Clean Sweep 58

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

Deals
Wastewater treatment firm Bluewater Bio has raised £2.3m from specialist investor Aqua Resources Fund. The round gives LSE-listed Aqua a 15% stake in Bluewater.
The London-based firm is commercialisting a proprietary wastewater treatment technology called HYBACS, or Hybrid Bacillus Activated Sludge, which can reduce the energy consumption and land requirements of treatment plants. Bluewater will use the new funds to accelerate global growth - the firm also announced a deal with Saudi contractor Nesma to roll out its tech.

French solar concentrating group Exosun raised Euro4.5m from Crédit Agricole Private Equity's Capenergie fund. The Aquitaine-based firm produces a range of solar tracking systems, and builds and operates its own solar power plants. The new investment goes towards installing several tens of MW of plant by 2010.

HgCapital's Renewable Power Partners fund has bought three Spanish PV plants from AIG Financial Products, a division of the troubled US bank, and Spanish investment bank 360 Corporate. The investor says the deal represents an enterprise value of Euro300m.
This is HgCapital's first solar investment, and includes two fixed-axis plants of 17MW total, and a 18MW solar tracker.The firm now has a renewables portfolio (mostly wind) of some 300MW in operation or construction, with another 300MW in the pipeline.

French green chemistry group Ecologistique raised Euro1.1m from state-backed Avenir Entreprises and regional investor Oséo.
The Courtenay-based firm produces personal care and domestic chemicals, with a focus on environmentally-friendly packaging. The new money will be invested in R&D and manufacturing equipment.

Nordic Windpower announced it had closed an additional, convertible notes based, funding round but did not disclose the amount. New investors I2BF Ventures and Pulsar Energy Capital joined existing backers including Goldman Sachs and Impax. Nordic previously announced 'significant investment' from Goldman Sachs in October 2007.
The California-based firm is currently ramping up US production, and says that the new investment allows it to fulfill the first orders for its new N1000 1MW turbines. Nordic's two-bladed turbines are based on Swedish state-funded R&D, but failed to find a market in Europe.

Smart grid leader Silver Spring Networks added $15m to its fourth round. The California firm had previously announced a $75m close led by KPCB back in October.
Last month, Silver Spring announced a technology partnership with UK domestic energy monitor firm Onzo.

Finally, a couple of companies looking to improve workplace sustainability. Canada's CoolIT Systems raised a C$6.2m round led by iNovia Capital to develop its energy-efficient liquid cooling tech for desktop computers. And California's New Leaf Paper took $5m from Pacific Community Ventures to expand operations and develop its recycled paper products.


Fund news
Climate Change Capital is reportedly raising a new Euro500m fund to invest in European renewable energy.
The London-based investment manager currently (as of 10/08, anyway) has around $1.6bn under management, including its Euro200m Clean Tech Private Equity Fund.

Dutch private bank Robeco has launched a partnership with China's TEDA International Corporation (a holding company for the Tianjin Economic and Technological Development Area).
The joint venture, the catchily named Robeco TEDA (Tianjin) Investment Management Company, will shortly launch the Robeco TEDA Sustainable Private Equity Fund, the first Renminbi-denominated cross-border private equity fund to focus on sustainable investments.

Spain's Eland Private Equity has launched a new Euro30m fund, Eland Energías Renovables III, to focus on renewable energy generation projects. The previous funds in the series were of Euro6m and Euro12m, and launched in 2006 and '07.

The Consensus Business Group, a family investment vehicle owned by Victor Tchenguiz, is meanwhile exiting many of its cleantech investments to focus on property. Tchenguiz blames the cost of capital for making cleantech unattractive. More at Environmental Finance.

New Deal or dead end?

The UK, like the US, has heard a lot of talk about using investment in renewable energy and other clean technologies to lever us out of both our economic and environmental crises. Last week, energy minister Mike O'Brien was spreading the word at OPEC. In the Guardian, economics editor Larry Elliot again outlines the case for a Green New Deal:
For Britain, a Green New Deal (GND) is even more of a no-brainer than it is for other developed countries, since the economy is acutely unbalanced, is experiencing a manufacturing meltdown almost on a par with that of the early 1980s, and has a strong science base that could, with the right sort of support, provide the products for a new industrial revolution.

But that looks much less likely if even the current projects are being crippled the downturn. The Guardian, again, led Saturday's financial pages with a two-page warning about green power companies heading for crisis:
The difficulties - triggered by the credit crunch, recession and a collapse in the carbon price - have led to new demands this weekend to ministers from companies warning that their renewables schemes are at risk without more financial aid.
Over the past week alone, the previously fast-growing renewable energy sector has seen Shell decide to stop building wind and solar schemes worldwide, the wave company Pelamis hit by technical and financial troubles, and EDF Energy warn that UK renewables targets would not be realised and should be scaled back to achievable levels.
In addition, a group of more than 40 businesses has taken the unique step of writing collectively to Joan Ruddock, the energy and climate change minister, warning her of the threats to a host of projects unless something is done.

For those with a cynical (or ideologically anti-renewables) turn of mind, it'd be easy to dismiss all this as special pleading by an industry already damned as subsidy-led. But the industry is far from alone in requiring government support (whether that's to correct market failure or to prop up favoured industries) and certainly not the worst offender - a graphic in the newspaper's report compares the £1bn annual UK renewable subsidies and £12m R&D support to the £75bn cost of nuclear decommissioning. And its job is one that needs doing, regardless of politics.

A side story from Terry Macalister outlines some of the current schemes in trouble, while environment correspondent David Adam offers a critique of UK renewables targets:
It was always going to be a big ask for Britain to meet its European target of generating 15% of its energy from renewable sources by 2020. And despite official optimism, government insiders privately admit that the task is hopeless[...]
The recession has made the task harder but experts say the financial crisis is merely peeling back the curtain and revealing Britain's renewables ambitions to be punier than advertised.

Still, could be worse. Things are looking really dirty in Spain:
Clean energy is believed to have attracted dirty money, as the notoriously corrupt construction business sought ways to launder illegal earnings.


Also on the policy side, PricewaterhouseCoopers adds its voice to calls for a global overhaul of the carbon trading market, suggesting a hybrid tax and trading scheme:
‘Carbon taxes vs carbon trading: pros, cons and the case for a hybrid model’, a white paper by PwC, argues that a modified trading scheme would bring some of the advantages of price certainty provided by a carbon tax while also capturing both the potential political attractions of carbon trading schemes and the virtues of allowing some price flexibility in response to evolving economic and technological conditions.[...]
The kind of hybrid scheme considered in the paper could be readily applied in Europe through relatively minor modifications to the existing EU Emissions Trading Scheme and this could then be linked to congruent schemes in the US and other major developed economies. In the longer term, such a scheme could also be rolled out to China, India, Brazil and other major emerging economies. This would, however, require international agreement on the levels of price caps and floors among participating countries, including arrangements for co-ordinated government action to buy or sell emission allowances in order to keep carbon prices within these limits.

Nice idea but, again, implementation will be the tricky part, to put it mildly.

Clean Sweep 57

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

Deals
South London waste management group Vertal has raised £5m from cleantech specialist Foresight Group.
Founded in 2006, Vertal is commercialising an anaerobic digestion technology to convert food waste into high-grade fertiliser. The new funding goes towards completing its first full-scale, 200t/day facility in Mitcham.

Foresight has also signed two solar farm deals with Italian developers Enerqos and Ecoware. Worth a total Euro50m, the projects involve 10MW of PV capacity. Equity comes from Foresight's European Solar Fund, launched in November.

Fuel cell developer ACAL Energy has raised undisclosed follow-on funding from Sumitomo Corporation. The investment follows a £3.3m fundraising in December led by the Carbon Trust and Solvay.
Cheshire-based Acal is developing small (<1kW) PEM fuel cells for domestic and transport applications, based on a proprietary 'liquid cathode' technology which replaces the standard platinum cathode. The firm is looking to Japan and other Asian markets to drive initial growth.

Clean pesticide developer Exosect has secured £2m growth funding from existing investors Oxford Capital Partners, WHEB Ventures and the Entrepreneurs Fund.
The Winchester firm, a spin-out from the University of Southampton, has developed a fine wax-based powder which can carry targeted insecticides and reduce chemical use and residual pollution. Exosect is now shipping its products internationally, and expecting strong commercial growth.

Following its recent £4m equity round, New Earth Solutions has raised £10m operational funding from private investors.
The Dorset-based firm announced a first close of its Recycling Facilities Investment Sub-Fund, which will invest directly in the firm's own recycling and waste management facilities. Open to experienced investors, the fund is listed on the Channel Islands Stock Exchange and managed by Isle of Man-based Premier Group.

European investor Waterland has stepped into the cleantech arena with a brace of sizeable if conservative deals.
International renewables project developer Enfinity Management secured a Euro50m capital increase to drive international expansion. Waterland says its investment is 'its first step in a sustainability-themed market'.
The house also invested Euro36m in Dutch biomethanol group BioMCN. The firm is preparing to open its first 200,000t/a processing unit, and will use the new funding to double that capacity.

Norwegian PV manufacturer NorSun has closed a NKr1.15bn (£120m) funding round. Cleantech specialist Good Energies invested half the NKr500m equity portion, alongside parent group Scatec and utility Norsk Hydro.
Norsun produces single crystal silicon wafers for solar cells and panels. New funding goes to towards completing a new production facility in Årdal, Norway, and also developing thin-film subsidiary SunFilm, which is jointly owned by NorSun and Good Energies.

Good Energies also led a $20m round in smart glass developer Sage Electrochromics, alongside fellow investors Applied Ventures and Bekaert.
Minnesota-based Sage produces metal oxide-coated windows which can control the amount of heat and light which passes through.

Energy efficiency systems developer SynapSense raised a $7m round led by Germany's Robert Bosch Venture Capital. Previous investors including Emerald Technology Ventures, Sequoia Capital, American River Ventures, Nth Power and DFJ Frontier also joined in.
The Californian firm produces wireless monitoring systems to improve efficiency in data centres. It's also exploring non-data applications such as, potentially, electric vehicles.


Fund news
European tech investor Index Ventures has closed its new early stage fund at Euro350m. The Index Ventures V fund will aim at early and seed stage investments in cleantech, ICT and biotech. Index has been relatively light in cleantech to date, but more deals seem likely.

US cleantech specialist Element Partners (part of the DFJ network) has closed its second fund at $486m, ahead of original $400m target. According to reports, most of the commitments were in before the fundraising market took a nosedive in Q4 last year.


Further reading
The BVCA has released more details of its new Energy, Environment and Technology Group, which aims to promote the cleantech and renewables sector and advise companies, investors and policy makers. Chaired by HgCapital's Tom Murley, the 12-strong group includes reps from familiar names including CT Investment Partners, Good Energies and WHEB. Environmental Finance has more from Murley.

Market research honchos Clean Edge have released their Clean Energy Trends 2009 report. Top trends this time round: big growth in smart grid, grid infrastructure, energy storage and micropower; and more renewables development in relatively under-developed nations.

Some relevant news from the Climate Change Congress in Copenhagen this week. Renewables could provide 40% of global electricity by 2050, according to academics studying the potential contribution of each sub-sector; and even stringent emissions cuts can create growth and development opportunities, says Cambridge's Terry Barker:
"There is some evidence that harder greenhouse gas targets and regulation may actually increase benefits through improved innovation and distribution of low carbon technologies, and increased revenues from taxes or permits. These revenues can be spent to further support new technology and to lower other indirect taxes, ensuring the fiscal neutrality of these measures."

But New Energy Finance warns Clean Energy Investment not on Track to Avoid Climate Change (244kb pdf):
New Energy Finance expects investment in clean energy to hold steady at around $150bn per annum through the economic downturn and resume growth thereafter. In
the Global Futures 2009 Base Scenario, investment is insufficient to drive down CO2
emissions from the energy system this side of 2030.

Summary of VC-related discussions at last month's Cleantech Forum in San Francisco raises some interesting points:
Whitney Rockley, a principal at Nomura, said VCs are presented with a choice between needing an exit in three to four years, and investing in “amazing technologies out there,” such as German companies developing Fresnel lenses for solar thermal, or water technologies being developed in Israel.

And there's an interesting paper in McKinsey Quarterly looking at ways to promote energy efficiency in the developing world by deploying smarter tech.

Low Carbon Industrial Strategy

The government has today launched its Low Carbon Industrial Strategy, with a draft report setting out the UK's industrial priorities in the emerging cleantech economy.

The report highlights four key areas:
* Energy efficiency to save businesses, consumers and the public services money
* Putting in place the energy infrastructure for the UK’s low carbon future – in renewables, nuclear, Carbon Capture and Storage and a ‘smart’ grid
* Making the UK a global leader in the development and production of low carbon vehicles
* Ensuring our skills, infrastructure, procurement, research and development, demonstration and deployment policies make the UK the best place to locate and develop a low carbon business and make sure international business recognises that.

It's all well-intentioned but wafty at the moment, but BERR is asking for input from businesses and other interested parties before a final strategy document is published in the summer. Comments can be submitted via the website linked above for the next month. The discussion document's also available as a 1.4MB pdf.

BERR has also provided supporting market intelligence complied by Innovas, setting out the scope of the Low Carbon and Environmental Goods and Services (LCEGS) sector.
The value of the UK LCEGS sector was £106.5 billion in 2007/8. In terms of size, this puts the low carbon and environmental economy somewhere between the UK’s healthcare and construction sectors.
The UK is the world’s sixth largest low carbon and environmental economy, with 3.5% of global market share.
For more, see the full report (8.1MB pdf) or the executive summary (340KB pdf).