A delegation of companies from the French cluster in Provence area is visiting Silicon Valley this week. They connected with other French entrepreneurs in Palo Alto yesterday. It was the opportunity to compare cleantech activities in US and Europe. The South East is the first region of France in photovoltaic power generation, and has an important nuclear industry.
Provence has been working on the Environment before cleantech came to age. "It was more of an associative movement back then. We have since reworked our strategic plan." stated Carine Schlewitz of the Technopolis Arbois Mediterranee. “Renewable energy is now a strong and clear vector of economic growth” explained Pascal Rioual who heads the clean technology cluster Cap’Energies (picture above). The French Government has borrowed more than $1Bn towards sustainable infrastructure, and first smart grid projects have been awarded.
If Southern California is often compared to the French Riviera for its mild climate and quality of life, many clusters would like to be associated with Silicon Valley. Provence is actually a fairly high-tech area with semiconductor factories. Gemplus is world-known for smart cards, commonly used in Europe for credit cards and other transactions. IBM once had a large campus in Sophia Antipolis near Nice, and many US companies still have offices. But the comparison with Silicon Valley stops there.
As the representatives of Provence boasted the infrastructure, Government aids, and the various buildings, I couldn't help to think about something else. Silicon Valley is a state of mind. People come here to change the world and think different. Entrepreneurs have access to large venture capital to take the good ideas, which have survived a brutal competition, to the next level quickly and sometimes completely revolutionize markets. Intel, Apple, Cisco, Google, Facebook, and Tesla have done it again and again.
The lack of young entrepreneurs at the French speaking networking event yesterday was telling. Representatives from Provence come to SIlicon Valley every year to attract entrepreneurs. Some who made the move talked genuinely yesterday about their choice, and the useful help Provence Promotion provided to make the transition. But the entrepreneurs are in the latter part of their career. Are they still working after a dream or moving for a better quality of life? France is still working an entrepreneurial model in a country where money, not sex, is a taboo.
The idea of creating a lasting eco-system in Europe based on renewable energies is not far-fetched though. Actually, the Grenoble area that now leads semiconductor activities in Europe, started as hub for hydro-power in the early 20th century. Hydro-power still represents more than 15% of the energy produced in France. With the successful French-Italian alliance of STMicroelectronics and the CEA-LETI spin-off Soitec, Grenoble was able to consolidate nanotechnology research in Europe after the Internet bubble collapsed.
The Alpine area across Germany, Switzerland, France and Italy is very strong scientifically with an old industrial heritage and large universities. Located at the South end of the Alps and with access to the Mediterranean Sea, the region of Provence Alpes Cote d'Azur (PACA) also benefits from a dense nuclear industry led by EDF and Areva, in collaboration with the Government nuclear lab CEA. If M&A is active in Europe, including Schneider Electric present in Provence, few start-ups are acquired locally, even less internationally.
The key for lasting success is to integrate new technologies with actual energy needs. Gemplus became succesful because smart cards changed the way we did phone calls and credit card transactions. So cleantech start-ups must provide tangible solutions, not just benefit from infrastructure subsidies. That is the way it will create real value to end consumers, creating higher-growth companies that can later acquire smaller start-ups. Google acquires Internet companies every week.
It is more difficult to do though in infrastructure as things don't "plug in" like on the Internet and have to last much longer. Smart grids are becoming a strategic area to absorb renewable energy production. To that extent, Cap’Energies facilitated one of the first smart grid demonstrators in Europe. This echoes a number of smart grid experiments in more progressive States like Oregon.
Cap'Energies has expanded to include technology activities in remote islands like La Reunion or Guadeploupe. Much like the islands of Hawaii, they have access to ideal sun conditions and have seen a surge in renewable energy infrastructure, from residential installation to larger farms. Peak energy production has peaked to 30% in daylight but solar only represents 5% on average. Tighter integration with comsumption is required to make a real difference.
Until solar and other renewable energy sources reach cost parity to be connected with the grid, Silicon Valley and Provence technology clusters have a common enemy. China dominates the solar industry with massive monetary support from their Government. Two French photovoltaic solar executives in Silicon Valley discussed with two French technology cluster representatives in a panel, and they agreed: China is taking over and there is not much semiconductor companies can do, even with start-ups working on new intellectual property.
But the competition is not ever. “With solar coming soon below 100 euros per MegaWatt-hours, it is a different game” highlighted Pascal Rioual. And they are trying to be ready for that in a few years. Most of the companies within Cap’Energies cluster are small, with ten or fewer employees. Despite large grants that will be provided from the Government to sponsor smart grid programs and renewable energies, several obstacles for innovation remain in France.
The main obstacles are the strong influence of large corporations on regulations, the lack of role models to inspire entrepreneurs and limited access to large venture capital. Talent can be found in Silicon Valley but answers will not come from there when it comes to cleantech. Despite large amount of VC investments, Silicon Valley has not produced a world leader in solar.
But Innovation has evolved in SIlicon Valley, from the semiconductor industry to the Internet. Innovation is not limited to technology prowess but design and business models. And people are willing to step up to protect it as an engine of opportunity. More than 4 million people signed the Google petition against the SOPA bill yesterday. This limits the power of large corporations to protect the statu-quo in favor of innovation.
The two growing solar companies locally Silicon are Solar City and SunRun who install solar modules with innovative business models, and leverage the Internet to reach out to customers and provide monitoring solutions. The succesful IPO's in 2011 came from bio-fuels due to the support of Military contracts and a fear of reliance of Middle Eastern Oil that jacked the price of gasoline up.
Young entrepreneurs in Palo Alto area are focusing on using the Internet and mobile applications to change customer behaviors. They do not think of Andy Grove, the co-founder of Intel, but fancy at the idea of starting a company out of house as portrayed in the movie The Social Network. Gamification of cleantech is a clear trend in Silicon Valley.
The Director of Provence Promotion, Eric Semerdjian, ended the panel talking about India, and rightfully so. Renewable energies won’t replace the nuclear industry in France more than Oil & Gas conglomerate in the US. This requires a timetable that does not necesseraly favor disruptive innovation. But cleantech companies in South East of France have an opportunity to bring solutions to emerging countries who have immediate energy needs. Whether It is India for energy markets, or China for IPO exits, French cleantech companies might want to look East.
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