The Cleantech Situation
by: Eric Drummond
Many of us in the industry have seen the headlines in the print media and have watched the “experts” on the cable news shows discussing the early demise of cleantech—newspaper articles and TV documentaries recently claiming that cleantech is dead, that the cleantech bubble has burst. But if we look beyond the provocative headlines, we’ll see that the industry is not dead or dying; it’s growing, and in some sectors maturing, but doing so without effective and rational policy support and during a time of financial difficulty. And because it’s hard, investors, entrepreneurs, regulators and other industry players are still figuring out the most efficient manner in which to bring new technologies to market.
The facts, on the other hand, appear to reflect a far different story:
- U.S. venture capital investment in cleantech companies reached $4.9 billion in 2011, according to an Ernst & Young LLP analysis based on data from Dow Jones VentureSource. This is flat in terms of deals compared to 2012 but represents a 29 percent increase from the $3.8 billion raised in 2009.
- Nationally, renewable electricity generation doubled from 2006 to 2011, and prices for wind, solar and other clean energy technologies decreased.
- Employment in cleantech industry sectors expanded by almost 12 percent from 2007 to 2010.
- Locally, the Denver, Colo., nine-county region ranked sixth out of the 50 largest metro areas in the United States in cleantech employment concentration in 2011, with around 1,500 cleantech companies operating in the nine-county region in 2011.
- Colorado had investments of $363.3 million throughout 2011, a 28 percent increase from 2010, making it the state with the third highest level of investments.
Recognized as one of the most innovation-intensive states, Colorado derives this honor from the strength of the research, investor and entrepreneurship communities built around the University of Colorado, Colorado State University, Colorado School of Mines and the National Renewable Energy Lab (NREL). Another data point, in the past five years, more than 450 provisional, nonprovisional and international clean technology patents have been filed by researchers at these schools.
Others have pointed out that Colorado has enormous local resources, and with NREL in our midst we have an incredibly strong link to the national cleantech ecosystem. NREL is the leader in research in solar, wind, biomass and other clean technologies. Indeed, known in the research and development community as “the Oscars of Innovation,” NREL has won 50 R&D 100 Awards in the last 30 years.
In addition to NREL, Colorado is also home to a number of other federal labs, including the National Institute of Standards and Technology (NIST) and the National Oceanic and Atmospheric Administration (NOAA), and the state is also home to the National Center for Atmospheric Research (NCAR). This feature set of national labs and research centers, as well as universities, and investor and innovator communities, all reflect on the rich diversity of the Colorado cleantech ecosystem.
A Cleantech Solution
What many of us have come to understand is that most venture capital firms are quick to acknowledge that they invest in teams and people, not just products and technologies. With that in mind, an enterprising and energetic group of people banded together to create a platform, the Cleantech Fellows Institute, to accelerate the development of cleantech in the region and across the nation.
Modeled after a successful program created by the New England Clean Energy Council, the Cleantech Fellows Institute is partially funded by support from the Advanced Energy Economy Institute (AEEI), NREL and the Colorado Cleantech Industry Association (CCIA). AEE’s mission is to influence public policy and to provide a unified industry voice in support of a strong U.S. advanced energy industry, as the economic engine of the global transition to a smarter energy future.
The Cleantech Fellows Institute is an exclusive program designed to facilitate the creation of start-up clean technology companies. The institute educates a highly select set of proven executives from across the country and from a wide variety of industry sectors that are interested in making the transition to cleantech.
The national profile of the Cleantech Fellows Institute allows the organizers to leverage partnerships across the state of Colorado and the United States, to gain access to industry leaders and visionaries that are willing to share their expertise and insight into growing a cleantech business. This model of leveraging the expertise of subject matter experts from across the nation has proven to be very effective.
The institute’s tuition-based, 17-week intensive program provides an in-depth understanding of the industry’s issues, technologies, research, support ecosystem and regulations. The institute offers more than 130 speakers and 30 site visits to support its nearly 150 curriculum hours. In addition to extensive investor and industry access, the Cleantech Fellows Institute will culminate in capstone projects designed to lead to a venture-backed start-up.
The 2012 Cleantech Fellows Institute curriculum includes, but is not limited to, the following sectors:
- Clean Energy Generation—solar, wind, hydro, biochemicals, natural gas, biofuels
- Storage Technologies—grid storage, ultracapacitors, fuel cells, batteries
- Advanced Transportation Technologies—electric and hybrid technologies, advanced engines, materials, biofuels
- Energy Efficiency and Building Technologies—lighting and HVAC, building automation, energy management systems, demand response, green buildings
- Foundational Elements—tech transfer, commercialization, national infrastructure, cleantech financing, regulatory, public policy
The sessions listed below are a sampling of the Clean Energy Generation curriculum:
- Session 1—Clean Energy Technology 101
- Session 2—Creating a Path to Subsidy Independence
- Session 3—Renewables Integration
- Session 4—Balance of System and Component Plays
- Session 5—Advanced Materials for Clean Energy Generation
- Session 6—Clean Energy Generation Forecasting
- Session 7—The Financial Bottom Line
- Session 8—Project Development
When the Colorado Cleantech Industry Association (CCIA) was formed four years ago, it was with the knowledge that Colorado had enormous clean technology development potential and an opportunity to harness those technologies to create jobs, tax base and state revenues. It was understood that a statewide organization supporting cleantech could be instrumental in the continued growth of this important industry sector. None of this has changed in the intervening years.
What has changed, however, is that when CCIA lead the development of the State’s “Cleantech Action Plan” in 2010, the action plan found the industry needed additional seasoned executive talent who understood the complexities—and opportunities—related to funding and growing a start-up enterprise. This realization was the impetus behind the creation of the Cleantech Fellows Institute. And because the nature of building the cleantech industry is national in scope, AEE and NREL, both with national presence, are the founding partners.
The Cleantech Fellows Institute will accelerate what we have come to understand is a fairly pervasive phenomenon, the desire of experienced innovators from other industries to move into and support cleantech. Many executives who have successfully built and exited technology companies have indicated that they want to do the same thing for cleantech. Rather than leaving their understanding of the industry to chance, and having to rely on anecdotal information without access to the network that makes these sorts of endeavors successful, the Cleantech Fellows Institute will surround these executives with resources, support and knowledge related to clean technological development, “go-to-market” strategies, an investment mindset and an ability to understand and possibly exploit regulatory hurdles. With the necessary tools and network in hand, these executives will be more prepared and more successful in their efforts to build funded cleantech companies.
Eric H. Drummond is a partner at the international law firm of Patton Boggs and has more than 20 years of experience in the energy industry. Mr. Drummond represents both public entities and private businesses, including having represented the Department of Energy both in the development of the largest, cutting-edge, high concentrating solar photovoltaic generation facility in the world (a $90.6 million financing pursuant to the U.S. Department of Treasury’s Section 1705 Conditional Loan Guarantee Program) and the first of its kind two-stage catalytic conversion of municipal solid waste to fuel ethanol production plant. Along with legal, regulatory and public policy assistance, he works with larger global financial institutions and other financial entities, as well as with entrepreneurs and innovators. Drummond is the Founding Clean Energy Generation Department Head for the Cleantech Fellows Institute.