All in all 2009 didn’t turn out to be such a bad year for the greentech industry. While companies across the board were hit by the economy, and the difficulty of raising financing this year, Uncle Sam stepped in with the stimulus package and helped turn clean power and energy efficiency into the largest venture investing sector in the U.S., eclipsing infotech and biotech for the first time ever. Clean power, smart grid, greener transportation and energy efficiency building tech in total received over $30 billion from the stimulus package.
But will cleantech’s upward trend keep going in 2010, mirroring the predicted comeback in other business verticals — or will growth in the sector drop off after its government-backed boost this year? Here’s the five biggest hurdles we see for 2010:
1). Post Stimulus Crash: As Google’s Dan Reicher, director of climate change and energy initiatives, has put it “we’re staring at the biggest cliff we’ve ever faced in renewables when the stimulus runs out in 18 months.” By those calculations the big vacuum financing year may not come until 2011. Still, most segments and companies will have less government funding next year than they did in 2009, given the unprecedented levels of funding pumped into the sector this year. What’s the solution? Make sure the stimulus funds actually create jobs and develop industries with legs. Last thing we need is all that funding failing to produce the “green economy” so many are waiting for.
2). Civil Pessimism: If the Copenhagen climate talks fail to deliver a strong political agreement, and countries return home without solid commitments, it will be a significant let down for people — from a social, environmental, political and business perspective. That combined with data that says that the economy has caused more people to be less concerned with climate change, according to a Nielsen/Oxford University survey, could lead to a strong feeling of “business as usual.” And that’s not to mention the still unfolding backlash that the so-called Climate Gate media storm will produce. The greentech industry could suffer a real step back.
3). Winning Consumers Over to EVs (and Keeping Them): Some of the first plug-in vehicles designed for mainstream consumers are scheduled to start coming out in 2010. The green car industry has seen its share of delays, financing potholes, production snags, and as several players come within striking distance of their commercial launches they face the challenge of marketing them to early-adopter consumers without over-promising on the technology. To start, they need a standard rating system for plug-in models’ fuel economy. The sooner the better, since in some cases overhyping a company or tech that ultimately falls short of expectations could cause skepticism among the larger group of consumers that automakers hope to bring into the fold as prices come down.
4). Differentiation in Green IT: Now that energy efficiency due to software and IT has started to boom, thanks in part to attention to the smart grid, the next problem for green IT companies will be how to differentiate products. Software, computing and communication networks have less of an innovation moat around it compared to, say, a solar material or a biofuel, because IT tech has been around for decades. That means that companies can develop very similar products and tools without much capital expense. Here come the me-too’s in data center power savings, smart grid networks, home energy management software, and carbon accounting software.
5). China’s Coming: The no-longer sleeping greentech giant has been investing heavily in clean power, plug-in vehicles and the smart grid throughout 2009. The largest clean power projects in the world, like the solar PV plant and factory in Mongolia, are being developed by the Chinese government. While that makes a valuable customer for some U.S. greentech firms, resources, attention, capital and innovation will start shifting where the projects are. Ultimately China will change the equation for all greentech development, but given all the announcements in 2009, 2010 is looking to be a pivotal year.
Josie Garthwaite contributed to this report.
Image courtesy of the russians are here Flickr Creative Commons.