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Efforts heat up in bid to draw investors on energy apps

Posted: 23 Jul 2008 ?? ?Print Version ?Bookmark and Share

Keywords:renewable energy? solar energy? photovoltaic? nanotechnology?

The U.S. Department of Energy (DOE) is making beefing up efforts to attract entrepreneurs at early stages to commercialize renewable energy concepts.

At the inaugural of Nano Renewable Energy Summit, Michael Bruce, senior advisor for finance in DOE's Office of Energy Efficiency and Renewable Energy, said bringing in specialists in business development when working on public-private collaborations is more effective than the "technology incubators" commonly created by academic institutions working with private industry.

Bruce delivered the keynote for a new conference focused on the use of nanostructures in energy applications. Nanotubes, buckyballs and similar nano devices are familiar in applications such as thin films for solar photovoltaics, but nanomaterials also are used in electricity generation and transmission, said Nano Business Alliance VP Vincent Caprio.

Bruce has witnessed the new involvement of scores of venture firms in renewable energy and nanomaterials, where only a few investment specialists played a few years ago. DOE started its entrepreneur program with Foundation Capital, Kleiner Perkins Caufield & Byers, and Arch Venture Partners. When DOE officials sought additional venture help to avoid the "commercialization valley of death," other venture firms like Khosla Ventures and Matrix Partners got involved.

While renewable energy investments have been on an upstroke since the late 1990s, in recent years solar in particular has enjoyed CAGR rates of 43 percent in generated megawatts (from 286MW in 2000 to 3.43GW in 2007), and 30 percent in revenue growth ($3.41 billion in 2000 to $21.2 billion in 2007).

Nanotechnology investment from the private sector began growing as the federal government expanded its National Nanotechnology Initiative, which has been funded to the tune of $10 billion since 2000. DOE has facilitated investor interest through the creation of five nanotechnology centers of excellence, covering areas such as micro-molecular structures and thin flims.

Energy investment
Bruce said that DOE has turned away from traditional licensing fees involving royalties for patents, and instead is promoting an equity-share license, in which equity shares in private companies are exchanged for technology licensing rights.

Several panelists at the conference warned of potential downsides to investment. In solar energy, Lux Research senior analyst Michael LoCascio said that growth will continue for many years in the solar industry, but that the rate of growth will decline in late 2008 or early 2009 due to price erosion, as supply of panels exceeds demand. This is a natural side effect of increased investment, he said, and does not indicate softening of interest in solar.

Scott Livingston, founder of the Livingston group investment arm of Axiom Capital, quipped that "$150 barrel oil and the collapse of the financial system in this country might be the best thing that's happened to our business." Consequently, the only thing that would slow renewable energy business would be oil at $40 a barrel.

Joel Serface of Kleiner Perkins helped it open a new office near the National Renewable Energy Labs in Golden, Colorado, to work with the DOE entrepreneur programs. He said the influx of venture capitalists into this area "inevitably brings some lemming-like tendencies, but in general, the expansion of venture in this area is a good thing, even if it means more competition for us."

Abe Yokell is a partner at Rockport Capital Partners, which has specialized in "cleantech" investments since 2000. He said that the field used to have a problem attracting good managers with both technology and business experience, "but lately, the semiconductor and biotechnology guys have been looking to move into this space, so talent is no longer a problem."

- Loring Wirbel
EE Times

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