09 April 2013

What's Going On: My Remarks from Cleantech Open Northeast

Investor panel at Cleantech Open NE Kick Off in Philly. 
Cleantech startups, like any new venture, need a leg up. That's where accelerators like Cleantech Open come in.

If you don’t know Cleantech Open, it’s an accelerator that has been helping cleantech startups and entrepreneurs launch, improve, and fund their businesses since 2006.

Last night, I delivered the keynote to kick off Cleantech Open NE in Philadelphia.  My remarks centered around three areas: ten trends and drivers, four reminders, and five things I’d like to see in the cleantech sector or hopeful signs.

First, the 10 trends and drivers:

  1. The VCs have left the building. Well, some of them. There’s been a capital “Shakedown Street” as VCs/LPs are backing out of cleantech. (Tucker Twitmyer offered the statistic that there were 184 investors in the cleantech space a few years ago; now there are a dozen.) And even CALpers is complaining publicly about getting burned in cleantech at the 2013 ECO:nomics conference. 
  2. Reduced government subsidies, at least in Europe and US, if not China. 
  3. Yet, natural resources, the environment, and food are among the top business risks called out in the WEF 2013 Global Risk report.
  4. And the food-water-energy nexus is one of top mega trends identified in the US National Intelligence Council report Global Trends 2030. 
  5. While Renewable Energy is becoming more cost competitive with "traditional” energy sources, and costs are coming down, particularly for solar, we may yet see a temporary increase in solar prices as the industry rationalizes. But the overall trend is down. Good for you and me; may not be so good for companies. 
  6. According to a recent EY survey, the resource use and the “energy mix” are becoming “C-suite” issues, but few companies have long-term strategies to deal with resource scarcity. 
  7. China, China, China: Both their own development & investment outside of China (in US companies; elsewhere) is something to behold…but, guess what, it’s largely fueled by coal and oil. Sure they are making huge advances in RE technology adoption, yet it's Old King Coal is driving their merry old economic growth. 
  8. Corporations increasingly see cleantech as an innovation pipeline, not just for strategic investments and M&A. 
  9. Consolidation happens: M&As, flame-outs, and bankruptcies, but wait…we’ve even had a couple of IPOS! 
  10. Natural gas is displacing coal slowly for generation, chiefly for new cogen development, which may provide an opportunity to accelerate the most promising, available renewable energy technologies. On the other hand, some argue it is largely damaging RE prospects. 

Next, 4 things we need to remember:

  1. As I wrote on The Green Skeptic back in August: we need to remember Gartner’s Hype Cycle for Technology. We’re currently sitting in the trough of disillusionment, somewhere between the peak of inflated expectations and the slope of enlightenment. (Hopefully, it’s not a slippery slope.) 
  2. We need to remember that energy transition is dynamic and full of risk. There will be flame-outs and successes. 
  3. We need to stop bickering about Tar Sands and Natural Gas – these are part of the transition away from a fossil fuel based society, In some ways, they may buy us time to get the best technologies to maturity. 
  4. We need to focus on adaptation, with a capital A. The die is cast, and smart government leaders like Christie, Bloomberg, and Nutter are working on adaptation as much or more than avoidance. It IS too late to turn back now and there is no global will to stop the carbon train. So, if it ain’t gonna stop, let’s figure out what we can do to adapt and deal. 

And finally, 5 things the sector needs now or hopeful signs:

  1. Cleanweb – or as I see it, get the best minds of the younger generation to apply the same creativity and excitement to energy and resource efficiency that they do to gaming and social web distractions. We need more business model innovation rather than technical innovation. 
  2. Level the playing field. Subsidy free, for all! Rather than subsidy free-for-all! If it’s a free market, let it be free. And let the winners win and the losers lose. 
  3. Get government out of the business of picking winners and focused on R&D. Solyndras will happen, but it shouldn't be on the public dime. 
  4. Get the partisans out of the picture. Cleantech, the environment, and energy are neither Republican nor Democrat issues. We can’t let this partisan divide tear this sector apart. 
  5. Now, more than ever, we should focus on the killer app or business model innovation of today not the platform “game-changer” of tomorrow. As my pal Tucker says, this is a game of incremental progress punctuated by breakthroughs that will take 50 years to commercialize. The good news is, the increments are meaningful.

Those were my thoughts shared with the audience last night in Philadelphia. Let me know what you think.