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The case against EVs in China

Stephen Marcus

As an analyst following the day to day happenings in green transportation, I often feel that the industry blindly accepts that the majority of the future economic opportunity for EVs is in China. Many articles often rehash the usual drivers of near double digit GDP growth, powerful government edicts, and poor urban air quality to support their statements. It certainly makes a strong case.

However, whilst the potential market for EVs in China is obviously HUGE, it is important to dig deeper in order to specifically assess the suitability of EVs as a solution to Chinese consumers rather than get overly excited every time the “C-word” is dropped into the equation. What will make Chinese buy electric vehicles over traditional ICE vehicles? Simply saying the economy is growing fast and air quality is poor, in my book, is not enough.

When taken from this standpoint, the opportunity for EVs in China looks less rosy for at least three reasons:

  • Price Sensitive Consumers: It is important to recognize that EVs will, at least for a number of years, command a significant ($10-15k) price premium over traditional ICE vehicles. And even though China’s economy is growing fast, the lion’s share of car
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Why Cleantech Should Drive the Future of Israeli Venture Capital

Greg Neichin

If you haven’t heard the news, as reported by Venture Capital Journal, the Israeli venture-capital sector has hit drought-like conditions with local funds raising a grand total of $0 in 2010.  Zeev Holtzman, founder of Giza Venture Capital, recently sounded the alarm in a public letter to Benjamin Netanyahu declaring, “Israel’s venture capital and startup industry is heading for collapse… the industry, which is the economy’s growth engine, is liable to be irreversibly damaged.

As a typical, neurotic American Jewish young man and strong supporter of Israel, these headlines gave me as much cause for concern as the recent, heightened debate over political borders.   Trying to allay these fears, Silicon Alley Insider picking up on this story wrote:

“One reason is that Israeli startups have often been specialized in sectors like security, semiconductors and networking equipment, which can be capital-intensive and that many feel are “played out” for startups… there’s a bright light however: Israel seems to start to “get” the consumer internet.  Facebook just bought a local startup for $70 million.

The last line struck me as both a comical and sad testament to the mindset of today’s startup landscape.  The Israeli startup …

Let’s Make Dumb Buildings Smarter

Sheeraz Haji

The most promising renewable energy sources are not actually energy sources. Instead, I believe ‘negawatts’ or opportunities to save energy by making our buildings, factories, and homes more efficient are the best path toward reducing our dependence on fossil fuels. While attractive energy efficiency opportunities are plentiful, I’m most inspired by the ways we can make ‘dumb buildings’ smarter and more efficient.

Buildings in the US represent 40 percent of energy consumption and 70 percent of electricity use. Unfortunately, most of these buildings are not optimized for efficiency. Opportunities to improve their energy consumption are abundant and well-understood. Implementing proven ‘no brainer’ efficiency technologies across all five million US commercial buildings would cut energy consumption by 30 to 50 percent, resulting in $30 to $50 billion in annual savings. Admittedly, the task of effectively promoting and accelerating adoption of such technologies is not easy.

Fortunately, a plethora of innovative companies recognize the magnitude of this opportunity, and are seizing it. For example, a number of startups (e.g., Adura, Encilium) are developing intelligent lighting control systems that ensure lights are only in use when needed. In the heating market, companies (e.g., Scientific Conservation, Building IQ) are competing to create smarter systems …

Weekly Investment Highlights

Hans Chen

Each week our research team tracks cleantech transactions across the globe. This week we recorded 15  VC/PE deals, five fund announcements, three M&As, two transactions of other types and three IPO-related stories. Below are some of the highlights. Cleantech Group subscribers can see the full roundup of all the deals here.

Venture capital and private equity Investments

Over $137 million of venture/private equity fund was raised by 15 cleantech companies, the two largest deals were:

  • China-based concentrated solar thermal device and solution provider Royal Tech Solar received a RMB 125 million (~$35.7 million) investment from Chinese investment firm Tripod Capital. Royal Tech is already a leader in the market and has received numerous government grants, including several project offers in the 12th Five-year Plan.
  • Massachussets-based nanotechnology company QD Vision raised $22 million in its most recent funding round. The financing was backed by new investors Passport Capital, Novus Energy Partners and Capricorn Investment Group, as well as existing investors North Bridge Venture Partners, Highland Capital Partners, In-Q-Tel and DTE Energy Ventures. The proceeds will be used to expand the company’s quantum dot technology.

Funds

Five fund managers launched or closed funds. Highlights included:

  • Aloe Private Equity, a Mauritius-based

212 Resources: Aiming for Sustainable Natural Gas Production

Mia Javier

The Oil & Gas industry has come under fire in recent months with a plethora of media coverage on fracking practices and their potential impacts on community water sources. Combined with the BP oil spill disaster, the industry has had its hands full with PR management though ‘fracking’ is the hot-button issue to date. Media coverage of methane contamination in Pennsylvania drinking water sources due to shale gas production has been widely cited. Regulatory agencies, as a result, have been mobilized to look into the issue.

Whether the methane contamination is due to the drilling (specifically well construction) or the fracking process (i.e. the injection of chemicals down drilled wells) the debate and conversation will likely rage on. All the same, like many other heavy water use industries, Oil & Gas has its specific water challenges and we here at the Cleantech Group are noting the emergence of technology vendors with specific treatment solutions for this sector.

According to Les Merrill, VP of Project Development at Utah-based 212 Resources, “At 212 Resources we see our solution as enabling natural gas production to help regions with energy needs.” (212 refers to the boiling point of water in degrees …

A Nod to Ontario

Mia Javier

After two weeks of travel, I’m pleased to be back safely on the ground here in San Francisco – fired up, no less by the commitment to sustainability and the required development of water technology tools articulated by various speakers at the Ontario Water Leadership Summit.

Mia's Panel

On my plate post event is to write-up a report that summarizes the key takeaways from the various discussions that took place. At the moment, I’m surrounded by piles of hand-written notes as I synthesize but there are a few key themes worth previewing before the report comes out:

1. Regions acknowledge the need for continued ecosystem development: Representatives from Singapore, Toronto, Cincinnati, Milwaukee and the Netherlands shared their best practices and efforts towards creating the idealized ecosystem for water technology development and sustainable use of water resources.

2. Closing the Water Loop: A number of startup companies featured at the event fell under the umbrella of ‘energy and resource recovery’ from wastewater. This is part of a growing trend for water users at every level to consider new and efficient ways of using water (direct and embedded).

3. Related to (1), an entrepreneur drought: Cultivating and encouraging talent to build …

Show Me the Car Facts

David Cheng

The EPA just released new fuel economy window stickers for 2013 model vehicles this week.  For the first time, these stickers would provide information about the vehicle’s greenhouse gas emissions, as well as estimated annual fuel costs.  It’s clear that the aim of the EPA and Department of Transportation is to provide more information to help consumers make purchasing decisions, including the full cost of ownership.  More information is a good thing.  Today, most used car buyers request the vehicle history report to uncover hidden costs or liabilities in the vehicle.  It’s about time new cars get the same type of treatment.…

Three Gorges Dam: China’s Dilemma

Hans Chen

Think the Chinese Communist Party never admits a mistake? Think again.

The rare occurrence happened earlier this week, when China’s State Council, the country’s Cabinet, said in an official statement that while the Three Gorges Dam “provides huge comprehensive benefits, urgent problems must be resolved regarding the smooth relocation of residents, ecological protection and geological disaster prevention”. This was the first ever official acknowledgement of the dam’s negative impact.

Some background information: Three Gorges Dam is the world’s largest capacity hydroelectric dam (total generating capacity of 18,200 MW) located in the mid stream of Yangtze River, the longest river in Asia. Also, it is probably the most controversial water project in the history of mankind, as political, humanitarian and environmental issues were brought up constantly by the opposition.

One would argue that such gigantic hydro power project is not really “clean energy” because the construction itself often has a negative impact on the environment, not to mention the CO2 emission just to produce all the concrete needed. That is a valid argument, of course. But when a country with 1.3 billion people generates 75% of its electricity via coal-fired thermal power, hydroelectric power looks pretty clean.

Many people …

Atlantic Wind Passes FERC Hurdle – A Murky Process Explained

TroyAult

The United States has significant wind energy resources offshore and a significant proportion of its population concentrated on its coasts.  Yet installed, grid connected offshore wind generating capacity in the U.S. in 2011 is… zero!  Perhaps not for long.

Prospects for the Cape Wind project off the coast of Cape Cod in Massachusetts are looking a little brighter.  And on May 19, the Federal Energy Regulatory Commission (FERC), an independent and self-funding agency within the U.S. Department of Energy charged with overseeing interstate wholesale energy transmission and sales, approved incentive rate treatment for several proposed transmission projects, including the 250-mile Atlantic Wind Connection project that plans to connect up to 6,000 MW of offshore wind power to the grid.

Sure, considerable obstacles remain.  The project still needs to be approved as part of the PJM Interconnection’s Regional Transmission Expansion Plan (RTEP) and consensus would have to be gained among coastal Governors as to the design and location of interconnections.  But the approval for incentive rate treatment is a significant step, basically assuring the project’s investors (which include the likes of Google, Good Energies, and Marubeni) that the price paid on wholesale energy markets to utilize the generation and transmission capacity …

Water: Week in Review

artipatel

M&A/ Partnerships

Projects