10 Cleantech Predictions for 2009

We know there’s been an end-of-the-year rush of top 10 green stories across the blogosphere, including ours — victories, disappointments, and most popular stories. But what better time than the last day of the year to look back at 2008 and make some predictions for 2009, when it will be the more cost-effective cleantech sectors — energy efficiency, green buildings, green IT — that move ahead, while the more capital intensive sectors — biofuels, solar — face tighter times.

1) U.S. Federal Policy On Climate Change Will Move Slowly: With the election of Barack Obama, the U.S. is making a clear shift in its climate change fighting stance. Obama has already chosen a variety of cabinet members that strongly support clean power, biofuels and energy efficiency, including Steven Chu as Energy Secretary, and Carol Browner as Climate Czar. Obama has also made significant efforts to talk about green jobs as part of the stimulus plan, but the global recession will lead to a pullback in federal funding for renewable energy and energy efficiency in 2009. Don’t get impatient, federal moves take time.

2) Oil Prices Will Stay Low For Much of the Year, Potentially Climbing in Q4 of 2009: With oil prices offering a contrarian indicator for alternative energy, where they go next year is important. While the consensus is mixed, many see oil prices fluctuating around $50 for much of 2009 and potentially creeping up closer to the end. (Though it’s hard to predict oil prices when they do things like crash from $145 a barrel this summer) But $50 is too cheap to be drive the uptake of hybrid and electric vehicles, so the price of oil could effectively slow the progress of the electrification of our cars.

3) Next Generation of Biofuels on the Backburner: The progress on biofuels slowed toward the end in 2008, with project financing drying up and a significant loss of political and public goodwill for corn-based ethanol. In 2009 corn ethanol companies will continue to go belly-up as margins remain tight and the ability to raise funding is delayed until at least the end of the summer. For the cellulosic ethanol companies that had been racing to be the first to build plants in the U.S., several will likely miss their pilot plant deadlines (a couple already have) awhile others could put greater commercial plant plans on hold.

4) Green Buildings are Bright Spot: As part of Obama’s Economic Recovery Plan that he hopes will create 2.5 million new jobs, he’s calling for federal and public school buildings to be made more energy efficient via retrofitting. The plan might be a drop in the bucket cost-wise, but it will bring significant attention to the sector and show how energy-efficient buildings can be money-saving buildings, too.

5) Utilities Turn to Energy Efficiency Programs: The way that policy is shifting to support energy-efficient buildings, utilities will increasingly turn to energy-efficiency programs, like demand response, smart meters, and energy reports to help their customers reduce consumption. Why is that? In hard economic times, utilities in certain regulatory-friendly markets will realize that the cost of reducing energy demand is a lot more cost effective than bringing a new coal power plant online. Startup Positive Energy recently raised $14 million from venture firm New Enterprise Associates in one of the most difficult funding times in recent years, to boost its business of selling software to utilities to curb energy consumption.

6) Gloomy Skies for Traditional Solar PV: While some thin-film solar makers like First Solar are already reportedly reaching grid parity, the traditional solar module market will face tough times in 2009. An oversupply has caused solar module prices to drop, which will continue in 2009 — the CEO of SolarWorld Frank Asbeck recently said that the company’s photovoltaic solar module prices will decline more than 10 percent during the next two years. And the economic downturn means a pullback on solar rooftops in general. As BusinessWeek put it: “If the recent five-year boom in solar energy marked the birth of a global industry, the next half-decade should be its coming of age. But like most adolescents, solar is experiencing growing pains.”

7) Infotech Turns to Energy Efficiency to Save Cash: Like utilities, companies in the information technology sector are realizing that more energy-efficiency computing hardware and software can deliver significant costs, which means greener data centers, servers, PCs and networks. According to the researchers at Forrester, twice as many companies plan to speed up green IT initiatives in the future rather than slow them down.

8) More Green Buildings? Yes. Emergence of the Smart Home? No.: While there will be more attention paid to green buildings, but the dream of the smart home that uses a wireless energy-management system and a smart meter to curb energy demand will remain just that — a dream — in 2009. A variety of startups that moved into the smart energy management space this year (see our Smart Energy Home briefing), but the U.S. market will only slowly add smart meters and it will be several more years before wireless energy management systems are anywhere close to mainstream.

9) Public Perceptions of Green to Become More Savvy: In harder economic times, consumers tend to more carefully investigate what they buy. That means tech companies with green claims — more eco-gadgets, solar panels, vehicles even — will face more scrutiny. And they should. If consumers spend extra money on a greener product, that product should deliver on its promises. The FTC plans a crackdown on greenwashing next year. Journalists are also getting more savvy for nascent topics like carbon markets (see the WSJ’s look at Dell’s carbon neutral strategy).

10) Green Investors Go Conservative Or Double Down: Venture investing across the board will drop in 2009, but some companies will go looking for capital — and more market share — by way of M&A, according to Susan MacCormac of Morrison Foerster.


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