Q&A: The clean tech opportunity
Jan Dekker – Managing Director, Cleantech Ventures (the views below should be clearly represented as mine only and not those of Cleantech Ventures more broadly)
What do you think represents the biggest trends in the clean tech industry in 2012/13?
I would expect that most of the trends we observe in the clean tech space in the coming year will be directly related to the global economic climate. For example, I would expect to continue to see increased clean tech investment activity in the Asia Pacific region (in particular China) which has demonstrated strong growth (albeit off a small relative base) in recent years. I believe Europe will be challenged due to its economic prospects at this time with the US maintaining its steady performance and leadership position.
A more conservative investment approach by fund managers globally will probably result in more later stage deals being done with average deal sizes therefore increasing. Capital raising will be a difficult challenge for PE and VC fund managers, particularly in western markets and possibly more so for those who are looking to raise specific 'clean tech only' as opposed to 'hybrid' tech funds that invest across a range of sectors. I would expect to see more Asia Pacific-based investment funds coming into clean tech investment markets however, and we are already seeing significant evidence of this in Australia.
Which subsector of the clean tech industry is likely to see the most growth and innovation in 2012/13?
Globally, I would expect the continued domination of the 'big 3' clean tech subsectors i.e. solar, transportation and energy efficiency. I expect this will be the case in terms of the quantum of funds invested as well as number of deals done. In Australia however, we would also expect to see growth in the water and waste sub-sectors and also significant growth in those sub-sectors influenced by the commencement of the carbon price, for example, commercial and industrial energy efficiency.
What do you think represents the biggest challenges and opportunities for investment in clean tech in 2012/13?
I believe that the biggest challenge for clean tech investment in 2012/13 remains in drawing institutional capital into the space. This challenge will only be exacerbated by continued negative global economic conditions which will clearly drive conservative investment and asset allocation decisions throughout the coming year. The most effective way to draw institutional investment into the cleantech space is clearly by delivering performance, both at an individual investment and fund level. In Australia, this issue is clearly a 'chicken and egg' one i.e. funds are needed to be invested such that the successes can be delivered as available capital is thin on the ground. Melbourne-based Cleantech Ventures is one of the few exclusively clean tech focused venture investors of any scale in the country. The biggest opportunity for clean tech in Australia remains its extremely strong base of R&D and quality investment candidates.
Martin Rushe – Managing Director, Moss Capital
What do you think represents the biggest trends in the clean tech industry in 2012/13?
-- Increasing overhead in the transmission and distribution element of delivered electricity will continue to drive opportunities for distributed generation.
-- Falling solar PV manufacturing costs will increase the feasibility of commercial and industrial scale solar.
-- The gap between electricity and gas prices will drive co-gen and tri-generation assets.
-- Energy efficiency will come into its own as market sector. The faltering first steps of smart-grid will begin to consolidate and deliver benefits.
What do you think represents the biggest challenges and opportunities for investment in clean tech in 2012/13?
The challenges are all on the capital side. Connecting the right risk return profile for investors with the right assets is the key to unlocking opportunities in this sector. And the opportunities are significant.