TrendGrowing investments in smart grid

Published 18 August 2009

Investment is seen shifting from capital-intensive energy generating technologies, such as solar and wind, to those associated with energy storage, transportation and efficiency

We wrote last week about the growing interest of investors in the smart grid (“Smart Grid Gold Rush,” 11 August 2009 HSNW). Others, too, have noticed the trend. Reuters reports that the U.S. green technology sector, which suffered a drop in funding early this year, is seeing renewed interest with venture dollars flowing in once again to promising startups and some companies looking to resurrect public offerings that had been set aside.

Investment is seen shifting from capital-intensive energy generating technologies, such as solar and wind, to those associated with energy storage, transportation and efficiency. Bets are being placed on lithium-ion battery makers and startups in the smart grid sector that offer a range of possibilities from helping electric utilities operate systems more efficiently to enabling consumers to control energy use. Smart grid technologies aim to make the existing power grid more efficient and reliable.

Six to nine months ago, people were putting the brakes on everything,” said Gary Vollen, managing director of Robert W. Baird & Co’s clean technology investment banking. “I don’t think we are in that condition these days.”

Industry experts and company executives are expecting the appetite for investments in green technologies, sometimes referred to as cleantech, to see a significant pickup as early as this fall, with continued improvement through 2010. They caution, however, that the level of activity is unlikely to reach the $2.6 billion peak seen in the third quarter of 2008. “I would expect to see a meaningful increase in cleantech investment over the course of the next six months,” said Tim Carey, head of PriceWaterHouseCoopers’ clean technology group. “Will they return to levels that we saw in 2007, 2008? I am not so sure about that.”

Aggressive stimulus from the U.S. government’s Department of Energy (DOE), which has pledged nearly $100 billion for a wide variety of green technology spending, is also providing a big boost. “There’s a lot of excitement about money coming out of DOE,” Carey said.

While the government has announced grants and loans, the money is still making its way to the companies. Overall, green technology venture investments rose 73 percent to $572 million in April to June from the previous quarter, according to a study by Ernst & Young.

Analysts said there was a lot more money on the sidelines waiting for an opportunity to jump in when the economy brightens. “If the companies can hold on, can stay through this curve, then there will

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