Haji: The Doomsayers Are Wrong

It’s easy to feel gloomy about cleantech these days. After all, total global investment in the sector dropped 11 percent last year, as we reported. But as Cleantech Group CEO Sheeraz Haji emphasized in his opening remarks to kick off the company’s industry forum this week in San Francisco, there’s plenty to be excited about in cleantech, too.

Here are the top 10 reasons why Haji says that cleantech is doing better than ever:

#10: Big companies care. For many global corporations, the era of cleantech as a morale booster during employee pep rallies is over. Verizon, Wal-Mart and Google all appeared at the forum to discuss new ways they’re looking to partner with cleantech companies, including Google’s effort to bring clean electricity to its data centers.

“This marriage of big and small companies is really exciting,” Haji said. “Cleantech startups benefit from this marriage. They look to big companies for scale.”

#9: Corporate strategics. Big companies aren’t just looking to cleantech for investment opportunities, they’re also looking for competitive advantage. That’s especially true in the traditional oil and gas industry, said Greg Neichin, executive VP at the Cleantech Group.

“It’s not because they’ve woken up and found an environmental streak,” Neichen said. “It’s because the projects that will drive their bottom line in the future, projects like shale gas and oil sands. . . are entirely dependent on good stewardship of water and resources.”

#8: Cities. There are other big drivers of government investment in cleantech, of course. There’s California’s new carbon trading system, offshore wind development in Maryland, investment by the U.S. military and other armies in biofuels, and Saudi Arabia’s $100-billion investment in solar. “This is Saudi Arabia. It’s crazy,” Haji said.

But the most exciting cleantech work is happening in cities, Haji said. They’re doing it through projects as diverse as San Francisco’s goal of sending zero waste to landfills and incinerators, and the global C40 Cities initiative. “It’s not a U.S. phenomenon,” Haji said. “Cities are key.”

#7: Smart people. “The world’s smartest minds are on it,” Neichin said. That’s not just true in behemoths like the U.S. and China. Small countries including Kenya, Morocco and Ethiopia all built clean energy projects last year worth more than $100 million each. Little Denmark ranked #1 in the Cleantech Group’s study last year of most innovative countries. Third place was taken by Israel, which has become a world leader in water and wastewater technologies, and is expanding into energy markets with heavy investment in energy storage and smartgrids.

“It is for me the quintessential case study of what happens when you mix necessity with innovation,” said Neichin.

#6: Scale. Don’t focus so much on the trees of last year’s venture numbers, Haji says. Look at the wider forest: Home energy efficiency is a $40-billion industry in just the United States; last year saw $6.5 billion invested in 704 renewable deals worldwide.

“Yes, the venture world has been down,” Haji said. “But these are still massive numbers. These markets are large and diverse.”

#5: Water, agriculture and biofuels are booming. Investors completed 54 water deals in 2012, including projects by Organica Water, a Hungarian company that builds wastewater treatment plants that “look like a greenhouse,” Neichin said.

Large and small biofuel and biochemical companies are growing as they specialize, including companies like Sweetwater Energy. “Early companies in biofuels were trying to tackle the entire biofulels value chain,” said Neichin. “And now you have companies like Sweetwater that are tackling one particular element, in their case breaking feed stocks down into sugars.”

#4: Finance innovations. Everybody knows about the massive growth in solar leases by companies like Solar City. There’s the successful recent IPO by smart grid company Silver Spring Networks, and the new financing agreement with KKR and United Water to manage and invest in municipal wastewater infrastructure. There’s also lots of talk about bringing securitization and master limited partnerships to cleantech, Haji said, plus new opportunities in crowdfunding.

Add it all up, and that’s a lot of creative ways to get cleantech projects funded.

“Our cleantech index of 77 companies is outperforming all the major indexes this year,” Haji said.

#3: Solar. Sure, it’s a terrible time to be a manufacturer of solar panels. But it’s a great time for everybody else. Solar installations jumped 76 percent last year in the U.S.  “If you’re downstream in this industry as an installer, financier, a racking company, a tracking company, life is good,” Neichin said.

#2: Data. “Big data is huge,” Haji said. It’s also broad. Merging data with cleantech involves everything from smart meters to farm management to the sharing economy. Two months ago the Cleantech Group and Facebook announced their “Cleantech Goes Social” challenge for the most innovative cleanweb companies. The winner, SunFunder, uses crowdsourcing to fund off-grid solar projects in developing countries. It won $25,000 and strategic advice from the Cleantech Group and Facebook.

#1: You. It’s a classic Top-10 list trick, but this time Haji and Neichin were being specific. The trials of 2012 drove out the “boom wrangler” investors who flood in and out of sectors based on the latest fad. If you’re still a cleantech investor, that means you see what Haji and Neichin see: Real, long-term opportunity.

“The boom wranglers will be back, because they always are,” Neichin said. “But I think we have a group of people who are absolutely committed to this sector. This is a good business and this is a business of good people.”


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