22 Feb Bio-energy and cleantech grab attention of investors
Madison, Wis. – In 2000, so-called “cleantech” investments made up only one percent of the venture capital market in the United States. By late 2006, that slice of the venture capital pie had grown to 14 percent. The message is clear: The markets are warming to technologies that produce alternative fuels, keep the air and water clean, and help conserve energy.
And while some environmentalists or policymakers may prefer to pick the winners in the “cleantech” world, it will be the markets that ultimately decide what specific technologies and products are sustainable – and which are not.
Wisconsin has a chance to ride the wave of clean technology because the state has ample supplies of raw materials, from wood waste to corn stover; a proven conservation ethic; an increasingly efficient manufacturing sector; and impressive research and development expertise. Here are just a few examples of what Wisconsin companies are doing:
• Virent Energy Systems in Madison is developing a process to economically replace fossil fuels by transforming biomass into carbon-neutral liquid fuels, gases, and chemicals. This company, which utilizes technology licensed by the Wisconsin Alumni Research Foundation, has attracted investors such as Cargill, Honda Strategic Ventures, and more.
• Plymouth-based Orion Energy makes energy-efficient lighting technology that’s popular in warehouses and factories for the nation’s largest companies. In August, the company landed a $4.5 million investment from Expansion Capital Partners of New York and San Francisco. This week, Orion was one of only 20 companies to make a pitch to investors at the annual Cleantech Forum in San Francisco.
• Joining Orion at the Cleantech Forum was Madison-based Best Energies, which is building a biodiesel plant in Cashton. The company hopes the plant will produce eight million gallons of biodiesel fuel per year from soybean oil.
• PDM Solar, a start-up company in Wausau, has raised more than $172,000 from angel investors who see promise in its low-temperature solar energy Concentrator, a way of producing electricity cheaply and safely.
• The Flambeau River Biorefinery in Park Falls hopes to become one of the nation’s first commercially viable producers of cellulosic ethanol, which is higher-energy ethanol that comes from wood products and other biomass instead of corn.
Cleantech bill of health
At last week’s Entrepreneurs’ Connection conference in Green Bay, four of 10 companies selected for presentations to a panel of investors and business experts were companies with ideas for producing or saving energy, cleaning up waste, or both.
Wisconsin is also home to the U.S. Forest Products Laboratory, which has made ethanol production one of its themes; the University of Wisconsin System and its energy- and resource-based R&D capabilities; and many manufacturers that have made energy production or conservation a priority.
The emerging picture is of a state poised to move ahead in the “cleantech” arena, but there’s no shortage of competition. The markets are plunging ahead where solid investments can be found. Companies with clean technologies raised $3.6 billion in 2006, a 45 percent increase over 2005, according to the Cleantech Venture Network. Governors and legislatures across the Midwest, in particular, are moving ahead to invest in a sector where they believe their agriculture-dominated states have an advantage.
Wisconsin is no exception. Gov. Jim Doyle has proposed $30 million in grants and loans for renewable energy projects, and $2 million in tax credits to help increase the supply of pumps for vehicles equipped to run on ethanol and biodiesel.
“I truly believe that the states that are going to be doing well 10 or 15 years from now are the states that have made significant investments today in renewable energy,” Doyle said.
Market picks winners
While policymakers aren’t in a position to pick winners – solar over biomass, for example, or ethanol over biodiesel – the marketplace is prepared to do so. And states that provide the framework to encourage a broad range of technologies will find themselves among the winners picked by the markets, themselves.
Recent articles by Tom Still
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