Interview with Patrick Burtis, Amadeus Capital Partners Limited

"VC often gets lumped in with private equity and that can be misleading"

Solar industry may not have reached grid parity but it continues to be under the spotlight considering its huge potential.

According to the investors, the current status of both CSP and CPV provides an avenue for ambitious and visionary entrepreneurs to start and build successful companies. Among the cleantech sectors, solar is one where new players have emerged all along the value chain to create a new industry. At the same time, the development of these technologies also relies on support regimes and cost reductions.

From venture capitalists' perspective, there are some European technology investors, which have been late entrants in this arena.

European VC firm, Amadeus Capital Partners Limited, fits in this bracket but it is gradually building its cleantech practice. And the potential of CSP and CPV is surely a big attraction for Amadeus.

Speaking exclusively with, Pat Burtis, an associate with Amadeus, said his company is working on ~100 new cleantech deals per year and these include solar deals.

Burtis, who is scheduled to speak during CSP and CPV Investment & Finance Summit (to take place on 8-9 October in Madrid), says when it comes to specifically CSP and CPV, "we are looking for the same things we look for in our other investment sectors:  great management teams; breakthrough, defensible technologies; large, fast-growing markets; and profitable business models."

According to Burtis, CSP and CPV do have important differences in comparison with traditional VC investment sectors, and certain aspects of investing in CSP and CPV require special attention namely capital intensity, time to market, and dependence on public policy.

"Because most VC funds operate on 10-year time horizons and dedicate $10-$30 million per investment, it can sometimes be difficult to find investments that will offer "VC-type" returns over traditional VC timelines, using the amounts of capital VCs typically work with. And of course the heightened importance of public policy in the solar market adds a dimension to solar investing that many traditional technology VCs are not comfortable with," said Burtis.

Overall, on the growth of CSP capacity in the time to come, he feels it is entirely feasible that CSP could have 16GWp installed by 2015. "But I would hesitate to hazard a guess to the exact number. A key question will be the segmentation of that 16GW - or whatever the number - between CSP and CPV. I believe the two basic concentrating approaches of CPV versus Concentrating Solar Thermal (or the combination of the two) are to some extent substituting technologies, and I expect they will compete for projects (and for policy support) in many of the same geographies," he pointed out.

Burtis added, "It will be very interesting to see how this race shakes out. Clearly, there are important functional differences between CST and CPV that make certain solutions better suited for certain locations and load profiles. I believe CPV has a bright future, but the very large project announcements (and very large VC investments) in solar thermal that we've seen in the last year lead me to believe that CSP has the head start at this stage. Given the understandably risk averse nature of many utilities and project financiers, this is perhaps not surprising. The challenge for CPV will be to demonstrate the reliability, low cost structure, and scalability that CST is now promising."

As far as solar in general is concerned, according to Burtis, clearly it will be a critical part of the global renewable energy portfolio.

"But it will co-exist with the other generation technologies, and we ought to remember that solar is not the best solution in every case, and is often more expensive than other technologies. Having said that, given the energy and environmental challenges we currently face, we will need to utilise all the tools available to us. The sun is a ubiquitous, powerful, and predictable resource, and we have to find ways to effectively harness it. Solar will always be an important part of the renewable generation portfolio," said Burtis.

A section of the industry points out that CSP and CPV are at a stage of maturity where it fits better VC than other PE/Project finance people.

Sharing his viewpoint, Burtis said, when talking about private equity, it's important to distinguish between venture capitalists (who tend to invest in more nascent technologies, look for returns on their investment over a 5-7 year period, and typically target a return of 10X their money on any given investment), and traditional private equity investors (who typically work with much larger funds, have shorter time horizons, tolerate lower technology risk, utilise more debt, and are more focused on cash flow).

"VC often gets lumped in with P/E and that can be misleading. And then of course there is project finance, which is an entirely different business. It's also important to distinguish between CPV and concentrating solar thermal when considering the suitability for different investment models," he said.

According to Burtis, CSP is a more mature approach than CPV, with lower technology risk than CPV.

"The CSP industry is already at a state of maturity where an investor can employ hundreds of millions of dollars in projects, and CSP can attract lower-risk capital. In my mind, the very large VC investments we've seen in concentrating thermal recently blur the line between VC investing and project or capital finance. CPV, meanwhile, is still cutting its teeth, and the fundamental approach has yet to be proven on a large scale. However the potential upside for CPV is still hugely compelling. CPV is still an approach well suited to VC investors," explained Burtis.

CSP and CPV Investment & Finance Summit

Patrick Burtis, Amadeus Capital Partners Limited is scheduled to speak during CSP and CPV Investment & Finance Summit (8-9 October in Madrid).

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