Tuesday, May 3, 2011

Cleantech: The next generation

Over the last 10 years the primary focus in cleantech has been on solving very difficult engineering and science problems, with the goal of bringing down the cost of solar, lighting, batteries and electric vehicles. In many respects, those efforts have yielded unprecedented results. Consider the example in solar, where technologies are nearing maturity. In the last five years, the cost of solar modules has dropped from $4.50 per Watt to $2 per Watt, with a pathway to grid parity by 2015 in some markets, based on further reductions.

During that period, something pretty extraordinary happened in the broader Tech space. The unique confluence of (1) lower storage and computing costs; (2) faster development cycles; (3) profileration of mobile technologies; and (4) rise of cloud computing and social media, resulted in all of us becoming walking supercomputers that generate mountains of data.

So what does that have to do with Cleantech?
As science and engineering solutions reach maturity and cost levels reach a tipping point, there will be a huge opportunity for companies that can leverage technology platforms (online, mobile, social, etc) to enable and accelerate mass adoption of renewables.

Folks have called this Digital Energy, Cleantech 2.0, Green IT , and many other names. Sunil Paul of Spring Ventures has probably done the best job articulating this general thesis and has called it GreenWeb. (For the record, the term we use at Novus is Green Net)

Green Net business models could include:
  • [Cleantech] as a service (for example "Lighting as a service", "Solar as a service", etc.)
  • Analytical tools to enable managing or developing renewable assets
  • Optimizing existing assets
  • Data analytics engines
  • Social platforms for energy efficiency
  • Innovative financing and leasing
...just to name a few.

Many companies are already hard at work in this space. Just recently, I've come across a number of interesting examples such as Solar Mosaic, which crowd funds solar development; Green Wizard, which serves as a market place and analytics tool for LEED construction; Geostellar, which has a geodata platform for solar developers; and Automatiks, which has a telematiks platform for electric vehicles. (I should note that Novus is not invested in any of these companies).

There has been a lot of commentary lately of generalist venture capital funds having been burned by cleantech investments, and leaving the space altogether to focus on their core sectors. While this is understandable (and probably rational given what's going on in the broader tech market), my belief is that we are about to enter a pretty extraordinary period in cleantech, and Green Net businesses will have a big role to play.

Only time will tell.

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