The Waves of Cleantech — Industrial Technologies Breaking Through to Households

by Lassi Noponen, Cleantech Invest Chairman

Waves of change.

Clean technology has become a significant global investment theme in the 21st century and this is thanks to, not only the pioneering entrepreneurs, but also the role that many large corporations around the world have played in bringing cleantech thinking into the core of their own aspirations for competitive advantage.

The subtle integration of sustainability and energy efficiency measures by global companies has become a significant driver of cleantech growth. Nevertheless, the current cleantech boom has its roots to a large extent in the previous century, with it being customary to describe the development of environmental technology at the end of the 20th century as occurring in two waves.

The First Wave

The first wave is regarded as having started at the end of the 1960s, with the general rise of environmental awareness in society being a visible manifestation of it. The psychological impetus for growth came from the academic world, but what was behind that growth on the corporate level was the increasing stringency affecting environmental norms. At this time technology was ‘end-of-pipe’, meaning that industry saw environmental investments only as an irritating expense, and the object was to avoid them.

Silent Spring by Rachel Carson was a catalyst for the environmental movement globally.

The Second Wave

The rise of the second wave was influenced by many factors during the 1980s. The times were affected by the growth in global environmental concerns, which were driven into the mainstream from the great environmental disasters of the 1980s, such as Bhopal, Exxon Valdez and Chernobyl. As a result of these disasters, the political commitment of states for the promotion of environmental matters increased as a result of subsequent UN environmental conferences.

The Exxon Valdez needs no introduction.

Via the growth in environmental awareness resulting from these conferences, the demand for environmentally-friendly consumer products clearly increased in the early 90s — environmental awareness was well and truly entering the mainstream consciousness.

Fast forward to today and we see that all social and business sectors are now committed to the promotion of clean technology and energy efficiency, with enterprises regarding environmental performance as an important source of competitive advantage — even if the role of norms and subsidies as engines for growth still cannot be denied.

Clean Competitive Edge

The competitive edge derived from clean technology has traditionally been based on the improvements in efficiency achieved by new technologies, operational savings and risk management, new or improved products, a responsible image, and a more open dialogue with interest groups. Currently, even with the fall in prices for energy and raw materials, environmentally friendly technology is cost-effective even in a world of cheap oil. This is what has occurred with respect to the large wind and solar parks in the United States, which have achieved parity with traditional production modes in many markets, even without subsidies.

SavoSolar is one such cost-effective renewable energy solution that is competing with traditional inputs for district heating

Cleantech in a New Millenium

During the cleantech boom of the 2000s, the object of investor interest has fluctuated in an intriguing manner. One could say somewhat pointedly that in the beginning the emphasis was on renewable energy production technologies (in particular wind power and solar energy). Energy production technologies are very capital-intensive and with the wind power industry as an example, the leading companies in this field were seeking a competitive edge through operational efficiency and economies of scale. The production of these companies has indeed concentrated on economical manufacturing-cost countries, and the margins of business operations narrowing to the level of bulk products.

The emergence of energy efficiency technologies commenced in the 2000s also, with these technologies usually being less capital-intensive than energy production technologies, but their impact being no less significant. In industry and real estate, it is now possible to achieve considerable cost savings with relatively small energy efficiency investments, with examples including frequency converters, automation, heat pumps and LED lighting. The more comprehensive utilization of these technologies is today reducing the need for basic power, with the repayment periods being considerably shorter than renewable energy production investments.

LED has enabled huge energy savings globally.

Cleantech and the Household

A truly ground-breaking moment in cleantech was the recent trend in financial innovation that enabled energy efficiency and decentralised energy production startups to offer customers solar-as-a-service (through Power Purchase Agreements) and other innovative debt financing options. This made it is possible to accelerate the deployment of their own sensible resource-effective solutions. An example of this has been Solar City in the US.

During this decade, ‘cleanweb’ technologies have begun to enter into the picture. Cloud-based software coupled with sensory-based technologies is seeing further efficiency improvements being achieved in both industry and consumer markets. Examples of these include technologies linked with the measurement and optimization of energy consumption such as Enersize and Watty in Cleantech Invest’s own portfolio.

Everything can be tracked with Watty.

In recent years, the ‘sharing economy’ has also risen as an object of interest among investors and entrepreneurs, with Airbnb representing a case of a community service that has strongly shaped the field as a whole. The ‘sharing economy’ can also be interpreted as a type of resource optimization whereby existing goods can be leveraged by owners in the market, reducing the need for newer products to be created in the first place.

The Advent of ‘Cleanweb’

The history of business operations connected with clean technology is only a few decades in duration, and during that period it has become a significant global business. During this millennium, huge growth in investment interest has first been experienced in investment, followed by the retreat of many capital investors. The trends supporting growth in clean technology are literally questions of life and death, and their import is growing continuously. Clean technology still contains enormous business potential for companies developing technology and business concepts.

ResQ Club is helping us all waste less food.

As a result of ‘cleanweb’, information technology applications have risen at the hub of clean technology, so that clean technology is approaching the world of the internet and other more traditional high-tech solutions. Also, those who have succeeded in the sharing and circular economies, such as the aforementioned Airbnb, and ResQ Club represent from our perspective at Cleantech Invest, the most interesting new clean technologies. Simply stated: when resources and goods are shared or used for a longer period, natural resources are saved.

When we are capable of doing more while using fewer natural resources, we can achieve economic growth without plundering the planet’s natural resources.

Now that is a wave worth catching!

Lassi Noponen, Chairman of the Board of Cleantech Invest.

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