Silicon Valley status threatened in green energy

SAN FRANCISCO Thu Sep 10, 2009 11:27pm EDT

Stephan Dolezalek, Managing Director at VantagePoint Venture Partners, speaks during the Reuters Global Climate and Alternative Energy Summit in San Francisco, California, September 10, 2009. REUTERS/Kim White

Stephan Dolezalek, Managing Director at VantagePoint Venture Partners, speaks during the Reuters Global Climate and Alternative Energy Summit in San Francisco, California, September 10, 2009.

Credit: Reuters/Kim White

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SAN FRANCISCO (Reuters) - Silicon Valley has big ideas and deep pockets, but the iconic cradle of semiconductors and the Internet fears it may be pushed aside in the clean energy future.

Other areas of the world, especially China, have quickly emerged as cleantech hubs thanks to their strong local markets and financing sources, company executives and venture capitalists said at the Reuters Global Climate and Alternative Energy Summit.

Silicon Valley founded and funded the technology revolution and is home to companies from Apple Inc (AAPL.O) to Google. It may hold on to its leadership in innovation, but it will probably get a smaller part of the bounty.

"We've now got four or five parts of the world that have seen the Silicon Valley movie and are basically saying cleantech is Silicon Valley redux and I'll be damned if I'm going to let those guys win in this battle," said Stephan Dolezalek, managing director at VantagePoint Venture Partners in San Bruno, California.

Areas such as India, China and the Middle East are betting on the sector while in the United States, the industry is still struggling from a dearth of financing because of the credit crisis and waiting for more action from Washington on federal policies for renewable energy.

Google Inc (GOOG.O) Green Energy Czar Bill Weihl said there was a "real danger" Silicon Valley and the United States in general would not lead the way in the space.

"Other countries, China being one of the major examples, are investing very heavily in this space across the whole innovation pipeline...from shower to power, from the idea in the shower to generating the power (in a) commercial scale enterprise," Weihl said.

Certain elements of cleantech, such as semiconductors, may lend an advantage to Silicon Valley, but executives and venture capitalists expect various cleantech hubs to emerge across the map, each one specializing in a different component from LED light bulbs to smart grid technology to batteries.

"There are so many categories. You'll likely see category dominance that's geographically so broad," said John Woolard, chief executive of solar thermal company BrightSource Energy Inc.

Already in Europe, Denmark is known as a wind center while China's eastern province of Jiangsu has developed into a center for the solar power industry.

Not surprisingly companies and venture capitalists are setting up business around the world, from U.S.-based solar panel maker First Solar Inc's (FSLR.O) plans to build the world's largest solar plant in China to privately-held BrightSource looking for partners in China and India.

For the United States to really play in the cleantech game, more federal money is needed for research, development and demonstration projects, said Google's Weihl, noting $10 billion to $30 billion a year would be a sustainable budget.

Yet Silicon Valley's spirit of entrepreneurship will probably protect its status to some degree, executives from China's Suntech Power Holding Co Ltd STP.N and California-based SunPower Corp SPWRA.O said.

"I like to say there's no place in the planet that you can get an idea and turn it into money faster than Silicon Valley," said Tom Werner, chief executive of SunPower.

Werner said the model that has evolved is that ideas and great companies come from Silicon Valley but manufactured elsewhere. "I think that model can thrive," Werner added.

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