We recently caught up with prolific cleantech and sustainable innovation investor Wal Van Lierop, CEO of Chrysalix Energy Venture Capital, about his key trends and predictions for 2015.
Van Lierop is chairing the Sustain Summit in Newport Beach, CA on Feb 12th where he will be addressing how corporations are adopting sustainability strategies. Register and use promo code CTIQ50 to receive a 50% discount.
What are 2014’s biggest successes?
For many, investing in green has been like riding an enormous rollercoaster. Yet I believe that 2014 was a pivotal year for cleantech and sustainable innovation. Most importantly, we saw that cleantech further penetrated in the core business of many large companies—it really is becoming part of the way the world does business today. In addition, the three biggest company stories in cleantech were undoubtedly Opower, Vivint Solar, and Nest. Opower, the utility-serving home energy efficiency and behavioral modification firm, held its IPO in April of 2014. Vivint Solar, a solar finance and installation company, went public in September. Nest, the home energy management technology company, was acquired by Google for an impressive $3.2B. These three companies serve as excellent examples of how the cleantech industry has turned the corner and sustainable innovations are now providing massive returns to the market.
What are the biggest changes you’ve observed over the past year?
Chrysalix has been investing in clean energy technologies for more than a decade, and during this time we have seen cleantech evolve immensely. In the past 12 months in particular, we have seen the cleantech industry reach a new level of maturity as sustainable innovations play a crucial role in the core business of large industries that are in transition, like oil and gas, power and utilities, chemicals and materials, metals and mining, and the supporting automation and manufacturing industries. We have seen clean energy technologies start to mature while at the same time large corporations figured out that they could use these innovations in a very positive way. And with that, we have also seen the total addressable market for sustainable innovation and energy tech, which was around US$500 billion in the early days of cleantech, is now approaching US$3-4 trillion as these innovations become cost-effective.
What types of corporate partnerships are emerging?
What is most interesting is that many large corporations have realized that innovation and sustainability can simultaneously improve the bottom line. A good example is our portfolio company Glasspoint, a leading provider of solar steam generators to the oil and gas industry for applications such as Enhanced Oil Recovery (EOR). In partnership with Shell and PDO, Glasspoint has in 2014 not just further matured the technology for solar EOR, but the company is also exploring novel financing models (e.g. yieldco’s) for further rolling out of additional projects. Wastewater company Axine has developed capital light service options for the processing of waste water— allowing customers to avoid having to invest heavily in capital-intensive projects up front. These are just two of the many examples of the innovative partnerships we are seeing these days.
What are the biggest trends to watch out for in 2015? Where are you looking to invest?
I believe that 2015 will be the year for industries and entrepreneurs, government, investors, and society at large to act on sustainable innovation. The potential for cleantech to usher in great change and help industries in transition while providing economic opportunities, financial returns, and environmental preservation, has reached a new level of maturity on the way to mainstream acceptance.
Tremendous pressure is mounting in the oil and gas industry as we enter 2015. The Brent Crude benchmark price dropped from over $100/BBL to under $70/BBL between June and November last year, with the potential to drop to an even further low of $30/BBL or below in 2015. This spells big trouble for the unconventional plays, where the average cost to produce a BBL of oil for North American Shale is $65/BBL and for the Canadian oil sands is $70/BBL (according to Morgan Stanley). This volatility has put the spotlight on innovation and disruptive technologies as a means of helping to control rising costs and increase returns, while improving the environmental footprint. At Chrysalix, we are increasingly looking for modular and scalable solutions that do not require capital-intensive economies of scale for traditional big “main frame” type industries, such as oil and gas. We predict these types of “in-the-box” solutions could be very beneficial for upstream exploration and production.
We predict that the attention surrounding the Internet of Things (IoT) will shift from “What can we connect?” to the more practical “What should we connect?” We focus on IoT solutions that can be applied to traditional industrial processes and markets. IoT has become an exciting part of the new energy industry, and we expect it will begin to address the pain points in some of the world’s largest industries that today face serious change.
We will also see renewable energy and energy storage become a top priority for major industries and corporations, and we already start to see this. According to the U.S. Energy Information Administration (EIA), hydropower is no longer the dominant renewable energy source in the United States. Non-hydro renewables such as wind, solar, geothermal and biomass have topped hydropower at ~300 billion kWh and are expected to account for two-thirds of all renewables by 2040. Bloomberg New Energy Finance has reported that annual investments in renewable energy power generation are now on par with new capital investments in fossil fuels, and will increase by $5 trillion in the next 15 years as renewable power generation market share increases to more than 50%. At Chrysalix, we see significant opportunity in energy savings, grid, and efficiency solutions.
To learn more about the Sustain Summit and hear from other leading investors such as: Björn Heinz, Investment Manager of BASF Venture Capital America; Cynthia Ringo, Managing Partner of DBL Investors; Tom Cain, Managing Partner of GSV Sustainability Partners; and Pat Ramm, Director, Corporate Venturing at Waste Management, click here. Use promo code “CTIQ” to receive a 50% discount.