Investors expect biggest growth in solar, hybrids and biofuels

What sectors do cleantech investors find most promising?

In the two weeks since the Cleantech Forum XII investor event in San Francisco, investment bank Jefferies & Company has been tabulating the results of a survey of investors that they performed at the event.

Today, the bank shared its findings.

Investors had plenty to talk about at the Cleantech Forum, if this shot of one (of many) breakout networking session was any indication. >>

Among renewable energy sources, the survey showed investors think solar power will be best positioned to contribute most to the world’s primary energy supplies by 2020. Among renewable energy sources, solar was selected by 40% of respondents, followed by wind (33%), hydro (22%) and geothermal (5%).

"While wind is expected to grow quickly as well, solar remains the more attractive investment because of the higher growth rate, better profit margins and, at least in the U.S., a wide range of investment options, including both traditional manufacturing and potentially game-changing technologies," said Jeffrey Bencik, Vice President and Equity Research Analyst at Jefferies covering clean technology companies.

In addition, 75% percent of attendees surveyed said they believe U.S. President Bush’s target for America to consume 35 billion gallons of ethanol and other alternative transportation fuels by 2017 – up from 5 billion today – is attainable.

Big oil was taking notes at the forum. Ricardo Angel, Principal of Chevron Technology Ventures (L) chats with his counterpart Mohammad A. Al-Ramadhan of Kuwait Petroleum Corporation (R). >>

But Laurence Alexander, Vice President and Equity Research Analyst at Jefferies responsible for coverage of chemicals and industrial biotechnology, said several issues need to be settled before America will be able to reach the President’s target.

"These include the impact on grain costs, the availability of water supplies and logistics. As part of the solution to these issues, alternate feedstocks, such as switchgrass and algae, are attracting more interest and may prove the more viable long-term solution."

Algae as a biodiesel feedstock is perpetually on the minds of these fun-loving three, caught at the forum: Lissa Morgenthaler-Jones, Founding CEO (L) of algae researcher LiveFuels, Dave Jones, LiveFuels CFO (C) and Charity DeLuca, LiveFuels VP of Research Relations (R). >>

"Investors are also showing more appreciation for the favorable outlook for biodiesel and the opportunity to integrate biofuels with biobased chemicals."

The survey results also indicate strong investor optimism for hybrid transportation. Asked which technology has the broadest commercial investment potential over the next five years, 39% of respondents chose hybrid transportation, followed by ethanol (26%), biodiesel (24%) and hydrogen fuel cells (11%).

Hosted by the Cleantech Venture Network, the Cleantech Forum was held at the San Francisco Marriott from February 19-21. Organizers say some 800 venture capitalists and other investors attended. Survey responses were tabulated from the responses of 148 venture capitalists, private equity firms, corporate executives, thought leaders and other financial influencers.

Josh Becker of New Cycle Capital (L) almost shares a smile with Josh Green, partner with Mohr Davidow Ventures (R), as they ponder far more interesting things than the serendipity of their names >>

Jefferies recently introduced a number of indices benchmarking opportunities in cleantech, including the Jefferies Global Clean Technology Index, a composite index of nearly 50 leading small- and mid-cap companies worldwide.

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