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Cleantech investment boom begins

Posted: 16 Sep 2008 ?? ?Print Version ?Bookmark and Share

Keywords:renewable energy? cleantech? photovoltaic market? solar cell?

Unless you live under a rock, you can't avoid all the bad news about the environment. Global warming, carbon footprints, extreme weather, rising sea levels, the possible extinction of polar bearsit's everywhere. And at our current rate of growth, there will be another 3 billion people on the planet within the next 40 years, up from 6 billion today.

The clean technology (cleantech) market is large and growing. According to a report by CleanEdge Inc., total revenue of the biofuel, wind, solar photovoltaic (PV) and fuel cell markets is expected to top $250 billion within the decade, up from $77 billion last year. And global investment in clean energy technologies reached close to $150 billion in 2007.

"The market size for cleantech will be measured in the trillions of dollarsit's immeasurably deep," said Erik Straser, partner and leader of the cleantech team at venture capital (VC) firm Mohr, Davidow Ventures. The firm has investments in 11 cleantech companies to date, including those exploring solar, biofuel and hydrogen fuel cell technologies.

VC investment in cleantech has grown as mainstream VC firms begin to pour billions into the sector.

VC push
According to Straser and other investors, we are in the early stages of an investment boom that will last 20 to 30 years. To date, the cleantech business has been driven by a relatively small number of VCs and entrepreneurial companies. But that's now changing. "Cleantech is going mainstream," Straser noted.

Indeed, mainstream VC firms, corporate capital funds and even nations are beginning to pour billions into the sector. China, which surpassed the United States in 2006 as the world's largest contributor to greenhouse gas emissions, is investing big in renewable power technologies. The nation had plowed nearly $3 billion into wind power, $8.1 billion in solar thermal energy, $1.7 billion in solar PV, $3.1 billion in ethanol and $1.3 billion in biodiesel, China Daily reported earlier in the year.

VC investments in China are expected to nearly double, from about $400 million in 2006 to more than $720 million this year, according to Cleantech China Research.

India ranks fifth in the world in renewable energy capacity. But to meet the country's energy demand of the next 20 years, capital investment on the order of $200 billion is required.

Even oil-producing nations such the United Arab Emirates are pouring billions into cleantech ventures.

Transforming the world
The cleantech trajectory looks something like the electronics industry in the days when Silicon Valley was still largely orange groves. Just as the transistor and semiconductor fundamentally transformed our world, many analysts believe cleantech will do the same, only on a grander scale. And of course, the electronics industry is expected to play a leading role in this transformation.

Why electronics? For one, nanotechnology is a driver in the creation of new cleantech applications. Nanotech, defined as below 100nm, is under development by semiconductor, hard-drive and display manufacturers. Its advent has driven investment in lithography technology to produce circuits down to 45nm to date.

Leading solar PV manufacturers are following in their wake. Thin-film innovators include Nanosolar, HelioVolt, International Solar Electric Technology and Konarka Technologies.

These companies and others are in a race to commercialize low-cost solar cells using nanoparticle inks sprayed onto flexible substrates. The process is more akin to printing than traditional semiconductor deposition. As they refine their manufacturing processes, the price of solar panels is expected to plummet, thus accelerating the adoption of solar power as a viable alternative to coal and other low-cost nonrenewable sources.

Overall, the market for PV cells is estimated to grow by 40 percent annually until 2010 and 20 percent beyond that, according to Henning Wicht, senior director and principal analyst for MEMS and PV at iSuppli Corp. Wicht predicts that the PV industry will be on par with the semiconductor industry by 2010 in terms of capacity and fab investment. He expects solar to reach grid parity as early as 2012 for regions with a lot of sunshine, such as Spain and Italy, and by 2018 for areas with medium sun exposure, such as Germany.

Opportunities in cleantech, including solar, have been a target for established electronics companies for a few years now. Among those investing in renewable energy technologies are Applied Materials, Bosch, Cypress Semiconductor, IBM, Intel and Sharp.

Intel expands clean funding
Energy efficiency ventures that benefit its core businesses have been the focus of funding by Intel Capital. However, it has recently expanded its scope. "Now we're looking more at the macro scale, at the grid level and at alternative power generation and storage," said Steve Eichenlaub, managing director at Intel Capital, who focuses on investments in cleantech and emerging platform technologies.

In July, the microprocessor maker led an investment round in Sulfurcell, a German manufacturer of thin-film copper indium gallium sulfide/selenide PV. Sulfurcell will use the infusion of cash to build a production plant in Berlin, Germany.

Intel recently announced it is leading a $50 million investment round in SpectraWatt Inc., the spin-off of a solar-PV cell startup business launched inside its new business initiatives group. SpectraWatt expects to ship its first product by mid-2009, according to Intel.

Then there's the investment in Grid Net, a software company that provides WiMAX services and reference designs for smart meters to enable the utility industry's Smart Grid. Grid Net is an example of how Intel's investments align with its core business interests, Eichenlaub said. Grid Net has partnered with General Electric and Intel to create an "open ecosystem" smart metering system that uses Grid Net's firmware, GE's smart meters and Intel's WiMAX connection chipsets, according to Grid Net.

Global investment in clean energy technologies reached close to $150 billion in 2007.

In-house environmentalism
While Intel is looking outside its own walls for compatible leantech investments, it's also among a growing number of electronics companies that are looking inside to apply environmentally responsible practices.

Typical internal initiatives include energy conservation, the offsetting and reduction of greenhouse-gas emissions, recycling and reuse of materials and equipment, design-for-environment in both products and processes, and the "greening" of the supply chain.

Energy efficiency and power management have been drivers for RF applications for years and are now being marketed for their environmental advantages as well. The U.S. Environmental Protection Agency's Energy Star program and the European Union's Energy-using Products directive are catalysts driving energy efficiency.

Increasingly, electronics companies of all stripes are touting the environmental benefits of energy efficiency in their products. Actel Corp., for example, is marketing its flash-based FPGAs as more energy-efficient than competing products, particularly when it comes to static-power requirements in cellphones and PDAs. The challenge, said Actel CEO John East, is to encourage designers to design for low power, whether it's a requirement or not. He believes this mind-set needs to be instilled early in their training.

"While sustainability is an increasingly important area for universities worldwide, with respect to electrical engineering, I think we can do more," said East. "I would love to see more focused coursework on design-for-environment at the undergrad and graduate levels within the electrical-engineering schools."

Sanitizing the supply chain
A major concern for many electronics companies for a few years now, supply chain issues were brought into sharp focus in the months leading up to the introduction of the European Union's WEEE and RoHS directives in 2005 and 2006, respectively. Now, a new phase of supply chain scrutiny has started with the EU's Registration, Evaluation, Authorization and Restriction of Chemicals (Reach) regulation.

Reach ultimately will monitor the use and distribution of thousands of chemicals in the EU. For now, though, the regulation requires that producers of finished products that include a modest number of "substances of very high concern" (SVHC) provide the European "recipient" of the product with information on the substance. In fact, anyone can be defined as a recipient and request this information. Under the directive, the producer company is required to respond within 45 days.

The fear among electronics manufacturers, including semiconductor companies, is that organizations such as Greenpeace and the World Wildlife Fund will launch mass letter-writing campaigns to request this information. This barrage could start as early as October, which is when the EU is expected to release the candidate SVHC list, said Michael Kirschner, president of Design Chain Associates. "It's mechanical engineers that need to be most aware of Reach," he said. "They need to get a better handle on what substances are in the connectors and injection-molded plastics that go into the products."

- Bruce Rayner
EE Times

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