16 April 2012

Contrarian Investors Take Stage at Mid-Atlantic Cleantech Investment Forum

"Energy efficiency is the cleaner energy option that pays for itself," suggested Mark Fulton to the large crowd gathered for the Mid-Atlantic Cleantech Investment Forum last Thursday evening. "It applies already existing technologies at scale with no government funding and a payback of 2-4 years." 
Mark Fulton

Fulton is Managing Director and Global Head of Climate Change Investment Research and Strategy with Deutsche Bank Climate Change Advisors, so he has the data and charts to back up his statements. 

His team is currently exploring financing models for energy efficiency, which they believe will generate over $1 trillion in savings over 10-20 years.

"The Empire State Building energy efficiency upgrade demonstrated 30 percent IRRs," offered Fulton. "So why isn't anyone investing in it?"

Perhaps it's the wise investor's contrarian outlook.

The Forum, now in its 4th year, co-hosted by the Cleantech Alliance Mid-Atlantic and Blank Rome's Cleantech Group, offered some contrarian suggestions from an investor panel.

The panel included Tucker Twitmyer of EnerTech Capital for whom "efficiency plays have been our bread and butter," and Lux Capital founder Josh Wolfe, who's refrain, "it's a great technology," belied the fact that not all great technologies make great investments.

It's such a contrarian outlook, too, that has led to successful investments for Lux, EnerTech, and NRG Energy's venture arm, and that has cleantech newcomer Edison Ventures looking to capital efficient "cleanweb" models as a way to play in the sandbox. 

The nascent cleanweb movement, initially launched by Sunil Paul at Spring Ventures, brings together web coders to tackle big energy problems. (You can read more about the cleanweb hackathons here.)
Tucker Twitmyer

Twitmyer, who has been investing in clean energy companies and projects for over 10 years, sees parallels with earlier cycles in the space, "LP [limited partners] who haven't seen the kinds of returns they want have started heading for the exits."  

But that's not necessarily time to panic, suggested Wolfe. On the contrary, when the bulk are investors are chasing the next big thing, Wolfe and other successful investors see opportunities in what's left untouched.
Josh Wolfe

This thesis has paid off handsomely with one such investment, Kurion, which has a solution for addressing toxic nuclear waste, realizing $40 million in profit on $100 million in revenue last year.

The company was one of the few working to clean up the Fukushima nuclear reactors in the wake of the tsunami a year ago.

Another panel at the Forum on shale gas development revealed that there's a growing need for clearly defined regulations in the natural gas sector, especially around well-casing construction and fluids disclosure.  But the panel of experts concluded that sustainable natural gas development is achievable.

Presenting company pitches by new entries in the space rounded out the evening's program, including Green Power Technologies (the "BERT" people), Matcor, OmniWind, Primus Green Energy and XL Hybrids.

"We need to start talking about cleaner energy, not just clean energy," offered Fulton in his keynote. "Sixty to seventy percent of American voters support the idea of cleaner energy," which includes advances to make existing forms of energy better, cleaner and more efficient.

Recognizing there are no silver bullets or magic remedies, fora like this one are designed to call attention to the variety of solutions available. No matter how contrarian they may seem. 

(Disclosure: The author is a co-founder of the Cleantech Alliance Mid-Atlantic, which co-hosted the Forum.)