Michael Butler, Cascadia Capital

Most of us vividly remember the rise and fall of the Internet. In the
late 1990s, Netscape and Amazon went public and saw their initial
public offering stock prices rise to unimaginable levels. Dozens of
newly created Internet companies soon followed Netscape and Amazon and
went from start-ups to multi-billion-dollar market-cap public
companies in a matter of months.



Everything seemed possible. Large Fortune 500 companies rushed to
develop an online capability for fear of being overrun by upstarts.
College dropouts became multi-millionaires almost overnight. A new era
of growth was upon us. The business cycle was a thing of the past. The
price/earnings multiple – which had been a traditional means for
valuing
public companies – was no longer used to value companies because
Internet companies going public did not have earnings. Indeed many had
no revenue at all. New valuation metrics such as “clicks and eyeballs”
were devised.



We all know what happened. The Internet bubble burst, companies worth
billions went to zero almost overnight, and the Internet became a
“four letter” word.



But something else also happened. During the darkest days of the
Internet bust, a rebirth was occurring away from the glare of the
media and popular press. New companies such as Google were being
formed and new business models based on sound economic principles were
being created. Today the Internet is everywhere and is a core part of
our lives. Many start-ups such as Google, Amazon, and Yahoo have
become household names and all of the Fortune 500 companies such as
GE, Wal-Mart and others have used the Internet to grow and transform
their businesses.



Sound familiar? It should. The clean-energy industry is going through
the same boom, bust, and rebirth.



Do you remember the excitement after the 2008 Presidential election?
Everything seemed possible: carbon-cap legislation; new companies and
a new industry being created; the public wanting environmentally
friendly products; young people clamoring for jobs in the sector; and
venture capitalists rushing to make investments in clean-energy
companies. Until it all came apart. The economy had its worst downturn
since the Great Depression. Investors pulled back and clean-energy
companies did not have the capital to survive. The lack of progress in
Copenhagen and the realization that carbon legislation would not occur
any time soon was the last nail in the coffin for many people.



However, much like the Internet went through its rebirth during its
darkest days, the clean-energy sector is also going through a dramatic
rebirth when all appears bleak. The rebirth of the sector is not being
driven primarily by government policy. Nor is it being driven by
consumers. It is, in fact, primarily being driven by Corporate
America. Big business has not necessarily become “green” or more
“socially conscious.” Rather, Corporate America has figured out how to
make money from clean energy and clean technology. And that is what
will make clean energy a sustainable, stand-alone industry that does
not rely on government support forever. Like the Internet sector, the
clean-energy sector is finding business models that work. And
Corporate America is leading the way. Combine that with the fact that
clean energy is one of the few potential growth sectors in a
growth-challenged economy, and you have the rebirth of an industry.
It’s everywhere, but not always in the press or evident on the
surface.



Some examples include:

Wal-Mart has taken the lead in “greening”
not only their
operation but those of their suppliers. Among their
goals:

- To be supplied 100
percent by renewable
energy

- To create zero
waste

- To sell products that sustain people and the
environment

Boeing is leading an industry effort to
develop alternative
sustainable jet fuels

Shell Oil invested in Prometheus Energy, a
start-up that takes
stranded methane gas in landfills and coal mines and converts it into
liquid natural gas

Areva, a leading French company, focused on
development of
nuclear energy, recently purchased the U.S. solar company Ausra as the
lynchpin of their effort to enter the solar industry

ABB, a Swiss-based leader in power and
automation technologies
recently purchased U.S. smart-grid company Ventyx for $1
billion

The list goes on and on. Virtually every Fortune 500 company either
(1) has in initiative around sustainability/clean energy, (2) is
making investments in companies that can help them achieve their
corporate goals, or (3) is buying companies to help them achieve their
goals.



The unprecedented investment in this sector by Corporate America will
also stimulate the wider clean-energy ecosystem. They will buy
products, services, and enter into power purchase agreements with
companies supplying clean energy and other carbon-neutral products and
services thus creating a virtuous cycle and giving young companies a
market in which to sell their products.



I firmly believe that we will look back in five to10 years and
remember this period as the time when the Googles and Amazons of clean
energy were created and an industry was reborn. Much like the Internet
today is an integral, commonly accepted part of our lives that we
don’t think much about, clean energy in five to 10 years will have
reached the same all-encompassing, ubiquitous status.



—


Michael Butler is Chairman and CEO of href=”http://www.cascadiacapital.com/” target=”new”>Cascadia
Capital, an investment
bank based in Seattle, Washington.