SAN FRANCISCO — Our economy sure could use the Next Big Thing. Something on the scale of railroads, automobiles or the Internet — the kind of breakthrough that emerges every so often and builds industries, generates jobs and mints fortunes.
Silicon Valley investors are pointing to something called clean tech — alternative energy, more efficient power distribution and new ways to store electricity, all with minimal impact to the environment — as a candidate for the next boom.
Despite last fall's financial meltdown, public and private investments are pouring in, fueling startups and reinvigorating established companies. The political and social climates are favorable. If it takes off, clean tech could seep into every part of the economy and our lives.
Yet no one knows how many jobs might be created — or how many old jobs might be cannibalized. It also remains to be seen whether Americans will clamor for clean tech products.
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Still, big bets are being placed. The Obama administration is pledging to invest $150 billion over the next decade on energy technology, saying that could create 5 million jobs. This recession has wiped out 7.2 million.
And clean tech is on track to be the dominant force in venture-capital investments over the next few years, supplanting biotechnology and software. Venture capitalists have poured $8.7 billion into energy-related startups in the U.S. since 2006.
That pales in comparison with the dot-com boom, when venture cash sometimes topped $10 billion in a single quarter. But the momentum surrounding clean energy is reminiscent of the Internet's early days.
Among the similarities: "Ultimately IBM and AT&T didn't build the Internet. It was built by Silicon Valley startups," says Bob Metcalfe, an Internet pioneer who now invests in energy with Polaris Venture Partners. "And energy is going to be solved by entrepreneurial activity."
The action is happening at companies like GreatPoint Energy in Cambridge, Mass., which has developed a technique for turning coal into natural gas more cheaply and efficiently than previous methods.
GreatPoint plans to break ground next year on a power plant in Houston that will cost $800 million and create thousands of construction jobs, says its CEO, Andrew Perlman. Dow Chemical Co. and energy giants AES Corp., Suncor Energy Inc. and Peabody Energy are all GreatPoint investors.
A123 Systems, a Watertown, Mass., maker of lithium-ion batteries for electric cars, had one of the most lucrative public stock offerings this year, raising $437.5 million. Its stock price jumped more than 50 percent on the first day of trading in September, with investors willing to overlook that the company has yet to make money.
Another target is "smart grids." As utilities install digital meters in homes and Americans buy appliances that can communicate with the electric system, individual power consumption can be monitored more closely. People could be cued to dial down appliances such as refrigerators and air conditioners when electricity is in highest demand. Fine-tuning in millions of homes can reduce the need for new power plants.
At Tendril Networks Inc. of Boulder, Colo., which makes software that links utilities to smart-grid devices in homes, the staff has tripled over the past five months to 90.
The government's push for these developments parallels the expansion of railroads in the 19th century, when the government granted land to companies laying track, says Jack Brown, an associate professor in the University of Virginia's Department of Science, Technology and Society.
One difference, he says, is that clean energy is such a vast field that government could make the wrong choice in backing one type of technology over another.
A TIME FOR INNOVATION
Some of the biggest booms first blossomed during recessions. The telephone and phonograph were developed during the depression of the 1870s. The integrated circuit, a milestone in electronics, was invented in the recessionary year of 1958. Personal computers went mainstream, spawning a huge industry, in the slumping early 1980s.
A year into the Great Recession, innovation isn't slowing. This time, it's better batteries, more efficient solar cells, smarter appliances and electric cars, plus all the infrastructure needed to support new energy.