A Bright future for clean technology.

Clean Technology Bright Future:

Observers could be forgiven for thinking that the so-called moment of clean technology in the sun has passed. In the past two years, many fair indexes of clean technology have performed poorly. In Europe, solar energy was affected after the European Commission decided to gradually eliminate renewable energy subsidies for 2017. The installation of solar panels fell by almost 60% in Germany in 2013, and 70% in Italy . Meanwhile, in the United Kingdom, less than 30% of clean technology agreements financed with venture capital were financed at an early stage.

The truth is that we have been here before. Seizures in the clean technology sector are simply symptoms of a cycle that characterizes emerging technologies: enthusiasm, inflated expectations and consolidation, ultimately followed by stability and growth resumption. In fact, recent underlying developments are signs of a much more significant transformation: clean technology is becoming commercially viable.

The confidence in the future of the clean technology sector is based on the need for sustainable solutions for a planet that is supporting an increasingly wealthy population. In the next 20 years, the number of middle-class consumers is expected to increase to about three billion, from 1.8 billion today. Your new lifestyles will require resources, including energy.

This increase in demand will occur at a time when finding, developing and extracting new sources of energy and resources will be increasingly difficult and expensive. In the last 12 years, for example, the average real cost of construction of an oil well has doubled, and in recent years new mining discoveries have been few, despite the best efforts in the industry (and often expensive) . But clean energy costs tend in the opposite direction, which makes these solutions develop at a time when the need, particularly in some of the world's largest developing cities, is sharpening.

A fundamental question for the future of clean technology has been whether it needs regulatory support to prosper. Undoubtedly, the withdrawal of subsidies in Europe hit the sector strongly. But, even when Germany and Italy lost their first and second place in terms of new solar energy installations, China and Japan took their place. Globally, the solar energy industry has grown at an average annual rate of 57% since 2006.

Regulatory support has been effective in creating demand and allowing renewable sources of supply to reach scale. But that support has not always been economically efficient. A lesson from the German experience is that sudden changes in regulation can create spikes and valleys in demand that are not useful for an industry that is still emerging. The greatest risk in many markets is not that subsidies and other supports are withdrawn, but that the regulatory structure does not adapt as the sector develops.

As industries mature, the case of political support weakens. And, in fact, solar energy seems to be able to survive more and more without regulatory help.

A thriving global market contributes greatly to leveling the playing field in all resource options. Over the past five years, dozens of solar manufacturing companies have failed, only to be replaced by stronger, more innovative and more efficient actors. Last year, more than a quarter of the accumulated global photovoltaic solar capacity was installed. The International Energy Agency, which has been conservative with respect to solar energy prospects, now expects it to be the world's largest source of energy by 2050.

However, concerns about the future of clean technology have made new projects more difficult to finance. But new innovative schemes, such as clean technology bonds and third-party financing, are changing the image. Third-party ownership, in which a company installs and maintains solar panels, in exchange for a fixed monthly rate or a fixed price per unit of energy, has increased adoption rates in California, financing more than two-thirds of the new facilities in 2012 and 2013. Similarly, new partnerships with large companies established in the industry, such as the link between Daimler and Tesla and the controlling stake that Total acquired at SunPower, are reducing the cost of financing for smaller companies .

Meanwhile, clean technology companies are becoming more sophisticated and creative. A completely new industry has been created around the use of information technology to reduce

Clean tech is maturing and adopting proven management practices in operations, marketing, sales, and distribution. Increasingly, the industry is implementing approaches that have ensured success in other sectors, such as reducing procurement costs and deploying lean principles in manufacturing. As clean-tech businesses continue to scale up, there will be additional opportunities to improve.

The shakeout in the clean-tech industry has been tough; but it has also been typical of emerging technologies, and, by weeding out the weaker players, it has made the sector more robust. This is a global segment meeting a growing global need. There is little room for doubt that the clean-tech industry can expect plenty of sunny days ahead.

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