The State of Cleantech in 2014

by Guest Contributor Maud Texier.

Where does cleantech stand?

 

Renewable Energy. A technician standing on top of a wind turbine. Image Credit: Glenn J. Asakawa.
Renewable Energy at work. A technician standing on top of a wind turbine. Image Credit: Glenn J. Asakawa.

After a big boom in early stage investments and a green policies kick-off a few years ago, the cleantech industry has been through the struggles that always come with a young and maturing industry. Where are we standing now?

Unavoidable growing pains

Back in 2008, VC funds for cleantech were blossoming; some of them arguing that it would be the next internet boom. Politics started to raise their awareness about climate changes and environmental issues. Europe had led the way with the first feed-in tariffs for renewables and even a cap and trade market for CO2 in 2005. The US introduced Renewable Energy Standards in 30 states, and created ARPA-E as the new government agency to support innovation in the energy industry.

However, overproduction of solar cells and panels, combined with rapidly falling prices for that and other reasons, led to the demise of numerous solar startups. Meanwhile, many European countries, facing a financial crisis, stepped back and reduced their support for cleantech. The early growing pains that face all industries as they mature also showed up. That included some innovators going bankrupt or struggling to make it to their teenage years. Iconic cleantech companies such as Fisker, Better Place, and A123 went bankrupt; a lot of other startups had poor exits as they were struggling raising new funds.

Now VCs are defiant and most of the main teams are being dismantled as their cleantech portfolio did not perform well enough. Was that to be expected? Actually, VCs historically targeted rapidly growing markets in order to ensure high returns in a few years, whereas the energy industry bets on 20+years returns. There has obviously been a mismatch. Also, a lot of investors and entrepreneurs — new to the energy industry — underestimated the barriers of entry for this market, as well as the resistance of utilities.

However, a few VCs did well and are still in the game. Today, most of them are either targeting this new “cleanweb” segment, which is more likely to be capital-light with a rapid return by focusing on apps and softwares. Others are partnering with corporates to ensure a more sustainable investment and facilitating industry alliances for the ventures.

The cleantech coming of age

Funding a hardware cleantech company is currently very difficult, if not impossible. However, we still need those technologies to evolve and mature, as they will be the pillar of the next infrastructures. Cleanweb, new business models, and financing are key and definitely necessary to mainstream those innovations, but let’s not forget our final goal by focusing too much on the means….

I believe that the solar industry has never been better than it is today. It is true that a lot of people are struggling, we have seen the number of module manufacturers dramatically dropping over the last two years, and now the pressure is put on other types of hardware from the balance of system, such as inverters. But the price drop has been so strong and the emergence of new business models so impactful that PV is becoming mainstream. The market has been maturing into a more sustainable industry, and it will keep growing but likely with a trend towards verticalization.

Also, storage is going to see a huge change this year. A lot of companies have been working on their technologies for years now, and the market is finally getting ready, one step at a time. Timing is always critical for innovations: now as energy demand keeps increasing despite limited and decreasing capacities, storage starts making sense even at a higher price. California once again pioneered by introducing the AB 2514 bill that makes storage capacities mandatory for the state IOUs (PG&E, SCE, SDG&E). Is storage on the same path as solar was a few years ago?

I will just add a few words on the energy efficiency industry, this low-hanging fruit that companies have been trying to grab for some years now. Despite huge potential, energy efficiency is still looking for the right model. The concept of monetizing negawatts needs a lot of structure: policies, regulations, standardized measure, and verification processes. Some promising technologies for consumption disaggregation and new financing structures could dramatically change the picture with the right business models.

The energy industry is re-shaping itself as it faces new challenges. The emerging segments of this market have definitely been going through difficulties to reach technology viability and find the right business model. This market is a tough one, where you need heavy investment and strong will to upgrade infrastructures and modify a legacy system which has been running for decades. But we are finally witnessing the development of those technologies at large scale, creating new economies. Beyond solar, the grid is finally starting to change with storage, energy efficiency and consumer-oriented services.

About the Author: As an engineer, Maud dedicated her efforts towards the energy market. She hails from the oil & gas industry, and started her career working in electricity markets. As an analyst on a power trading desk, she studied the market mechanisms that can develop new demand-response models. She has been scouting new technologies such as renewables, storage or energy efficiency for a large power utility in Silicon Valley before joining a solar start-up.

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This article, The State Of The Cleantech Industry, is syndicated from Clean Technica and is posted here with permission.

California Passes 600MW Shared Renewables Program

by Silvio Marcacci

Just when it seemed like the outlook for renewables in California couldn’t get any brighter, the state legislature has passed a bill that will open up access to the 75% of its residents unable to install clean energy on their property.

SB 43, also known as the “shared renewables bill” passed the State Assembly and Senate yesterday, and now heads to Governor Jerry Brown for signature into law.

Shared renewables graphic via California Shared Renewables

The bill immediately creates the largest shared renewables program in the US and could supercharge California’s clean energy economy — all without any state subsidies or extra costs to non-participating residents.

Shared Renewables
Shared renewables image via California Shared Renewables

New Access To Renewables For Millions Of Residents

California’s Green Tariff Shared Renewables Program, as the shared renewables program is officially called, allows any customer of the state’s three largest utilities to purchase up to 100% renewable electricity for their home or businesses. Cumulative investments will be capped at 600 megawatts (MW) and the program will sunset in 2019.

For context, California installed 521MW of solar during the second quarter of 2013 — an all-time record for any one state in a three-month period. Considering any new renewables capacity created by the shared renewables program would be in addition to the state’s 33% renewable portfolio standard, this could theoretically push the state’s annual solar installation record further than ever before.

Buying renewable power on the electricity market isn’t a new idea, but California’s shared renewables program and the customers it would reach bring a few new twists to the scene. To start, the program targets people without property suitable to install clean energy systems – renters, business owners who lease offices, those with shaded roofs, people in homeowner associations, and so on.

“SB 43 will allow the millions of Californians who cannot install their own solar unit, windmill, or other renewable power generation system to obtain renewable energy through their utility,” said State Senator Lois Wolk, who sponsored the legislation.

Consumers from Pacific Gas and Electric (PG&E), San Diego Gas & Electric (SDG&E), and Southern California Edison (SCE) will be able invest in renewable energy by buying shares of the electricity generated by new projects up to 20MW in size, at a locked-in price that’s added to their existing electricity bill as a credit.

Shared Renewables Benefit All – Even Big Utilities

Since the subscription price includes a credit to the utility for grid use, any increased transmission and distribution costs aren’t spread to other ratepayers who may not be participating in shared renewables investments. And, the program avoids the fight over net metering because utilities aren’t worried about paying ratepayers back for power they generate but don’t use themselves.

While the program is capped at 600MW total, 100MW of that total must be reserved for residential consumers ,and 100MW of new renewable energy projects less than 1MW in size must be built in disadvantaged communities – two provisions that generated a diverse band of support as the bill wound its way through the legislature.

Advocacy organization Vote Solar estimates the bill will create around 6,000 new green jobs, allow 20,000 residential ratepayers to participate, and generate over $2.2 billion in economic activity within just a few years.

California added more than 9,000 green jobs in second quarter of 2013, so while the state didn’t need any help holding onto its lead as the epicenter of America’s clean tech market, shared renewables could cement that status for years to come.

This article, California Passes 600MW Shared Renewables Program, is syndicated from Clean Technica and is posted here with permission.

About the Author

is Principal at Marcacci Communications, a full-service clean energy and climate-focused public relations company based in Washington, D.C.