China Cleantech Market Profile

November 23, 2009 by Jie Liang

China is the largest clean technology (cleantech) market in the world, with a market value of over $200 billion in environment protection and renewable energy industries alone. Energy generation became the most popular segment of cleantech investment in  2009 , followed then by the water and energy efficiency segments.

Chinese government spending on cleantech is snowballing. China has tripled its government investments on cleantech to 1.35 trillion yuan in the past decade, and boosted the share of cleantech spending in gross domestic product (GDP) from 1.3 percent to 1.5 percent.

As for the areas of cleantech investment, $172 billion has gone to environmental protection – 37 billion for desulphurization, 25 billion each for industrial waste water treatment and vehicle exhaust gas, and 22 for municipal waste water treatment.

In the renewable energy sector, $2.8 billion has been invested in wind, $8.1 billion on solar thermal energy, $1.7 billion on solar PV, $3.1 billion on ethanol, and 1.3 billion on biodiesel.

For its Five-Year Plan (2006-2010) period and in the long term, China has set two targets. The first is achieving at least 10 percent of total energy consumption from renewable energies by 2010, and the second is boosting the proportion of renewable energy consumption against primary energy consumption from 10 percent to 16 percent by 2020. Meanwhile, the government wants to reduce energy consumption per 10,000 yuan of GDP by 20 percent. It also seeks to reduce the water consumption per industrial output ratio by 30 percent by 2020.

Specifically, development goals of environmental protection for the 11th Five-Year Plan period are to treat 70 percent of municipal sewage and 60 percent of municipal garbage, discharge 10 percent less primary pollutants, and reach a 20 percent forest coverage.

In view of the current situation, China, however, faces tough challenges ahead, such as high energy consumption and high raw materials consumption. China’s energy consumption per 10,000 yuan of GDP was four times the world average and 14 times that of Japan. Raw material consumption is going up rapidly. In 2005, China consumed 310 million tons of rolled steel, up 15.1 percent year on year; 12.84 million tons of aluminum oxide, up 9.7 percent; and 960 million tons of cement, up 12.4 percent.

High environmental costs are offsetting about 4 to 6 percent of China’s GDP growth, only 43.6 percent of polluted water is treated, and 58.6 percent of Chinese cities have unhealthy air conditions. The continuing rapid growth of the Chinese economy presents unparalleled opportunities and challenges.

Since most of the vast cleantech market in China remains untapped, the country’s policy incentives, such as the latest environment and renewable energy tax, are attracting a lot of investment. Statistics from Cleantech China Research show that cleantech venture capital (VC) grew from a bit over $550 million in 2007 to more than $720 million in 2008, and is expected to reach over billion $dollars in 2009.

What we can see the vast investment would be used to massively expand China’s solar, wind, biofuel, electric car, energy efficiency sectors, carbon capture & store, environment protection and smart-grid markets in a move that could be as groundbreaking as the commercialisation of the internet. China has huge clean energy business opportunities for USA. US clean-energy companies can help Chinese firms meet their enormous energy demands while deploying technology that benefits the environment in the world.

Silver Spring Acquires Greenbox

October 16, 2009 by John Doyle

SilverSpring logoThis acquisition is a solid example where digital media and technology expertise is being utilized in greentech environments.  In order to reduce our carbon footprint, not only does there need to be an increase in demand for renewable energy, but there also needs to be an increase in the level of consumer engagement with regard to energy use.  Digital media technologies will play a key role with cleantech companies trying to engage with consumers to lower their energy use during peak demand.  Silver Spring clearly understands this point in their decision to buy versus build with their acquisition of Greenbox Technologies.  (Peachtree Media Advisors, Inc clearly understands this as well with Peachtree Green Advisors!)

According to their press release, the acquisition allows Silver Spring to provide another application to their customers – “a smart and intuitive energy-management portal.”  The Greenbox technology allows consumers to engage in time-of-use and other Smart Grid-enabled energy-saving programs.  According to Jonathan Gay, Founder and CTO, Greenbox Technology, Greenbox can now deploy its home energy-management solution much faster and more broadly than they could alone.

I wish Ivo (Greenbox’s CEO) and his team luck with their new partner.  Although the real trick is getting consumers to actually care about their energy usage, you will not be able to get them to take action without being somewhat engaged by at least being hooked up to the monitor!

Best,

John Doyle

Greentech Valuations are Edging Up

October 16, 2009 by John Doyle

The greentech sector (as well as most other sectors) appeared to have bottomed out a few months ago.  As seen in the most recent Peachtree comps update (www.peachtreegreenadvisors.com), valuations for publicly traded comparable greentech companies are creeping up.  The overall EBITDA multiple for renewable energy companies increased slightly from 15.3x EBITDA in July-09 to of valuation to 15.6x EBTDA in Oct-09.  The slight increase represents a re-calibrated definition of confidence on behalf of investors.  While current growth predictions are not the “we are changing the world” pie in the sky projections of yesteryear, the political will to push forward on these renewable fuels and clean technologies is clearly apparent.  That said, the two largest renewable energy sectors (solar and wind) are well-positioned to capitalize on a stable economic environment with continued public and private support.  (Although there have been several renewable energy projects scrapped or sold on the part of the large oil companies, the Lewis & Clark will on the part of investors to push on can be seen in the relatively high valuations that the market is putting on these renewable energy and cleantech companies.)

The reason that I say greentech valuations are “relatively high” is due to the fact that this sector is still in its early stages with the valuation, reporting and capital raise efforts akin to the wild wild west.  (Yes, be prepared for many more 19th century Manifest Destiny type  analogies.)  The greentech industry is filled with many so many companies with lofty valuations, but no real business revenue.  Similar to the Internet sector 15 years ago, most of the greentech “technologies” have been around for years.  Media was not invented with the Internet.  Many companies are also changing their name to “green” similar to the way companies changed their name to .com in the late 90s.  (Did someone say Peachtree Green Advisors?)

Sorting through the business models is posing a small challenge for many of the providers of capital as well.  More importantly, the inability for these companies to produce revenue at an early stage and the capital intensive nature of developing these technologies are prohibitive to traditional Angel investors getting involved (many of whom are licking their wounds right now).  Also, many companies have taken to the practice of counting grant money and partnership investment as revenue, making it more difficult to build uniform apples-to-apples comparisons.  Hence, the term “wild wild west” comes to mind.

As seen in Wonderhill New Energy’s latest global index of greentech stock prices appears below, greentech valuations are on the rise globally.  Although valuations are far from where they were at the height of optimism in 2008, a stable economic environment will help to propel growth for greentech companies by allowing these companies to compete in an environment with a more receptive consumer.  The only sand trap that I can see is whether the political will exists to continue onward for the next decade.  National and local governments across the globe generate substantial amounts of tax revenue from dirty cheap fossil fuels.  (Cigarettes are still sold and taxed around the world.)

Wilder Index Sep 2009

New Posts On the Way…But First

October 7, 2009 by John Doyle

There are many new posts on the horizon that are dedicated to greentech M&A.  The blog posts relate to business models, end users, acquisitions and partnerships and will reflect many of the insights that I learned from conversations with green tech CEOs this past month.

But First…I would like to clearly state something in our industry that concerns me.  (The reason I blog is because a former client of mine suggested that I be a part of social media, especially since I was his banker!)  So, I began blogging.  My concern with green tech is that most of the units produced (solar, blades, meters, etc.) are made with energy from non-renewable sources.  There has to be some way to correct this.

Bizarre and slightly hypocritical.  It’s one of those things that make you go, “Hmmmm.”

Follow GT Solar on Dipity.com

October 1, 2009 by John Doyle

Dipity.com is an excellent Web site for tracking companies, events, politicians, or anything topical, on the Web.  I just put in GT Solar and will soon add a link to the companies when I upload my quarterly public market comps to the blog.  Here is an example.

http://www.dipity.com/timeline/GT-Solar

or Tesla Motors.

http://www.dipity.com/timeline/Tesla-Motors

Pretty cool stuff.

Best,

John

Five Greentech Venture Capital Stars from 2008

September 9, 2009 by Joshua Feng

Greentech has emerged as one of the hottest sectors for venture capital funding within the past few years.  Today we introduce some of the major players driving this trend.  Below, as reported by New Energy Finance, the top five greentech investors of 2008 are ranked by their number of transactions, with total deal value listed as well.  The deal values are not entirely accurate, however, as numerous deal values were undisclosed.

[1] Good Energies (21 deals/$65.3m)
As in 2007, Good Energies claimed the top spot, this time participating in twenty-one deals sprayed across a variety of sectors, development stages, and countries. The seemingly low $65.3m figure is misleading due to the presence of fifteen deals with undisclosed values.

[2] Draper Fisher Jurvetson (20 deals/$102.9m)
In addition to leading segments solar and biofuel, Draper heavily focused on early stage companies in the energy efficiency and energy storage segments. Efficiency companies Luminus Devices and Tesla Motors, alongside solar thermal startup BrightSource Energy, headlined DFJ’s list of deals.

[3] Kleiner Perkins Caufield & Byers (16 deals/$187.2m)
Famous for successful tech investments in Google and Amazon, KPCB has recently bet big on greentech. Its $187.2m topped the list for transactions value in 2008, mostly focused in efficiency and biofuel.

[4] RockPort Capital Partners (14 deals/$166.3m)
Solely a greentech-focused VC, RockPort poured money into all areas of the efficiency segment, ranging from green building (Aspen Aerogels) to supply-side efficiency (Powerspan) to digital energy (Northern Power Systems). Investing in both early-stage and late-stage companies, RockPort also made investments in solar and fuel cell technology.

[5] Khosla Ventures (14 deals/$111.5m)
Already notorious for making big bets in greentech, former Sun co-founder Vinod Khosla’s firm kept busy once again in 2008. In particular, biofuel was a major area of investment, including large raises for Range Fuels, Amyris Biotechnologies, and Mascoma.

For more on greentech venture capital activity, you may read Peachtree’s greentech report.

Easy as 1…2…Ummmm

September 3, 2009 by John Doyle

dairy-cow1Although the purpose of this blog is to provide the market with information related to M&A transactions, valuation, trends and capital raised, sometimes I like to discuss fun lifestyle elements in the sectors that I serve.  This post relates to my attempt to lower my carbon footprint in order to not be a hypocrite in the clean-tech vertical.  (The reason I even have a blog is because I had a social media client a little over a year ago, but had never written a blog!)  But I’m not as bad as some of the old heads out there who still have their assistants print out their e-mails on paper and then respond by writing in the margins on the white parts of the page.  Yes, there are people under 60 who still do this and their assistants type in the responses the next day or Monday!

So, this weekend I tried to lower my personal carbon footprint by starting with the easy stuff.  I changed most of the easy to reach bulbs with funny-shaped expensive light bulbs with a picture of the earth on the package.  I will soon trade in my SUV for a hybrid when I get a new car.  (I may wait for the volt…hmmm.)  I started using much less water and turn the water off when brushing my teeth or shaving…

Then I read that the methane gas from meat and energy used to create feed are major contributors to the green house gas effect.  Beef?  Wow.  This one is going to be tough, especially with football season approaching. My first thought was to ignore it.  I mean, I’ve got relatives that I’m still trying to get to recycle, right?  Uggghhh, just thought about cheese and milk.  (There’s absolutely no way I can go without cheese.)

So, I ended up making a promise to myself the other day that I would lower my beef intake gradually to once a week and then to once a month.  This will do little to decrease the overall demand for meat, but will make me feel like less of a hypocrite.  In the venerable words of the late Michael Jackson, I’m going start with the man in the mirror.  (Plus, I might start feeling better.)

2009 U.S. Green Tech Transactions YTD

August 31, 2009 by John Doyle

In the first seven months of 2009, transaction volume in the U.S. renewable and clean tech sectors of energy declined 40.9% versus the same period in 2008.  It is important to note that sustainable energy transaction volume fell off of a cliff in the fourth quarter of 2008, which means that the first three quarters of 2009 are not necessarily an apples-to-apples comparison.  The uncanny retreat of investors and venture capitalists to safer proven investments (if investing at all) was a clear sign of significant fear in the marketplace.   More importantly, the first nine months show a trend toward less capital intensive energy efficiency investments on the part of U.S. VCs.

Green Tech Transaction Volume 2009

In the first seven months of 2009, 101 transactions were completed for a reported $2.29 billion in deal value versus 171 transactions and $4.90 billion for the same period in 2008.  Deal value declined 53.3% in the 1st seven months of 2009 vs 2008 as a direct result of access to acquisition capital in the form of credit and stock.  Debtors were clearly skittish in the last nine months and when valuations fell off of a cliff in the latter part of 2008, companies could not issue stock to raise money for acquisitions at favorable valuations.  It goes without saying that buying a company with paper was too expensive a proposition for most public companies based on their much higher stock prices just a few months prior.

Green Tech 2009 Transactions

Morgan Stanley Took TARP Money

August 31, 2009 by John Doyle

I noticed that Morgan Stanley has been sponsoring a substantial number of Green Tech conferences lately.  Pretty much all of them.  That’s good for the green tech conference sector as well as the hotel, podium and A/V industry.  But I want to be very clear that Morgan Stanley took TARP money.  TARP means troubled asset relief program, which means that their investment bank was about to go under unless they had help from the government.  This does not translate into a sound financial advisory practice.

While most business owners have weathered the storm, Morgan Stanley has been sponsoring conferences and throwing their weight around as the big cheese in the industry.  As the small fry in the crowd that did not take TARP money, I would like them to explain where all that platinum sponsorship money came from before they hit the podium.  There should be an asterisks next to their name as a sponsor or any sponsor that took TARP money and is now posturing as the clean tech financial oracle.

(Like a little dog tugging and nipping at your pant leg, MS you’re going to have some bruised ankles in 2010.)

Peachtree Green Advisors

Better Service, Lower Fees (no TARP money)

Peachtree Green Advisors M&A

August 27, 2009 by John Doyle

Green Logo JPEGPeachtree Green Advisors, a division of Peachtree Media Advisors, Inc.,  is a new investment banking division that serves the needs of the rapidly growing renewable and clean tech sectors of energy.  Peachtree Green Advisors provides capital raise, merger and acquisition, DOE grant writing, strategic partnership and joint venture advisory services to early-stage and middle-market companies.  Leveraging fifteen years of investment banking experience in the media and technology sectors, Peachtree Green Advisors is well-positioned to assist entrepreneurs and growing clean tech companies with maximizing value at each stage of the transaction.

Peachtree Green Advisors will focus on the following sectors of sustainable energy:

  • Battery/Storage
  • Biofuels
  • Efficiency/Enabling
  • Smart Grid
  • Solar
  • Wind

A complete overview of the clean tech sector in the U.S. and information about the Green Tech division of Peachtree Media Advisors, Inc. can be found on the division’s Web site:  www.PeachtreeGreenAdvisors.com.

“I launched this group not only because green tech is one of the most important verticals in our lifetime, but it has always been a passion of mine.  Including when I was an Engineering major at Dartmouth working on regenerative braking systems for solar cars and trucks.  I can now work with many of these innovative entrepreneurs to help them raise capital and maximize value in the M&A process.”

John H. Doyle II, Managing Director & Founder,
Peachtree Media Advisors, Inc.