Cleantech needs billions to scale up

Cleantech Funding Gap drives urgency as venture capital chases electric vehicles, solar thermal, LED lighting, and charging infrastructure; China leads with industrial policy and scale-up financing for clean technology and low-carbon growth.

Emerging clean energy technologies are facing a funding shortfall in a race to roll out at a commercial scale, said Alan Salzman, chief executive of investors VantagePoint Venture Partners.

VantagePoint manages over $4.5 billion of funds invested in growing companies in information technology, health and clean technology including solar power, low-carbon light bulbs and electric cars.

The venture capital firm holds a stake in Better Place, a company specializing in installing charging infrastructure for electric cars which raised a further $350 million recently, aligning with Israel's cleantech push seen regionally.

"There is an issue as these new technologies come on, that to deploy them, whether it's Better Place deployment across countries, the solar thermal power plants around the world, our LED (light emitting diode) light bulbs and factories to make them, we need billions and billions of dollars to scale out," he told Reuters.

"I don't really have a good answer" to where that capital would come from, he said.

"VantagePoint is one of the largest in the world doing this stuff but we have $5 billion. I think Exxon generated more than that last weekend," he said, speaking on the sidelines of a business and policy summit in the Davos Swiss ski resort.

A funding gap meant companies were scouring the world for capital. "We need to make sure new industrial policies that will drive our economies this century are the right ones focused on future industries such as energy storage and advanced manufacturing. Those societies that marshal their resources behind this best are going to benefit the most."

China was emerging as a leader in electric cars, he said. "China is being very aggressive, there's no question they're going into electric vehicles, and hedge funds are betting on EVs and Chinese wind amid that momentum."

Cleantech is an emerging sector of technologies which contribute to a cleaner environment, and the drive for clean technology includes supplying low carbon energy, boosting efficiency, recycling waste or cleaning water supplies.

Salzman was upbeat, however, about the future of the sector, saying electric cars and utility scale solar power plants using mirrors to generate power — called solar thermal — would be mainstream before 2020, even as the EV boom faces headwinds.

He said a number of items taken for granted today, like cell phones, had needed a long gestation period before really taking off once the infrastructure was in place: "I think we're going to see the same phenomenon."

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