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Quick Take: It may feel as if the cleantech bubble has burst. That would be a mistake, warns Frost & Sullivan, a research consultancy. Yes, renewables are in retreat thanks to bankruptcies and the expiration of tax credits and incentives. But at least three other sectors are waiting in the wings, as you will read below. We agree that all three are poised at the threshold. - By Jesse Berst

Research consultant firm Frost & Sullivan said that while new investment in renewables grew by 30% in 2010, it was followed in 2011 and early this year by dismal news including bankruptcies, employee layoffs and profit warnings – and that global cleantech indices were slipping downward.

"We witnessed important solar manufacturers going bankrupt, tariff cuts being accelerated, even retroactive cuts in feed-in tariffs for already operating PV projects," said Alina Bakhareva, manager for Frost & Sullivan's Renewable Energy Program. "This situation affected investors' confidence, and the current scenario does not look promising."

But, as the company explained, renewables aren't the only game in cleantech. Bakhareva commented "We believe that the cleantech industry holds the answer to a few looming global problems in the energy, food and water industries. A new wind of cleantech innovation will bring the answer and this will have a positive impact on the overall market."

So, where are next cleantech growth and investment opportunities? Frost & Sullivan highlighted three areas that are exhibiting the most potential in their developments.

·         Smart water is showing substantial opportunities in both hardware and software segments; and companies operating ahead of the market to identify those markets, like combined analytical control and automation systems, will have a competitive advantage.

·         Energy storage appears to be on the brink of getting away from pump storage facilities, which had been the dominant segment, and moving toward batteries and molten salt for concentrated solar power (CSP) projects. Another promising area is innovative distributed storage applications on the customer end of the meter, which are being tested and evaluated to help strengthen the grid.

·         Energy efficiency, Frost & Sullivan says, remains the cheapest option for reducing our carbon footprint and strain on the grid. Major commercial building retrofits can save up to 50% in energy costs with energy efficient windows, heat-saving radiator insulation, lighting improvements and climate control systems.

As Bakhareva put it "It is important to highlight that with rollback in government R&D funding and feed-in tariffs, only those sectors identified as holding strategic long-term opportunities are safe to enter."

Investors are also advised to re-consider the geographic perspective of their strategy, noting that China, India and Brazil, along with other Asian, Latin American and African countries all will develop more projects – and with them more opportunities.

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Jesse Berst is the founder and chief analyst of Smart Grid News.com, the industry's oldest and largest smart grid site. A frequent keynoter at industry events in the U.S. and abroad, he also serves on advisory committees for Pacific Northwest National Laboratory and the Institute for Electric Efficiency. He often provides strategic consulting to large corporations and venture-backed startups. He is a member of the advisory boards of GridGlo and Calico Energy Services.

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