Is Cleantech The Next Bubble?

Judging by the reaction to recent IPO A123 Systems (AONE) [Sep 24: A123 Systems - Hype or Hope?] there certainly can be a case made that ‘cleantech’ has a chance to be one of the bubbles the Federal Reservecreates next. I am not so sure in terms of job creation (solar is nowdominated by China, wind we are way behind and there only be so many"battery" companies in the world) but certainly in stock hype.


Via AP

  • Oureconomy sure could use the Next Big Thing. Something on the scale ofrailroads, automobiles or the Internet — the kind of breakthrough thatemerges every so often and builds industries, generates jobs and mints fortunes.

  • Silicon Valley investors are pointingto something called cleantech — alternative energy, more efficientpower distribution and new ways to store electricity, all with minimalimpact to the environment — as a candidate for the next boom.

  • Andwhile no two booms are exactly alike, some hallmarks are alreadyshowing up. Despite last fall’s financial meltdown, public and privateinvestments are pouring in, fueling startups and reinvigoratingestablished companies. The political and social climates are favorable.If it takes off, cleantech could seep into every part of the economyand our lives.

  • A year into the Great Recession, innovation isn’t slowing. This time,it’s better batteries, more efficient solar cells, smarter appliancesand electric cars, not to mention all the infrastructure needed to support the new ways energy will be generated and the new ways we’ll be using it.

Keypoint on why it’s more likely a stock bubble than a job bubble – wejust don’t like making things that aren’t heavy (cars, defense, perhapsa stray wind mill)

  • Yet for all the benefits that might be spawned by cleantech breakthroughs, no one knows how many jobs might be created — or how many old jobs might be cannibalized. It also remains to be seen whether Americans will clamor for any of its products.

  • Cleanenergy projects could simply replace old jobs and functions, likemeter-readers. And there’s no guarantee new jobs won’t shift tocountries with cheaper labor. (all you need to do is make them government jobs and then they’ll be protected for a few more centuries – boo yah)

  • Thelaser, for instance, was a big innovation, but it wasn’t clear at firstwhat it could be used for. That’s why there wasn’t an economic boom inthe 1960s from the advent of lasers, even though they ended up drivingeverything from medical devices to CD players for four decades.

Butnot to worry, we are promised 5M jobs are on the way – sort of like the3-4M jobs that would be "created or saved" as long as we gave up $800billion of our grand children’s money via stimulus.

  • The Obama administration is pledging to invest $150 billion over the next decade on energy technology and says that could create 5 million jobs.

How does it compare to the interbubble? Not yet even close at least in the VC world

  • Andcleantech is on track to be the dominant force in venture capitalinvestments over the next few years, supplanting biotechnology andsoftware. Venture capitalists have poured $8.7 billion into energy-related startups in the U.S. since 2006.

  • That pales in comparison with the dot-com boom, when venture cash sometimes topped $10 billion in a single quarter.

Which can mean only one answer – our only answer to all our problems. To the printing presses Ben!

  • A123Systems, a Watertown, Mass., maker of lithium-ion batteries forelectric cars, had one of the most lucrative public stock offeringsthis year, raising $437.5 million. Its stock price jumped more than 50percent on the first day of trading in September, with investorswilling to overlook that the company has yet to make money.

Nowthis next part is actually viable and is something that could beexported the (developed) world over if we innovate and take the lead.But will "privacy concerns" kill this in America ? ("I don’t want bigbrother to know if my fridge is at 48 degrees or 43 degrees!")

  • One target is "smart grids."As utilities install digital meters in homes and Americans buyappliances that can communicate with the electric system, individualpower consumption can be monitored more closely. People could be cuedto dial down appliances such as refrigerators and air conditioners whenelectricity is in highest demand. Such fine-tuning in millions of homescan reduce the need for new power plants.

  • It’s not juststartups getting in the game. General Electric Co. plans to stringtransmission lines to deliver solar or wind power. Hewlett-Packard Co.is adapting techniques for printer cartridge chips so digital sensorscan send data to smart grids.

  • The government’s push for thesedevelopments parallels the expansion of railroads in the 19th century,when the government granted blocks of land to companies laying track,says Jack Brown, an associate professor in the University of Virginia’sDepartment of Science, Technology and Society.

  • One difference, Brown points out, is that clean energy is such a vast field that government could make the wrong choice in backing one type of technology over another.

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