Investor classes are concentrating and shifting slightlyFewer overall investors – which is natural and probably goodmore corporates – particularly in later stage deals (probably through JVs and other buildouts)Mostly we see the players who were dipping their toe pull back a bitCorporates and private equity play a heavier role in cleantech investing than in other VC categoriesWe’ve heard some questions about whether the VC model works in cleantech, and we will get some opinions on that here on this panel. Many, but not all CT plays are more capital front loaded. The fact that PE and Corp play a larger role highlights this and the need for accessible downstream financing…. And what we are seeing is….
We’re seeing continued growth in asset financing and exits.Project Finance, M&A, and IPOs all up in 2010Interestingly a large portion of the Cleantech IPOs were in China (11 of 14 in Q1-3). Increasing player not just in tech liquidity but clean tech.
Amazing how much CT continues to correlate with oil and NG pricesMost people see the long term trends here being up and to the right – even with shale gas we have a fundamental set of problems
Taking another step back. I just want to put this chart up and leave it during our discussion. It shows a view of how different types of capital layer into a theoretical heavy industrial innovationThe commercialization section I just showed is this middle area where you all are entering and where we all spend our time investingYou can see that some gaps can emerge in those later stages as I mentionedMore importantly, you see how different types of capital layer inGovtARPA-E and early seed (Michael)VC (My firm)Corporates and PE (although most PE is later) (Daniel)And then Project finance equity and debt (Daniel)
By way of comparison, Bureau of labor statistics says - 79,500 Americans work in iron & steel manufacturing. 84,000 work in coal mining.
How to Save a Planet - On a Budget: Cleantech, the Venture Capital Climate, and Policy
How to Save a Planet – On a BudgetHour 3 (11:15 – 12:15 EST): • Green Seeds: Venture Capital and Cleantech Startups • Government Policy and Cleantech Brought to you by #GreenFinance
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About Our SpeakersWill Coleman is a partner at Mohr Davidow Ventures. He has logged ten years in cleantech and hasworked with startups, cleantech funds, and on project finance structures for new energytechnologies. He previously worked as the Legislative Director for the New Fuels Alliance (FormerlyREAP), for GE Wind in the commercial operations group, for Xseed Capital, and on a variety ofrenewable energy projects abroad.Scott Edward Anderson is founder of VerdeStrategy, a consulting and advisory firm focused on thecleantech, energy, and environment sectors, and is a frequent commentator on FOX BusinessNetwork. He has over 20 years experience in management, marketing, fund raising and businessdevelopment, and has held management positions institutions such as The Nature Conservancy andAshoka, a social venture capital organization.Daniel Shugaris CEO of Solaria, and has spent over twenty years advancing the renewable energyindustry, most recently as president of SunPower Corporation, and previously of PowerLight. Mr.Shugar has invented various PV system applications, holds multiple U.S. patents and has publishedover 50 technical papers. Mr. Shugar holds a BS in electrical engineering from Rensselaer PolytechnicInstitute and MBA from Golden Gate University.Jesse Jenkins, moderating,is Director of Energy and Climate Policy at the Breakthrough Institute, andis a leading energy and climate analyst and advocate. Jesses work and analysis has been featured inmany media outlets, and he is recently the co-author of Bridging the Clean Energy Valleys of Death:Helping American Entrepreneurs Meet the Nations Energy Innovation Imperative #TECLive #GreenFinance
Financing Cleantech Innovation Will ColemanEnergy Collective WebinarNovember 30, 2011
Firm Overview • Founded in 1983 Early Stage • “Early Stage” Venture Investor Venture Investor • Invested in more than 275 companies • $2B Under Management Cleantech Life SciencesInformation Technology
Competition is still relatively cheap and plentiful 14
Different types of capital fill different needs
Financing – Typical Risks / Issues • Early capital intensity before validation – Requires access to different sources of capital (PE / debt / strategic / government) • Late binding risk reduction – Economics of process only proven at scale • Later stage investors’ interests might not be aligned with entrepreneurs and early stage investors – Cost of Capital less important to decision making
Things we have learned• Build something that matters – Typically: difficult = differentiation = value capture• Build something that can be a solution not a component• Manage capital intensity – It’s as much about the timing as the total capital• Cleantech investing is more complex than classic IT – Many more financing sources, strategic interests, policy, etc.• Successful business development can beat technology (at least over the short run)
Financing Cleantech Innovation Will ColemanEnergy Collective WebinarNovember 30, 2011
A Year of Unprecedented Energy Disasters BP Deep Water Horizon Oil SpillApril 2010 Fukushima Daiichi Nuclear MeltdownMarch 2011 Natural Gas Upper Big Pipeline Branch Coal Explosion in San Mine Bruno, DisasterApril CASeptember, 2010 2010
Solar Power Applications – Diverse RangeResidential Commercial Rooftop Utility Scale1-10 kW 10 kW – 1 MW 1 MW– 250 MW
Solar Growing Rapidly, Averaging 65%Compound Annual Growth Rate for the Past 5 Years 17 nuclear power plants worth of solar peak power shipped in 2010 Source: PV Industry Growth Data from Paula Mints, Principal Analyst, Solar Services Program, Navigant
Global Solar Industry Growth hasProduced Steadily Falling Prices Module Pricing Trends 1985-2011 Sources: 1976 -1985 data from IPCC, Final Plenary, Special Report Renewable Energy Sources (SRREN), May 2011; 1985-2010 data from Paula Mints, Principal Analyst, Solar Services Program, Navigant; 2011 numbers based on current market data
Solar Adoption on High Tech Trajectory US cell phone subscribers has risen from 5.3 million to 285 million in 15 years
Solar Price Drops MirrorHigh Tech Consumer GoodsDriven by Innovation, Automation, and Scale Cell PhonesDigital Cameras with plan DVD Players
Financing is Driving Residential Solar Adoption• 100% Financing accelerating solar home sales• Sale of Energy, not equipment• Never an Increase in your Utility Bill• >100,000 solar power systems already installed
Solar is Less Expensive Than New Nuclear $0.139 $0.129 Cents per Kilowatt Hour $0.095 $0.07 Average time to permit and build a nuclear 1 GW power plant – 13 years. Average time to permit and build 1 GW solar – 1 year. The last nuclear power plant completed in the US, Watts Bar 1 in Tennessee, took 23 years 7 months to construct.Sources: 2011 nuclear price is the mid-point of the LCOE range given by Lazard, version 5.0. 2020 nuclear price is illustrative, calculated assuming 3.5% annual escalation; 2011 & 2016 PV Prices from DOE, Advanced Research Projects Agency - Energy, $1/Watt Photovoltaic Systems, May 2011, 2020 PV price illustrative, assuming 4% annual cost reduction from 2016 (further validated by prices bid by solar developers into the California markets).
Solar Beats Natural Gas Peak Power Today $0.238 $0.226 Cents per Kilowatt Hour $0.139 $0.086 250 MW Gas CT Gas peakers pollute 3 times more than natural gas power plants. Sources: 2011 gas price is the mid-point of the LCOE range given by Lazard, version 5.0. 2016 gas price is illustrative, calculated assuming 1% annual escalation; 2011 & 2016 PV Prices from DOE, Advanced Research Projects Agency - Energy, $1/Watt Photovoltaic Systems, May 2011 (further validated by prices bid by solar developers into the California markets).
New Coal Can’t Deliver Power for 6-8 Years,When Solar Will Be Competitive $0.139 $0.109 Cents per Kilowatt Hour $0.08 $0.07 $0.07 Coal Plant 5% 500 MW Source: 2011 coal price is the mid-point of the LCOE range given by Lazard, version 5.0. 2020 coal price is illustrative, calculated assuming 5% annual escalation: 2011 & 2016 PV Prices from DOE, Advanced Research Projects Agency - Energy, $1/Watt Photovoltaic Systems, May 2011, 2020 PV price illustrative, assuming 4% annual cost reduction from 2016 (further validated by prices bid by solar developers into the California markets).
Solar Meets Critical Peak Power Demand Sources: For summer peak load shape – California Independent System Operator (CAL-ISO); For time of use rates – Pacific Gas and Electric Company (PG&E); For PV Tracking Output – Solaria Corporation
Solar Creates U.S. Jobs100k 80k 60k 40k 20k 8 7 7x more jobs per MW100,237 Americans work in solar today 6 than coal 5 4 Solar employment grew 6.8% while 3 the general economy grew 0.7% 2 1 0 Nat ural Gas Coal Nuclear Wind CCS Biomass Solar Thermal Geot hermal Solar PV Sources: Kammen, David M et al, 2004, Report of the Renewable and Appropriate Energy Lab, Putting Renewables to Work: How Many Jobs Can the Clean Energy Industry Create?, Energy Resources Group, Goldman School of Public Policy, University of California, Berkeley.Wei, Max et al, 2010, Putting Renewables to Work: How Many Jobs Can the Clean Energy Industry Create?, Energy Resources Group, Goldman School of Public Policy and the Haas School of Business, University of California, Berkeley, in Energy Policy, vol 38, issue 2, February 2010. Solar Foundation 2011 National Jobs Census U.S. Bureau of Labor Statistics: May 2010 National Industry-Specific Occupational Employment and Wage Estimates
Solar is Ready Now Solar Coal Natural 17 GW 6.7 GW Gas 5.5 GW Solar added more Major combined than 17 GW sources of polluted worldwide energy only added 12.2 2010 GW in the US 2010 Source: Erik Shuster, National Energy Technology Laboratory, Tracking New Coal-Fired Power Plants, January 14, 2011(Natural as includes NGCC at 4GW and NG GT and 1.5 GW.)
Bipartisan Public Support for Clean Energy 91 percentof Americans say developing sources of clean energy should be a priority for the President and Congress 85% of Republicans 89% of Independents 97% of Democrats Sources: Public Support for Climate & Energy Policies in May 2011, Yale Project on Climate Change.
Transition to Renewables To 2030 To 2040 To 2050 • Flexible Generation • Substitute Generation •Smartgrid • Energy StorageTWH/yr Solar power will be the largest source of electricity in the U.S. Sources: McKinsey Report, 2007 for starting points and energy efficiency; AWEA for wind; internal SunPower calculations for DPV, CPV, CSP
Solar Less expensive than new nuclear and cost competitive with new coal and gas started today Delivers Gigawatts of power fast – 8 to 20 years faster than coal or nuclear Delivers strong ROI in the form of American jobs and global economic competitiveness
How to Save a Planet – On a BudgetBrought to you by #GreenFinance
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