NEW ENERGY – THE RIGHT BET

They all say so. The leaders in the California solar business, the Chinese wind business, the New York and London money business and the Washington, D.C., vote-getting business. They all say so: New Energy and Energy Efficiency are the answers.

Whether the question is about global climate change or energy security or economic choices or what the public wants, New Energy and Energy Efficiency are the answers.

Add 3 more voices to the chorus, the voices of 3 very successful investors who know a good bet and who know New Energy.

Wilber James, managing general partner, Rockport: "The fundamentals are there, and they're not going away…"

In other words, New Energy is the best bet to meet demand at affordable prices in a carbon constrained world despite the fact that right now financing is hard to find.

Alan Salzman, CEO/Managing Partner, VantagePoint Venture Partners: "The world is industrializing, and with that comes a great demand for all natural resources - clean water, energy and materials…A billion and a half people have no electricity. Do we really think that's going to continue?"

In other words, there is no end in sight to the demand that was on the rise before the current recession set in and will resume growing when the world economies stabilize.

Paul Maeder, General Partner, Highland Capital Partners: "We'll have a new administration that will very likely lead to a complete about-face in our government's approach to energy and the environment."

In other words, change is coming and it is bringing New Energy. Believe it.

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Why clean energy is still a good bet; Despite falling oil prices and the credit crunch, green technology investors remain bullish.
Marc Gunther, November 5, 2008 (Fortune via CNN Money)

WHO
3 top venture capitalists (VCs) who know New Energy: William E. "Wilber" James, , managing general partner, Rockport Capital, Alan Salzman, CEO/Managing Partner, VantagePoint Venture Partners, Paul Maeder, General Partner, Highland Capital Partners.

WHAT
Despite the difficulties of the current financial crisis and credit crunch, the 3 VCs see powerful forces driving the U.S. economy towards New Energy and Energy Efficiency.

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WHEN
In the last 1-to-2 months: Capital markets have become risk-averse, financing is hard to get, the falling price of oil prices makes New Energy fuels seem expensive and many are whispering the global climate change legislation promised by the next Congress may not be feasible because there is no tolerance for higher short-term gas and electricity rates.

WHERE
- The tax credit extensions for solar, wind, geothermal and fuel cell companies in October’s federal financial resuce package should open up the U.S. market.
- Solyndra has sold more than $1 billion of its solar energy systems but nearly all to European customers.

WHY
- Energy businesses - particularly utility-scale solar and wind companies-require lots of capital.
- James’ Rockport was the first venture fund to specialize in New Energy and Energy Efficiency
- Rockport's companies include Solyndra, a solar company with breakthrough technology, and Think Global, a Norwegian electric car company.
- James sees short-term obstacles. Example: Think Global has slowed its U.S. electric car rollout.
- James is urging other Rockport-funded companies to pare spending.
- James expects the tax credits extensions to help with raising capital
- VantagePoint's investments include BrightSource Energy, a builder of utility-scale solar thermal power plants, and Better Place, which is planning a worldwide electric car and infrastructure project.
- VantagePoint's Salzman expects politics will be key factor in New Energy’s development and believes Congress and President-elect Obama will support policies that promote New Energy and green collar jobs to stimulate the economy.
- Salzman sees New Energy as a way to more energy independence and energy security.
Maeder co-founded Highland.
- Highland has avoided New Energy investments (except for a successful geothermal project) until now because Bush administration policies were not supportive.
- Maeder expects energy prices to fluctuate but demand to continue growing 2%-to-3% per year.
- Highland will not invest in capital-intensive energy projects but will look for opportunities in energy efficiency and demand management (which are not dependent on the price of oil).
- Highland is looking for ways to use IT software and connectivity in the energy business. (Example: A thermostat that displays the cost of electricity per hour drives down consumption.

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QUOTES
- The New York Times: "Alternative energy suddenly faces headwinds…"
- The Wall Street Journal: "Winds shift for renewable energy as oil price sinks, money gets tight…"
- Alternet:"Will the Economic Crash Take Down Our Hopes for Clean Energy?"
Wilber James, managing general partner, Rockport Capital: "Later stage companies that have huge cash burns that thought they could source capital through an IPO or a hedge fund or private equity are going to be really hurting…Those people are going to be really punished."
- Alan Salzman, CEO/Managing Partner, VantagePoint Venture Partners: "Any addition to energy capacity takes capital. If you're going to put an offshore drilling rig on the continental shelf, that's expensive. If you are building a nuclear plant, your costs are in the billions. It's really a question of the choices that we as a society make…We're shipping huge amounts of dollars overseas for something we literally put a match to…"
- Paul Maeder, General Partner, Highland Capital Partners:"The design assumption for most of our world is that energy and water are free, and information is expensive…I want to be on the demand side…"