From high-speed microbial digesters that turn food waste into water to a kite that harvests wind power from 1,000 feet up, Vancouver’s clean-tech entrepreneurs have no end of innovative ideas.
Greentail Environmental Inc.’s waste-to-water technology and Crosswind Power’s kite-turbine were among a handful of nascent clean technologies sketched out in brief pitches at the Vancouver Enterprise Forum’s clean-tech industry update January 24 at the Vancity Theatre.
But, as close to 200 entrepreneurs attending the forum heard from a panel of four experts, many of those ideas will ever make it past the R&D stage and fewer still will get to the point that Vancouver’s Angstrom Power Inc. reached at the end of November, when Paris-based BIC Group (Euronext:BB) bought the micro-fuel-cell maker for $18.7 million.
While there is a growing market for clean energy worldwide, Vancouver has become something of a clean-tech greenhouse that produces fruit for which there is little local demand.
“There really are few local markets, and there’s really no supply chain for the products that we manufacture here,” said panellist Kirk Washington, a partner with Yaletown Venture Partners.
With some of the lowest corporate and income tax rates in Canada and a technology hub created by companies like Ballard Power Systems (TSX:BLD), which helped foster an a industry and create a tech labour pool, B.C. is a good place to start a clean-tech company, the panellists agreed.
The fact that B.C. has received 25% of the $1.9 billion in funding from Sustainable Development Technology Canada indicates just how vibrant the clean-tech sector is here.
But getting the venture capital to move from R&D to commercialization and beyond is getting harder. Capital is scarce, for one thing, Washington pointed out, and investors wanting lower-risk, high-return investments are likely to park their money in resource sectors like mining.
“Trying to finance an early-stage venture these days, that’s almost impossible,” Washington said.
While the B.C. and federal governments provide a range of good incentives, governments and Crown utilities are reluctant to use their procurement powers to help clean-tech companies land that first contract.
So when a company like Endurance Wind Power is trying to sell its wind turbines outside of Canada and is asked for examples of the turbines turning in the company’s own province, Endurance can’t point to any.
“It would be great if, in our backyard, we could validate more of our wind turbines,” said Endurance COO Peter Tyszewicz. “At the end of the day, we still did it in the U.S., and based on the success, we expanded very quickly into the U.K. But it would be great to develop that infrastructure in your backyard. Having that domestic demand for the product would be very useful.”
There are roughly 700 clean-tech companies in Canada, 60% of which have annual revenue of less than $5 million, according to a presentation made by forum moderator Ian Heine, a partner with PwC. More than 80% of those companies are exporters.
Panellists said smart-grid technology, reducing the environmental impacts of fossil fuel extraction and processes for cleaning up waste water and industrial effluent are areas with good growth potential.
Donald McInnes, executive vice chairman of Alterra Power Corp. and chairman of the Clean Energy Association of BC, also pointed to a U.S. military target of switching to 50% biofuels by 2020 as one possible new market.
“So if you can crack the code for getting fuel out of algae better than the other guy, you’re going to do well,” he said.
However, Washington warned that Canadian equipment manufacturers (solar panels and wind turbines, for example) are up against China.
Asked what China means for clean tech, Washington said: “It means, for an equipment manufacturer, death.”
He pointed out that thanks to cheap manufacturing in China, the cost per watt for solar cells is dropping 30% per year, which explains why companies like Vancouver’s Day 4 Energy (TSX:DFE) are having such a hard time.
“You can’t compete with that,” Washington said. •
