Investment Drivers in
Energy and Clean Tech
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1
NEESC
• NEESC provides support for fuel cell and
hydrogen companies for technical, marketing
and financial growth
• Liddy Karter focuses on strategic planning and
financing
• Provide information on financing sources
• Review business plans
• Make introductions
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2
Clean Tech and Energy Investing
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3
Clean Tech and Crude Oil
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CleanTech Energy 15x Under Invested
• Relative to underlying industry size, the venture
capital industry has underinvested in
energy/cleantech (by approximately 15x)
Energy
10.5
Industry
Size
$B
1545
Telecom/IT
Ratio: Energy as
a Percent of IT
57.8
551
10.49%
18.2%
280.4%
6.5%
Five Year VC
Funding $B
Funding as a
Percentage of
Industry Size
0.68%
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Small $ compared with VC $
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6
Minor Correlation with VC $
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Low, Irregular Returns for Clean Tech
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Innovation and Implementation
•
•
•
•
Energy Innovation has limited upside
Capital requirements are high
Implementation $ are volatile
Venture Model fails for clean tech
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9
Enough Regulatory Incentives?
•
•
•
•
•
•
ARPA-E and SBIR
Investment Tax Credit
ITCs for Renewable Energy Investment
Advanced Energy Manufacturing Credit
Accelerated Depreciation
Feed in tariffs, RECs, renewable portfolio stds, biofuel
incentives
• Regional and state tax incentives
• Federal or state loan guarantee programs – DOE, USDA, SBA
• Over $100 BILLION Incentives available in 2012.
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10
Wind More Stable than Incentives
“The ideal state will have high average KWh
electricity costs, high annual wind speeds and
attractive state incentives. Annual average
windspeeds and average electricity costs are
relatively constant. However, state incentives
are constantly changing. As a result, XXXXXXX’s
team is committed to regularly tracking the
available state incentives and will adjust its
marketing strategy accordingly.” Funding memo for wind
developer
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Incentives are Gravy
How FundX Selects Projects
 Partnership Deal Flow
 Baseload Projects
 Local Fuel/Local Load
 Contractual Balance
 Competitive IRR BEFORE Incentives
 Evident Exit Options
 Technological Advantage
» Fund description in investor memorandum
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Who Gets the Funding?
 Ability to do $10MM+ projects
 Use proven technology
 Project developers who derisk
» Supply contracts in place
» Put up 40% equity
» Get Power purchase agreements
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Summary
•
•
•
•
Market drivers trump incentives
Public sector as best customer
Combine regional incentives and demand
Standardize and Simplify
[email protected] / 203 376 7958 / www.enhancedcapital.com
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Thank you
Liddy Karter
Managing Director, Enhanced Capital
Executive Director, Crossroads Venture Group
203 376 7958
[email protected] / 203 376 7958 / www.enhancedcapital.com
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Resource Links
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•
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www.pwcmoneytree.com
www.nvca.org
www.cvg.org
www.enhancedcapital.com
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