Green-energy companies are enjoying a boom in investment. But will they live up to expectation, asks Declan Butler.
Silicon Valley is greening. Investors are flocking to low-carbon (clean) energy technologies, fuelling a boom in the sector, with investments set to overtake those in Internet start-ups. But does this venture-capital explosion herald another dotcom bubble?
Last week, Google announced its entrance into the green-energy field — hundreds of millions of dollars for a technology push to make renewable energies cheaper than coal. And in the same month, Nobel prizewinner Al Gore and his London-based firm Generation Investment Management joined forces with one of Silicon Valley's foremost green-energy investors, Kleiner Perkins Caufield & Byers in Menlo Park, California — the company that nurtured the likes of Amazon, Google and Genentech — to create an alliance to fund global climate solutions.For the fast-moving entrepreneurs of the valley, who have successfully invested in disruptive technologies such as the Internet to change the face of entire industries, the next frontier is the roughly US$6-trillion energy market, where the dinosaurs of power-generation utilities have traditionally invested a pittance in research and development.
“Venture capital is exactly what we need to try new things outside the bounds of what the traditional energy companies think is worth doing,” says Vinod Khosla, a veteran entrepreneur who co-founded Sun Microsystems and now heads Khosla Ventures in Menlo Park, one of the most prominent clean-energy venture-capital firms. “There is almost no technology risk-taking in any of the energy companies.” Khosla predicts that within five years there will be a green form of electricity that is cheaper than coal, and cleaner fuels that are cheaper than oil....MORE