VC Investment in Greentech 2005–2009

There are a lot of voices of late sounding the death knell for venture capital. The New York Times dusts this meme off every few years. One just has to have a good memory and ignore the nattering nabobs of negativity. They’re usually wrong.

Fred Wilson of Union Square Ventures has a different take. Wilson has crunched some numbers and claims that “VC doesn’t scale.”  He has determined that: “You cannot invest $25 billion per year and generate the kinds of returns investors seek from the asset class,” and that, “The number that the asset class can take on each year is around $15 billion to $17 billion. It's interesting to note that the industry raised $4.3 billion in the first quarter of 2009. That's a good thing. If we can keep it to that level, or less for a while, then we may be able to downsize and get returns back on track.”

Fred is right.

There has also been a sky is falling mentality in the greentech investment sector.  The bubble has burst, project finance money is gone forever, the end is nigh, etc.  These folks are wrong as well. 

Unsurprisingly, first quarter greentech investing was down. That makes sense if you’ve been paying attention to current events. But second quarter investment in greentech is already showing signs of a rebound and has gotten off to a roaring start with about $500 million in greentech VC invested in April alone.

Renewable energy, green and cleantech, ecologically sustainable technology and investment is at the beginning of a 20-year boom and there are going to be ups and downs along the way. Get used to it.

Steven Strong and Luke McKneally of Solar Design Associates spoke at the American Institute of Architects (AIA) show in San Francisco this week about moving, “toward carbon neutral green design with renewable energy.”  Strong is a solar zealot and a pioneer in installing solar heating and power on homes and buildings as well as making these structures more energy efficient.

He began his career as an engineer working on the Trans Alaskan Pipeline from 1973 to 1974, which he likened to being, “like a kid in a candy store for a young engineer.”  But sobered by the oil scares precipitated by the Yom Kippur War, he went back to architecture school and started his solar design firm.

He has an absolutely impressive portfolio of solar installations to his credit.  Here is a quick tour of some of his work.

The Mountain Conservation Center in Northern New Hampshire

In a solar starved environment of 8,765 Degree Days (that’s not good) -- Strong helped design a 7,000 square foot carbon neutral facility, powered exclusively by solar with back up provided by a dead fall-fueled wood boiler.  The building is optimized for winter production and also uses solar thermal.  At the end of the year they are negative 490 kWh -- in other words, “The utility pays them.”  Strong adds, “If this can be accomplished in Northern New England -- it can be done most anywhere.”

The Lewis Environmental Center at Oberlin College

A net zero energy building built in partnership with William McDonough + Partners. The environmental studies building includes an organic water purifying system, a solar cell roof, and passive solar heating.

The Carlisle House

Strong’s firm helped build the first solar residence connected to the grid -- the Carlisle House in 1980.  Strong admits that “the house looks like a large solar array behind which a living space has been organized.”  Realize that this was done with solar panels with a conversion efficiency of 7 percent The building has super-insulated walls and ceilings.

Tiger Woods Learning Center, Anaheim Calif.

Incorporating thin-film curtain wall with varied transparency -- the structure is sloped and curved requiring BIPV modules of differing size and shape.

Discovery Center, Santa Ana, Calif.

Built in partnership with extreme architects, Arquitectonica, the entire South face of this big cube is thin film photovoltaics.  The installation crew was an all-volunteer-group and they did not miss a single electrical connection.

The Solaire, Battery Park City, NYC

Multi-family dwelling BIPV

Strong’s website shows many more of his award winning and trail-blazing installations.

I’ll leave you with a few more of his thoughts…

“Why aren’t we building PV arrays on freeway sound barriers? They are near the urban core, they have good foundations, the grid crosses the highway, and it’s is a very good use of land.”

And despite his solar zealotry, Strong insists that, “The building needs to be worthy of a solar investment.”  The dessert part is solar.  It’s hard to see designers getting excited about enhanced insulation levels or variable speed motor drives, low emissivity coatings on glazings. They can’t see these things and architects get very little direct credit for that.  But they can see solar.”

“Solar should be the last resort.  Why do architects want to go straight to the dessert?  There are hundreds of other strategies to make buildings perform.”

"The success formula for zero energy buildings is efficiency + efficiency + more efficiency + conservation and then adding renewables."

Yes, But How Will This Impact the Price of My Sushi?

South Korea will invest $275 million over the next decade to grow seaweed forests off its coast and increase the country's ability to produce biomass energy. The biomass would be used to produce a target of 400 million gallons of ethanol per year by 2020 or roughly 10 percent of the country’s petroleum-based fuel usage.

Most of the algae farming and algae investments in the U.S. and Europe are focused on microalgae.  Seaweed, which is already sustainably farmed in Asia and is a multi-billion dollar market, is considered macroalgae.

$418 Per Gallon

According to Biofuels Digest, Professor George Poste of Arizona State University, a member of the Defense Science Board of Department of Defense, and an adviser to Burrill & Company, a VC firm, claimed that the cost of providing fossil fuels to the military in Iraq is $418 per gallon.  He believes that the Department of Defense is ready to invest in biofuels research to control the cost of fuels for troops in “forward areas.”

$777M for Energy Frontier Research Centers (EFRCs)
The White House announced that the U.S. DOE Office of Science will invest $777 million in 46 new Energy Frontier Research Centers (EFRCs) over the next five years.

Supported by funds from President Obama’s American Recovery and Reinvestment Act, the EFRCs will bring together groups of leading scientists to address fundamental issues in fields ranging from solar energy and electricity storage to materials sciences, biofuels, advanced nuclear systems, and carbon capture and sequestration.

Demand Response Factoid

The cost of generating electricity during peak-demand periods can be up to 10 times more expensive than during other periods, and 100 hours of peak demand (about one percent of the hours in a year) can account for as much as 20 percent of annual electricity expenditures.