Israel is rapidly becoming one of the most exciting opportunities for clean energy investors, according to a new report released last week by a respected London-based research and consulting firm.
The country has already generated a large number of the world’s leading clean energy companies, and a great deal more are just waiting in the wings for suitable investment, according to the report ‘And on the Eighth Day’ by research analysts New Energy Finance (NEF).
This is the first report that NEF has carried out on the Israeli clean energy industry, and it examines all sectors of renewable energy, biofuels, and low carbon technology in what has become one of the world’s most important technology powerhouses.
Israel spends more on R&D per unit of GDP and has more engineers per capita, than any other country in the world. It has a good track record in technology investments. It also has more reason than most to develop alternatives to fossil fuels, according to the report, since it has few natural resources and seeks to reduce its reliance on the oil producing countries of the Middle East.
In the report, NEF estimates that Israeli clean energy technology companies have an immediate need of $210 million in venture capital money and private equity, and could yield good deals for venture capitalists.
“Israel is unknown to a lot of venture capital and private equity investors in clean energy,” Chris Greenwood, operations director at the London-based research and consulting firm said in an article in Red Herring.
“What we’ve tried to do is open the eyes of the worldwide investment community to the opportunities there.”
Worldwide, clean tech investment is growing dramatically but most of the investment activity is either in the US or Europe. As a result, deals there are becoming pricey. In Israel, however, competition is smaller, so prices are also lower, according to Greenwood.
“It’s not as active as other markets,” he told Red Herring.
“There are companies looking for investment but there aren’t many investors looking to invest. The market isn’t as high-profile as other markets, and there’s more demand than supply.”
Israeli clean tech companies are active across the whole renewable energy spectrum, but are particularly strong in the areas of solar energy (photovoltaic and thermal), power storage, grid intelligence, hydrogen and fuel cells.
Leading companies in these fields include publicly traded Ormat Technologies (market cap $1.35 billion) and Medis Technologies (market cap $711b.), a specialist in direct liquid fuel cell technology. Ormat, which specializes in geothermal power, recovered energy generation (REG) and remote power, has been involved in the renewable energy field for 40 years. Both companies are members of the WilderHill New Energy Clean Energy Innovation Index.
The report highlights a number of other interesting companies, which have not yet gone public. These include Alga Technologies, which aims to make biofuel out of algae; Engineuity, which has developed a unique technology for hydrogen production in vehicles; Genova, which makes fuel from olive pits; GreenFuelCells, which converts smokestack pollution into biofuel; MainNet Communications; Cerel; Elspec; Metal-Tech; Milennium Electric; Modcon; and Solel Solar Systems.
Earlier this month, Solel, which has built the largest solar energy plant in the world in California’s Mojave Desert, announced that it has signed an agreement to build three solar collection plants worth $890 million in Spain.
“Israel has been doing world-class research into clean energy technologies for decades, but the state-owned monopoly electricity utility has been slow to provide support for pilot projects,” said Michael Liebreich, CEO and founder of NEF. “There is an overhang of technology just waiting for venture capital and private equity investors to step in. Anyone looking to invest in clean energy should be in Israel right now.”