2009: The Year of the Smart Grid?

Smart grids and related technologies ranked fourth on a list of 17 green sectors venture capitalists invested in last quarter.

"Look for 2009 to be the year of smart grid, energy storage and energy efficiency," says senior analyst Eric Wesoff in a statement issued with a report from Greentech Media that showed VCs invested $208.5 million in 11 deals.

Investments in seven green IT deals topped $37.3 million, making it eighth on the list. Solar topped the list with nearly $1.34 billion invested in 29 deals.

IBM’s Interest Demonstrates IT's Tie to the Smart Grid

If IBM is interested in the electrical smart grid, you got to believe there’s a strong IT connection to smartly managing the efficient use of energy and the money to be made doing just that. In a posting on GreenTechMedia.com, Draw Clark, director of strategy, emerging markets, at IBM’s Venture Capital Group, is quoted as saying:

"Cleantech may be the only category [of venture investing] that is left relatively unscathed and [VCs] are looking to put new money into traditional IT type of companies and smart grid is exactly that."

As the article author Michael Kanellos points out, IBM's VC group doesn’t invest in startups, but meets with them to determine future trends and promising companies. Then, IBM figures out how best to tie its strategies and services with these emerging trends. As Kanellos writes:

If Big Blue is excited about something, there is a good chance that a channel for bringing a new idea to market is already being assembled.”

Kanellos writes that the IT angle better fits into the VC mold for building companies.

Unlike solar or biofuel companies, most smart grid outfits don't need to build huge factories. They develop software or networking devices for controlling various aspects of power transmission or consumption.

Who’s getting VC money to make the grid smarter: Trilliant, GridPoint, eMeter, Silver Spring Networks, Smart Synch, GainSpan, Grid Net and Onzo.

Today, the electrical grid isn’t too smart; its electrons mostly move in one direction. Making it a two-way highway is a challenge that will need lots of IT smarts.

Info Tech Pros Could Benefit By Slowing Green Investments

Silicon Valley might pull back in their green startup investments in the coming year, and venture capitalist Rob Day sees that as a good thing.

Michael Kanellos, blogging on GreenTechMedia.com, cites @Ventures partner Day as seeing VC investing in green-tech declining by as much as 40% in the first half of 2009. Funds would be diverted away from crowded markets like solar and biofuels.

Why is that a good thing? Funds that will be invested would be redirected toward areas that could benefit IT professionals. Kanellos writes:

You can already see the re-education of many investors taking place. Many have begun to pay more attention to green software companies and smart-grid companies that hope to port classic IT technologies to the grid. Can smart grid become a bubble too? Sure, but at least it’s familiar territory to many, and these kind of companies don’t need big factories. Thus, the dangers of over-funding are reduced.