Clean tech is Silicon Valley's hope in tough economic times

Green-energy innovation is Silicon Valley's best hope for emerging from the recession, a new report said.
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But there is room for other regions, including Austin, to play a role in clean-technology development, experts say.

The 2009 Index of Silicon Valley paints a bleak picture of the Northern California technology hub's economy, but it singles out clean technology as the smartest path to job creation and a stronger high-tech base.

"The climate crisis is an opportunity to innovate, to invent new technologies, to commercialize them, to grab market share, to create whole new clusters of green jobs and grow the economy," said Russell Hancock, chief executive of Joint Venture: Silicon Valley Network, an organization that assesses the region's social, economic and environmental health and publishes the annual survey.

Although Silicon Valley is the dominant player in the emerging industry, President Barack Obama's promise of $17 billion for renewable-

energy projects will create opportunities for areas around the country, said Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy.

"The new administration's emphasis on science and technology and innovation has to be good for both San Jose and for Austin," Levy said. "I don't personally like this idea of this competition between regions. I think the competition is between us and other parts of the world."

Reed Benet, the new head of the Austin Technology Incubator's clean-energy division, said that as long as "Silicon Valley is the 800-pound gorilla in terms of a concentration of academic institutions, venture capital and corporate funding, a deep bench for 'been there, done that' management, and an infrastructure of product and service providers," it will continue to have an undisputed edge.

But that's OK, Benet said.

"Silicon Valley venture capitalists are calling around looking for deals and actually traveling beyond the magic 90-mile radius from their home offices," he said. "And if a city like Austin — with all its critical mass advantages in photovoltaics, mixed semiconductors, batteries, information technology and wireless, semiconductor fabrication and automotive electronics — can self-organize itself on a 'rising tides raise all boats' principle, we can really make a mark, and maybe even shoot for a top position."

As examples, Benet cited recent efforts to leverage Austin Energy, considered a national leader in renewable energy, as an ally for alternative-energy projects. They include the newly launched Pecan Street Project, a public-private initiative to develop a local clean-energy power system.

Austin attorney Pike Powers is also building business, government and political alliances to pursue several clean-energy economic development projects tied to batteries and smart grids.

Still, it's money that matters, and it's more abundant on the West Coast.

In Silicon Valley, investment in clean technology grew 94 percent between 2007 and 2008, reaching nearly $1.9 billion, according to the report, accounting for about 31 percent of all clean-tech venture investment in the United States.

With the exception of HelioVolt Corp., the Austin-based solar-power technology company that has raised more than $109 million in funding, the boom in clean-tech investing has largely bypassed Austin.

In Central Texas, software, chip design and medical implant startups dominated venture capital activity in 2008.

Austin Ventures, which provided seed money for Central Texas' software and semiconductor design industries, has mostly steered clear of clean tech, making just one investment, in Austin-based AstroWatt, which is developing a technology for producing affordable solar cells.

But outside venture players are beginning to scout the area, and two have recently done deals here.

Clean-tech investors Quercus Trust of Newport Beach, Calif., and 21Ventures LLC of New York announced in January that they've founded two Austin companies: Advanced Hydro Inc., which is developing advanced water filtration systems, and Graphene Energy Inc., which is commercializing advanced energy storage.

Both companies were formed by licensing technology from the University of Texas, and 21Ventures said it is looking to make additional deals.

In addition, the Texas Emerging Technology Fund, which awards money to promising startups in cutting-edge fields such as clean technology, has invested $42.6 million over the past four years in 15 Central Texas companies and seven regional institutions and universities.

Austin economist Angelos Angelou said he thinks that Texas's biggest competition for clean-tech jobs won't be Silicon Valley but states that are offering major incentives to lure projects, including New Mexico, Iowa, Michigan and Oregon, which has won a number of big solar energy plants in the past two years.

"Everyone is jumping on this, and others are catching up," said Angelou, who said he thinks it's crucial for Austin to win a major manufacturing project. That would allow Central Texas to build its green-energy base like it did with the semiconductor industry with Motorola Inc. in the 1970s.

"There is not an infinite number of manufacturing projects out there," Angelou said. "If one of those companies makes a decision to go elsewhere, then the chance of winning another becomes that much harder."

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BY Lori Hawkins, AMERICAN-STATESMAN STAFF
Source：AMERICAN-STATESMAN

Additional material from the San Jose Mercury-News.
lhawkins@statesman.com; 912-5955.