The French Vogue for American Clean Techs

Total, Schneider, Saint-Gobain, Areva, etc. All these corporations have very different activities but at least one shared interest: They are all buying more and more clean tech firms across the Atlantic. And this buyout movement — rather unusual in that direction — involves all the great green technology fields. While Total wants to become a front-runner in the photovoltaic industry — and is also eyeing biofuels — Areva is showing interest in the solar thermal industry. As for Saint-Gobain, it is proving to have an eye on smart building, whereas Schneider Electric is establishing itself as one of the leaders in energy efficiency. The list of great French corporations that are specifically targeting the American clean technology market can even be expanded if we take into account the agreement by EDF and First Solar or the program Veolia launched in order to be the first to benefit from the best of America’s green startups — notably in California.

Though these movements were obviously not coordinated, they follow a similar line of reasoning. As these corporations are all anxious to find new growth engines from core activities or proven skills, it is understandable that they would turn to green technologies, as they are fast growing markets. According to the advisory firm Clean Edge, solar energy, wind power and biofuels rose by 35 percent last year and represented a $188 billion market. Like many others, Clean Edge predicts that this growth rate will, at the very least, remain stable in the coming years.

Second shared characteristic: These corporations are all interested, first and foremost, in American companies. Though concern about climate change is a debate that has less impact on American society than in the Old Country, it did not prevent the United States from radically shifting toward green technology innovation a few years ago. This was especially true in California, where former Gov. Arnold Schwarzenegger increased fiscal incentives and regulatory constraints in order to make the Golden State the paradise of solar energy, biofuels, smart buildings and electric cars.

As a result, its technological gems are not only countless — they have been extremely well financed by venture capital since the mid-2000s — but also, now, quite affordable. This is thanks to the strong euro (currently almost $1.50), but that is not all.

Of these gems, those that are public — like SunPower, which was just bought by Total for $1.4 billion — have lost a great deal of their value since the beginning of the financial and economic crisis. But all in all, the problem is deeper. Whether it is renewable energies, energy efficiency or smart building, they all need enormous capital in order to finance innovation, production capacities and commercial forces on global markets. And yet investors — who have already shelled out a lot of money — are realizing that they will not be able to finance all the emerging companies this way until they get their return on investment. And so they are starting to abandon some of them along the way, even though their technologies seemed promising.

This is where opportunities emerge. The great French corporations are indeed strong enough not only to bring in the needed capital (and they also have access to the financial markets at better conditions than startups do), but they can also include these new technologies in their existing portfolios and offer them to their own clients — who would have been, for the most part, reluctant to adopt these technologies had they been presented by unknown startups. This is the reasoning behind Veolia’s program, which relies on partnership with a California collaborator who selects the best technologies for the company that are likely to diversify its offering of environmentally-related activities. It was also Areva’s when it bought Ausra last year — a Silicon Valley company specializing in solar thermal energy that was having financial difficulties at the time. Since then, the French corporation has applied its technical and commercial expertise and just announced its first contract for a solar farm in Australia.

Thus, the French companies’ reasoning is to get their hands — as soon as possible — on the best gems in order to have the best new weapons with which to face their traditional rivals. This was also Schneider Electric’s reasoning when it bought Summit Energy, an American company specializing in smart grids, for $268 million last March, while it was competing against Siemens and General Electric in these markets. The fact that GE had just acquired the French company Converteam — which specializes in energy efficiency — a few weeks earlier, for the tidy sum of $3.2 billion, is a sure sign that daggers are drawn.

The movement toward “global industrialization” of green technologies is only just beginning and will change our way of life. Because they know that they are better at industrially valorizing technological innovations than creating them in their labs, French companies are among the most active in this economic restructuring movement.