Is it possible to have a bubble in a recession? It sure is. The long-awaited alternative-energy bubble is here, and it starts with solar. It’s all over the blogosphere:
First there was Seeking Alpha’s: Is An Alternative Energy Bubble On the Horizon?
The warning signs of a bubble are appearing in the energy segment, where IPO value rose from $1.6 billion in 2005 to $4.1 billion in 2006 and venture capital raised went from $623 million to $1.5 billion, primarily on solar and biofuel deals. With 930 energy start-ups operating worldwide - 198 of which are venture-funded - energy technology looks primed for a classic private equity boom and bust.
Followed by my post at CNET: The Alternative-Energy Bubble
What do you get when you mix Al Gore, global warming, whacky environmentalists, skyrocketing oil prices, lots of venture funding, and irrational exuberance? An alternative-energy bubble. It may not be the biggest bubble in the history of technology - yet. And it may not be ready to burst - yet. But it’s a bubble, all right. All the signs are there.
In solar energy alone, hundreds of millions of dollars of venture funds have been poured into the likes of Nanosolar, SoloPower, OptiSolar, HelioVolt, eSolar, SolFocus, Solel, Miasole, GreenVolts, Hydro Green, Infinia, Sopogy, Cyrium, SkyFuel, BrightSource Energy - the list goes on and on.
All the usual suspects are in the game: big-name venture capital firms, investment banks, private-equity firms, energy companies, technology companies, individual investors, a new batch of investment companies focused primarily on energy, and even a hedge fund or two. There are lots of recognizable names, as well, including Google founders Larry Page and Sergey Brin, Microsoft founder Paul Allen, and Sun Microsystems founder and ex-Kleiner Perkins partner Vinod Khosla.
Last week, in Earth2Tech, Suntech CEO: Solar Panel Glut to Slash Prices by 30% in 2009
And on Friday, GreenTech Media’s First Solar Panels Piling Up?
First Solar’s thin-film panels might be piling up in European warehouses, a bad omen for a company envied by many in the solar industry.
While an inventory build up is bad news for First Solar and its customers, the phenomenon might spell more trouble for crystalline silicon panel makers, said Travis Bradford, president of the Prometheus Institute, which tracks the solar market.
Do you see a trend here? And why is it important? As we’ve learned, all too recently and all too painfully, bubbles have a way of rippling through other markets.
As a grim reminder, here are the current market valuations of five once high-flying tech companies, relative to their valuations during the dot-com bubble:
- JDS Uniphase Then: $226B Now: $853M - 99.6%
- PMC Sierra Then: $54B Now: $1.05B - 98.1%
- Brocade Then: $50B Now: $1.27B - 97.5%
- AMCC Then: $29B Now: $282M - 99.0%
- Vitesse Then: $23B Now: $33M - 99.9%
Not that the alternative-energy bubble will be anything like the dot-com variety, or will it? In any case, I think it’s a good idea to maintain some perspective, don’t you? Something about ignoring history dooms you to repeat it sticks in my head.
