Print
	Email
	Text size
	Comment

‘We aren’t looking for interesting technology that is going to save the world. We are looking for investments that will make our clients money.’

Sandy Christie, fund manager at BlackRock Merrill Lynch, may not sound like your typical environmentalist, but the New Energy Fund he works on has an impressive $6.7 billion (£3.4 billion) to invest in renewable energy businesses, making it one of the key players in the sector.

‘We have no environmental wrapper or investment screen,’ Christie continues. ‘Our approach to a new energy company is just the same as our approach to a traditional energy company.’

High-street retailer Marks & Spencer has a similarly hard-headed philosophy. ‘We get a lot of people offering to sell us green products or services at a premium,’ says sustainable development manager Carmel McQuaid.

‘We say no, because this is a competitive marketplace and they have to be affordable.
‘Other companies say: “The performance of our product isn’t that great, but hey, it’s green.” That’s not good enough either.’

According to McQuaid, M&S aims to make sustainability an integral part of its day-to-day business and that means solutions to problems from wastage to climate change have to be fit for purpose and make good business sense.

It’s an attitude that’s becoming more prevalent. As green concerns are taken more seriously, spreading from corporate social responsibility (CSR) departments to entire organisations, green technologies must prove themselves financially, as well as environmentally, sustainable.

Recognising leaders
The Rosenblatt New Energy Awards, held at the Jumeirah Carlton Tower hotel in Knightsbridge, London, recognised ten companies (see below) that have taken this principle on board.

Tessa Laws, partner at Rosenblatt Solicitors, conceived the idea. ‘We need to direct our time, our money and our activities towards ensuring our kids have a sustainable future,’ she says.

Laws’ view is shared by the award winners, all of whom have pioneered or backed technical innovation that promises a cleaner, greener future. And yet none regards this
as its sole raison d’être.

Simon Daniel, New Energy Entrepreneur of the Year, is managing director of Moixa, the developer of the USB battery. According to Daniel, Moixa files almost one patent every month – which means it accounts for one in 1,000 patents filed internationally by UK companies. However, only a small proportion of Moixa’s ideas go beyond the drawing board because, at a most basic and fundamental level for a growing concern, they have to make commercial sense.

Daniel’s latest big idea is low-power, low-voltage outputs for the home. He points out the inefficiency of converting a high-voltage output from your AC mains to a low-voltage output to charge your mobile phone or digital camera.

‘The power consumption of electronic devices has reduced considerably, but we are still powering them from a high-voltage source,’ he states. ‘It’s like turning on a dam to get a dribble of water.’

Daniel adds that the concept of DC outputs in the home has to be packaged in a way that will attract consumers. Saving on energy bills is a draw, but the added boon is being able to dispense with the proliferation of AC adaptors festooning the modern home.

‘People won’t buy green products in isolation; they will buy products that are useful,’ says Daniel. ‘We don’t believe in green products for their own sake.’

If what Daniel says is true, the typical consumer has a take on green similar to the approach of M&S: both expect convenience and cost savings to go hand in hand with greener solutions. Likewise, an investor like BlackRock Merrill Lynch sees the new energy sector generating interesting investment returns as well as cleaner power.

A costly solution
The problem is that renewable energy doesn’t always pay for itself. According to figures from the International Energy Agency, only biomass and smaller hydroelectric projects can compete with the prices resellers pay for power from fossil fuels. Admittedly, these figures are from 2006 and oil prices have increased since then, but technologies such as solar power are still far from cost-competitive, and rely on government support in the form of subsidies and legislation.

‘Not only is solar too expensive, there’s also a problem with scalability,’ says Christie
of BlackRock Merrill Lynch. ‘Even a large solar plant will only produce ten to 20MW
of power, compared with 500MW at a standard coal or natural gas power station.’

Nevertheless, Christie believes that solar will eventually represent ‘a fantastic opportunity’ for investors, as fossil fuels become pricier and silicon (a key component of solar cells) cheaper.

That’s where two other award winners, ReneSola (Company of the Year) and PV Crystalox Solar (IPO of the Year) come in. Both manufacture silicon wafers, the former from its base in China and the latter from its UK headquarters. Both are listed on AIM and have a stated strategy of remaining competitive by driving down costs.

‘Silicon prices will come down in the next decade,’ predicts Christie. ‘Some people expect it to happen earlier, but that’s our view.’

The renewable technology Christie regards as the ‘key opportunity’ is wind. ‘Wind is the only power source that enables [governments] to both reduce emissions and meet the increasing demand for energy,’ he argues, adding that a small field of 25 wind turbines on a good wind site can generate 50MW of electricity.

Biofuels also offer the potential of cheaper, cleaner power. TMO Renewables, New Energy Rising Star of the Year, has developed a process to produce ethanol from organic waste.

‘At the core of the process is a smart organism we have engineered,’ says CEO Hamish Curran. ‘The starting point was a “wild type” that began life in the compost heap, so it eats anything – grass cuttings, biological municipal waste, or wood chips.’

Curran explains that TMO’s breakthrough was to find the omnivorous organism first,
then ‘train’ it to produce biofuel, rather than starting off with an organism that produces biofuel naturally. ‘It’s a complete paradigm shift from using food crops and sugar-based [feedstock] to biomass,’ Curran adds.

A former oil and gas man who joined TMO in 2006, Curran makes the company’s breakthrough sound simple.

But, as he explains, the foundation for it was laid about 30 years ago and it has taken the company six years to secure funding to build a demonstration plant.

A hard graft
Innovation, usually thought of as a lightning flash, more often means years of work. ‘The bright idea is the seed, which is germinated by a combination of serendipity and determination,’ Curran explains.

It’s a picture Bengt Åkerström, CEO of Chromogenics, might recognise. The company won the New Energy University Spin-out Award for its technology that promises to reduce air-conditioning bills by controlling the amount of heat that comes through windows.

Research on the electrochromic material that is central to this technology began more than 20 years ago at Uppsala University in Sweden. Åkerström explains: ‘There were continuing battles between different research projects for funding and our project was not always successful.

‘The other reason [for the project’s long gestation period] is that it’s a very complex technology. There are five different layers that have to co-operate in order to deliver the ultimate function. This needs to be tested in different conditions and over long time periods to make sure it is durable.’

The experience of Chromogenics seems to point to a problem with the way innovative projects in the new energy sector are funded. Projects that will not deliver a return for investors in a few years, but may provide rich returns down the road, have to rely on public funding that is often insufficient or inconsistent.

‘There were a couple of times when the project came very close to being closed down,’ says Åkerström. ‘But the very enthusiastic person driving the project, Professor [Claes] Granqvist, managed to keep it going.’

Apart from sheer bloody-minded determination, Chromogenics illustrates another way in which projects with a longer-term pay-off can stay in the game. Although its technology is intended for use in the windows of buildings or vehicles, the company’s management saw a shorter-term opportunity in eyewear: the coating could be applied to ski goggles and motorcycle helmets to help their wearers deal with glare.

‘We needed to develop confidence that our technology works, and also to increase our own production experience,’ says Åkerström. ‘That’s why we looked at eyewear.’

Business benefits
Renewable energy will not provide answers to the world’s problems overnight. But, as the winners of the Rosenblatt New Energy Awards show, there is natural business logic to the best companies in the sector, which means they have far more to offer than simply bright ideas.

‘The UK is great at energy innovation,’ says Daniel. ‘There are a lot of things going on that could make a difference in the future, but we are focused on things that can make a difference now.’

Comments [0]