Cleantech Infrastructure Growth Creates Convergence of Industries and Opportunities for New Wave of Entrants to Emerge as Leaders, According to PricewaterhouseCoopers

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Report Highlights Cleantech Investment Rebound and Defines Role for Companies Entering Emerging Smart Infrastructure Market

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The smart infrastructure market is creating a new era of convergence as companies collaborate and transfer key skills and assets across industry sectors.

The national push to gain energy independence, conserve energy, and mitigate greenhouse gas emissions is driving a wave of new entrants -- the cleantech players-- to help build the new smart infrastructure market. This is opening opportunities not only for large established players, but also for start-ups eyeing opportunities to leapfrog swiftly from small and peripheral to central and significant players, according to a new report from PricewaterhouseCoopers LLP (PwC), entitled "Cleantech Revolution: Building Smart Infrastructures."

The report includes findings from the MoneyTree Report, a quarterly survey produced by PricewaterhouseCoopers and the National Venture Capital Association, based on data from Thomson Reuters.

According to PwC, venture capital (VC) investing in the cleantech sector rebounded sharply in the third quarter of 2009 to $898 million in 57 deals, rising considerably from $475 million in 49 deals in the second quarter. The jump continues a trend of recovery in VC investing which dropped precipitously in early 2009 in the wake of the recession and banking crisis.

“The smart infrastructure market is creating a new era of convergence as companies collaborate and transfer key skills and assets across industry sectors,” said Tim Carey, PricewaterhouseCoopers U.S. clean technology leader. “As the build-out gains traction, it has the potential to support a proliferation of new businesses across sectors, much like the evolution of both the semiconductor industry and the Internet.”

At the forefront are the transformative alliances forming between the automakers, utilities, battery makers and communications providers. As the grid takes shape, the incumbents changing strategies could spur further mergers and acquisition activity in cleantech. According to the report, companies that identify their roles and capitalize on these convergences will establish early leads in nascent markets. The anticipated next wave of cleantech companies will begin to “horizontalize” the infrastructure, as new players enter and fill in gaps and as both the smart grid and electric transportation infrastructures spread and diversify.

Additionally, in the wake of the recent United Nations Climate Change Conference in Copenhagen, companies will increasingly assess their roles as players in smart infrastructure build-outs globally, as well as their adoption of clean technologies to mitigate their exposure to more stringent greenhouse gas emissions policies and cost-cutting and energy-saving endeavors that these technologies can help carry out.

“The utility sector is at a major inflection point and at the epicenter of the cleantech revolution,” said David Etheridge, PricewaterhouseCoopers' U.S. utilities and power generation leader. “Global demand for more aggressive carbon management coupled with the development of new and innovative technologies to make the electricity infrastructure in this country fundamentally ‘smarter’ will radically alter the utility and power generation landscape over the next 20 to 30 years.”

The report defines the role and outlines the opportunities for companies in the emerging smart infrastructure market:

  • A new M&A rule book -- The old rules of valuation may not apply in cleantech. In such a fast-moving regulatory and investment landscape, it will be challenging to choose which acquisition targets hold the greatest promise in the build-out of smart infrastructures -- and, more important, to ascertain the right purchase price.
  • Forging of public-private partnerships -- New public-private partnerships will be necessary in such an ambitious goal of creating a ubiquitous, national smart grid, but these new models of collaboration must be governed and managed so they are enduring and harmonious.
  • Creating a customer-centric smart infrastructure -- For customer adoption to take place, stakeholders building out these infrastructures must develop programs that accommodate customers’ needs and preferences.

“Keeping a vigilant eye on the current and anticipated support on both federal and state
government levels, as well as consumer and commercial adoption of clean technologies, will be key for companies to take advantage of the significant opportunities in the emerging smart infrastructure industry markets,” added Carey.

For more information and to down load an electronic copy of "Cleantech Revolution: Building Smart Infrastructures," visit http://www.pwc.com/us/cleantechrevolution .

About PricewaterhouseCoopers
PricewaterhouseCoopers (http://www.pwc.com ) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 163,000 people in 151 countries across our network share their thinking, experience and solutions to develop fresh perspectives and practical advice.

"PricewaterhouseCoopers" refers to PricewaterhouseCoopers LLP or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity.

© 2009 PricewaterhouseCoopers LLP. All rights reserved.

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