After a healthy rebound in 2010 when the new investment in renewables grew by 30 percent, 2011 and beginning of 2012 were marred by waves of bad news: bankruptcies, profit warnings, staff layoffs. Furthermore, global cleantech indices showed a downward trend. However, despite a short-term slowdown in demand and challenging conditions in financing projects, Frost & Sullivan believes that the long-term outlook for cleantech is positive.
Renewable Energy Programme Manager Alina Bakhareva explains: "We witnessed important solar manufactures going bankrupt, tariffs cuts being accelerated, even retroactive cuts in feed-in-tariffs for already operating PV projects. This situation affected investors' confidence, and the current scenario does not look promising."
"The sceptics may feel it is a moment of triumph, and their predictions on a cleantech bubble collapsing are coming true," continues Ms Bakhareva. "But are they indeed? Are we witnessing an inglorious end or a temporary slowdown? We believe that the cleantech industry holds the answer to a few looming global problems in the energy, food and water industries. A new wind of cleantech innovation will bring the answer and this will have a positive impact on the overall market."
So where are the next growth and investment opportunities? Frost & Sullivan has identified three important sectors that show the most promising and interesting developments.
Smart water is emerging with opportunities in both hardware and software segments. Companies moving ahead of the market to define emerging segments, such as combined analytical control and automation systems, will have an advantage over the competition.
Energy storage seems ready to move away from the dominance of pump-storage facilities. Batteries, molten salt for CSP projects, and creative distributed storage applications on the customer side of the meter are being tried and tested in strengthening the grid.
Energy efficiency is still the cheapest way to reduce carbon footprint and strain on the grid. Extensive commercial building retrofits can save up to 50% of energy through energy efficient windows, heat-saving radiator insulation, improvements to lighting and climate control systems
Despite losing its first place to other clean sectors, green energy still abounds with opportunities. "Even manure green energy segment may become interesting for VC/PE investors as new technologies and solutions emerge from the labs and testing grounds," explains Ms Bakhareva. "It is important to highlight that with roll-back in government R&D funding and feed-in tariffs, only those sectors identified as holding strategic long-term opportunities are safe to enter."
Investors will also need to continue to consider new geographies as part of their strategy. A larger number of countries is introducing targets and goals and enacting support mechanisms for green energy and energy efficiency. China, India and Brazil - followed by other counties in Asia, Latin America, and Africa – will all see more projects.
To know more about investment opportunities in the Energy and Environment sectors please contact Chiara Carella, Corporate Communications, at chiara.carella[.]frost.com
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