The Catch 22 Of Cleantech in B.C.
Everybody wants B.C. cleantech to grow, but the industry faces a Catch 22 situation when trying to leap beyond the start up and development phase.
Cleantech is an industry that's booming in B.C. But according to a recent study published by a trio from the University of Victoria's Faculty of Business, that boom may be approaching a ceiling.
Cleantech is important to B.C. for several reasons, say Sonia Germain, Tristan Hasselback, and Yuri Perez Gonzales. They discussed cleantech in their paper entitled, "Cleantech Access to Venture Capital in British Columbia: Analysis and Recommendations."
Although most cleantech remains in the development stage, B.C. hosts the largest cluster of cleantech companies in Canada: more than 1,300 companies and 18,000 workers.
And it has been on a growth path for a while. B.C. cleantech investments in 2009 were up 35 per cent to $45 million, which constituted 44 per cent of the total Canadian venture capital invested in cleantech in 2009. Moreover, several provincial and federal programs encourage investment in the cleantech area, says their report.
While it is an important and growing part of the B.C. economy, the industry faces several difficulties in trying to grow beyond early stages. These include a small local market, and the fact that any company involved in cleantech that generates power (such as solar, wind, or, water electricity) must sell that power through BC Hydro.
The utility, in turn, must balance several factors, such as infrastructure costs, keeping domestic rates low (they are currently the third lowest in North America), exporting, and those critics who suggest B.C. power should only be for those in B.C.
Another problem that hinders growth is that, although most say they do, few venture capital companies actually wish to invest in cleantech in a large way.
Development times for cleantech are very long; the investments are often illiquid and exits, or cash returns, are far in the future. Experts who develop clean technologies are often skilled scientists and technologists, but poor business people; and because the sector is broad, investors have a difficult time becoming expert about it.
Aside from the BC Hydro barrier, these blocks resemble a common refrain from the tech industry and several other knowledge industries in B.C. This is that we are doomed to forever remain small unless some radical rethinking is done.
Yes, there are some cleantech successes in B.C. that are on a growth path.
But for the most part, it’s a case of our hearts being in the right place about encouraging industry but our minds – and certainly our wallets – aren’t.
We want it to happen, but we don’t want to spend the money to make it happen.
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