California’s Leadership in 21st Century Energy Technology

November 10, 2008

Alan Salzman
Managing Partner, CEO
VantagePoint Venture Partners

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Beginning with the gold rush, California has successfully established itself time and again at the center of big waves of business innovation; from the establishment of the entertainment industry, to aerospace, personal computers, biotech, data communications and the Internet.

Once again, California is taking the lead in growing our future economy; this time by showing leadership in the most important 21st Century technology that will shape our economic well being: CleanTech.

Recently, Governor Schwarzenegger signed into law key legislation promoting renewable energy and CleanTech businesses:

AB 2267 builds on California’s green economy by requiring the California Public Utilities Commission to grant incentives to eligible California technology manufacturers and requiring the California Energy Commission to give priority to California-based companies when granting awards, thereby creating jobs and attracting more CleanTech companies to the state.

AB 2466 will increase energy efficiency and help protect the environment by authorizing local governments to receive a utility bill credit for surplus renewable electricity generated at one site that can be applied against the electricity consumption at other sites.

AB 1451 will build on the state’s solar power usage by continuing the property tax exclusion for projects that use solar panel energy and expanding the exclusion to builder-installed solar energy systems in new homes.

The Governor is demonstrating essential leadership in a vital area. Complex problems in need of global solutions are increasingly evident in our shifting world. Entrepreneurs who apply cutting-edge technology can turn those problems into opportunities. Now is the time to combine the capital, technology and people to fashion the transformative companies of the 21st century.

With the current budget crisis in California, the Governor and innovative Legislators like Mark Leno (D-San Francisco), John Laird (D-Santa Cruz), Felipe Fuentes (D-Sylmar) and Sally Lieber (D-Sunnyvale) looked for solutions to help grow CleanTech companies without busting the budget, and we should applaud their leadership.

Public policy can – and should – be a driver for business and the economy, especially job-creating, environmentally conscious business. The right government actions and policies can be the “silent partner” in these business ventures. Just look at the explosive growth of California-based renewable energy – which will fundamentally change how we power our homes, offices and vehicles. At last count, more than 4 Gigawatts of large solar projects are planned in California – a vital source of new California-based jobs that will result in enough energy to power about 3,000,000 average homes. This growth can be attributed to strong, forward-thinking renewable energy policies.

Today, California leads the nation in CleanTech innovation and investment. California’s clean technology companies brought in $1.8 billion in investments last year, a 50 percent increase over 2006. These investments represent 45 percent of total green investments in North America.[1]

The US needs to do the same thing. If our Federal government adopts clear, predictable clean energy policies, we will scale our CleanTech businesses and end our addiction to foreign oil. We have the know-how, talent and capital. Now all we need is the political will to take advantage of the opportunity before us.

We must adopt strong policies that establish long term-term incentives and a new energy infrastructure that connects sun and wind power to the grid and distributes it efficiently to our homes, businesses and vehicles. We need to realistically assess the true cost of carbon, develop a national renewable portfolio standard and build clean incentives into consumer choice.

And if Washington needs help developing these policies, it only needs to look west to California, where we have been incubating good ideas for generations.

[1] San Francisco Chronicle, “California scores nearly half of North American green tech capital,” January 17, 2008

Alan Salzman is Managing Partner and CEO of VantagePoint Venture Partners.

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