“Where’s there’s muck there’s brass”—old Lancashire saying

 

This truism, from the part of England that my family hails from, the coal-fed hearth of the Industrial Revolution (News - Alert), exemplified by smoke-choked streets of red-brick “terrace cottages” and reeking canals, is at the heart of the “Cleantech Revolution” of green-infrastructure enabling goods and services. This revolution is rebounding from the downturn, just as its industrial predecessor survived crises and crashes, thereby demonstrating its resilience.

 

A new report by PricewaterhouseCoopers (News - Alert) LLP, “PwC,” Cleantech Revolution: Building Smart Infrastructures,” showed there are growing opportunities for large established players and start-ups making items such as electric vehicles and components, carbon sequestration tools, and smart grid solutions. This market is being driven it says by a “national push to gain energy independence, conserve energy, and mitigate greenhouse gas emissions.”

 

The report, which includes findings from the MoneyTree Report, a quarterly survey produced by PwC and the National Venture Capital Association and based on data from Thomson (News - Alert) Reuters reveals that venture capital, or “VC,” investing in the cleantech sector rebounded sharply in the third quarter of 2009. The amount poured in reached $898 million in 57 deals from $475 million in 49 deals in the second quarter.  The jump continues a trend of recovery in VC investing which dropped precipitously in early 2009 in the wake of the recession and banking crisis.

 

“The smart infrastructure market is creating a new era of convergence as companies collaborate and transfer key skills and assets across industry sectors,” Tim Carey, PwC U.S. clean technology leader, said. “As the build-out gains traction, it has the potential to support a proliferation of new businesses across sectors, much like the evolution of both the semiconductor industry and the Internet.”

 

At the forefront are the transformative alliances forming between the automakers, utilities, battery makers and communications providers.  As the grid takes shape, the incumbents changing strategies could spur further mergers and acquisition activity in cleantech.  Companies that identify their roles and capitalize on these convergences will, the report says, establish early leads in nascent markets.  The anticipated next wave of cleantech companies will begin to “horizontalize” the infrastructure, as new players enter and fill in gaps and as both the smart grid and electric transportation infrastructures spread and diversify.

 

Moreover in the wake of the recent United Nations Climate Change Conference in Copenhagen, companies will increasingly assess their roles as players in smart infrastructure build-outs globally. They will likely boost adopting clean technologies to mitigate their exposure to more stringent greenhouse gas emissions policies, and the cost-cutting and energy-saving endeavors that these technologies can help carry out.

 

“The utility sector is at a major inflection point and at the epicenter of the cleantech revolution,” David Etheridge, PwC’s U.S. utilities and power generation leader, said. “Global demand for more aggressive carbon management coupled with the development of new and innovative technologies to make the electricity infrastructure in this country fundamentally ‘smarter’ will radically alter the utility and power generation landscape over the next 20 to 30 years.”

 

The report also defines the role and outlines the opportunities for companies in the emerging smart infrastructure market:

 

*          A new mergers and acquisitions rule book

 

The old rules of valuation may not apply in cleantech, it says.  In such a fast-moving regulatory and investment landscape, it will be challenging to choose which acquisition targets hold the greatest promise in the build-out of smart infrastructures and, more important, to ascertain the right purchase price

 

*          Forging of public-private partnerships  

 

New public-private partnerships will be necessary in such an ambitious goal of creating a ubiquitous, national smart grid, but these new models of collaboration must be governed and managed so they are enduring and harmonious.

 

*          Creating a customer-centric smart infrastructure

 

For customer adoption to take place, stakeholders building out these infrastructures must develop programs that accommodate customers’ needs and preferences.

 

“Keeping a vigilant eye on the current and anticipated support on federal and state

governments as well as on consumer and commercial adoption of clean technologies, will be key for companies to take advantage of the significant opportunities in the emerging smart infrastructure industry markets,” Carey said.