Tilting at windmills

Font Size

Print

Feedback

Email

Discuss

• Discount UK Shopping

: Until recently, recalls Charlie Gay, a 30-year veteran of the solar-power business, venture capitalists were far too busy catering to captains of the information-technology industry to waste time on “hippy-dippy tree-huggers” like himself. But now the tree-huggers are in the ascendant and the IT barons are busy investing in clean-energy technology.

Among them is Vinod Khosla, a celebrated Silicon Valley financier. He is touting ethanol as the next big thing. Applied Materials, where Mr Gay works, has branched out from flat screens and computer chips into solar cells. Sun Power, the solar subsidiary of Cypress Semiconductor, is now worth almost as much as its chipmaking parent company.

Investors are falling over themselves to finance start-ups in clean technology, especially in energy. Venture Business Research reckons that investment in the field by venture capitalists and private-equity firms has quadrupled in the past two years, from some $500m in 2004 to almost $2 billion so far this year. The share of venture capital going into clean energy is rising rapidly . New Energy Finance, another research firm, reckons that investment of all sorts in the business will reach $63 billion this year, compared with just $30 billion in 2004. The lure of big money is leading investment banks to ramp up their analysis of the latest boom industry.

Clean-energy fever is being fuelled by three things: high oil prices, fears over energy security and a growing concern about global warming. The provision of energy, the industry’s cheerleaders say, will change radically over the coming decades. Polluting coal- and gas-fired power stations will give way to cleaner alternatives such as solar and wind; fuels derived from plants and waste will supplant petrol and diesel; and small, local forms of electricity generation will replace mammoth power stations feeding far-flung grids. Eventually, it is hoped, fuel cells running on hydrogen will take the place of the ubiquitous internal combustion engine. It is a bold vision, but if it happens very slowly, or only to a limited extent, boosters argue that it will still prompt stupendous growth for firms in the business.