By: Clint Wilder
“Clean tech is dead. The same way that the Internet was dead in 2000.”
To me, in assessing the state of the clean-tech industry in my final CE Views column of 2012, that may well be the quote of the year. Its source, at last month’s VERGE@Greenbuild conference in San Francisco, was Mitch Lowe, founder and managing partner of Greenstart, an incubator for software-based clean tech startups. Lowe’s sarcastic and insightful quip deftly describes the industry’s current condition: it’s transitional, challenging – and not going away anytime soon. Or ever.
Having covered the high tech and clean tech industries since 1985, I’ve seen countless hype waves come and go. The bursting of the Internet bubble around 2000 that Lowe referred to is still by far the biggest hype-and-crash that I’ve witnessed, Solyndra or no Solyndra. But in both high tech and clean tech, two things are always true. Hype about the latest new new thing (think Donald Trump exclaiming, “Huuuge!”) always exceeds the (long-term) business reality. And just as important to remember, what I will call the reverse hype – the naysaying and death knells from the doomsayers – always overstates reality as well. Remember, hype is not just buzz; it’s short for hyperbole, which means exaggeration. It may have been good for Internet stock valuations in 1999 or, I would argue, for shale-gas speculators today – but it’s not a long-term business strategy.
Mainstream media memes like “clean tech is dead” are understandable. They’re simple, easy to comprehend, and fit nicely into a Tweet, TV news chyron, or cocktail party conversation starter. But reality is always far more complex.
I don’t mean for one minute to minimize the obstacles faced by the clean-tech industry as we head into 2013. For most sectors and companies, 2012 has ranged somewhere between challenging and brutal. (Solar installation and deployment has been a notable exception, with the U.S. market on track for 50 percent growth in 2012 and SolarCity’s forthcoming IPO capping off the year). Public and private funding is hard to come by, policy is uncertain if not hostile, stock prices are battered, and low-cost natural gas has made the grid-parity game for renewables more daunting. It's probably the most challenging environment for the industry since at least the Great Recession of 2008-09, if not the early 2000s when clean tech’s challenge was trying to get noticed at all.
And in contrast to the Internet industry, a perception problem directly impacts clean tech in a very critical area: policy. Although the right-wing Republican campaign strategy of trashing renewable energy did not prove successful in last month’s election – President Obama’s victory was just one of many positive results for clean tech – the policy outlook is not good. Front and center is the federal production tax credit (PTC) for wind power, set to expire at year’s end. Although most wind-industry observers expect that some form of last-minute PTC extension will squeak through Congress before New Year’s Eve, it may be a short-term stopgap (like one year) that keeps the business clouded in uncertainty. But failure to renew at all would be a complete disaster. Thousands of employees across the U.S. wind energy supply chain have already been laid off, and Navigant Consulting has estimated that job cuts could reach 37,000 from a PTC non-renewal.
Contrary to perception, this is not because of natural gas – it’s because of politics. Renewable energy accounted for 46 percent of the new generation capacity that came online in the first 10 months of 2012, according to the Federal Energy Regulatory Commission, whereas natural gas plants’ share was 38 percent. As has been the case for several years, wind power accounted for the lion’s share of renewables, with 35.8 percent of all new U.S. capacity. In the month of September, 100 percent of the nation’s new electricity capacity came from wind and solar. While both renewables and natural gas have thrived, nuclear and coal’s overall contribution to the nation’s energy supply has been on the decline, with renewables now providing more of the nation’s total energy supply than nuclear.
Does that sound like a dead industry? Of course not. And a lot of the big action isn’t even in renewable generation. I don’t always agree with high-profile venture capitalist Vinod Khosla, but he made great points in a recent Forbes blog post pointing out the burgeoning opportunities in LED lighting, energy efficiency software, energy-saving materials, some niche biofuels, and more. He also noted that clean-tech startups need to shift direction as markets and technologies change. For companies whose business models are often about changing long-established industries, some can be surprisingly inflexible, with perilous results. “Agility, not religion, is often the key to a venture’s success,” Khosla wrote, “and pivots in strategy are common for the successful ones.”
The Internet’s survivors and successes understand this, which is why the Net’s “death” in 2000 weeded out the inadaptable while Amazon, Google, and others kept innovating and growing through the subsequent industry phases of Web 2.0, the wireless and mobile revolutions, cloud computing, and others. Shakeouts and consolidations always occur as industries mature, and anyone who takes the time to look beyond the sound bites will know that the “death” of clean tech is a ludicrous concept.
“We may be in a valley now,” said Vantage Point Capital Partners managing director Stephan Dolezalek at a recent conference, “but the inevitability of clean tech has not gone away.” Some players will vanish, and others will thrive, as technologies, markets, and policies evolve. But the national and global needs for clean power, efficiency, and innovative companies that create wealth and jobs? Those are here to stay.
Wilder is Clean Edge's senior editor, co-author of The Clean Tech Revolution, and a blogger about clean-tech issues for the Green section of The Huffington Post. His new book, Clean Tech Nation: How the U.S. Can Lead in the New Global Economy, co-authored with Clean Edge managing director Ron Pernick, was published in September by HarperCollins. E-mail him at wilder[at]cleanedge[dot]com and follow him on Twitter at @Clint_Wilder.