By James Paton - May 27, 2011 11:39 AM ET
Starfish Ventures, Australia’s biggest venture capital fund, plans to invest in businesses focused on energy efficiency and avoid solar and wave power until a carbon price makes the technologies more attractive.
“It’s a good sector because it’s not dependent on a carbon price, so we don’t have to worry about the uncertainty that it brings,” Ivor Frischknecht, investment director at Starfish Ventures, said in an interview in Sydney. “Solar long-term is a really good space. Wave power and geothermal too. All of those depend dramatically on a carbon price, so you’re just not going to get any movement from people like us.”
Starfish, which manages more than A$400 million ($426 million), aims to make four to six additional investments and is evaluating companies developing initiatives to help businesses and households use energy more efficiently, he said. The fund will likely invest in solar, wind, geothermal or wave power if Australia imposes a carbon price, making those technologies more competitive with fossil fuels and giving investors increased “clarity” on how profitable they may become, he said.
“We’ll be able to have a much better view on a company’s return profile,” Frischknecht said yesterday after speaking at the Eco Innovation Forum. “A fraction of the companies coming in now that we are saying no to, we will probably say yes to. Not all will meet that hurdle, but some will.”
Australian Prime Minister Julia Gillard, who pledged to resume an effort to tackle climate changeafter replacing Kevin Rudd last year, wants a price on carbon emissions in 2012 before a trading system that may begin as early as 2015.
A cap-and-trade program in Australia, which burns coal to generate more than 80 percent of its electricity, would give power plants, factories and other polluters a “very strong” incentive to curb emissions, Gillard said this year.
The Australian government in the annual budget increased grants for “emerging” geothermal, wave, wind and solar technologies to A$100 million from A$40 million and committed A$100 million to a renewable energy venture capital fund, Resources Minister Martin Ferguson said this month.
Starfish investments in the “clean-technology” industry have included Ausra Inc., the U.S. maker of sun-driven steam generators bought in 2010 by Areva SA, and Myriax Pty, a Tasmanian research and development company, the firm’s website shows. Starfish, based in Melbourne, also invests in industries including biotechnology, medical devices and software.
The fund has invested in Energy Response, an Australian company that works with users to reduce demand during peak seasons, and is likely to buy further stakes in developers of energy efficiency technologies amid projections energy demand and electricity prices will surge, Frischknecht said. He said he likes companies such as U.S.-based Opower, which helps consumers gauge energy consumption compared with neighbors.
“It’s a market we think will grow pretty dramatically,” he said. “They make money.”
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