Cleantech Market The Next Favoured Investment Destination

Date:   Tuesday , February 01, 2011

Clean technology is an umbrella term including both the new energy efficient technologies and the related business models that offer competitive returns for investors and customers while providing solutions to global challenges. It is driven by productivity-based purchasing, and therefore, enjoys wider market economics with greater financial upside and sustainability.

Cleantech incorporates a wide range of products, services and processes all aimed to provide high standard performance at a lower cost, eliminate negative ecological impact and to improve the production and responsible use of natural resources.

According to a report by Bloomberg New Energy Finance, global investment in clean energy reached $243 billion last year, which is a 30 percent growth from $186.5 billion in 2009. The rapid growth was mainly driven by players such as China, European rooftop solar, European offshore wind, and research and development. China topped in investment with 30 percent growth reaching $51.1 billion in 2010.
Investment in this sector will hit a new high in 2011 due to the continued growth in Asia and the ongoing push for resource efficiency. Energy efficiency represented the highest number of deals last year. Solar energy was the most popular technology area for investment which is followed by transport and energy efficiency.

As the global economy is recovering from the recession, 2011 is expected to be a record year for renewable energy generation as more and more clean power plants open. Many countries like Germany, France and Spain will generate more energy from zero carbon sources without any deterioration in reliability.
The revenue generating aspect of cleantech comes from a verity of areas such as energy generation, energy efficiency, energy storage, energy infrastructure, transportation, air & environment, water & wastewater, materials, agriculture, manufacturing/ industrial, recycling & waste.

The investment trends in cleantech shows a very positive approach because the market has a gigantic potential to reap huge profits if successfully exploited. Development of a viable system for carbon capture and sequestration is a prominent market in cleantech which is not fully explored. It is obvious that the development of efficient, zero-emissions coal plants will revolutionize the energy market. Low-cost desalination is undoubtedly going to be the point of attraction in the future. Another huge market of the future will be vertical or protected farming. It is expected that low-cost farming using hydroponic and aeroponic methods within large urban structures will be a necessity to feed the ever-growing world population. Solar energy and PV systems will emerge as another viable, long-term prospect for replacing fossil fuels.
Other major trends in cleantech investments for the coming year include a low growth rate for solar standards, a shift from biofuels to biochemicals and increased investment on energy efficiency efforts.

Although cleantech offers a multibillion dollar opportunity for investors, it has a number of snags which stops investors from step into it. The venture capital investors are mostly deterred by the lengthy time lag between investment and commercialization. It is a fact that the number of successful cleantech exits remains few because either the technology is not as disruptive as competing solutions or it is simply taking longer to adopt it. The large-scale capital expenditures required to develop the technology is also another obstacle.
Binu T Paul