One figure more than anything else shows that there is still something amiss in solar business: In 2007, Germany represented 48% of the global solar market. And believe me, as a permanent resident: Germany isn’t one of the sunniest places on earth. In fact, the country’s high market share stems from early and generous government support for this technology, which has nurtured a veritable industry with players like Q-Cells and SolarWorld.

The longer term effect, though, is that as these players start to globalize their business and optimize production technologies, the entire industry will be moving toward fewer subsidies and greater competition. This fundamental change will be driven by both enormous progress in the technology of using solar power to produce energy as well as by economies of scale thanks to rapidly rising global demand. Both of these developments will lead to declining prices and will narrow the gap between the costs of conventional energy production and the use of solar power.

As the solar industry enters the era of commercialization, now is the right time for venture capitalists to enter this market. Our industry tends to shy away from investing in industries that depend upon public money, and is keen on investing in marketable technologies that offer strong growth potential. Due to the scarcity of fossil resources and the issue of climate change, there is no question in our minds that the solar industry will be posting double-digit growth over the course of the coming decades! And in order to live up to its promises, it will need to develop a multitude of technologies aimed at further increasing efficiency and lowering costs – that’s an ideal turf for start-ups.

And a very interesting one for Wellington Partners, where we have a long tradition of supporting young technology companies in commercializing their technologies on a global scale. Starting in 2002 with our investment in EnOcean, we have been following the Cleantech sector for many years and have gradually increased our investment activity in this sector. At the moment, we have a portfolio of five Cleantech companies and are seeing a tremendous, rising deal flow across all development stages. With Indian-born Arun Renuka Jayadev, we now have a full-time associate with focus on Cleantech on board. And thanks to our new Venture Partner Christian Reitberger, who has been active in this industry for many years, we have strengthened our team even more in order to enable us to capitalize on this tremendous opportunity.