NEW ENERGY, LOW TECH

Energy ventures go low tech
Marianne LaVelle, March 6, 2007 (US News & World Report)
- Although high-tech gurus helped to triple venture capital investment in alternative energy in 2006, a large share of that $2.4 billion went in a decidedly low-tech direction.

- ["Clean Energy Trends 2007"]…by investment research firm Clean Edge and San Francisco venture firm Nth Power shows that instead of pouring money into the breakthrough idea that will free the nation from the grip of oil, the financiers focused on workaday projects like factories and electric transmission enhancement.
- The authors…are bullish on the sector; they estimate the market for ethanol, wind and solar power, and fuel cells grew 39 percent last year to $55.4 billion, and they predict it will expand to $226.5 billion within a decade.
- Alternative energy accounted for 10 percent of venture-capital funding in 2006, up from less than 5 percent a year earlier and less than 1 percent seven years ago…

- The age-old science of making fuel alcohol from grain–ethanol and biodiesel–attracted nearly one third of the energy venture capital money…
- The largest single deal of the year was an infusion of more than $200 million into Cilion of Southern California, the corn ethanol firm founded by Sun Microsystems founder Vinod Khosla. Richard Branson chose Cilion for the inaugural investment by his new Virgin Fuels renewable energy fund. Also near the top of the list was another Khosla-backed corn ethanol firm that is building biorefineries, Altra of Los Angeles, which received $120 million from Khosla Ventures and John Doerr's Kleiner, Perkins, Caufield & Byers…
- It could be that some energy ventures have reached the stage where they simply need infrastructure to go along with their intellectual property. For example, Nanosolar of Palo Alto, Calif., had previous backing from Google founders Sergey Brin and Larry Page for its idea of mass-produced, ultrathin solar panels. The firm last year rounded up $75 million in venture capital to build a manufacturing facility. Silicon Valley's MDV-Mohr Davidson Ventures and Capricorn Management, the investment arm of eBay founder Jeff Skoll, were behind the deal…

- There was, however, at least one high-tech energy idea grabbing attention and money. About 20 percent of the energy venture funding went into "intelligent energy" companies, which propose to use software or hardware to improve electricity transmission and distribution…to make advanced metering widely available, allowing consumers to pay lower electricity rates when they use power at off-peak hours.
- Some companies obtaining funding, like Current Communications of Germantown, Md., seek to create additional revenue streams from high-speed data communications over the electricity grid. With previous funding from Google, Current Communications landed $130 million in new funding from TXU, General Electric, EarthLink, and Sensus Metering Systems. Another closely watched development in this area: Two intelligent energy companies that received venture backing in previous years, EnerNOC of Boston, and Comverge of East Hanover, N.J., are preparing public offerings.
- As for ethanol, the simple surge in demand, being helped along by politicians who are eager to promote a Farm Belt business, has helped attract money…