By Alison van Diggelen, host of Fresh Dialogues
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I caught up with David Chen, an executive director at Morgan Stanley, while attending the AlwaysOn Going Green Conference 2009 in Sausalito. Chen, a specialist in the green tech investment sector, discussed the morale of investors; and why he’s expecting a bumpy ride ahead. He also explains the key differences between high tech and green tech business plans; and how the government plays a vital role as catalyst in the development and commercialization of the green economy.
On the mood of investors
“We’re coming out of a year of tough project finance and corporate finance opportunities…You don’t have the hype feel you had last time we were here; there was this frothy sense of exuberance…bubble making. Now people are a lot more realistic…(there is) cautious optimism.” (Note: last year’s conference coincided with the collapse of Lehman Brothers)
On the bumpy ride ahead
“There’s a general sense in the broader capital markets that we’re set for a bumpy ride over the next 18-24 months. We’re not out of the woods yet in terms of fundamentals of the economy…That means a low growth expectation environment but low volatility…There’s good opportunity whether M&A or financing; you are looking for market stability and I think we’re going to have that.”
On government stimulus: An Obama bubble?
“The government has done a great job of re-instilling confidence in the financial system. The government is a necessary catalyst for the clean tech industry, like it or not…Obama has done a phenomenal job.” (David Chen cites thin film solar manufacturer, Solyndra as a good example of a company supported at a critical stage by $535 Million in Federal loan guarantees)
On high tech and clean tech business plans – how they differ
“The big problem in the clean tech market is, though it’s called ‘tech’ they’re really just large industrial markets, all of which will dwarf the overall IT sector…and these markets are fundamentally driven by the project finance industry. You really need a catalyst to effectively close the gap between a company that has very interesting technology but doesn’t have the track record to prove the system will last 25 years – and the natural gas plant with 50 years of operating history… and reliability performance set of data.”
On Tesla: its achievements, challenges and future (Note: At the conference, Vinod Khosla’s predicted that green solutions need to be economical to reach the mass market)
“At the end of the day, Tesla Motors is the only company to go from start to finish, a full electric vehicle system… Tesla has done the industry a great service..in terms of paving the way. Their plan is to build a manufacturing plant and commercialize the design for the S Class Sedan ..it can be a practical car. If they can get the manufacturing process down in a cost effective way… at some price point, they can hit some semblance of demand and wider audience, then I think they could survive.”
The interview was recorded on September 15, 2009 at the AlwaysOn Going Green Conference 2009, in Sausalito California. Please excuse the intermittent whistling wind and other nautical sounds; the interview was recorded at Cavallo Point, near the Golden Gate Bridge on a blustery afternoon.
For other interviews recorded at the conference:
Tony Perkins of AlwaysOn
Stuart Evans of Novacem