01 April 2010 #Environment
2010 looks to be a year of recovery for the global cleantech market. Both the public and private sectors are beginning to realise the potentially lucrative market opportunities that cleantech has to offer in the medium to long term.
A recent report by research firm, Datamonitor, suggests that investments flowing into the sector are likely to increase by 35% in 2010, whilst New Energy Finance predicts that the sector is likely to see $160bn in investment in 2010, compared with $125bn in 2009. The expected increase in investment in the sector is likely to be associated with increasing public sector involvement in the climate change debate globally. Rafts of policy measure, legislation and incentives are beginning to come into play in national governments worldwide, not to mention the major role cleantech has played in many stimulus packages. However, although investors are likely to continue to be incentivised to get involved in cleantech, they are still cautiously optimistic, mainly due to technology risk. This risk is being mitigated by risk-averse investors considering investing in businesses that have a strong track record of offering products and services to other sectors, which can now be provided to the cleantech sector as part of the supply chain.
Certain sub-sectors, especially solar and wind, are expected to make significant strides in 2010. Though relatively well established, wind has been significantly backed by policy and cash by governments around the world. In fact, the European Wind Energy Association recently reported that installation of wind power capacity in the European Union in 2009 was greater than any other form of electricity generation. The solar market is likely to overcome any rough period associated with Spain and Germany reducing their feed-in-tariff (FIT) supports. The Photovoltaic Industry Association expects the market to grow by at least 40% in 2010. Overall continued growth is likely as grid parity is becoming a real possibility in many parts of the world in addition to governments globally continuing to incentivise the private sector via policy mechanism, recent examples of which include the soon to be introduced FIT in the UK and the Indian government`s ambition to make solar power a major contributor to its renewable energy ambitions.
The corporate world is also seeing the potential market opportunities available. The first quarter of 2010 saw significant corporate involvement in the sector, examples of which include Intel, Google and Marks and Spencer (M&S). Intel announced an investment into 8 solar installations whilst Google continues to dabble in energy efficiency and solar thermal. Interestingly, M&S announced plans to launch a five year £50m incubator fund ‘to support the development of innovative new ‘Plan A` products and services at M&S`.
An increasingly positive view of the sector seems to be also buoying expectations for the public markets in the year ahead. It is reported that several well known businesses in the cleantech world are planning IPOs in the coming year. According to a recent survey of investors by investment bank, Jefferies, 75% of respondents suggested that the European cleantech IPO market will rebound in 2010. In fact, there are approximately 78 businesses planning IPOs in the US according to Jefferies. Though there is optimism for the IPO market, the increasingly common trend of backing more established businesses with established technologies and customers amongst investors, which came about as a result of the economic downturn, will likely follow into the coming year. As a result, IPOs of unproven technologies are unlikely to be taken forward.
Despite the recent economic downturn and turbulent times, the fundamental drivers of energy security, resource scarcity and the continually increasing sense of urgency for climate change mitigation and adaptation have not changed. The sector`s medium to long term prospects therefore look promising, and 2010 looks to be the beginning of this prosperity.
Taken from The EIC Environmental Investment Network.