The Renewable Energy Sector is Fundable in 2011

My picks for favorite startup sectors to improve your fundability in the new year include green, biotech, and renewable energy (also called alternative energy or sustainable energy). In previous articles, I’ve put some definition around the green and biotech investment categories, so I’ll try to do the same here for renewable energy.

Renewable energy is any source that can be produced cleanly, will not disappear like fossil fuels, and is less polluting. The Clean Technology venture capital sector, which includes alternative energy, soared 68 per cent year-on-year during the first quarter of 2010. I expect another increase this year. Here are the key components, as summarized by the New Alternatives Fund:

1. Solar power. Solar cells produce electricity from the sun. Conversion efficiency of silicon cells has increased from 4% in the early eighties to over 20% for the latest technologies. The cells create no pollution when they generate electricity. They are not yet as cost effective as coal-generated electricity, but costs keep declining and efficiency is increasing.

2. Wind power.  The latest turbine technologies have resulted in wind-produced energy becoming more cost efficient, and more widespread. New wind energy development is essentially cost-competitive with conventional energy technologies.

3. Hydropower. This technology is clean but limited by geography. This is already an important source of renewable electricity. More attention is going to low-impact and "run-of-the-river" hydropower, which does not have the ecological problems of older dams.

4. Ocean energy. Technologists predict that wave action, current, tidal movement and temperature differential will become an outstanding form of clean energy. Ocean energy has a big advantage because the timing of currents and waves are understood and reliable.

5. Geothermal energy. Geothermal energy is produced by heat from sources below the Earth's surface. Steam created by these underground heat sources is used to spin turbines for electricity generation.

6. Biomass energy. This is a broad category encompassing a variety of fuels produced from biological sources.

   • Bio-diesel can be created from used or virgin plant oil. Production and testing today center around rapeseed oil, soybeans, sunflower oil. Overall, bio-diesel works cleaner than petroleum-based diesel fuel.

   • Ethanol is derived from agricultural products, including corn, wheat, fruit, wine, and various kinds of cellulose stalks and wood chips. The techniques are steadily improving. Ethanol can be mixed with gasoline to minimize engine changes.

   • Waste gas (methane), emitted from landfills, breweries, waste water, animal sewage and coal mines, provides almost free fuel for stationary fuel cells and conventional gas generators.

   • Hydrogen is the ideal alternative fuel, since it releases no toxins into the air. It can be derived for waste gas, or mixed with natural gas in hybrid fuels. Liquid hydrogen, the preferred form of hydrogen, still requires more storage space and pressure than other fuels.

There are many other technologies which may be lumped into this category, including combustibles, municipal waste, and even nuclear energy. There is overlap between this category and the green category, as it relates to global warming and environmental impact.

Nevertheless, if you are looking for a hot sector to help you recover from tough economic times, get you tagged as a world leader, and increase your probabilities for funding support, put some energy into this one in 2011.

Marty Zwilling