attractive returns: where and why now?. costs declining, deployment increasing as costs of wind,...
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Attractive Returns: Where and Why Now?
Costs Declining, Deployment Increasing
As costs of wind, solar and energy storage decline precipitously…
The rate of deployment of wind, solar, batteries andelectric vehicles all show exponential levels of growth
Are You Still Stuck in Old Energy?
A: Number of Years,start – peak - trough
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C: 1% penetration of target market
D: Number of yearsfrom 1% to 70% penetration of target market
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THE INNOVATION CURVES:How new fundamental technologies happenand how they capture market share
A: Number of Years,start – peak - trough
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THE AUTOMOBILE:A: 35 yearsB: 250 companiesC: 1912D: 48 (happened in 1950, but would have been 28 without Great depression and World War II)
1896 1912 1950
A: Number of Years,start – peak - trough
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THE PERSONAL COMPUTER:A: 20 yearsB: 200 companiesC: 1986D: 17 years (happened in 2003)
1975 1986 2003
A: Number of Years,start – peak - trough
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D: Number of yearsfrom 1% to 70% penetration of target market
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SOLAR PHOTOVOLTAICS:A: 24 yearsB: ~200 companiesC: 2014D: too early to tell but current growth rates would suggestabout 25 years
1990 2014 2039?
A: Number of Years,start – peak - trough
B: N
umbe
r of C
ompa
nies
, at p
eak
C: 1% penetration of target market
D: Number of yearsfrom 1% to 70% penetration of target market
YEARS
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POWER STORAGE:A: ~30 years?B: ~100 companiesC: ~2020?WHERE ARE WE TODAY?
1990 2014 2039?
BIOFUELS:A: ~30 years?B: ~75 companiesC: ~2020?WHERE ARE WE TODAY?
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OTHER FAMILIAR TECHNOLOGIES:
1900 1945 2005
INTERNETMOBILEPHONE
THE VCR
MICROWAVE
COLOR TELEVISION
WASHINGMACHINE
REFRIGERATOR
RADIO
AUTOMOBILE
TELEPHONE
19901975196019301915
100
75
50
25
10
0
Important Historical Parallels
Enables shift from utility-scale to corporate and personal energy solutions Growing industry of financial innovations, applications and solutions Value increasing through network demand response, time shifting and storage Will spur the development of a large storage industry, perhaps in concert with EV’s Spawning an entire industry of linked in home appliances and software tools
“Personal Mobility”
Automobiles
“PersonalTechnology”
the PC
“Personal Energy”Solar PV
Shift from train to personal transportation Grew industry of financing models, applications, solutions and components Value dramatically increased by the “network” – roads and highways Developed its own version of storage – the gas station Its “features and functions” continue to be greatly enhanced by the IT revolution
Shift from enterprise to “personal” computing Grew industry of software applications and new business solutions Massive industry around information storage Value dramatically increased through Ethernet, then Internet network Spawned an entire new industry of software tools, applications and “big data”
ConsumerProduct
Power/InfoStorage
LeveragesNetwork
Applications & Solutions
+ + =TransformativeInvention
+
A Realistic Perspective on Achieving Success
(Understanding Patterns of Failure, Challenge, and Success)
Defining the Market Segments(Where you are playing defines risk/return)
The area of Hardest Lifting that Remains Challenged from a
Financing Perspective, it is the path that SunPower and first Solar made it through, but many other struggle
to survive in a much leaner financing environment –NO REWARD FOR EARLY
INVESTMENTS
The “Project Finance Area” which remains more challenging for first factory and not yet bankable products, but is providing significant
liquidity for more mature and later stage bankable products/companies – RATES OF RETURN DROP RAPIDLY AS
PERCEIVED RISK IS REDUCED
This is where Tesla and Nest Labs
succeeded with product solutions
that leveraged others hardware – LIMITED
REWARDS FOR EARLY INVESTING
This Uber, SolarCity, Airbnb and other
“capital light” solutions –
SIGNIFICANT REWARDS FOR
EARLY INVESTING
Companies gettingto this stage
are attractive long-term
holdings
Targeted Returns and typical returns to Date
(Expectations and Experiences have failed to line up)
Targeted IRR of 30%+ with
potential of 10X return
Average Actual
Return is negative
Targeted IRR of 30%+ with
potential of 5-10X return
Limited sample size but better
return
Targeted yield of 15-
18%Targeted
yield of 8-10%
Actual yield of 0-18%
Actual yield of 4-6%
Interesting Development
Company possibilities
Limited sample size
but best returns so far from
companies that have made it
here
Targeted IRR of 15%+ with potential of
3X return
Targeted IRR of 20%
+ with potential
of 10X return
Limited sample size
but good returns
Targeted yield of 10-
15%Actual yield
of 6-10%
Investment-Ready Sectors(focus on those technologies now experiencing hyper growth)
Solar PV & Advancing Distributed Generation
Advancement of Energy Storage
Technologies
Proliferation of Electric and Autonomous
Driving Vehicles
Corporate Solar PPA’s & Deployments
Energy Efficiency
Management
Community Solar
Smart GridHardware
Demand Response
Consumer Premises
Management
Micro-grid Deployments
Intelligent Load
Management
Smart Energy Trading/ Arbitrage
Smart Devices & Appliances
Energy Security
Storage Deployment
Distributed Storage
Management
Vehicle Charging Networks
Virtual Power Plants
Vehicle to Grid
New Mobility Solutions
Ride SharingTaxi plus Solutions
Road Condition Reporting
Active Traffic Management
Intermodal Solutions
Fleet Management
Parking Management
Solar Securitization
Distribution Automation
SmartInfrastructure Management
Impact of Internet of Things and “Big Data” Analytics
SmartCities & Traffic
SmartBuildings &
Homes
Indicates Need/Benefit
of Project Finance