Is Smart Grid the Next Green-Tech Bubble?

By Martin LaMonica on June 19, 2009

People have been talking about the smart grid for ten years but a combination of factors is pushing the vision closer to reality, she said, citing the need for reliability, the need to reduce carbon emissions, and the emergence of more technology-savvy end users. "We've passed a tipping point. I think we're going to see a tremendous amount of capital in this area."

Venture investors in the past two years poured hundreds of millions of dollars into thin-film solar technology companies, many of which aren't expected to survive. Smart-grid technology (and energy storage) is generating a similar excitement level this year, but there are some differences to the solar bubble, said Ben Koch, managing director of investment banking at Southwest Securities.

"With smart grid, there are fewer companies and they are more mature," Koch said, noting that demand-response company Comverge had 500 utility customers before it went public.

On the other hand, a rush of available money tends to mean more risky ventures will get funded. "We won't have irrational exuberance...but there could be some bad investments," he said.

Koch added that the stepped-up presence of IBM, Cisco, Intel, and Google in the utility industry could stiffen competition for smaller firms.

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