Shepherd Advisors

Looking Ahead … Clean Energy Market Drivers In 2009

What’s coming for the clean energy market in 2009, with the overall economy facing such challenging dynamics?

Shepherd Advisors’ team recently reviewed Clean Technology market predictions for 2009 from five different sources (listed at the end) and, taken together, they offer a scenario that resonates with our own observations.  What might 2009 bring?   Let’s look.

Government will play a larger “grow the market” role as national and state policy makers create …

• Pro-Clean Energy economic stimuli that reduce energy vulnerability, meet Renewable Portfolio Standards (RPS) laws, and, especially, foster “green jobs”
• Legislation that tilts the playing field towards clean energy.  A national RPS in 2009? Carbon cap-and-trade in 2010? Kyoto II in 2012?  Odds are going up
• Incentives that encourage clean energy purchasing (especially tax incentives) by businesses and homeowners

Overall clean energy market growth will be challenged as …

• Economic contraction reduces everyone’s budgets
• Oil prices remain modest, as global recession continues
• Customers become much more savvy and cost-conscious about their clean energy choices
• Government interest wanes in numerous “green programs” as budgets contract
• Investment capital levels off and financing becomes harder to secure
• Many more clean energy startups falter

The green that will really count will be the color of money, rewarding those who…

• Make and sell clean energy products priced to compete head-on with fossil fuels
• Keep costs low and lower through higher efficiencies, larger scale, continuous innovation, and expanding market share

Clean energy opportunities likely to make solid strides in 2009 include …

• Energy efficiency – it's the fastest and cheapest way to lower the energy bill
• Wind energy – as turbine prices stabilize and production grows, while demand-growth slows
• Energy storage – as battery performance increases, costs go down, utilities want to better manage when they dispatch power, and the auto industry invests in electrified vehicles
• IT-based energy products – as consumers buy energy options that are smarter

Clean energy segments likely to experience greater “headwinds” in 2009 include …

• Biofuels – as gasoline and diesel prices remain low and feedstock costs moderately high
• PV solar - as supply begins to exceed demand and local governments reduce incentives
• Large capital projects – as financing constraints persist

How could these forces affect your opportunities?  Do you want to better align with these dynamics?  If so, how? Should be an interesting year!

Sources and Further Reading

Clean Tech Group report

Lightspeed Ventures report

Huffingtonpost.com report

IT Business Edge report

Earth2tech.com report