YPSILANTI – With oil prices flirting with record highs, the environment for investing in alternative energy companies is the best it has been in a decade, a panel of experts at the University of Michigan Growth Capital Symposium agreed Tuesday.
But they also agreed that an industry dominated by Fortune 10 global corporations is not for the average angel investor. But those investors who put their money into smart niche markets have a golden opportunity to realize gigantic financial gains.
What looks hot in alternative energy?
“Ethanol and biodiesel,” said Ryan Waddington, Director of Entrepreneurial Programs for NextEnergy, an alternative energy accelerator/incubator at Wayne State University’s TechTown.
H. Jeffrey Leonard, President of the Global Environment Fund, said single input and output environmental controls used in industrial environments also are hot picks.
“There is a revolution in controls going on,” he said. “Who buys these controls? Honeywell and Siemens. If you sell Siemens chips for use in an industrial environment, they will get behind you.”
Howard Berke, Chairman and CEO of Konarka Technologies, said look for companies that develop technologies needed to make information technology more energy efficient.
“Focus on companies that make the picks and shovels, not what’s coming out of the mines,’’ he said.
They all agreed that the energy space will continue to be dominated by huge global corporations with hundreds of billions of dollars and very long investment horizons, such as Exxon Mobil.
Another big hurdle for alternative energy companies is energy customers are firmly entrenched with huge infrastructures tied to traditional energy sources provided by the Exxon Mobil’s of the world, petroleum-based products. So it makes conversion to alternative energy a tougher sell.
With oil prices hovering around $70 a barrel, producing $3 a gallon gasoline in the United States, the return on investment for alternative energy technologies, such as wind, and solar, will improve dramatically this decade, panelists said. The trend should benefit Michigan.
“Electro mechanical devices for wind power generation and efficiency is what Michigan should be up to,’’ Berke said. “Michigan has an industrial base and a very knowledgeable industrial workforce ideally suited for alterative energy development.”
Berke predicted solar energy will eventually evolve into the world’s ultimate source of energy because it’s renewable and distributed. Technology will duplicate Mother Nature’s 100 million year development of photosynthesis, which is an organic technology that will be used on a nano technology scale.
To foster alternative energy development, the federal government needs to step up in a big way, the way the German government has done, Berke said. Subsidies are needed to help the transition from non renewable petroleum-based energy or coal used to generate electricity on a mass scale to alternative energy production.
The federal government also should implement an energy support price to keep the momentum moving forward on alternative energy technology development, Leonard said. When energy prices fall below the support level, the excess cash would flow to the U.S. Treasury, he said.
“Right now the federal government is trying to choose winners,” he said. “It’s the wrong policy. Energy efficiency technology would save this country far more money.”
Said Berke: “China will have a renewable energy policy before the United States.”
Check back at MItechnews.Com all this week for more stories from the 25th anniversary U-M Growth Capital Symposium. Day two is Wednesday.