November 2010
Financing the Future - The New Energy Equation
Data Sources
New Energy Finance Report, “Global Trends in
Sustainable Energy Investment 2010 Report.”
Deloitte and Cleantech Group LLC.
Bloomberg New Energy Finance
Cascadia Capital LLC, is a national investment
banking firm for emerging growth companies
in a wide range of industries.
Cascadia Capital, LLC
Columbia Center
701 Fifth Avenue, Suite 2600
Seattle WA 98104
Phone: 206.436.2500
Fax: 206.426.2501
Member FINRA
Cascadia capital Page 1
Sustainable Industries -
The Story Behind the Q3 Numbers - “Perhaps Not
As Bad As Data Indicates”
While Q3 data indicates a significant slow
down in terms of number of investments
made in the cleantech sector, the pent up
momentum and deal activity that has yet to
culminate in closed transactions indicate to us
that Q4 2010 and Q1 2011 will see significant
pick up in activity. Most of the headlines over
the past few months paint a dismal picture of
the cleantech space – whether it be venture
capital, private equity or public market invest-
ing activity, or M&A – causing many to ques-
tion whether we are experiencing a bursting
of the cleantech bubble.
Admittedly, based solely on trending data
points, one could conclude that the fervor
around investing and M&A activity in clean-
tech has lost its luster similar to the nanotech
hype of years past; however,
based on our position in the
market – investment bank-
ing advisors to renewable
energy and cleantech compa-
nies seeking, growth capital,
project capital and M&A exits
– we are seeing significant
momentum building from a
more seasoned, knowledge-
able and energetic pool of
counter-parties. With the tre-
mendous challenges in the global economic
environment, coupled with inconsistent and
oftentimes conflicting national positions on
environmental frameworks and policies, the
biggest challenges to the renewable energy
and cleantech markets were bringing suffi-
cient capital to bear to mature the commercial
side of the markets, as well as the technolo-
gies that will be ultimately sold into them.
Over the past 12-24 months we have seen
corporates and new (non-traditional) growth
capital providers enter the renewable energy
and cleantech markets with force – this wave
of new market entrants has taken some time
to get oriented to investing or buying into a
global, fluid and rapidly evolving new market
sector – and based on our discussions and
activities on behalf of our clients across the
North American and foreign markets, we see
significant non-public activity culminating to
a point where we expect a near term surge
in announced deal activity on the capital and
M&A front. As we enter the push to the end of
the year, it is becoming increasingly apparent
that contrary to years past, there is a new and
often long forgotten driver entering the ethos
of counterparties vying for deal opportunities
– “Fear”.
Fear and greed are the two
primary motivators that drive
action in the capital markets,
and for the past two plus years
there has been no sense of fear
in the market – that is, the fear
of losing a deal to a competitor.
As the commercial markets and
technologies have matured, the
better companies have risen
to the top and it is becoming
quite apparent who will be a
success and who will not. Finally, as inves-
tors and corporates vie for investment and
M&A opportunities, fear has begun to creep
back into the market and momentum is
building. With fear comes a forcing func-
tion for counter-parties to stop the endless
diligence cycles and make decisions – with
decisions coming and momentum building,
we believe we will see a steady increase in
interest and activity in this space. Of course,
 November 2010

Financing the Future - The New Energy Equation

Data Sources
New Energy Finance Report, “Global Trends in
Sustainable Energy Investment 2010 Report.”
unique to the renewable energy and cleantech markets, federal policies have the ability
to move global markets significantly, so our current purview on the markets are subject to
potentially unforeseen sovereign actions.

Deloitte and Cleantech Group LLC. Four main themes we expect to track for the remainder of 2010 include
the following:
Bloomberg New Energy Finance
1. Increased activity of cross-border M&A

2. Increase in growth equity investment amounts per round of financing; Darwinian theory
Cascadia Capital LLC, is a national investment
banking firm for emerging growth companies supporting the fittest have survived and will attract capital at the expense of un-fit
in a wide range of industries.
3. Continued vertical integration of more mature renewable energy supply chains (wind,
solar), as well as smart grid consolidation

4. Project financing activity momentum begins to turn positive

Equity
Global Venture Capital and Private Equity New Investment in
Clean Energy

Global venture capital investment in

clean energy decreased in Q3 2010 from
Q310   Q1 and Q2 2010, however investment
through the first three quarters of 2010
Q210   ($5.7B) is ahead of FY2009 and very
likely to top 2007, meaning 2010 will
record the second highest annual total
Q110  
investment.

Q409  

Q309  

Q209  

Cascadia Capital, LLC

Columbia Center Q109  
701 Fifth Avenue, Suite 2600
Seattle WA 98104
$0.00     $0.50     $1.00     $1.50     $2.00     $2.50    
Phone: 206.436.2500
Fax: 206.426.2501

Member FINRA

Cascadia capital Page 2

 November 2010

Financing the Future - The New Energy Equation

Data Sources
Equity
New Energy Finance Report, “Global Trends in Venture Capital Investments By Category
Sustainable Energy Investment 2010 Report.”
• Clean energy commanded the
Deloitte and Cleantech Group LLC. third largest share of VC invest-
ments – the first dip from the
Bloomberg New Energy Finance 17%  
top slot since taking the lead
30%   four quarters ago – a significant
achievement given the com-
Clean  Energy  
plexities to the clean energy
Cascadia Capital LLC, is a national investment
Biotech   market place coupled with the
banking firm for emerging growth companies
in a wide range of industries. 20%   economic realities of the past
So8ware   year.
Medical  Dev.  
12%   • A good portion of invested dol-
Other   lars has come from corporates
21%   taking minority positions in in-
novative technology companies.

Source: Cleantech Group

US Venture Capital and Private Equity New Investment in Clean Energy

US venture capital investment in cleantech companies in Q3 2010 fell 55% to $575.6 million
compared to Q3 2009. The number of deals also decreased in Q3 2010 to 53 financing rounds, a
22% drop from Q3 2009.

• The US took the lion’s share of the

global brunt of the downturn in
Q310  
invested dollars and deal in Q3 2010,
as momentum shifted to later stage
Q210   growth opportunities.

• A significantly larger drop in invest-

Q110  
ment dollars relative to a drop in
total deals supports the trend of
Q409   migrating to growth investments in
more established companies.

Q309  
• Later stage financing continues to
drive US cleantech investment with
Cascadia Capital, LLC Q209   $407 million invested over 25 later
Columbia Center stage deals. These figures accounted
701 Fifth Avenue, Suite 2600
Seattle WA 98104 for 48% of deal activity and 70% of
Q109   capital invested.
Phone: 206.436.2500
Fax: 206.426.2501 $0.00     $0.50     $1.00     $1.50     Source: PR Newswire
Member FINRA
Dollars  in  Billions  

Cascadia capital Page 3

 November 2010

Financing the Future - The New Energy Equation

(Continued From Page 3)

Data Sources
US Venture Capital and Private Equity New Investment in Clean Energy
New Energy Finance Report, “Global Trends in
Sustainable Energy Investment 2010 Report.” • The most active sector this quarter was Energy Efficiency with 17 deals raising $161.7 million,
an increase of 21% and 6% respectively.
Deloitte and Cleantech Group LLC.
• Approximately 23% of the VC cleantech deals in Q3 2010 included participation by corporate
Bloomberg New Energy Finance investors. Corporate investor participation increased from 15% in Q309.

• California investments declined, with deals falling 44% to 21 and investment volume falling
71% to $295 million.
Cascadia Capital LLC, is a national investment
banking firm for emerging growth companies
in a wide range of industries.
M&A
Global Clean Energy M&A Volume
• Clean energy M&A volume in Q3 2010 reached $4.5 billion, down from $5.77 billion in Q2 2010.

• Though the total numbers speak for themselves, the clean energy markets are still relatively nascent
so large deals can skew results. Based on our activities in the market, we expect to see momentum
of deal activity in the coming quarters, both in terms of deal size and deal numbers.

• Vertical integration of the

$18.00    
wind and solar markets will
$17.5    
$16.00     continue as foreign enti-
ties deal with local content
$14.00     $14.4     requirements and a general
sophistication upgrade to the
Dollars  in  Billions  

$12.00    
global component supplier
$10.00     base, as well as market access.
$8.00    
• The smart grid arena is seeing
$6.00     $6.0    
the large industrials enter
$5.8    
$5.2     en masse, which is causing
$4.00     $4.2     $4.5    
increased M&A activity.
$2.00    
Source: Cleantech Group
$0.00    
Q109   Q209   Q309   Q409   Q110   Q210   Q310  

• Clean M&A volume through Q3 2010 outpaced 2009 – 565 transactions to 521 transactions. But the
Cascadia Capital, LLC
Columbia Center overall dollar volume was marginally lower in YTD 2010 ($27.8 billion) versus 2009 ($32.81 billion).
701 Fifth Avenue, Suite 2600 We expect this trend to accelerate in 2010, lead by overseas buyers and concentrated in the smart
Seattle WA 98104
grid, wind and solar sectors.
Phone: 206.436.2500
Fax: 206.426.2501 • Nine M&A deals were closed in the US, of which the disclosed amounts totaled approximately $1.9
billion, according to IHS Herold.
Member FINRA

Cascadia capital Page 4

 November 2010

Financing the Future - The New Energy Equation

Data Sources
M&A
New Energy Finance Report, “Global Trends in Average Size of Clean M&A Transactions
Sustainable Energy Investment 2010 Report.”

Deloitte and Cleantech Group LLC. • The average size of clean energy M&A
$100     $100     transactions decreased from $63
Bloomberg New Energy Finance million in 2009 to $49million through
$90    
Q3 2010. We don’t expect a significant
$80     $82     correction on this phenomenon in the
near term as the markets need more
$70    
Cascadia Capital LLC, is a national investment time to mature before we will see
banking firm for emerging growth companies $60     $63    
substantially larger deal sizes.
in a wide range of industries.
$50     $49    
$40    

$30    

$20    

$10    

$0    
2007   2008   2009   YTD2010  

Key M&A Transactions

• Sharp’s acquisition of US-based solar power developer Recurrent
Energy for $305m. This transaction represents a continued trend of
technology providers vertically integrating downstream to provide
access to growth markets.

• Constellation Energy’s purchase of CPower. This transaction high-

lights the froth in the smart grid market and the positioning large
corporations and progressive utilities are taking in fear of losing
momentum to competitors

• Exelon Corp’s $900m acquisition of John Deere Renewables wind

power portfolio of operating assets and project under development.
This transaction highlights a situation where a well capitalized utility
Cascadia Capital, LLC takes advantage of a transitioning wind market to take a long posi-
Columbia Center tion in advance of federal renewable energy mandates that will likely
701 Fifth Avenue, Suite 2600
Seattle WA 98104 come in future years.

Phone: 206.436.2500
Fax: 206.426.2501

Member FINRA

Cascadia capital Page 5

 November 2010

Financing the Future - The New Energy Equation

Data Sources
New Energy Finance Report, “Global Trends in
Sustainable Energy Investment 2010 Report.”
Deloitte and Cleantech Group LLC.
Project Finance
Global Asset Financing
The activity in Q2 and Q3 2010 was driven by large transactions in China and Europe. US activities
remains subdued with $4.4 billion in Q3, down 16% from Q2.

Bloomberg New Energy Finance

$35.0  
Cascadia Capital LLC, is a national investment
banking firm for emerging growth companies
in a wide range of industries. $30.0  

Cascadia Capital
Sustainable Industries Team $25.0  

Michael Butler, Chairman & CEO

In  Billions  

mbutler@cascadiacapital.com
$20.0  
206-436-2530
$15.0  
Jamie Boyd, Senior Vice President
jboyd@cascadiacapital.com
206-436-2514
$10.0  
Alexis Broadbent, Senior Associate
abroadbent@cascadiacapital.com $5.0  
206-436-2570

Kyle Montgomery, Analyst $0.0  

kmontgomery@cascadiacapital.com
Q109   Q209   Q309   Q409   Q110   Q210   Q310  
206-436-2572

Clare Nordquist, Director

cnordquist@cascadiacapital.com • Unfortunately, we don’t see much momentum in the latter half of 2010 that will cause a massive spike
206-436-2548 in the project financing figures for the remaining of the year – however, we are seeing new project
financiers (and old ones returning) enter the markets again causing us to forecast an uptick in project
activity in the near term.

• As always, the wind markets are subject to the ebbs and flows of subsidization schemes and given the
relative turmoil in the US markets, we don’t expect a quick recalibration to past years.

• Solar technologies are maturing to the point of bankability and we are beginning to see significant
momentum building on solar project financings.
Cascadia Capital, LLC
Columbia Center
701 Fifth Avenue, Suite 2600 • Biomass projects continue to garner interest and we expect to see continued activity here.
Seattle WA 98104
Source: Bloomberg New Energy Finance
Phone: 206.436.2500
Fax: 206.426.2501

Member FINRA

Cascadia capital Page 6