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Green energy: Silicon Valley leads a back-to-basics revolution

Green energy has long aimed to overthrow fossil fuel's stranglehold on world power generation. But for now, Silicon Valley is taking green energy down a different path.

By Rajeev PoduvalContributor / December 14, 2011

Workers for Silicon Valley green-energy firm SolarCity prepare to install solar panels on the roof of a home in Palo Alto, Calif., on March, 31.

Tony Avelar/The Christian Science Monitor/File

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Mountain View, Calif.

Even before Solyndra became synonymous with the perils of the green-technology industry, the industry was changing.

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Grand plans, like those of Solyndra to bring solar energy to firms nationwide, still ripple through Silicon Valley, but quietly. The current economic slump and Chinese competition have taken a toll.

Instead, a new vision for the future of the green economy is emerging – at least for the short term. Instead of transforming power grids, green companies are looking at more incremental advances, whether it's improving light-bulb efficiency or helping Wal-Mart make its supply chain more environmentally friendly.

But this more modest outlook is not a retreat, analysts say. Moreover, data suggest that the United States remains the world leader in private-sector investment in clean technology, with Silicon Valley leading the way.

"I think clean-tech industry is still a growing area for venture capital investments," says Mark Heesen, president of the National Venture Capital Association. "It is an area fraught with a lot of risks – no question about that – but there are also huge and significant game-changing technologies coming out of venture-backed clean-tech companies."

China has invested far more public money into clean-tech industry than any other country, according to Cleantech Group, a global research organization in San Francisco. But the US is still No. 1 when it comes to venture capital.

  • The US accounted for 76 percent of the $2.2 billion in clean-technology venture investments across the world in the third quarter of 2011, according to Cleantech Group. The Asia Pacific accounted for 14 percent, and Europe and Israel 10 percent jointly. Within the US, California attracted 39 percent of the investments.
  • California attracted 40 percent of global clean-tech venture capital in the first half of 2010, more than double what it attracted in the first half of 2009, according to the California Green Innovation Index, published by Next 10, an independent research group. Silicon Valley attracts 54 percent of clean-tech investment in the state. "The valley continues to be the hot spot for clean tech," says Noel Perry, founder of Next 10.
  • California ranks first in the US in green-tech patents by a wide margin. It had 450 between 2007 and 2009, outpacing New York, which had 300.

Several experts attribute a major part of the success to the industry's strategic move to support multinational corporations in their efforts to go green.

"Green is now mainstream and should be measured in private-equity spending and growth in the green offerings of mainstream companies like General Electric and Procter & Gamble," says Terry Tamminen, author of "Lives Per Gallon: The True Cost of Our Oil Addiction."

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