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Clean Tech's Challenge of "The Disconnect"

Who's harder to educate, investors or politicians?

Clint Wilder, Clean Edge
February 15, 2012  |  0 Comments

Who's harder to educate, investors or politicians?

That was a question left on the minds of the 400 attendees at the eighth annual Clean-Tech Investor Summit, co-produced by Clean Edge and IBF, and chaired by Technology Partners’ Ira Ehrenpreis, on Feb. 1-2 in Palm Springs, California. In the wake of the 2008 financial crisis, government budget constraints at all levels, and the Solyndra bankruptcy fallout, the clean-tech industry continues to face a huge challenge of perception in the investment and political arenas. And in both financial markets and election campaigns, perception quickly becomes reality.

The clean-tech industry is growing up in a sound-bite, 140-character world that’s very easily exploited by forces that want to marginalize the industry for their own political or financial gain. So the “S word” Solyndra spooks policymakers and potential investors alike. In that skeptical and even hostile environment, companies seeking capital often feel like, in a great phrase from Morgan Stanley managing director Kevin Genieser, people “trying to sell great houses in really bad neighborhoods.”

But to me, the clean-tech industry is actually a really good neighborhood with some bad houses. Renewable-energy technologies are becoming more mature, reliable, scalable, and above all, affordable. Solar companies, for better or worse, know full well how plunging PV prices have affected their businesses in the last 18 months. A California Public Utilities Commission report released the day after the Summit revealed that renewable-power contracts offered to the state’s utilities last year were priced an average of 30 percent lower than in 2009.

And public support for clean energy is broad-based and deep, with poll after poll showing high numbers of Americans – across the political spectrum – in favor of increased R&D funding and deployment. In the latest example, a focus group of swing voters polled during President Obama’s State of the Union address rated his mentions of clean energy higher than any other issue except one: the death of Osama bin Laden.

Clean energy’s attributes – domestic energy supply, job creation, reduced pollution ­– are resonating with the public. But you wouldn’t know it from the current inaction/hostility in Congress, and that’s the political disconnect that was on the minds of Summit attendees. Clean tech “has been infected with the toxic political culture,” said conference chairman Ira Ehrenpreis, general partner at venture capital firm Technology Partners. The result? Among other effects, noted ARPA-E director Arun Majumdar, the U.S. has fallen to ninth in the world in clean-energy investment as a percentage of GDP.

No one had any easy answers on how to bridge this disconnect, particularly in an election year that has often given new meaning to the term “silly season” (two words: Donald Trump). But one tactic that could really help in the perception game is getting our politicians more educated about the massive amount of clean-tech deployment underway in the U.S. military. From biofuels-powered Navy destroyers to the largest-ever U.S. residential solar deployment project – SolarCity’s SolarStrong initiative on military housing – the Pentagon is emerging as one of the world’s biggest advancers of clean tech. Getting that message out would go a long way to thaw the cultural Cold War that slaps the liberal Democrat label on clean energy and the conservative Republican brand on fossil fuels.

On the investment side, innovators know all too well that game-changing technologies that challenge the status quo can be a tough sell. “It’s a very, very shallow pool of investors who really understand this space,” said Solazyme co-founder and CEO Jonathan Wolfson, whose algae-based biofuels company has seen its share price fall by half since its peak after a successful IPO in May 2011. “We think our technology is completely disruptive. But right now, we need to educate investors in what is still, despite all the Facebook IPO headlines, a pretty risk-averse market.”

In the Summit’s annual panel on the state of clean-tech exits, KeyBanc Capital Markets managing director Russ Landon pointed out that current high turnover among investment fund portfolio managers makes entrepreneurs’ and VC’s education challenge that much harder. “People new to the space are more likely to react to mainstream comments against clean tech,” he said. “And most clean-tech companies will always have two big hurdles to deal with that other spaces don’t – high capital requirements and policy/subsidies.”

It’s tough times in the trenches, for sure. But one great value of events like the Summit is the chance to step back and assess the big picture – the long-range view that transcends any particular quarterly report or election cycle. Since General Electric launched its Ecomagination initiative in the last decade, its commitment to clean and efficient technologies has never wavered – it has only increased. That’s in spite of the lack of a price on carbon that GE and many other large companies have aggressively sought. “We’ve been using the weapon of innovation to eliminate this concept of a false choice between economy and environment,” said GE’s Ecomagination VP Mark Vachon, the Summit’s closing speaker. “I know it’s been bumpy out there. But the need for these technologies is only going to increase.” In time, hopefully even investors and politicians can understand that.

Wilder is Clean Edge's senior editor, co-author of The Clean Tech Revolution, and a blogger about clean-tech issues for the Green section of The Huffington Post. His new book, Clean Tech Nation, co-authored with Ron Pernick, will be released in September by HarperCollins. E-mail him at wilder@cleanedge.com and follow him on Twitter at @Clint_Wilder.

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Clint Wilder

Clint Wilder

Clint Wilder is contributing editor at Clean Edge, a research and strategy firm in the San Francisco Bay Area and Portland, Oregon, focused on the business of renewable energy and other clean technologies. He is the co-author of The Clean...
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