Analysis of investment data from the Cleantech Group i3 platform.
Daniel Gabaldon is a director at Enovation Partners. The Cleantech Group – and its i3 platform for connecting innovators, corporations, and investors, which served as the source of the proprietary data used in this column – joined Enovation Partners in January 2016. Thanks to Mike Nolan and Leo Zhang for their assistance on this article.
Since the term "cleantech" entered the investment vernacular back in 2002 by Cleantech Group founders Nick Parker and Keith Raab, much has changed. But perhaps not as much as many early cleantech investors may have hoped.
The capital intensity, long development times, dependence on government policy, conservative customers for its products, and sheer complexity characterized many of the technologies and businesses encompassed by the term. This made it difficult to compete with investments in Web 2.0 companies, with their rapid, global scalability and fat gross margins.
And so cleantech became viewed as a passing fad. By the beginning of this decade, even the corporate venture groups from many utilities and energy companies directed their attention to other investment themes.
But one could be forgiven for thinking that the past couple of years may have at least partially vindicated the cleantech pioneers. For example, wind and solar combined made up sixty-seven percent of new generation capacity added in 2015. The Tesla 3 boasts a greater than two hundred mile range for $35,000.
Even from a financial perspective, there have been some notable successes, most famously Google's acquisition of NEST. And terms like innovation, energy storage, distributed energy resources, and Internet of Things, IoT, for energy have become de rigueur in many utilities' investor presentations these days.