44 APRIL 2009 INTERNATIONAL WATER POWER & DAM CONSTRUCTION
ENVIRONMENT
and solar, will cost hundreds of billions of dollars. Technical inno-
vation in the production of new vehicles that use more efficient con-
ventional technologies, or more likely electricity, will be of a similar
scale. Carbon capture and storage will be essential as we wean our-
selves off dep endence on coal. Hydro power projects have great
investment potential and we must work to expand the capacity for
storage of hydro power beyond our existing capacity.
Building vital infrastructure, training young people to become the
engineers who construct the infrastructure and develop innovative new
technologies, re-training older people and educating investors to
improve their knowledge of the underlying sector are all immediate chal-
lenges. Equipping management teams with the requisite skills to take
optimum advantage of the evident opportunities will also be crucial.
A private equity backer can take these companies to the next stage
of their development by bringing the necessary skills, capital and expe-
rience. A private equity investor can also help instil focus and disci-
pline while ensuring the growth strategy and business plan is clear.
Private equity and venture capital firms are servants of the real
economy. They don’t dabble in exotic derivative instru ments but
invest for the long term with a view to strengthening a company and
equipping it to compete more effectively. These skills are particu-
larly well suited to the resource and time intensive nature of invest-
ing in renewable energy and clean technologies.
D
ON
’
T WAIT
Investing in innovative clean power technologies is not something
that can wait until our economy recovers. Innovation can provide
us with a path out of recession and it will also be central to a remod-
elled economy. We have an opportunity to lay the foundations of a
new economy based on innovat ion and create thousands of new,
highly skilled jobs in the renewable energy sector.
However, to do this we must have certainty of regulation and a
regulatory framework in place which supports those investors able
to bring their capital and skills to fledgling renewable energy and
cleantech businesses, and build them into world leaders. I am con-
fident that with this support, private equity and venture capital will
play a crucial role in nurturing innovation and ensuring a sustain-
able energy future.
Simon Walker,
CEO,
British Private Equity and Venture
Capital Association,
3 Clements Inn,
London WC2A 2AZ,
UK.
Email: bvca@bvca.co.uk
T
HE fact that I am being asked to write a piece for this maga-
zine is a sign of how wide the investment reach of private
equity and venture capital has become. Our industry is no
longer a niche area of the financial services marketplace but
a mainstream asset class. For the uninitiated, here’s a quick summary
of the private equity and venture capital industry and how it operates.
T
RADE BODY
Private equity firms raise capital from institutional investors such as
pension funds and invest this money into larger established busi-
nesses which typically need private equity capital and management
skills to continue growing. Increasingly, private equity firms are using
this capital and experience to rescu e businesses in t rouble due to
recessionary pressures.
Like private equity, venture capital firms raise money from insti-
tutional investors but invest into smaller, pre-revenue or pre-profit
businesses. They tend to focus on backing technology or life-science
companies developing innovative products.
The British Private Equity and Venture Capi tal Ass ociati on
(BVCA) is the trade body for private equity and venture capital. We
aim to promote the industry and educate stakeholders through com-
munication and research initiatives which feed into government,
trade unions, media and the general public. Our sector encompass-
es private equity and venture capital firms investing across many dif-
ferent industries, in the UK, Europe and globally.
Part of the education process involves bringing our m embers
together through fo rmalised groups and committees in order to
speak authoritatively with a unified voice on issues of mutual inter-
est and concern. We formed the Energy, Environment and
Technology Group as a response to the increasing demand amongst
investors, the government an d media for more ed ucation on the
opportunities this sector can offer. The members of the group have
a wide range of experience across the renewable investment space
which we can harness and help inform future government policy and
assist investors who wish to understand more.
The EU has a target of generating 35%-40% of its energy from
renewable sources by 2020. Meeting this target will require massive
capital investment. This presents private equity and venture capital
investors in this sector with a unique opportunity to lay the foun-
dations for our future energy economy.
S
TEPPING UP INVESTMENT
The environmental case for stepping up investment in clean energy
is obvious – the economic one is even more compelling. Renewable
energy will form the backbone of the new energy economy which
will develop over the next 20-30 years.
Shifting our electricity generation base from the current conven-
tional capacity to new low CO
2
capacity, primarily through wind
Time to step up investment
The Energy, Environment and Technology Group of the British Private Equity and
Venture Capital Association (BVCA) has been set up in response to the increasing
demand for more education on the opportunities this sector can offer. Simon Walker,
BVCA’s chief executive, believes that hydro power projects have great investment
potential. Furthermore, he adds that investing in innovative clean power technologies
is not something that can wait until the economy recovers
IWP& DC