Opinion: Sustainable Energy and Cleantech Trends for 2014

on December 18, 2013 at 2:00 PM

Crown Prince Naruhito Visits Renesas Technology Corp

The year 2013 marked a new era for sustainable energy and cleantech. Innovative sustainable technologies have started to mature and are getting closer to mainstream acceptance. Growing pains are over for many of these technologies and they can now simultaneously reduce cost and the energy intensity of products and production processes, while also improving the environmental footprint. No wonder that we now see new technologies penetrating in the core business of large industries like oil and gas, power and utilities, chemicals and materials, metals and mining.

Chrysalix EVC believes that 2014 will be the year for investors to double up their investments in clean energy innovations now that the returns are becoming very attractive. With virtually every industrial company calling for some kind of sustainable innovation strategy, this trend is comparable to ten years ago when companies talked about the need for an Internet strategy – that is now part of the normal way of doing business just as cleantech will be in the next decade.

Our top five forecasts for 2014:

1.    Solar makes a come-back.

Firstly in downstream installations. The bankruptcy of Solyndra and many other solar companies marked a natural consolidation process that we have seen time and again as industries mature. The cost of solar has come down by 20% annually in the past four years while efficiencies have continued to rise. So customers are benefitting. No wonder sales are increasing – hence the successful IPO of Solar City earlier in 2013. We expect this trend to pick up further steam in 2014. The future of solar looks bright!

And secondly, solar for industrial innovation – an area where our portfolio company GlassPoint is leading the charge. GlassPoint uses solar to generate steam for the process industry. Their first application is replacing expensive natural gas for enhanced oil recovery (EOR) in the Middle East with a significantly cheaper solar solution. Today, Shell and Petroleum Development Oman are already benefitting from GlassPoint’s technology.

2.    Big data and smart grid are stepping up to the plate – utilities beware.

The application of the Industrial Internet and big data is an exciting area with the potential for radical innovation in energy intensive industries, enabling them to make more cost effective decisions as well as process optimization and efficiency gains. It will make the integration of renewables in utility offerings more attractive, but could also help change the utility industry dramatically. Companies like ENBALA will benefit from that trend. ENBALA’s Smart Grid technology uses real-time connectivity to manage grid demand – maximizing system efficiencies and reducing overall energy costs.

3.    The quest to achieve large-scale energy storage continues.

We need a breakthrough to really be able to firm up wind and solar power – and to move to attractive local micro-grids. People are working hard on all kinds of new technologies for energy storage, such as very large flow batteries or compressed air for the utility market. But we haven’t yet seen anything that is really on its way to deliver energy storage below $500 per kilowatt-hour. The reality is that most of it is still north of $1,000 per kilowatt-hour, which is too expensive. We do however expect significant progress in the area of energy storage in the coming years.

4.    Water, water everywhere and not a drop to drink!

We are at the beginning of a huge surge in water investments – in particular waste water treatment and desalination, as well as water savings and conservation technologies. The energy industry requires huge amounts of water, for example electricity generation is the second largest consumer of water globally, yet there are water shortages in many areas of the world. This is also impacting the oil and gas, and mining industries. You need a lot of water to produce oil — two gallons of water for every gallon of oil. The mining industry is highly water intensive as well with significant waste water contamination.

Cleaning up the increasing volumes of waste water across these industries is a huge issue, and a huge opportunity area for innovation. We are excited about our portfolio company Axine, which has developed a simple chemical-free solution for treating high concentrations of toxic organics and other pollutants in industrial wastewater, solving a multi-billion dollar problem for companies in a wide range of industries including mining, and with a 60-80% cost advantage over incumbents.

5.    Innovations and sustainable solutions will accelerate.

We will see the pace of innovation pick up resulting from three key drivers: (1) the enormous volumes of high quality engineers graduating from top academic institutions around the world (in particular now also in China and India); (2) the eagerness to push the limits of science and find interdisciplinary breakthroughs; and (3) the thirst for open innovation stimulated by the need of large companies to solve pain points in their value chains, as well as the Internet and social media.

The world is at the beginning of a new era of innovation, which will result in spectacular developments in nanoscience and new materials, biophysics, biochemistry, and very likely the arrival of commercial nuclear fusion.

These five trends will help find the profitable sustainable solutions the world needs. As the population approaches nine billion by 2050, the demand for energy will continue to rise while nonrenewable energy sources become scarcer and more costly. With this in mind, there has never been a better time for investors to get back in to cleantech.

Wal van Lierop, President & CEO, Chrysalix Energy Venture Capital. Wal has a 35 year career in energy, including 20 years working with startup companies and 13 years in venture capital with Chrysalix EVC. He is responsible for the overall strategy and leadership of the firm, as well as fund raising and strategic partnerships with leading financial and industrial companies worldwide. Wal has a significant track record as a VC and has had hands-on involvement in dozens of innovation companies. Between Chrysalix EVC and its 19 portfolio companies, Wal has been directly responsible for raising more than $1 billion for early stage technology ventures.