NEW ENERGY BUBBLE?

Define bubble. The article points out opportunites but neglects to mention that, very UNLIKE A BUBBLE, clean tech investment is responding to concrete demand and meeting real, not market-induced, needs. See the posts below.

Venture Capital Rushes Into Alternative Energy
Mathew L. Wald, April 29, 2007 (NY Times)
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WHO
New York firm Lux Research (Matthew M. Nordan, president), reporting on the investment status of the clean tech industry

WHAT
Money is flowing into alternative energy companies fast enough to raise concerns of a “bubble” (dum-dum-dum---DUUUMMMM)
2005 venture capital in clean tech: $623 million; IPO’s: $1.6 billion
2006 venture capital in clean tech: $1.5 billion; IPO’s: $4.1 billion

WHEN
The Lux report was released April 29.

WHERE
2005 and 2006 IPO’s primarily in solar power and biofuels companies.

WHY
Investment drivers:
1. Fear of peak oil
2. Anticipation of taxes and incentives to curb greenhouse gas emissions in response to global warming
3. The market is large: China intends to get 10% of its electricity from renewables by 2010, 6 gigawatts, enough to keep solar factories very busy.
Interest is so high investors are chasing entrepreneurs: 1,500 clean technology start-ups globally, 930 in energy. More than twice as many as usual are taking in venture capital.
The report questions the substantiality of many ethanol investments.
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QUOTES
Nordan: “When you see venture capital more than double from one year to the next, and I.P.O. values double from one year to the next, that’s the sign of a bubble in the making…”
Lux: “Air, water and waste [waste= 32% of merger and acquisition value, 2006, but only 1% of IPO’s and 4% of venture capital] segments present hidden opportunities that are relatively starved for investment…”