While concerns are increasing over how long global oil supplies will match consumer needs, the pathway is widening for companies offering technological and environmental solutions. With increasing support from a Federal level and individual States increasing their incentives for energy saving products, companies already establishing themselves in this sector are also in a position to expand their product lines and reach into new areas being promoted at a government level.
The venture capital world has had a stormy relationship with energy technology. Over the past twenty years there have been a number of waves of interest in new and renewable energy technologies, usually coinciding with periods of high oil prices, but activity has always died back in the face of low-cost, fossil fuel-based energy. The past four years have seen a remarkable increase in funds flowing into the sector. Will things be any different this time?
Sales in this sector reached over $35 billion globally in 2005, an impressive growth from 2004.
When one looks at financing and investment in renewable energy, certain key trends emerge:
- Global investment is growing, but the emerging markets are exerting the real influence
- Interest is growing as the technology matures and proves its merit, reducing risk
- Private investors are showing more interest due to government policies and political influences
- Investment banking firms are showing interest, further legitimizing the technology.
- The bond market is beginning to invest in renewables.
- Venture capital favors clean energy.
- Renewable energy company evaluations have increased substantially.
- Market growth appears to have stabilized
While many investors are still concentrating on the markets they are familiar with (North America and Europe), Asia is a new and massive target market. As one industry analyst has said: "the emerging markets won't be emerging anymore, they'll be core markets". India has already surpassed the United Kingdom in Ernst & Young’s Renewable Energy Country Attractiveness Indices.
The true turning point for renewable resource producers was 2005-2006 when a number of countries adopted aggressive targets and policies for biofuels.
In 2005 there were 60 renewable energy companies being publicly traded. In 2006 that number had increased to 80 with a market capitalization of more than $50 billion.
BioCRUDE Technologies Inc.