Cleantech: A Complete Guide
If you’ve heard a lot about cleantech and were wondering what all the fuss is about and how you can leverage it to your benefit, read on. This article takes you through everything you need to know about this green technology: 1) what is clean technology?, 2) some key cleantech categories, 3) building blocks for a successful cleantech startup, 4) a picture of cleantech entrepreneurship in 2014, 5) about the Cleantech Open, 6) cleantech case studies.
WHAT IS CLEAN TECHNOLOGY?
There is no single definition for clean technology or cleantech. According to Clean Edge, a research firm for cleantech, the term refers to a varied range of products, processes and services that tap renewable energy sources and materials, reduce or do away with wastes and emissions and considerably decrease the utilization of natural resources. Investopedia says the usage is intended to describe an investment philosophy of those investors who hope to gain from environmentally friendly companies. Cleantech companies look to increase productivity and performance by diminishing the damaging consequences on the environment.
Frequently, the term is credited to Clint Wilder and Ron Pernick, authors of a book titled “The Clean Revolution: The Next Big Growth and Investment Opportunity” in which they identify a number of key drivers of the technology:
- the capital put into research and development by huge corporations
- the present cost of conventional technology
- a cutthroat global marketplace
- an increasing population of middle-class Chinese which is compelling the Chinese government to invest greatly in alternative energy sources
- a shift in consumer attitude that has made environmental concerns mainstream
Interest in clean technology is increasing
Interest in cleantech increased from the 1990s onwards due to two trends:
#1: A fall in the comparative price of these technologies and a rising comprehension of the connection between industrial design utilized in the 19th century and that utilized in the early 20th century such as chemical manufacturing, the internal combustion engine and fossil fuel power plants.
#2: An up-and-coming comprehension of the human-engendered effect on earth systems springing from their utilization China is considered to be a cleantech leader. In 2013, global investments in cleantech fell but that isn’t really bad news. The truth is the bigger picture is positive and renewable energy is on a sturdy growth path with tools emerging to take the sector even further.
SOME KEY CLEANTECH CATEGORIES
This category incorporates innovations that utilize, accelerate and enable the utilization of renewable energy resources in addition to energy production from alternative sources such as sewage, materials and heat. It comprises technologies such as low-emission power sources (example: solar, biofuels) and technologies that utilize waste streams to directly produce energy such as energy from landfills or manure. Some examples of such technologies are solar panel coatings, wave energy capture, tidal energy and geothermal heating and cooling technology for homes and businesses.
This category incorporates technologies that facilitate saving energy at home and in industrial processes. Saving energy positively affects energy expenditures and also decreases greenhouse gas emissions. Some examples of such technologies are enterprise energy management, energy analytics, pure manufacture techniques, industrial process improvements, waste heat recovery, LED lighting, and smart plugs.
Energy distribution and storage
It incorporates technologies which facilitate electricity delivery and provide commercial, residential and industrial customers with more control over how and when their energy is delivered and utilized. Some of the areas it covers are: enhancements in all kinds of energy storage and methods for increasing or controlling the efficiency of energy transmission or storage. Some examples of such technologies are: nickel-metal hydride improvements, advanced metering and home automation network, flywheels, electrical engineering and controls for distribution of power, compressed air energy storage technology, and power storage for renewable, intermittent, resources.
Under this category comes innovative technology that not only enhances the ways and means of mobility, but also decreases the environmental consequence of mobility markets. Start-ups concentrating on motorbikes, electrical vehicles, aviation, logistics and trains and fleets should select this category. It covers applications in transportation and mobile technology that reduce air pollution, involve developing biofuels for transportation, reduce vehicle travel (not restricted to automobiles), reduce air pollution or improve fuel efficiency. Examples of such technologies are: fleet management software and hardware systems, logistics management, cold-ironing systems, fuel cell vehicles, drivetrain conversion systems, combustion designs, and biodiesel applications.
Information and Communications Technologies (ICT)
Under this category come companies whose key businesses are developed around software design improvements, computing hardware, or the application of web, IT, social or mobile applications to decrease environmental impacts and resource consumption. This grouping has many possible overlaps with other groupings. Fortunately, a distinction can be made. If the business value incorporates technology specifically aimed at the market complemented by applications or data, they fit in the vertical (such as transportation). Examples of such technologies are: carpooling solutions, cloud based applications and services, modeling software, exploiting location and GPS information, mashups, energy reduction software, and mobile and web applications to raise environmental awareness.
Agriculture, water, and waste
Applications in this category center on improving conservation, resource availability and pollution control. Agriculture covers novel farming technologies that decrease the need for resources required to produce food, ensure sustainable food security and improve supply chain. Examples are: sustainable animal and plant nutrient products, food processing, soil technology, indoor cultivation systems, production of sustainable fertilizers and production of micro-irrigation and smart drip solutions.
Water has to do with novel technological solutions that look into drinking water distribution, treatment or usage. Some examples are: on-site water monitoring, reverse osmosis, cooling solutions, recycling of microbial water treatment, rainwater harvesting, storm-water, and flood control.
Waste centers on cradle-to-cradle approaches to reduction, recycling and reuse technologies in addition to original business models and approaches to materials utilization. Some examples are: CHP (combined heat and power), waste cleanup and remediation and reprocessing technologies.
Chemicals and Advanced Materials
This relatively new technology category covers technology that reduces or does away with the generation or utilization of hazardous substances in chemical products or materials. The category includes pharmaceuticals, novel detergents, household products, surface and finishing materials, fabric, cosmetics, packaging materials and lubricants. Examples of such technologies are: production of algae based chemical products (usable for consumer products such as luggage, furniture and carpets) and plant forestry-feedstocks; manufacture of new biodegradable material, technology for developing chemicals and fuels from natural gas, novel flame retardant polymers, manufacture of natural rubber latex for medical products and manufacture of polymers from recycled pollutants.
BUILDING BLOCKS FOR A SUCCESSFUL CLEANTECH STARTUP
- Technology: Though new technologies are associated with a very high risk of failure, the few technologies that do succeed would transform the world. Hence, cleantech technology, money and time are key.
- Markets and Feedstocks: In general, with respect to bio-based products, it shouldn’t be difficult to get a market. The challenge is to develop these products in an economical manner.
- Social License: Society is currently calling for enhanced environmental performance. In future, accomplished oilsands companies would have to strive for environmental and economic excellence. On the other hand, Enerkem’s social license is solid.
- Government Support: Government support is associated with some different areas: research grants, premium product pricing, loan guarantees, direct investment and feedstock support for newly introduced technologies such as Enerkem. With respect to more mature companies such as NOVA, support is more generic with streamlined regulatory requirements or competitive tax rates. In the 1970s when NOVA was starting up, it had strong support from the Alberta government, chiefly because it was not difficult for NOVA to acquire investment dollars from the usual public sources.
- Financing: One of the biggest problems that cleantech start-ups face is financing, owing to the risk involved. Startups of this kind with new technology must depend on unconventional sources such as angel investors, venture capital, direct government investment and strategic investors. As soon as you’re commercialized and are demonstrating profits or at least have a track record that would take you to profitability, you can access things such as banks and public equity markets. Exceptions are few and very rare. A start-up that utilizes proven technology also turns to these sources but with prospects of private equity utilization.
- Investment decision: One of the concepts of most importance is getting a competitive advantage. Thousands will make an effort, but only a few would succeed. For example, NOVA began a new industry utilizing “proven technology” and so, there was only a very low risk of failure. Enerkem is utilizing garbage and converting it into a needed commodity.
Creating a Movement, Expanding Clean Tech: Matthew Woods at TEDxSanLuisObispo
A PICTURE OF CLEANTECH ENTREPRENEURSHIP IN 2014
Some features/trends of cleantech entrepreneurship as of June, 2014 are discussed below:
Cleantech markets are booming
Electric vehicles are setting monthly records in terms of sales. In May, the sales were ten times higher than they were three years back.
Solar (particularly community-scale and rooftop) is still booming, but the booming will continue only as long as costs continue to be pushed down. For the first time, over one-third of all rooftop solar installations in the first quarter took place devoid of any state-provided incentives.
LED lighting installations are progressing at a 435 percent CAGR.
Startups are being neglected by venture investors
Factors such as the renunciation of growth-stage VCs and the shortage of early-stage VCs are causing many of the top startups to be invested in by foreign-based investors, corporate and other non-traditional investors such as family offices. At the same time, there is some reason for positivity with the early signs that LPs (Limited Partners) are beginning to put some funds back into the sector and mainstream VCs are absolutely willing to invest in adjoining areas.
Corporates are quickly getting involved
Google is entering home energy automation and supposedly preparing for distributed energy management.
Big ‘cleantech giants’ such as Tesla, SolarCity, and First Solar are making acquisitions, opening up fresh markets and partnering.
Industrial automation giants recognize that energy automation is an essential aspect of what their customers expect.
Politicians in D.C continue to be difficult, but there’s progress at the state-level
In Washington DC, they’re still blocking moderate, bipartisan and smallish energy bills.
Time after time, polls have revealed that voters in all states want extra access to clean, distributed energy and energy efficiency. So, practical leaders at the state-level across parties are finding out ways to encourage this access, some in a subdued manner compared to others. Though the trend is not unanimous, it seems to be clear at the state level.
Startups are healthier and smarter than ever
Many startups that managed to stay afloat through tough times are now set for growth. Startups that started after the lean times with intelligent business models or which were better positioned owing to lower capital burn are performing quite well.
There’s currently a widespread adoption of business model innovation entrepreneurship. An example is downstream startups using cost declines upstream to their advantage.
ABOUT THE CLEANTECH OPEN
The Cleantech Open is a not-for-profit establishment that manages the world’s biggest accelerator for cleantech startups. The organization’s aim is to find, foster and fund entrepreneurs with great ideas that tackle current environmental, energy and economic challenges. The process is powered by a network of over 2000 volunteers. These are some of the organization’s programs and events:
- Global Ideas Competition
- Accelerator and Business Competition
- Global Forum and Expo
- National Conference and Expo
CLEANTECH CASE STUDIES
Sefaira – cloud based software to choose most energy efficient building designs
Buildings account for approximately 40 percent of international energy usage and greenhouse gas emissions. Though a large quantity of energy-efficient fittings and new design concepts are currently available, the dilemma for architects is frequently how to select among these various available choices. This is the inspiration for a cloud-based software program called Sefaira that makes it possible for architects to study different building designs and select the best ones to enhance energy performance.
As architects weigh up the various pertinent design options, the software helps steer them in the right direction. The UK based design company estimates that high-performance building designs could reduce energy utilization by 50 percent or more when contrasted with conventional design techniques.
Doe Run – energy efficiency
Doe Run Co. proved that sustainability is also about huge savings. In 2013, the St. Louis based natural resources company put $600,000 into the Herculaneum High School, an element of the Dunklin R-V School District in Jefferson County, Missouri, thereby preparing the pathway for considerable improvements to the inefficient campus. Assisted by MicroGrid Energy which carried out the energy audit encompassing HVAC, heating, building envelopes, plug loads and covered lighting, the final project incorporated various energy conservation measures meant to save the school roughly $2 million over the course of the project’s life.
When the project was completed in 2014, the financials and upgrades were checked by Noesis Energy, verifying the savings at approximately $44,000 a year.
Attero – recycling of e-waste
Attero, an Indian recycling company has a straightforward mantra: “We believe it’s not waste, until it’s wasted.” As per recent estimates, a half million tonnes of e-waste is thrown out each year in India but close to 95 percent continues to be recycled in the informal sector. However, the process is inefficient and damaging not just to the environment but also to the people involved who are chiefly women and children laboring with no protective gear.
Seeing an opportunity to convert the environmental calamity into a business plan, Attero came into being. Attero’s CEO and co-founder says the company is India’s leading waste recycler, tackling about 500 tons of e-waste every month.
The company’s success can be attributed to its widespread collection system, its novel four-stage recycling technology that recovers valuable metals without tainting the local environment and its relatively lower cost.
Liquid Robotics – Wave Glider
Liquid Robotics developed an emission-free robot for sea survey applications for commercial and government customers, considering the expense and danger associated with manned ocean exploration. The unmanned robotic vehicle (called the Wave Glider) is suitable for observing, measuring and monitoring the world’s oceans. According to the chief executive at the California-headquartered ocean data service providing company, the robot doesn’t get bored, doesn’t slip on the deck and injure itself, doesn’t get sea-sick and doesn’t run out of fuel.
The company’s technology developed out of endeavors to catch the songs of migrating humpback whales. The Wave Glider is completely silent and has no emissions and no carbon footprint.
In spite of the mixed condition of the industry and associated risks, cleantech entrepreneurship is exciting, and it looks like the green technology is here to stay.