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Green energy investment is hot again in the US. To some, the new boom will raise the spectre of the clean-tech bust that followed a streak of exuberance a decade ago. But there are reasons to believe that this time the trend is no bubble or mirage. In the late 2000s and early 2010s, there was an explosion of investment in clean technology—renewable energy, plus other technologies to reduce carbon emissions. At first, the money came largely from venture capitalists (VCs), but then the federal government stepped in and began providing cheap loans and subsidies. Then in 2011, solar manufacturer Solyndra spectacularly failed, causing an immense political backlash. And that was only the most prominent failure; overall, investors lost about $25 billion when the sector crashed. Money dried up fast. For years, “clean tech" was a dirty word for VCs.

But clean tech is back.A venture fund led by Bill Gates is committing billions of dollars. Funding for battery companies and electric-vehicle companies has skyrocketed. And investment in solar and wind energy dwarfs everything else.

This raises fear of another bubble for some—of history repeating itself. My colleague Liam Denning believes that the rapid rise in valuations is a clear indicator of overpricing, which he expects to collapse when interest rates rise. Others see investors repeating the mistakes of a decade ago.

I’m more optimistic. Although investors will experience some ups and downs, I’m pretty confident that the clean-tech industry as a whole won’t experience the kind of bust it did last time. The most basic reason is that the fundamental underlying technology has matured in a way it hadn’t a decade ago. In 2009, the levellized cost of solar photovoltaic electricity was $359 per megawatt-hour, more than four times as expensive as electricity from a natural gas plant. By 2019, solar PV had fallen in price to $40 per megawatt-hour, 28% cheaper than gas. That’s an 89% decline in 10 years, with more drops yet to come. Meanwhile, lithium-ion batteries have cheapened too.

That order-of-magnitude drop in costs makes all the difference. First, it means that solar and wind aren’t risky new technologies. Solyndra failed because it was trying to market an innovative new kind of solar cell, which ended up being too expensive once the tried-and-true design came down in cost. Future investments in solar won’t have to bet on any difficult technological breakthroughs. Batteries might be a different story; lots of money is being thrown at startups trying to create solid-state batteries, which would be a true breakthrough. But Tesla is doing just fine with the old kind, so that sector is probably going to do okay as well. Venture investing does well when it doesn’t have to bet on ‘hard tech’, and much of clean tech is no longer hard.

Second, cost drops mean that success doesn’t depend on state intervention. In the earlier boom, fickle government subsidies were often necessary for capital-intensive energy firms to succeed. Now, even though President Joe Biden plans a big push for clean-energy investment, the market is investing a lot in renewables on its own.

Finally, investors have probably learnt their lesson. Clean energy itself was never a good fit for venture. It’s capital intensive, since buying solar panels and wind turbines entails a lot of money up front; venture capital tends to focus on cheap, small investments that scale. And instead of companies creating highly differentiated products and new markets, as in software, clean electricity firms are basically all trying to provide the same commodified product.

This time, VCs are letting bigger investors handle solar and wind, and finding other niches where startups can add value, such as solar services and financing, lab-grown meat and electric vehicles. Some of those bets will fail, but that’s always the case in private equity. The success of Tesla—now with a market cap of almost $700 billion, or 28 times the amount that was lost in the clean-tech bust—demonstrates the principle that a few big hits can compensate for a lot of little failures.

In other words, clean tech is entering the final stage of the famous Gartner Hype Cycle, a pattern that describes the progression of emerging technologies and business models, starting with an innovation that sees expectations climb and then crash, before they finally rise again to sustained productivity.

The clean-tech bust, like the dot-com bust in 2000, was a case of investor enthusiasm for a new technology outstripping the technology itself. But, just as few today would question the value of companies like Google and Facebook that came into their own during a dip in investor enthusiasm, clean-tech will pull through. In Gartner’s terms, we have passed the ‘trough of disillusionment’ and are now climbing the ‘slope of enlightenment’.

Noah Smith is a Bloomberg Opinion columnist

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