MNN - Mother Nature Network

In several of my previous posts, I've reported on the advancements of renewable energy in the state of New Jersey. It seems everyone from private firms to the state government is making the commitment to making the state the U.S.'s renewable energy leader. Until now, all we had heard was a couple big names and news of some interesting government incentives meant to stimulate investment in the renewable sector.

 

We now have a better idea of the scope of the magnitude of these events.

 

Many energy and clean energy firms have essentially gone "all-in" on this clean energy movement, staking their fledgling companies' futures on the success of renewable energy in New Jersey over the next decade. Collectively, New Jersey firms are pouring billions of dollars into renewable energy ventures.

 

According to Abby Gruen of the Newark Star Ledger, "from Short Hills to Princeton, public and private companies are committing their own capital, or that of large investors, to building wind and solar farms and developing other types of renewable power, as well as smart-grid and energy-storage technologies."

 

The clean energy industry in general, not just the New Jersey industry, has been one of the biggest bright spots in a world economy severely dampened by a global recession. According to Bloomberg New Energy Finance, "total venture capital and private equity investment in clean energy went up 24 percent in the first quarter of 2010."

 

One example of a firm making significant investment in the clean energy industry is Hudson Clean Energy Partners. Based in Teaneck, Hudson is a billion-dollar private-equity firm that exclusively invests in clean energy. For such a firm to place all its eggs in one basket truly shows the potential that many see in renewables.

 

According to Gruen, private-equity firms aren't the only ones betting big on clean energy. "Billions have been dedicated to growing a global green economy by Jersey-based money managers and energy companies including Prudential Financial and Public Service Enterprise Group in Newark; Lord Abbett in Jersey City; Siemens Financial in Iselin and NRG Energy in Princeton."

 

However, just because these firms are pouring billions into this clean industry doesn't mean that they will receive a positive return on their investment. Gruen cites statistics from the Cleantech Index, the first stock index for the clean energy market stating that the index "outperformed the S&P 500 Index by four percent in 2007, underperformed it by 39 percent in 2008, and outperformed it by 27 percent in 2009."

 

Clearly there is potential in the industry. But as you can see from the Index statistics, just because the industry does well in one particular year does not come close to guaranteeing it will have a repeat performance the next year.

 

Despite this uncertainty, there is one thing we can be certain about. For this industry to really grow, take hold in this state (and this country) and really make a difference, we're going to need people and firms like Hudson Partners to be willing to bet big on clean energy.