China’s Cleantech Pioneer Again Rides Nation’s Spending Wave
By Jonathan Shieber
Based in a Beijing office park less than a five-minute walk from one of the gates to China’s prestigious Tsinghua University, Tsing Capital has been laying the foundation for China’s new energy economy since its launch in 2001.
Now the firm, one of China’s first clean technology-focused venture capital funds, is preparing to raise its fourth China Environment Fund with a $250 million target, according to sources with knowledge of the vehicle.
In an email, Tsing Partner Ian Zhu declined to provide additional comment about Tsing’s fund-raising plans. “Regarding fund-raising, Tsing Capital is currently still investing its latest fund CEF III,” Zhu wrote. “Although raising our next fund is a natural progression in CEF’s ongoing development, we will execute definitive plans only when the appropriate time arrives.”
China’s state and municipal governments have been outspending the rest of the world in alternative energy and sustainably focused stimulus programs for the past few years. A March report from the Pew Research Center said that China has claimed the top spot in clean energy spending, dedicating $34.6 billion to clean energy programs in 2009. The U.S., at number two on the Pew list, spent $18.6 billion over the same period.
Tsing Capital is one of the oldest of the many venture firms in China riding the country’s wave of clean technology spending. The firm also has pride of place in Beijing thanks to its position as the new energy and clean technology VC arm of Tsinghua Holdings Co., which is owned by Tsinghua University and operates as the commercial development arm for its science research.
Tsing Capital previously raised approximately $251 million through its three earlier China Environment Funds and a nearly $51 million for a yuan-denominated investment fund. The Yiyun Cleantech Fund raised CNY350 million in a November first closing from investors including Beijing Zhongguancun Venture Investment Development Center, which is backed by the district’s municipal government, along with other investors like the Xuzhou Economic Development Zone Co. and Zhejiang China Merchandising Group Co.
Of the 21 investments that Tsing has made through nearly a decade of investing, the firm has scored exits on U.S. exchanges with two solar companies - China Sunergy Co. and LDK Solar Co. - as well as with hydropower company China Hydroelectric Corp., which listed on the New York Stock Exchange earlier this year.
In recent months the firm has also expanded its investment scope, putting money into Taiwanese LED companies and U.S.-based stealthy battery company Atieva Inc., and solar technology developer Sunpreme Inc.
For Tsing Capital and other clean technology investors springing up in the country these days, their investment strategy is buoyed by significant support from China’s central, provincial and municipal governments, among others.
This latest fund-raising will proceed, however, with two partners employed by the firm since its earliest days shifting to much reduced roles with the firm, VentureWire has learned.
Patrick Tam and Austin Jieh, both former general partners, are still working with Tsing in some capacity, according to Zhu. However, their names are no longer listed on the firm’s Web site, and won’t be working at Tsing’s offices.
“Due to personal and family reasons, both Patrick and Austin have had to reduce their full-time work capacity with Tsing Capital,” Zhu wrote. “Consequently they have both transitioned to the role of adviser and will continue to work with Tsing Capital in its investment activities and portfolio management.”
Neither Tam nor Jieh responded to emailed requests for comment.
Staying on to head up the firm’s investment team are its founder and Managing Partner Don Ye and Managing Partner Shelby Chen.
The firm has also promoted some of its staff in recent months and added fresh faces, according to its Web site. Larry Zhang, a former principal with the firm, is now a partner, and the firm also has added Richard Xue, a former venture partner at Softbank China & India Holdings, to its roster.
U.S. Ignores China Greentech at Its Peril
San Francisco, Calif.-- Reporting from The End-to-End Smart Grid Seminar put on by the U.S. Department of Commerce.
This conference covered a lot of ground, technically and regionally, but I'm going to limit this article to the China story. Because it is huge and has the momentum to leave the United States energy business behind, mired in regulatory and standards quarrels, amidst political and bureaucratic paralysis without a true energy policy.
William Brekke, Senior Commercial Officer, U.S. Commercial Service, China spoke in San Francisco today. His job is to help U.S. companies get into the China market.
China's Green March
Brekke noted that China is a technocratic society -- while the U.S government is overrun with lawyers, many Chinese government officials have engineering degrees.
China realizes that their recent pace of economic growth is unsustainable. The country understands that their energy demands and pollution levels are unsustainable. Sixteen of the globe's most polluted cities are in China, and China now has the dubious honor of being the top producer of greenhouse gases.
"So China's policy has changed. It's no longer growth at any cost -- it has to be green GDP."
China is committed to change -- with a target of 40 percent improvement in energy intensity.
"We [the U.S] like to think we have a stimulus plan; China actually does."
Coal and Oil
- China is Asia's largest oil producer and the world's second largest importer of oil.
- China is building one 1,200 megawatt coal-fired power plant per week -- the country is tripling its coal consumption and becoming a net importer of coal
- China is expanding its quest for natural resources, signing major deals in Africa, the Middle East, Central Asia and South America.
- Many engineers say that China has better coal plants than the U.S.
Nuclear
- There are twenty nuclear plants under construction in China with many more in the planning stage. They have a goal of 60 gigawatts of nuclear power by 2020.
Solar
- China is now the number one global producer of photovoltaic cells. They were barely on the map a few years ago in solar production. There is $3 billion in Chinese government stimulus for solar. Compare that with last week's announcement from Secretary Chu allotting $200 million for solar and water power technologies. The Chinese government will fund 50 percent of the cost of very large solar (>500 megawatt) installations and expects their solar market to increase to 20GW by 2020.
Wind
- China, currently second in the world in wind, will soon be the leader, with a goal of 150 gigawatts by 2020.
Hydropower
- China is number one in the world in hydropower.
Smart Grid
- China is working on ultra high voltage (UHV) power lines.
Green Buildings
- Adopting new building codes
- Expecting huge potential gains from energy efficiency
Clean Transportation
- In 2005, China had 22 million cars on the road. In 2030 the number is forecast at 295 million -- that's a 1340 percent increase. The goal is 60,000 electric vehicles on the road by 2012.
I spoke with Mr. Brekke after the presentation and he cautioned, "The Chinese are good at the large scale while U.S. firms do well at the distribution and retail level," adding: "It's not just China moving fast -- it's Japan, Korea and India."
Source:http://www.greentechmedia.com/articles/read/u.s.-ignores-china-greentech-at-its-peril/
Special 'green' fund for SMEs
By Jonathan Shieber
BEIJING - China will set aside 10.6 billion yuan as a special fund to help the country's small- and medium-sized enterprises (SMEs) to cut down their carbon dioxide emissions and energy consumption this year.
The news was announced by an official of the Ministry of Industry and Information Technology during an industrial forum last week in Beijing.
Because more than 50 percent of industrial emissions are from SMEs in China, the Chinese government said it would step up efforts to close down those that pollute heavily and those with outdated technology. It would help certain manufacturers to embrace environmentally-friendly technology, said Chen Xin, a division director of the ministry, during the meeting.
Chen said the government was striving to reduce the country's carbon intensity by 40 to 45 percent in 2020 from 2005 levels, in line with its commitment at the international environment summit in Copenhagen last year. The special fund reflects part of the government's commitment to have the country marching towards the goal, he added.
The ministry's SME development and promotion center will recommend a group of model SMEs in energy saving and emission reduction to relevant government departments so they can receive strong policy backing.
"Comet Group, a Guangzhou-based paper shredder manufacturer, is a leader in energy saving and technology development," Chen said.
Comet paper shredder machines now meet more than 40 percent of the Chinese market demand, which was 500,000 units in 2009.
"We are going to produce a brand new generation of paper shredder machines for the market this year in order to meet the govenrment's call for energy cost efficiency," said Comet President Huang Fenqiang.
The latest water-cooled paper shredder doesn't have to be turned off every 15 minutes as did the previous mode to prevent overheating. The new one can save about 30 per cent in energy consumption, Huang said.
"Water cooling technology is considered the latest in the paper shredder industry," he added.
Source:http://www.chinadaily.com.cn/business/2010-05/17/content_9857631.htm
Goldwind gets nod for HK IPO
2010-05-18By Liu Yiyu
BEIJING - Xinjiang Goldwind Science & Technology Co, the world's fifth largest wind power equipment maker, said on Monday that it has received approval from China Securities Regulatory Commission to make an initial public offering in Hong Kong.
The company may offer up to 454.59 million shares, including 59.29 million shares in over-allotment, according to a statement released on Monday.
Goldwind, which is already listed on the mainland's Shenzhen stock exchange, said in October it planned to float shares in Hong Kong. Sources familiar with the company's Hong Kong listing plans said in January that it aimed to raise $1.5 billion and this would take place in the first half of the year, according to Reuters.
The listing still needs approval from the Hong Kong Stock Exchange.
"The Hong Kong listing exemplifies Goldwind's ambition to expand its global business and provides the capital that would be used to develop megawatt-capacity equipment, which is the trend of the industry," said Jiang Qian, an industry analyst at China Investment Consulting.
China has been encouraging and supporting internationally competitive enterprises like Goldwind to go overseas by offering preferential policies, Jiang added.
Wu Gang, chairman of Goldwind, told China Daily in an earlier interview that the company is looking at markets in the United States, Australia, Central Europe and Africa and he expects overseas sales to account for up to 30 percent of its business over the next three to five years.
Chinese wind power equipment manufacturers are very competitive in the international market as the result of the relatively good quality of their products and lower prices, according to industry analysts.
Meanwhile, Chinese manufacturers have also seized a bigger slice of the domestic market from their foreign competitors who are losing ground as their products are much more expensive.
China has overtaken the US as the largest wind power market. The country will have an installed wind power capacity exceeding 16 million kW by June.
Industry experts estimate China will install wind power capacity of around 10 million kW annually in the coming years, while the production capacity of the equipment is likely to exceed 20 million kW next year, raising concerns about overcapacity.
Goldwind's revenue in the first quarter of this year surged 61.69 percent to 1.855 billion yuan but profit only rose 27 percent to 248 million yuan, indicating a narrower profit margin due to more intense domestic competition.
The company's overseas expansion strategy will offset the negative impact of domestic overcapacity, according to analysis by Gerson Lehrman Group Councils.
Besides, Sinovel, now the world's third largest wind power maker and Goldwind's major rival, has outstripped it in recent years, forcing the company to seek markets abroad, according to Jiang.
Source:http://www.chinadaily.com.cn/business/2010-05/18/content_9862381.htm
BrightSource Raises $150M More: Is China on the Horizon?
BrightSource Energy said it raised $150 million in a fourth round of financing, bringing the total the firm has raised so far to more than $300 million.
The financing will be used for two purposes: to help BrightSource build solar thermal power plants in the U.S. Southwest to serve customers like Pacific Gas & Electric and Southern California Edison, and to expand internationally.
International. There's a word you haven't heard much from BrightSource. Rival eSolar has already taken the international route, signing deals to provide equipment and intellectual know-how to power providers in China, South Africa and India. China could be a lucrative market, although to date, it has yet to produce a domestic powerhouse in this industry like Suntech in photovoltaic solar panels. A number of Chinese companies make solar thermal water heaters but not solar thermal power plants or solar thermal power plant equipment. Sources, however, have told me that the government is interested -- very interested -- in seeing the market expand.
So to are some solar thermal power plant developers. Solar thermal equipment is expensive. Chinese equipment manufacturers could help bring down the price, one developer told me at the recent Solar Industry Summit. Potentially, BrightSource could enter deals to build power plants overseas or enter into joint ventures with local companies; First Solar has cut deals like this in China to build photovoltaic power plants. (PV panels harvest energy by effectively stripping electrons from sunlight. Solar thermal plants are like big tea kettles: they harvest heat from the sun, mostly to boil water.)
Like the solar panel industry, the solar thermal industry is in the midst of consolidation. Last year, Siemens bought Solel, one of the older companies in the business, for $410 million, while Areva, the French company known for nuclear, bought struggling startup Ausra.
Among the startups that popped up in the early part of the decade, three seem to be doing well: BrightSource, eSolar, and Stirling Energy Systems. BrightSource has signed contracts to build solar thermal plants that will produce 2.6 gigawatts of electricity for major California utilities. It has also struck an alliance with Bechtel to help build these plants. It hasn't been easy. Regulators have squeezed the size of its Ivanpah, California plant. BrightSource's power plants will be based on tower technology: mirrors will direct heat to a water tank in the sky to produce steam. The success to date, and the company's vivid history, is why we put founder Arnold Goldman in the Greentech Hall of Fame.
Stirling uses a Stirling engine that generates hot air. It and sister company Tessera Solar are building power plants in California and Arizona.
Meanwhile, eSolar has a power tower similar to BrightSource but a different business model. It largely gave up on trying to build power plants. Instead, it now concentrates on making equipment and selling it to power plant builders or licensing the technology.
Source:http://www.greentechmedia.com/articles/read/brightsource-raises-150-more-is-china-on-the-horizon/
In 2020: When China Rules the Clean Energy World
I've been most recently reading When China Rules the World. A fascinating treatise on what happens to the world economy when, over the coming decades, China's economy becomes paramount in the world economic system. China and cleantech is something I've been thinking about and investigating for some time now.
Timely then to see the report from New Energy Finance (note: opens pdf) that in Q1, China was the biggest recipient of clean energy project finance, nearly double that of the amount invested in clean energy project finance in the U.S., nearly two-thirds again more than that invested in Europe.
I think it's safe to say that China will be a major driver of clean energy and water technology adoption over the coming decades. Not only because their economy is growing so quickly. Not only because China has only 1/5th the water per capital, as well as much less domestic energy supply and arable land, than the U.S., thus necessitating wiser use of natural resources earlier in their economic development cycle. But also because now they've visibly committed themselves to becoming leaders in the sector and, as one regional GP told me today, "they don't want to lose face by not meeting that target."
So China will be a major mover in cleantech markets. But what does that mean?
I believe that the developments will impact cleantech investors in three phases:
1. The rapid-growth market phase
At first, the major impact on the cleantech economy will be China as outsourced manufacturer, and China as fast-adopter market. We are already seeing this happening. With such strong economic growth comes strong resource needs, and many cleantech startups I speak with are already in discussions in China about potential early rollouts of technology. Using local distribution or other types of partners, they are looking to build early projects and find early customers there.
This requires establishing such local partnerships, however, as it's a lot easier said than done to sell cleantech goods and services into this market. So I know many entrepreneurs and investors who are racking up lots of frequent flier miles getting back and forth. And spending a lot of time establishing strong partnerships there as a stepping stone to actual sales.
Furthermore, as cleantech hardware markets shift toward a fabless model using contract manufacturers for their device businesses, China will naturally increasingly become the actual manufacturer of cleantech hardware systems and components, just like has happened in the IT and telecom industries.
2. The homegrown innovation phase
China is awash in liquidity. There is a lot of external capital chasing the opportunities presented by the market, but there is a lot of internal capital as well, looking for good domestic investment opportunities in China. Plus, there is the national commitment to establish more homegrown technology leadership in this sector.
In the next few years we will see the emergence of more homegrown Chinese clean technology startups that are developing proprietary IP. It is already beginning in sectors (such as large-scale wind turbines) where the technology is readily adaptable from technology developed elsewhere. But with a steady source of strong technical expertise and domestic markets available, Chinese cleantech entrepreneurs will increasingly be among those developing first-to-commercialize solutions across a number of cleantech sectors and subsectors.
For cleantech investors, finding out how to access these entrepreneurs, and develop winning deals from such relationships, is the still-unanswered question.
3. The China-sets-the-standards phase
As the Chinese market becomes the most important global market, and especially as homegrown producers become more independent producers of technology themselves, China will hold increasing sway over the development of entire industries like smart grid communications, smart buildings, distributed generation power management, M2M communications, and other subsectors of cleantech where standards-setting will be important.
In smart buildings, languages like Bacnet are important standards that have been brought to market by European and U.S. technology developers to date. But in the future, what the Chinese market settles on a standard will often be what the world settles on.
And thus China will shift from being an attractive market for western cleantech entrepreneurs to think about servicing, to a critical must-address market that will be addressed by both domestic and foreign innovators alike.
All of the above will happen a lot more rapidly than many might expect.
Source:http://www.greentechmedia.com/cleantech-investing/post/when-china-rules-the-clean-energy-world
