California dreaming of a green future

Silicon Valley investment in clean technologies is in a state of limbo. The bankruptcy of solar company Solyndra, declared in August, threw investors into a panic. Concern grew over whether US companies could keep pace in clean tech innovation against China’s low labour costs and government subsidies.

While some venture capitalists remain dedicated to their clean tech portfolios, including companies working on solar energy, biofuels, LED lightbulbs, batteries and electric cars, many are consolidating.

“Has this slowed down ‘herd’ investing in solar? Absolutely,” said Vinod Khosla, founder of Khosla Ventures, which funds early-stage clean tech companies. “Has it slowed down all investing in solar? No. Has it made people more discriminating? Absolutely. And that’s a good thing.”

Mr Khosla predicts a consolidation of clean tech funding. The next time a new idea captures the minds of technologists and investors, rather than 10 companies getting funding to launch it he expects investment to be concentrated in the most promising two or three.

“We had the dotcom bust in 2000. Guess what? Most companies went under,” he said. “But a few companies, like Google, got to be worth billions of dollars and made up for all the companies that went under. That will happen in clean tech, too.”

Among the companies that hope to be among the prevailing clean tech start-ups are Solazyme, MiaSolé and Switch.

In addition to navigating shifting finance priorities, they must also balance government involvement, in the form of industry regulation, partnerships, or loan guarantees.

“We had looked at taking government money,” said Rob DeLine, vice-president of marketing at MiaSolé, which produces thin-film solar panels. “We looked at the terms and conditions and decided that was something we didn’t need to do.”

Solazyme, an oil and biofuel company, says its collaboration with the government supported its growth up to its initial public offering last May and beyond. The US navy has helped fund research and development and is now using Solazyme’s jet fuel. The department of energy is helping the company build a refinery in Illinois.

“There’s always political risk,” said Jonathan Wolfson, Solazyme’s chief executive. “That’s part of what you live with when you work in an industry where there are very large incumbents and there’s a lot of regulation.”

Other companies benefit from government regulation that promotes the development of new technologies, in part by banning old ones.

Next year, the sale of 100-watt incandescent light bulbs will be outlawed in the US, on the heels of bans in several other countries and some states in the US. Lower wattages will be phased out over time.

Switch plans to release its first energy-efficient LED light bulb as the new law comes into effect and hopefully mirror other future regulatory developments with new green developments.

“Probably, 10 years from now, if you try to buy a regular incandescent light bulb that we’ve been used to all our lives, you won’t be able to get it,” said Brett Sharenow, chief financial and strategy officer for Switch.

Photographs: Mathew Sumner/Zuma

Written, narrated and field produced by April Dembosky

Produced by Ed Robinson

Designed by Steve Bernard