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Archive for the ‘green financing’ Category

image: SolFocus

In The New York Times on Wednesday, I write about the year-end green tech investing numbers for 2009:

In a flurry of dealmaking bolstered by government subsidies for renewable energy, venture capitalists invested $5.6 billion in green technology companies worldwide in 2009, according to a preliminary report released Wednesday by the Cleantech Group and Deloitte.

That represents a 33 percent drop over the $8.5 billion invested in 2008 — a reflection, the report said, of the global economic downturn. But the overall amount of venture capital fared much worse, retreating to 2003 levels, according to the report, whereas clean technology investments were on track to match 2007 levels.

“In 2009, clean-tech went from a niche category to become the dominant category in venture capital investing,” said Dallas Kachan, managing director of the Cleantech Group, a San Francisco market research and consulting firm. “Clean-tech continued to outpace software and biotech.”

The report’s preliminary survey showed that there were 557 deals in the clean technology space in 2009, compared to 567 deals in 2008 and 488 in 2007.

Solar companies secured $1.2 billion in 2009 — 21 percent of the total and the largest share of venture funding. The biggest deal of the year also went to a solar company, Silicon Valley’s Solyndra, which raised $198 million at the same time it secured a $535 million federal loan guarantee to build a solar module factory.

You can read the rest of the story here.

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2009 Solar Decathlon

photo: Stefano Paltera/DOE

In my new Green State column on Grist (I’m stealing the above headline from Grist executive editor Russ Walker), I take a look at the state of green tech venture investing gleaned from a recent seminar at the University of California, Berkeley:

Silicon Valley is by nature an optimistic place. After all, inventing the carbon-free future and making boatloads of money along the way is fun. And even though California is slouching toward apocalyptic collapse these days, there’s always another innovation wave to ride.

So it’s always interesting to get a more-or-less unvarnished assessment of the state of green tech, as happened last week when a group of regulators, venture capitalists and entrepreneurs gathered at the University of California, Berkeley’s business school. They were there for the Cleantech Institute, one of those pricey, closed-door seminars for executives and government officials. (I was present to “facilitate.”)

The good news: Speakers reported that investors are starting to turn on the taps again when it comes to funding green tech startups.

But don’t expect a return to the halcyon days of 2008 when $4 billion poured into all manner of green technology companies. In the wake of the “Great Recession,” VCs are reassessing their investment strategies as it becomes clear that the success of their portfolios will be influenced to a large degree by government policy and incentives.

You can read the rest of the column here.

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SolarCity_FirstSolarArray-_Coast

photo: SolarCity

When Wall Street collapsed last year so did  tax equity funds, the primary vehicle to finance renewable energy development.  But as I write in The New York Times today, investors are beginning to jump back into the game.

U.S. Bancorp has agreed to finance $100 million of solar installations in 2009 for California startup SolarCity. Investors are being lured in part by a federal stimulus package provision that lets them take a 30 percent investment tax credit for renewable energy projects as a cash grant:

The credit crunch has walloped the residential solar industry, making it hard for installers like SolarCity to tap investor funds to finance rooftop arrays for their customers.

But in a sign that the recessionary clouds are parting a bit, SolarCity on Tuesday said that U.S. Bancorp has agreed to finance $100 million worth of solar installations in 2009.

That’s double the money the bank committed to provide SolarCity in June when the original deal – but not the financial details – was announced.

SolarCity, based in the Silicon Valley suburb of Foster City, offers customers the option of leasing their rooftop panels and thus avoiding the five-figure cost of buying a solar system.

The company retains ownership of the solar array and thus qualifies for a 30 percent federal tax credit against its cost. Since most startups have no use for such tax credits, they give them to investors in exchange for financing installations.

Still, most such tax equity partnerships have collapsed along with the Wall Street banks that often funded them. In fact, U.S. Bancorp stepped in after Morgan Stanley pulled the plug on a financing arrangement with SolarCity earlier this year.

“For all of this year, tax equity has been the number one constraint in financing for the entire solar industry,” said Lyndon Rive, SolarCity’s chief executive. “In the third quarter of last year there were about 20 active banks and insurance companies making tax equity investments. They all fell off a cliff and now there’s three or four.”

You can read the rest of the story here.

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ausra-kimberlina

photo: Ausra

In my new Green State column on Grist, I sit down with legendary Silicon Valley venture capitalist Vinod Khosla to talk about his approach to green tech. Khosla — who raised a record $1.1 billion for green tech investing earlier this month — believes that unless a technology can scale and be adopted in markets like China and India, it will not have a meaningful impact on climate change.

Getting an audience with Silicon Valley’s guru of green investing isn’t always easy.

If Vinod Khosla is not speaking at one of the innumerable, and apparently recession-proof, green business conferences that seem to happen every other week, he’s giving lectures at Google headquarters, writing white papers, or, of course, inking checks to green tech startups with the potential to disrupt multi trillion-dollar global industries like energy, automobiles and building materials.

He’s something of a Valley legend:  Co-founder of Sun Microsystems, then a longtime tech investor with marquee venture capital firm Kleiner Perkins Caufield & Byers and now head of Khosla Ventures, which he started in 2004 to invest in green tech startups.

Khosla and his partners had been investing their own money, but earlier this month the firm announced it had raised $1.1 billion for two funds—one of which is the largest first-time fund in a decade. It was a rather staggering amount, given that clean-tech investing has plummeted from $4 billion in 2008 to $513 million so far this year, according to PricewaterhouseCoopers, as the “Great Recession” continues to take its toll.  Putting money into the two Khosla funds was the nation’s largest pension fund, the California Public Employees’ Retirement System.

It’s not the size of Khosla’s fund but what he intends to do with it that should command your attention. In short, he wants to take the green out of green investing and globalize the bottom line.

You can read the rest of the column here.

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esolar_8
photo: eSolar

In Sunday’s Los Angeles Times, I write about how the rise of green technology is changing the way Silicon Valley venture capitalists do business:

Silicon Valley venture capitalists have always been about inventing the future — taking a wild idea, nurturing it with cash and creativity and giving birth to new products, companies and industries we once couldn’t imagine and now can’t conceive of living without: the Web, Google, the iPhone, Twitter.

But as green technology becomes the latest tech wave to break from the nation’s entrepreneurial epicenter, it’s now all about companies reinventing the past. Solar power companies, electric car start-ups and algae biofuel ventures aim to remake century-old trillion-dollar industries on a global scale.

Venture capitalists poured $4 billion into green-tech start-ups in 2008 — nearly 40% of all tech investments in the U.S., according to a survey by PricewaterhouseCoopers. Green-tech investment plunged in the first half of 2009 to $513 million as the recession dragged on, but there are signs of a rebound: Silicon Valley’s Khosla Ventures announced this month that it had raised $1.1 billion — the biggest first-time fund in a decade — that would be largely devoted to investing in green-tech start-ups, many in Southern California.

But green-tech companies face unique challenges, including global markets, tough technological hurdles and a future shaped by government incentives and regulatory policy. Those challenges are changing the game on Sand Hill Road.

“If you’re starting a Web 2.0 company, your basic needs are personnel and servers — there is no physical product, no manufacturing capacity, no inventory, no steel in the ground,” VantagePoint’s Salzman said, referring to software-based companies that provide services over the Internet.

Green-tech start-ups, he said, often need big money and investors steeped in big science and big government.

You can read the rest of the story here.

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ausra-kimberlina

photo: Ausra

In Wednesday’s Los Angeles Times, I write about green tech guru Vinod Khosla’s new $1.1 billion venture funds — the biggest first-time fund since the halcyon days of the dot-com era a decade ago and and a strong signal that investors see a bright future in clean and green technologies. CalPERS, the United States’ biggest pension fund, is the major backer of the new Khosla Ventures’ funds:

In a sign that green technology investing is bouncing back, Silicon Valley venture capital firm Khosla Ventures said Tuesday that it had raised $1.1 billion to spur development of renewable energy and other clean technologies.

It is the biggest first-time fund in a decade and comes as venture capital investment in green technology is just beginning to recover from a precipitous fall prompted by the global economic collapse last fall.

In the first half of the year, investments in green tech plunged to $513 million from $2 billion in the first six months of 2008, according to a survey by PricewaterhouseCoopers.

But Vinod Khosla, founder of Khosla Ventures in Menlo Park, Calif., and a leading green tech guru, has managed to raise an $800-million fund to invest in early and mid-stage clean energy and information technology companies as well as a $275-million fund to finance what he called high-risk “science experiments” that may exist only in a university laboratory.

You can read the rest of the story here.

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Along with the rest of the economy, venture capital investment in green technology has fallen off the proverbial cliff, according to a survey released Wednesday by market research firm the Cleantech Group.

Global investment in renewable energy, electric cars and other green tech dropped 48% to $1 billion in the first quarter of 2009 from the previous year and fell 41% from the previous quarter. (Global here being defined as North America, Europe, China and India.)

The survey, conducted with Deloitte, found that the size of the average round of funding also crashed, from $20 million in the fourth quarter of 2008 to $12.3 million in the first quarter.

Solar captured the biggest chunk of VC cash at $346 million, with the money going to companies like concentrated photovoltaic startup SolFocus and Norwegian polysilicon maker Norsun.

“Venture funds continue to invest significant sums, albeit at a slower pace and smaller scale than in the past two years,” Brian Fan, the Cleantech Group’s senior director of research, said in a statement.

North America remains the epicenter of green tech investing, with nearly two-third of all of investments in the first quarter.

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photo: WorldWater & Solar Technologies

The consolidation of the solar industry got underway Monday with the acquisition of San Francisco-based green energy financier MMA Renewable Ventures by Spanish solar developer Fotowatio.

The Madrid-based company will purchase most of MMA Renewable’s solar assets – including the world largest photovoltaic power plant and its pipeline of projects – making it one of the biggest solar developers in the United States.

The financial terms of the deal were not disclosed.

MMA Renewable CEO Matt Cheney told Green Wombat that he’ll continue as CEO of what will be called, for now, Renewable Ventures and that his staff will be joining him. MMA Renewable Ventures was a subsidiary of Municipal Mortgage & Equity, which has been hit hard by the financial crisis.

Fotowatio, on the other hand, scored $350 million in funding last July from General Electric (GE) and Grupo Corporativo Landon. “You’re taking a very robust player in the European market see how much opportunity and potential there is in the U.S. market,” says Cheney. “It’ll produce one of the biggest, if not the biggest, independent solar power producers. It’s the story of consolidation.”

MMA Renewable Ventures raises funds to invest in big commercial solar arrays and photovoltaic power plant projects. The company finances the construction of solar systems by companies like SunPower (SPWRA) and retains ownership of the arrays, selling the electricity under long-term power purchase agreements.

Last year MMA Renewable and Chinese solar giant Suntech (STP) created a joint venture called Gemini Solar to build large-scale photovoltaic power plants.  Cheney said Gemini will continue under Fotowatio.

When the deal closes, Fotowatio will gain 35 megawatts of solar projects in the U.S. with another 400 megawatts under development.

Cheney says the Fotowatio acquisition is a sign of the times as the global economic crisis and falling prices for solar cells disrupts the renewable energy market. “There’s a shakeout in the marketplace and there’s opportunities for consolidation.”

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solar_and_your_home_header
photo: Sungevity

Berkeley on Friday hands over checks to the first two homeowners who tapped the California city’s pioneering solar financing program to install solar arrays.

The city fronts the cash for rooftop solar panels for any Berkeley business or homeowner, who pays back the cost through a 20-year surcharge on their property tax bill. If a home is sold, the surcharge rolls over to the new owner. The city council created a Sustainable Energy Financing District and launched a $1.5 million pilot program for the Berkeley FIRST Financing Initiative for Renewable and Solar Technology) in November to finance 40 rooftop systems. It took all of nine minutes for those 40 slots to be filled when the online application went live.

Berkeley issued a bond for the programs that was bought by Oakland-based Renewable Funding, which financed the solar arrays and whose president, Francisco DeVries, devised the Berkeley program when he served as Mayor Tom Bates’ chief of staff. Renewable Funding now is taking the program nationwide as cities from Portland to Tuscon consider adopting similar solar financing schemes. Under legislation enacted last year, any California city can implement a Berkeley-style program.

Municipal financing of solar arrays has become even more attractive since October when Congress lifted a $2,000 cap on federal tax credits for residential systems. Homeowners now can claim a tax credit for 30% of the cost of a solar system. When a state rebate is added, the cost of going solar in California has fallen by half.

Municipal financing programs are good news for solar panel makers and installers like SunPower (SPWRA), SunTech (STP), Akeena (AKNS) and First Solar (FSLR), the thin-film solar company that recently jumped into the residential market.

On Friday, Berkeley homeowner Jeanne Pimentel will receive a check from the mayor to hand over Borrego Solar, which installed her solar panels while homeowner Aaron Mann will sign his check over to Sungevity.

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optisolar-panels
photo: Optisolar

SAN FRANCISCO — With the financial crisis dimming solar’s prospects to become a significant source of renewable energy, utility giant PG&E on Tuesday said it will spend $1.4 billion over five years to install 250 megawatts’ worth of photovoltaic panels in California while contracting with private developers for another 250 megawatts. PG&E chief executive Peter Darbee said the utility is also prepared to be a “green knight,” rescuing distressed big centralized solar power plant projects by providing financing so they can get built.

“We have contracted for 24% of our energy to be renewable and we’re concerned whether our [developers] will have access to capital,” Darbee said at PG&E’s San Francisco headquarters during a press conference. “We think financing for these projects may be in jeopardy. PG&E is well-positioned with its $35 billion balance sheet to step up and help.”

PG&E’s (PCG) move to take a direct role in obtaining the renewable energy it needs to comply with California’s global warming laws could be big business for solar module panel makers and installers like SunPower (SPWRA), Suntech (STP) and First Solar (FSLR). The action was prompted in part by a change in the tax laws that lets utilities claim a 30% investment tax credit for solar projects.

Fong Wan, PG&E’s vice president for energy procurement, said most of the 500 megawatts of solar panels will be installed on the ground in arrays of between one and 20 megawatts at utility substations or on other PG&E-owned property. (The utility is one of California’s largest landowners.) A small portion may be installed on rooftops, he said.

PG&E said the solar initiative will generate enough electricity to power 150,000 homes and will provide 1.3% of the utility’s electricity supply.

“There’s no or little need for new transmission and these projects can plug directly into the grid,” said Darbee. “Given our size and our credit ratings and our strength, we can move forward where smaller developers may not be able to do so.”

The California Public Utilities Commission must approve PG&E’s solar initiative, which Wan estimated would add about 32 cents to the average monthly utility bill.  An $875 million program unveiled by Southern California Edison (EIX) last year to install 250 megawatts of utility-owned rooftop solar panels has run into opposition from solar companies that argue it is  anti-competitive and from consumer advocates who contend the price is too high. The state’s third big utility, San Diego Gas & Electric (SRE), has also proposed a rooftop solar program.

Wan acknowledged that objections to Edison led PG&E to design its program so that private developers would have a 50% stake in the initiative. PG&E will sign 20-year power purchase agreements for privately owned solar installations.

PG&E will also need regulators’ approval to inject equity financing into companies developing big solar power plants. The utility has signed power purchase agreements for up to 2,400 megawatts of electricity to be produced by solar thermal  and photovoltaic power plants to be built by companies like Ausra, BrightSource Energy, OptiSolar and SunPower.

“We are looking at the least risky and most developed opportunities to see where we can be the most helpful,” Darbee said.

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