Thursday, 29 May 2008

Clean Sweep 38

A round-up of recent news in clean technology and cleantech investment.


Clean plastics company Novel Polymer Solutions has raised a £5m second round. The Malvern-based company is commercialising a new patent-protected process for manufacturing polymers with near-zero emissions of volatile organic compounds. Early target markets include replacing PVC in building, protective clothing and transport applications.
The deal was led by cleantech investor Environmental Technologies Fund, in its third investment. Advantage Growth Fund, a regional venture capital fund which first backed the company in 2003, also joined the round alongside private investors.

Dutch renewable energy group Econcern has raised Euro300m from a consortium of institutional investors. Rabobank and Delta Lloyd joined existing investor SHV to boost the firm's growth.
Econcern is developing a broad portfolio of renewable generation, from offshore wind to algal biofuels. The group says it is planning an IPO in two to four years time.

Busy times in the Netherlands, as plastics recycling group Morssinkhof Rymoplast raised an undisclosed investment from mid-market investor Egeria.
And at the venture end of things, LED tech developer CrystalQ raised an undisclosed round from Sustainability Energy Technology Fund, E2 Cleantech and private investor Benno Wiersma. The firm produces crystal wafers for low-energy LED lighting.

In the US, the big money's still following the sun. All-solar electricity supplier SunEdison raising a parcel of $131m equity and $30m debt to support its operations. Investors include Greylock Partners, HSH Nordbank, Applied Ventures, Black River Commodity Clean Energy Investment Fund, MissionPoint Capital Partners and Allco Renewable Energy Limited.
And utility-scale solar thermal developer BrightSource Energy raised $115m in its third round., BP Alternative Energy, Statoil Hydro Venture, and Black River joined existing investors VantagePoint, DBL Investors, DFJ, and Chevron Technology Ventures. The Californian firm is preparing to build its first 'power tower' plants in the Mojave desert next year.

Novel biofuel developer Gevo meanwhile raised a $17m third round from new investors Burrill and Malaysia Life Sciences Capital Fund, and existing investors Khosla Ventures and Virgin Green Fund. The Colorado-based firm is developing a range of technologies including protein-engineering agricultural waste, and tweaking the metabolism of unspecified 'host organisms'.

And Principle Power, a San Francisco renewables developer, raised $2.3m seed funding via a convertible note offering. The firm aims to develop a portfolio of renewable energy projects, with a focus on offshore wind, solar and hydro.

Fund news

Belgian VC Capricorn Venture Partners has closed its first dedicated cleantech fund with Euro100m of commitments. The firm says this was well ahead of targets. Investors include chemicals group Solvay and the European Investment Fund.

Cleantech stalwart Good Energies has a new managing director and head of venture capital in the form of George Coelho, founding director of Balderton (née Benchmark) Capital.

Further reading

KPMG scrutinises the M&A boom in the renewables sector in a new report, Turning up the heat. With valuations at record highs, half of the industry respondents say there is real risk of a bubble in the sector.

New US cleantech VC figures from Ernst & Young, showing investment up 18% to $572m in the first quarter, despite total VC falling 7%. Fastest growing sub-sectors include power and efficiency management (up a whopping 454%, from a low base), efficiency products, and solar (still). The report also notes the shift from early to later-stage deals.

Thursday, 22 May 2008

All-Energy - and on the second day...

Day two of the UK's largest renewables event, with some weary faces after the previous night's big football game. Delegates who'd been off to enjoy Aberdeen's famously boisterous nightlife didn't seem too disappointed.

The morning saw some events directly addressing some of the issues we regularly look at here on Clean Ventures, beginning with the plenary session.

David Clarke, the head of the UK's new Energy Technologies Institute in Loughborough, gave an overview of what it's all about. The ETI taking a collaborative public/private approach, with the government providing £550m over 10 years to be matched by a bevy of heavy industries. Ideally, the ETI wants 11 companies providing £5m pa each - some big boys such as Rolls-Royce, Shell, BP and E.On are already on board.

The focus is on moving tech from R&D into the demonstration phase, and validating the complete system. Project funding will typically be in the £5-25m range, with the ETI potentially providing the entire costs as well as access to the industrial partners. Echoing the previous day's themes, Clarke emphasised the need for a massive scale-up in production of renewables capital equipment, and a new supply chain. Everyone needs to take more risk than they're used to, he noted.

Then came the much-awaited private equity perspective, courtesy of Anne Quinn from energy specialists Riverstone Holdings. Riverstone already has investments of around $1bn in renewables companies and is gearing up for more - Quinn noted that it's a great time to be an investor but also a difficult and challenging time.

The renewables sector likely to be entering consolidation phase very soon, she predicted - some might say it's already started, of course. Quinn also noted that the scarcest resource for renewables firms is management talent, a common complaint from the PE people in most sectors.

A later session, sponsored by the Carbon Trust, focused on the road to commercialisation for new renewables technologies. Not much new, but solid stuff from spin-out entrepreneurs Win Rampen of Artemis Intelligent Power and Clive Dyson of St Andrews Fuel Cells, Dave Raval of the Carbon Trust's TTP Incubator, and IP expert Roger Gill of ITI Energy.

Ken Bruder of research stalwarts New Energy Finance closed the panel by presenting his views on trends in clean energy finance. There's a lot of money looking for clean energy investment, Bruder said, but people still complain they can't access it. He also noted that lots of people were stopping by NEF's booth to ask about raising finance, on the assumption they were some kind of VC outfit. Maybe that's why the real VCs stay away.

Bruder observed that the smart money is moving back into earlier stage VC, especially for tech which takes account of demand-side efficiency. I asked him for his thoughts on the continuing question of whether there's a bubble in cleantech at this level - his answer was yes there is, in some sectors at least. In particular, a lot of solar investments are going to come to earth with a bump next year when new silicon production unblocks that constraint - "We'll go from a situation of high under-supply to high over-supply almost overnight," he said.

With no attention-grabbing sessions tabled for the afternoon, I took another circuit of the exhibition floor, and a chat with the guys who are actually developing this stuff. A lot of the most interesting homegrown tech is in marine, such as the alarming-looking Anaconda and the Manchester Bobber (a name change is in the pipeline for that one, thankfully). Of the bigger companies, StatoilHydro drew a lot of attention by unveiling plans for its prototype deep-water floating wind turbine.

An interesting couple of days in all (even if I did skip out early to enjoy the rather unAberdonian sunshine and see a bit more of the city). The over-riding impression was the scale of the challenge in making the necessary move to a low-carbon economy - but there is reason to be at least cautiously optimistic.

Wednesday, 21 May 2008

All-Energy - memo from the Highlands

So I'm up in Aberdeen for the All-Energy exhibition and conference - the two-day shindig that claims to be the UK's largest renewables event.

It's certainly big, sprawling across the labyrinthine complex of the AECC - delegates wandering confused in search of the next talk were a regular feature of the day.

It's events like this, with 380-odd exhibitors, that give you a better idea of the size and increasing maturity of the sector. It's not just the guys making and selling the wind turbines, fuel cells, solar panels et al, but a whole ecosystem of supporting industries - from the hard hats who brave the elements to put the turbines up, to the suits who will lobby the regulators on your behalf.

There was little sign of the VC and finance side of things, though. There was one stall from a small but keen investor (hello, Sigma Capital Group) but you wouldn't know that renewable energy and cleantech has become the key investment category that it is. Obviously the VCs themselves don't do their real hunting at events like this, but a some visible presence would have been good - I met a few serious guys who were looking for investment, so there were contacts to be made.

But then there were the talks - as expected, not much was said that was radically new, but a few sessions presented a good opportunity to catch up on some key areas.

I missed the opening plenary session as I was still travelling the last leg of the journey, but reports from those who were there suggested it was all a bit doom and gloom. I did manage to catch the second big panel - 'Policy: countdown to the EU 2020 targets'. Heady stuff.

The 2020 basically aim to make sure that the EU zone derives 20% of its total energy (not just electric generation, but heat, transport, etc) from renewable sources by the year 2020. Exact targets differ between countries, depending on their assessed ability to comply - the UK has a humble 15% target. The targets raise a lot of issues with significant implications for the cleantech industries in each country - perhaps particularly for that of the UK.

As the moderator, Tom Hodkinson, managing director of AMEC Wind Energy, emphasised - the UK's position is not good. There's very little manufacturing industry in the UK of the kind that can provide the necessary product - primarily wind turbines, which are suffering severe supply chain problems as global demand soars.

EU representative Reijo Kempinnen was a bit more optimistic - all EU member states are agreement on the principle of cutting emissions, but the devil as ever in the detail. If we are to reach the 2020 goals, we have to secure a European agreement by the end of this year, he reckoned.

Kempinnen also highlighted some issues with the incoming third phase of the European emissions trading scheme (ETS). This will produce revenue of some Euro50bn a year, and the EC wants 20% of that earmarked for actions to fight climate change, including R&D funding and support for tech commercialisations. The treasuries of member states have other plans, however. He urged interested parties such as industries (and, presumably, investors) who genuinely believe in the rightness of the cause to apply what pressure they can in their own territories.

The other speakers focused on off-shore wind, the key tech for the UK in the medium term at least. In a popular show for the economists in the audience, Richard Slark of Poyry Energy Consulting presented a cross-European supply curve of renewable energy sources, showing what technologies can achieve what reductions for what price. At the renewables production target of around 1100TWh (with an associated cost of cEuro110/MWh), off-shore is still marginally too expensive - but with the international give-and-take trading of 'Guarantees of Origin' (which may or may not be allowed by the current regulatory plans), off-shore should still play a large part in the UK's options. In fact, Slark said, it's absolutely critical for the UK to meet its obligations.

Alan Bruce of Scottish and Southern Energy and the British Wind Energy Association also (as you might expect) flew the flag for off-shore wind, and called for more UK businesses to enter the sector, particularly in component manufacture. We've got no problem raising capital for renewables in the UK, he noted - the problem is in deploying it here.

After an interesting research-based talk from Amec's Elaine Greig on the grievous constraints imposed by lack of grid resources, energy minister Malcolm Wicks took the podium. His talk had been postponed from the plenary session thanks to the previous night's abortion and embryo research votes, but it wasn't particularly worth the wait - a familiar trot round the overlapping climate change and energy security agendas, with an emphasis (disquieting for many) on tapping the more inaccessible fossil fuel resources, taking the Alberta oil sands as an example. With regards to the previous points, he noted that the government is currently consulting with Ofgem on the grid issue, and looking to streamline planning process for nationally important infrastructure.

After lunch, I caught a short presentation by Dane Wilkins of Ernst & Young's renewable energy group. He repeated some of the observations of the policy session with regards to the challenges facing the key technologies - planning, grid and supply constraints for on-shore wind, and the marginal economics of off-shore. The E&Y team are seeing investor interest in off-shore, however.

Despite the credit crunch knocking off a good portion of margins for large installations, utilities remain a dominant source of funding for renewable assets, Wilkins noted. There's also still strong appetite from private equity for developed assets and buy-and-build deals, he noted, as well as appetite for emerging technologies - though, he reckoned, we're not seeing much emerging tech being presented in a way that would appeal to later-stage private equity.

I also caught a session on the UK's renewables solutions and market prospects, hosted by the good folk at BERR (the former DTI). Basically a pitch for inward investors, presented in a deathly civil service fashion - not the best advertisement in all.

Special mention, on the other hand, must go to the Caithness Energy Alliance for their sterling marketing efforts. Attaching a wee bottle of Old Pulteney to your press pack is an excellent way of making sure the journalists pick them up. Slainte!

Wednesday, 7 May 2008

Clean Sweep 37

A round-up of recent news in clean technology and cleantech investment. Lots to catch up on again, so let's crack on!

First up, a couple of smallish deals from UK specialist investors.
Ludgate Environmental Fund has put £4m into Rapid Action Packaging, a manufacturer of 'environmentally responsible packaging', as part of a wider placing. Can throw-away sandwich-wrapping really be considered 'environmentally responsible'? Probably not, but if we've got to have it, best if it is recycled, biodegradeable, etc. Cleaner rather than clean, anyway.
And Low Carbon Accelerator has upped its investment in sewage treatment group Eco-Solids by £750,000. The Hampshire-based firm holds the rights (outside the US) to a range of technologies which can help turn waste into burnable methane or biofuel.

With spring finally here, there's been some big US money moving round the European solar market.
Malta-based SunRay Renewable Energy announced a strategic partnership with US private equity group Denham Capital, primed with an initial $200m equity commitment. The partnership aims to developer over 300MW of solar power around Europe and the Mediterranean over the next four years.
Spanish energy group Gamesa sold its solar wing to energy investor First Reserve for Euro261m. Following First Reserve's acquisition of Italy's Ener3, the deal gives the US group a pipeline of some 400MW capacity over the next four years.
Spain's own Banco Sabadell meanwhile took a 25% stake in wind and hydroelectric player Adelanta Corporación via its Sinia Renovables private equity arm. Forbes has the essesntials if you don't read Spanish.

Also attracting big money - stirling engines! Ohio-based Stirling Energy Systems raised $100m in what was effectively an acquisition by Ireland's NTR. SES is developing two large-scale solar concentrating plants in Southern California, with a total target capacity of 1750MW. The company uses stirling engines, first developed in the early 19th century, to turn the solar heat into electricity.
Washington-based stirling engine developer Infinia meanwhile topped up its previously announced $50m second round with an extra $7m tranche led by Foxconn Technology Group.

Still in solar thermal,'s favourite eSolar raised $130m from Idealab, Oak Investment Partners, and the investment wing of the search engine goliath. The California firm, which is developing what it calls pre-fab solar power plants, was sprung into the limelight in November 2007, when Google named them while launching its Renewable Energy Cheaper Than Coal programme.
And New Mexico's SkyFuel raised a $17m second round led by Leaf Clean Energy. SkyFuel is focused on 'line concentrating' solar installations, including an innovative linear Fresnel system and the parabolic 'SkyTrough'.

In solar PV, Ohio's cutely-named Xunlight secured a $22m second round led by Trident Capital. The funding aims to take Xunlight's thin-film silicon modules into commercial production.
Rival thin-film silicon developer Sencera meanwhile landed $3.6m from Quercus Trust. The North Carolina firm says it is working towards that magic target of solar cells costing less than $1 per watt.

Elsewhere, cellulosic ethanol developer Mascoma announced a $10m investment from Marathon Oil, bringing its second round up to a total $61m. General Motors also upped its investment in the round.
New York's TechnoSpin whipped up a $8m first round led by local VC 21Ventures. The firm is developing small wind turbines for residential and small business customers.
And Texan start-up Hydro Green Energy netted a $2.6m first round led by the Quercus Trust. The firm is developing a series of hydrokinetic power projects in Alaska and Mississippi.

Fund news
Santander Private Equity has announced a dedicated renewable energy fund, Santander Energías Renovables, with a first close of just Euro15m. Not much, chaps.

Italian environmental investor Ambienta has launched its first private equity fund, with a target closing of Euro250m. The Intesa Sanpaolo bank has committed Euro40m to kick things off.

As ever, they do things bigger in the States. Kleiner Perkins Caulfield & Byers announced a new $500m fund. The dedicated cleantech Green Growth Fund will also be supported by the firm's other new fund, the $700m KPCB XIII. Lucky for some.

Further reading
The Times reports on a new green investment push from Britain's armed forces:
Turning all three services “green” was one of a number of new defence targets outlined last week by Paul Stein, the MoD’s science and technology director, to the Royal Aeronautical Society in London[...]
The MoD’s science and technology experts envisage more efficient engines and greater use of solar power, microbe-powered fuel cells and lightweight and remotely operated aircraft and robots.

A useful new site for any business looking to become a little cleaner (especially if they can get hold of some money for doing so) - Green Grants Machine. A new venture by grants information group j4b (who, in the interests of disclosure, I should say I did some work for several years ago) aims to help businesses identify and access the right funding programme from a pool worth over £1.2bn. The site also offers funding and policy news.

Finally, I'll be heading up to Aberdeen in a couple of weeks for the All-Energy conference. If you're also heading up and want to say hello, drop us a line.
Or if you're going to SustainabilityLive in Birmingham the same week, have a good one. You'd think it wouldn't be too hard to make sure the country's two biggest renewable energy tech conferences don't clash, wouldn't you?