My good friends over at Cleantech Group put out their 10 for 2010 cleantech predictions after Thanskgiving, and after our usual “webside” chats on the future of the sector, chastened me into responding with a set of counter predictions. What’s in store for cleantech 2010?
1. Private capital recovers. Nick Parker predicts that private capital will recover and we’ll see global cleantech fundraising set records. I like this prediction, and hopefully for more than just projecting the results I’d like to see. But it does feel like a lot of cash on the sidelines, a lot of policy beginning to bite and drive demand, and few other exciting places to put cash. And according to the Cleantech Group who has more data on it than anyone else, the fundraisings are gearing up.
2. Carbon Rules – One of the Cleantech Group’s longtime theses has been on the increasing interaction between different commodities (like water and energy and carbon), and they predict 2010 is the year the “non carbon” commodities come to the forefront and the commodity tradeoff debate intensifies. I call this one a bust. It’s all about carbon. 2010-2013 is the start of 4 years of carbon mashup. We’ll spend it dealing with fallout from Copenhagen, wringing the last drops from Kyoto, beginning in the US to commence planning to handle the EPA reporting rules and the to be finalized in 2010 CARB rules in California, and new EPA regulations and maybe, just maybe, our own private cap and trade scheme. Water still won’t yet matter. But we may finally get a picture on how much the carbon overlay on energy will end up biting. And part of the reason I’m calling this a bust is we’ll still be in a viciously flat to weak economy in 2010, which means definitely energy, along with most commodity prices, are more likely to be deflationary not inflationary. And when commodity demand is weak, the interactions bite less.
3. Energy efficiency eclipses solar. This is a fascinating prediction on Nick’s part, and made me stop and think for a moment. I’m going to cry cautious bust on this one. Solar has carried cleantech almost by itself so far. And I don’t think the run is over. And if my prediction above on weak demand growth for energy holds, it feels like it’s a bit early to start passing the mantle to energy efficiency, which is traditionally late to the party.
4. I will, however, make a call on solar. I will call solar’s emergence into real scale power (RSP) starts in 2010. Real plants, 5MW-100 MW, big enough to produce more than a thimbleful of power. We’ll start to get enough of them globally to get real data on costs and issues at scale. And while RSP for solar is still lilliputianland in real energy, 2010 will be the first year solar starts to run with the big dogs. With the massive demand void left by Spain to fill, and the industry learning how to take costs out like a real manufacturing sector does, now we find out if solar’s got game. And I think we’ll find it will, but it’s going to end the year feeling a little battered and bruised on 2010 playground.
5. And I’ll make another call on smart grid. Real business, M&A, and maybe even an IPO or two by 3Q or 4Q. Ignore energy efficiency, smart grid will matter in 2010.
6. Biofuels bust. The last petal of the last bloom off the biofuel rose falls by the anniversary of Pearl Harbor in 2010. The cleantech investment community will finally figure out that small scale experiments in pretty labs do not a business make, and that they don’t have the horsepower, expertise, or balance sheet to play this big boy game.
In short, I believe that 2010 does mark a watershed year in cleantech. The blue norther of the GFC, as the Australians all refer to the global financial crisis, has slammed straight into a rising warm air mass of cleantech and renewable energy policy, and forced cleantech to grow up. So maybe, just maybe to quote Winston Churchill, for cleantech it’s not the end, and not even the beginning of the end, but it is perhaps, the end of the beginning.