Presented at Nordic Green II conference, April 2010

1. 4/29/2010
Overview
• Welcome!
• Our Perspective on the Energy Issue
• The Dramatic Growth of the Cleantech Industry
• Mega Trends and Dynamic Markets
• Innovating to Thrive
Innovation in Cleantech
Thriving in Dynamic Markets
Thriving in Dynamic Markets
Steve Ciesinski
Vice President, Strategic Business Development
Nordic Green II, April 27, 2010
© 2010 SRI International ‐ Company Confidential and Proprietary Information 2
SRI’s Impact on Society SRI is Heavily Invested in Cleantech Research
Innovation! Multidisciplinary technology and research provides real‐world solutions
Information Technology
HDTV Health, Education,
and Economic Policy
SRI’s Value
Creation
Engineering and
Systems
Process™
Advanced Materials,
Biotechnology Microsystems, and
Nanotechnology
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2. 4/29/2010
A Cubic Mile of Oil ‐ CMO
Understandable unit: mental image
Our Perspective on the Energy Issue
Statue of Liberty
6
Visualizing a Cubic Mile Current Global Energy Consumption Is About 3 CMO
How long can we afford to live off our inheritance? What are the social costs?
Renewables Biomass
Hydroelectric 0.19 Geothermal <0.01
0.17 Wind + Photovoltaic + Solar
Nuclear Thermal <0.03
0.15
Oil
1.06
Natural Gas
0.61
Inherited
Coal
1 cubic mile = Manhattan under 150 feet of oil 0.81
7 Source: A Cubic Mile of Oil, Hewitt D. Crane, Edwin M. Kinderman, Ripudaman Malhotra 8
*2006 Data
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3. 4/29/2010
Replacing Today’s World Energy Requirements* Projected Energy Demand by 2050
Any single resource is not enough Need additional energy on the order of several CMO/yr
10.00
Recent energy growth rate: 2.5%/yr 2050 9 CMO
9.00
Annual GDP growth rate:
8.00
8 00 World: 5.5%
World: 5 5%
• Hydro China: 11%
7.00
India: 9% 6.5 CMO
• Nuclear
Energy Demand (CMO)
6.00
• Solar CSP
• Windmills 5.00
• Solar Roofs 4.00 4 CMO
D
3.00
2.00
1.00
0.00
1990 2000 2010 2020 2030 2040 2050 2060
*Current world energy consumption is about 2.6 cmo
Source: http://www.spectrum.ieee.org/print/4820 9 9 Year 10
Changes in Global Energy Mix Have Occurred Before
Transitions take scores of years, Cleantech companies can lead!
100
esources
90
Wood/Biomass
Percent Total Prima Energy from Various Re
80
Coal
70
60
~1960
50
The Dramatic Growth of the Cleantech Industry
40 ~1940 Affecting the scope and speed of innovation
Oil
ary
~1880
30
Coal
20
Gas
Nuclear
10
Oil
Hydro Wood/Biomass
0
1850 1870 1890 1910 1930 1950 1970 1990 2010
Year 11
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4. 4/29/2010
VC Investment in Cleantech Takes Off Investments by Industry
From negligible to substantial in just 9 years Q4 2009 – All industries
Clean‐Energy VC Investments in US‐Based Companies as % of Total
Year Total Venture Energy Technology Energy Technology
Investments Investments Percentage of
Percentage of
(US$ Billions) (US$ Millions) Venture Total
2001 $40.6 $351 .09%
2002 $22.0 $271 1.2%
2003 $19.7 $424 2.2%
2004 $22.5 $650 2.9%
2005 $23.0 $797 3.5%
2006 $26.5 $1,308 4.9%
2007 $29.4 $2,867 9.8%
2008 $28.3 $3,213 11.4%
2009 $17.7 $2,216 12.5%
Source: Bloomberg New Energy Finance with supporting data from Clean Edge and Nth Power, 2010
Source: 2009 MoneyTree Report
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Renewables Capacity Nearly Tripled in Last Decade Renewable Energy Costs Vary Widely
Wind and PV capacity is growing most rapidly But electricity from certain renewables is now cost competitive
Source: 2008 Renewable Energy Databook, July 2009, DOE Source: 2008 Renewable Energy Databook, July 2009, DOE
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5. 4/29/2010
Cleantech Patents Indicate Growth Corporate Commitment to Sustainability
Chief Sustainability Officers are the newest hire
The Definitive Corporate Sustainability Benchmark – Top 10 2010
Key Performance Indicators
K P f I di t
• Energy productivity
• CO2 productivity
• Water productivity
• Waste productivity
• Leadership diversity
• CEO‐to‐average worker pay
CEO to average worker pay
• % tax paid
• Sustainability leadership
• Sustainability pay link
• Innovation capacity
• Transparency
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Is Cleantech a New Bubble? Recently, IPOs have dropped off the radar‐ ominous
And M&A Exits Have Dipped from Previous Years
VC‐backed company exits 1992‐2008
M&A transactions
IPO transactions
IPO transactions
Too broad to pop?
Uncertainty still surrounds the US IPO market! Maybe Cleantech can lead a new wave!
Jean Paul Rodrigue, Transportation Geographer, Hofstra University, NY, USA, February, 2008
Source: PWC Money Tree Q4 2009 Report www.renaissancecapital.com
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Cleantech Companies/Projects
“Venture capital firms have invested almost $20 billion into
hundreds of greentech startups since 2005. All of these
firms are looking to launch a disruptive force into their
target markets, scale rapidly and grow quickly.
Innovating to Thrive Very few of these firms will actually make it.”
‐ GreentechMedia, March 2010
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Nordic Region Pioneering Cleantech Innovation The Creation of the Wind Turbine Industry
Supporting cleantech through policies, investments, and purchases A Nordic example of government supported innovation
• Geothermal
• Public transportation/hydrogen buses
Denmark 1978 –
Denmark 1978 2009:
• District heating • From 22 kW to 3.6 MW turbines
• From 0 to 20% of total electricity supply
• Energy efficient buildings • 28.000 jobs created
• Strict building code • From 0 to 7.2% of total Danish exports
• Wind turbines
• Biomass
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7. 4/29/2010
Other Regions and Countries Are Investing Heavily What to Do? Think Innovation!
It’s become serious business for many
• Korea: “Green New Deal” ‐ $46 billion / 5 years
• Japan: invests $63 billion / 5 years
• China: invests $440 billion / 10 years
Innovation is the creation and delivery of new
• US: plans to invest $172 billion / 5 years customer value in the marketplace with a
sustainable business model for those producing it.
Cleantech VC investments as % of 2009 total: Remember: True Innovation is more than R&D:
US 21%, China 14%, India 6% It’s Research + Development + Commercialization
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Innovation Creates the Highest Value SRI’s Five Disciplines of Innovation
Entrepreneurs should focus on being truly innovative
Highest company 1 Important Customer & Market Needs
Innovation and societal value
2 High Value Creation
High Value Creation Top 10 Business
i
Book of the Year!
Invention and knowledge Not customer or market focused 3 Innovation Champion
creation from R&D
4 Innovation Teams
Low‐cost incremental No breakthrough or sustainable advantage
Low‐cost incremental No breakthrough or sustainable advantage
improvements
i 5 Organization Alignment
O i ti Ali t
Disciplines are multiplicative Market
Low‐
Low‐cost Success
imitation Commodities at minimal value
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8. 4/29/2010
The New Balancing Act for Cleantech Companies Thank You, Enjoy the Conference!
• Focus on True Value Creation (not incremental)
• Deeply understand your market, and how it’s changing
Headquarters
q
• Capture your niche SRI International
333 Ravenswood Avenue
• Secure growth financing Menlo Park, CA 94025‐3493
+1 650.859.2000
• Constantly analyze your Washington, D.C.
approach or solution‐ SRI International
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Arlington, VA 22209‐3915
avoid getting caught in +1 703.524.2053
a bubble that can burst!
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international locations
www.sri.com
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