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Smart Grid Funding Outlook – VC Perspective

Smart Grid Funding Outlook – VC Perspective. Dharmesh Thakker Vice President Advanced Technology Ventures (ATV Capital) dthakker@atvcapital.com. Cleantech VC $$ Trend. Source: Cleantech Group.

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Smart Grid Funding Outlook – VC Perspective

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  1. Smart Grid Funding Outlook – VC Perspective Dharmesh Thakker Vice President Advanced Technology Ventures (ATV Capital) dthakker@atvcapital.com

  2. Cleantech VC $$ Trend Source: Cleantech Group • Cleantech VC $ declined significantly from 2008, but on par with ‘07 and reversing trend from early ‘09

  3. Cleantech Relative to Other Sectors Source: Cleantech Group • More importantly, cleantech investments as % of overall investment $$ showing clear positive trends • Recent IPO – A123 and S-1 filings, and DoE funding further driving investments

  4. Not All Sub-sectors Equal! Source: Cleantech Group • Energy Efficiency & Smart Grid Investments significantly higher at the cost of solar, wind and biofuels

  5. Why the Trend from Generation towards Efficiency / Smart Grid? Source: Lazard Analysis , July 2008 • Pure Economics!! From an LCOE perspective, Energy Efficiency and supporting Smart Grid initiatives most cost-effective in achieving our GHG and RE goals, relative to “sexy” technologies including Solar, Biomass etc.

  6. Renewables – Fit the VC Model?Need Tremendous Tax Equity Apetite • Need almost $45B in tax equity for project finance by 2012, while # Tax Equity players dwindled from 17 to 3 in 2009! • “Valley of Death” for commercially-ready renewables, hard to fit the VC model

  7. Strategic Drivers for Smart Grid • Expected Demand outstripping Supply • Electricity consumption expected to grow 31% to 4,870B KWh in 2030, while generation including renewables only expected to grow by 22% • Shrinking reserve margins, intermittent renewables and distributed generation driven by RPS • Aging electrical system • DoE states 70% transmission lines and transformers > 25 years old and approaching EOL • $1.1T in US energy economy riding on aging infrastructure! Urgency to effectively network and manage grid to ensure reliable energy delivery

  8. Other External Drivers • Technology Drivers: • Improved two-way communication technologies • Enhancements in human-machine interface (think iPhone!) leading to increased comfort around energy mgmt systems and rules engines • DoE Stimulus: • $32B in ARRA funds for energy infrastructure transformation • $3.4B in grants to 100 projects, matched by $4.7B in private investments • $620mm for advanced smart grid technology demos

  9. How BIG is the Opportunity Anyway? • U.S. electric utilities have an installed asset base that is 2x the size of telecommunications, but staffed with 60% less people. Urgency to enhance infrastructure automation. • 29 States (+DC) have Renewable Portfolio Standards, but Federal RPS would accelerate oppty • Conservative estimates size the US opportunity at $100B by 2020 (WW market 2-3x) • 37-45% for grid sensing and communication • 23-25% in metering infrastructure • 23-24% in data storage, IT, systems integration • 6-17% in home energy mgmt solution

  10. Smart Meters / AMI Laying the Foundation • 70 utilities in 30 states with ongoing AMI activities • 4mm installed by ‘09 with regulatory visibility into 30mm more • European utilities represent 70mm meters in 2012 (EDF, Endesa, E.ON)

  11. Smart”er” Grid Evolution

  12. Next Up in the Investment Landscape

  13. Investment Landscape by Sub-sector

  14. Summary • Electricity supply-demand imbalance and surging intermittent renewables require significant upgrades to aging electrical infrastructure • Tremendous opportunity NOW to build a fully-integrated smart”er” grid to support $1.1T electricity economy in the US and $6T world-wide • AMI / Smart Meter roll-out laying a strong foundation to build next-gen smart-grid apps to enable a clean energy ecosystem

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