VC Chrysalix Predicts 5 Sustainable Energy and Cleantech Trends for 2014
Chrysalix Cleantech Forecast outlined by Greentech Media
January 10, 2014
By Wal van Lierop
2014 will be the year for investors to double down on their investments in clean energy innovations.
The year 2013 marked a new era for sustainable energy and cleantech. Innovative sustainable technologies have started to mature and are getting closer to mainstream acceptance. Growing pains are over for many of these technologies and they can now simultaneously reduce cost and the energy intensity of products and production processes, while also improving their environmental footprint. It’s no wonder that we’re now seeing new technologies penetrate the core businesses of large industries like oil and gas, power and utilities, chemicals and materials, metals and mining.
Chrysalix EVC believes that 2014 will be the year for investors to double down on their investments in clean energy innovations now that returns are becoming very attractive. With virtually every industrial company calling for some kind of sustainable innovation strategy, this trend is comparable to the situation ten years ago when companies talked about the need for an internet strategy. Today, that’s part of the normal way of doing business, just as cleantech will be in the next decade.
Solar makes a comeback
This will happen first in downstream installations. The bankruptcy of Solyndra and many other solar companies marked a natural consolidation process that we have seen time and again as industries mature. The cost of solar has come down by 20 percent each year for the past four years, while efficiencies have continued to rise. Clearly, customers are benefiting. No wonder sales are increasing. This helped to bolster the successful IPO of SolarCity earlier in 2013. We expect this trend to pick up further steam in 2014.
Second, solar will play a big role in industrial innovation — an area where our portfolio company GlassPoint is leading the charge. GlassPoint uses solar to generate steam for the process industry. The company’s first application is replacing expensive natural gas for enhanced oil recovery in the Middle East with a significantly cheaper solar solution. Today, Shell and Petroleum Development Oman are already benefiting from this technology.
Utilities, beware: Big data and smart grid are stepping up to the plate
The application of the industrial internet and big data is an exciting area with the potential for radical innovation in energy-intensive industries, enabling them to make more cost-effective decisions, as well as process optimization and efficiency gains. It will make the integration of renewables in utility offerings more attractive, but could also help change the utility industry dramatically.
The quest for large-scale energy storage continues
We need a breakthrough to really be able to firm up wind and solar power — and to move to attractive local microgrids. People are working hard on all kinds of new technologies for energy storage, such as very large flow batteries and compressed air for the utility market. But we haven’t yet seen anything that is really on its way to delivering energy storage at less than $500 per kilowatt-hour. The reality is that most of it is still north of $1,000 per kilowatt-hour, which is too expensive. We do, however, expect significant progress in the area of energy storage in the coming years.
Water, water everywhere, and not a drop to drink
We are at the beginning of a huge surge in water investments, particularly in the domain of wastewater treatment and desalination, as well as water savings and conservation technologies. The energy industry requires huge amounts of water — for example, electricity generation is the second-largest consumer of water globally — yet there are water shortages in many areas of the world. This is also impacting the oil & gas and mining industries. You need a lot of water to produce oil: two gallons of water for every gallon of oil. The mining industry is highly water-intensive and also produces significant wastewater contamination.
Cleaning up the increasing volumes of wastewater across these industries is a huge issue — and a huge opportunity area for innovation. We are excited about our portfolio company Axine, which has developed a simple chemical-free solution for treating high concentrations of toxic organics and other pollutants in industrial wastewater, solving a multi-billion-dollar problem for companies in a wide range of industries including mining, and with a 60 percent to 80 percent cost advantage over incumbents.
Innovations and sustainable solutions will accelerate
We will see the pace of innovation picking up as a result of three key drivers: (1) the enormous volumes of high-quality engineers graduating from top academic institutions around the world (in particular in China and India); (2) the eagerness to push the limits of science and find interdisciplinary breakthroughs; and (3) the thirst for open innovation stimulated by the need of large companies to solve pain points in their value chains, as well as by the internet and social media. The world is at the beginning of a new era of innovation, which will result in spectacular developments in nanoscience and new materials, biophysics, biochemistry, and very likely the arrival of commercial nuclear fusion.
These five trends will help find the profitable sustainable solutions the world needs. As the earth’s population approaches 9 billion by 2050, the demand for energy will continue to rise while nonrenewable energy sources become scarcer and more costly. With this in mind, there has never been a better time for investors to get back into cleantech.