Sewage gas to bioplastics, hybrid drive to thermal waste – the definition of CleanTech is ever-evolving and it is a lot more than your standard solar panel or wind turbine.
The global CleanTech industry encompasses a wide range of processes, services and products used to limit environmental waste by relying on renewable energy sources and materials, and reducing natural resource use. The sector is worth more than €2 trillion ($2.26 trillion) a year, and it is expected to more than double by the mid-2020s, according to 2012 research from Roland Berger Strategy Consultants. Last year the World Bank said there was a $1.6 trillion market opportunity in clean technology in developing economies.
Why do families like investing in CleanTech? At what stage do they get involved?
Investing in CleanTech allows families to help address climate issues and achieve impact investing strategies. Fossil fuels are limited and clean technologies offer our best alternative – this means a lot of money can be made in the sector.
The stage at which families get involved varies, as do the investment vehicles they use. Early-stage direct investments are featured on the following pages, however, families can also have an impact by investing via managed funds into large scale infrastructure, such as wind farms. These will be longer-term plays but with theoretically predictable returns.
Are there certain areas families prefer?
Even when investing using an impact strategy, a family still wants to make money. Therefore families prefer areas where risk is lowered. Unfortunately the very nature of natural resources means they are subject to changes in weather and natural phenomenon, which can destroy an investment overnight. Efficient, small scale, domestic technologies are making big leaps forward in efficiency, up-take from the public, and compatibility with national grids/infrastructure. Not only can these be used in developing countries but in developed countries too – the market is huge, demand is rising and the technology is improving. All good indicators for investors.
How much are families typically investing and what’s the typical ROI?
This depends on the investment. Early-stage investment is still a venture investment environment whereby target returns can be made in five to 10 years, at which point the investor can exit. However, the venture model in all industries dictates that you have to typically see eight of your 10 investments fail to find the successful ones.
Ones to watch
LENR Cars, founded in Switzerland in 2012 and based next to the EPFL Science Park in Lausanne, is developing patent-pending fuel cell generators based on low energy nuclear reaction (LENR) technology to power electric vehicles without CO2 emissions or waste.
These generators can produce heat and electricity, on demand, at a much lower cost than fossil fuel (under $0.01 / kWh). One gram of fuel – a mix of nickel and hydride powders, which stores hydrogen – is enough to produce 2.0 MWh of heat. LENR technology is based on electron capture and neutron capture reactions – non-conventional nuclear reactions that do not produce radioactive waste or dangerous radiations. The reaction produces 10,000 times more energy than a conventional fuel cell from the same amount of hydrogen. LENR Cars are currently developing small-scale systems, with a focus on hybrid electric vehicles since the Swiss company patented the use of this technology for transportation applications. A hybrid car based on its technology is expected to have a range of 150,000 km with zero emissions, and use less than $100 of fuel. It is about to start a collaboration with Nissan to develop such a vehicle together.
Over the years, LENR technology could become a game changer in the entire field of energy. It has the potential to address many problems like affordable water desalination, decentralised energy production, reduction of carbon emissions, and nuclear waste treatment. LENR Cars is sharing its technology with larger corporations in exchange for licenses on their own technologies, in order to accelerate its development while managing costs.
Leveraged Green Energy
Leveraged Green Energy (LGE) is a US venture capital fund focused on the rollout and global exploitation of next generation CleanTech innovations in the waste, energy, environmental remediation and de-risking, and waste-to-energy sectors. LGE’s technology investments have broad applicability to many industries, geographies, and industrial processes. To drive its technologies to full commercialisation, LGE identifies and engages with a “first-mover” strategic partner to lead the deployment of the technology in their respective industry.
LGE has a substantial equity position and IP rights in Gasplasma®, a waste-to-energy technology. It is a completely closed-loop system that transforms any organic waste into a clean synthetic gas (syngas) that performs identically or better than natural gas. It has a validated negative carbon footprint; and captures over 80% of the energy in the waste stream in a usable form. Gasplasma® does not require subsidies to generate attractive returns, with revenues from tipping fees and sales of heat and power. Only 10% of the waste is a residual product, which is inert and can be sold as an aggregate for construction and other uses.
LGE has also invested in SOLID Power, an Italian-Swiss partnership that has developed a second generation solid-oxide fuel cell technology. It is deployable in multiple market segments, residential and industrial. Commercialisation has already started for combined heat and power (microCHP) applications for large utilities with support from the European Union. It has also achieved key milestones for data centre applications in cooperation with a world-class industrial leader for multi-megawatt-scale deployment.
The global energy industry is in the midst of its most dramatic transformation ever. And with over $10 trillion to be spent on power generation equipment by 2030, it’s the biggest market opportunity in history. Australia’s RayGen has re-imagined solar power, and in doing so expects to beat its peers on both cost and efficiency. Conventional photovoltaic (PV) panels combine two functions - collecting sunlight and converting it into power. RayGen separates them. It uses simple, low-cost mirrors to collect sunlight and concentrate it onto a separate receiver, rather like an industrial-sized magnifying glass, before converting the sunlight into power. The result is highest efficiency and lowest cost.
RayGen collaborated with the University of New South Wales to set a world record in PV efficiency last November. High efficiency means it uses half the materials of PV, and manufacturing requires 95% less capital investment.
Dr John Lasich, the world’s leading concentrating solar technologist, and Bob Cart, a successful Californian CleanTech CEO, founded RayGen in 2010. Over $300 million has been invested in the technology and the team has deployed over 10MW globally, and 2GW of renewable energy in China.
RayGen’s business model is capital efficient. It manufactures only the receiver — 1% of the system, but one-third the value, which translates into margins more like a tech start-up than a solar company. Its customers are like franchisees, developing projects and sourcing balance of plant. RayGen has a $60 million agreement in China and is in advanced discussions with customers in India and the Middle East.
Are you looking to invest in CleanTech? Attend the 6th CleanTech Investing Europe Conference on 2-3 December 2015