Although commercial success could take years, venture capitalists are pouring cash into, fuel cells, , , new lighting microchips, and other innovative energies.
"The best brains in the country are no longer working on the next pharmaceutical drug or the next Silicon Revolution. They want to work on energy," said Vinod Khosla, a top venture capitalists in Silicon Valley.
While there is competition from Canada, Germany, China, India and other nations, traditional energy companies have been relatively quiet.
"It is under-researched. There are easy pluckings. Oil companies spend no money on research, especially outside of how you discover more oil. All their efforts are token or nominal. The same is true of the coal business," Khosla said.
It could be years, however, before "clean" power plans translate into commercial products, not only because of scientific barriers, but also due to uncertainties about timing, market development and competition.
"We have yet to see any major successes. A lot happening right now is sort of a research-and-development wave for individual technologies, Silicon Valley and industry itself," said Regis McKenna, a veteran marketing strategist who helped launch Apple, Electronic Arts and Genentech, among others.
McKenna recalled that the microprocessor, the brain of computers, was developed in 1971, but it took another 10 years before pioneer Intel found a market for the device in personal computers.
More than two-thirds, or $883.6 million, of all clean technology investments last year were made by U.S. investors.
Cleantech Venture Network, an industry trade group, estimates that clean energy investment in Silicon Valley topped $500 million last year, including not just venture capital but also corporate and some debt financing. The group estimates $3.6 billion was invested across the United States and Europe.
Among the largest clean tech investments were $75 million in solar cell maker NanoSolar of Palo Alto, Calif., and $50 million for Los Angeles-based renewable biofuels producer Altra.
Biofuels, wind power,and fuel cells are likely to pace new energy growth, according to Clean Edge, a research and consulting firm.
While new spending on clean technology is growing far faster than classic venture capital sectors such as computers, health care or retail start-ups, it remains a tiny fraction--only 3.7 percent--of the overall market.
A growing sense of urgency to reduce the use of carbon-based fuels, which scientists blame for global warming, is driving the move in Silicon Valley.
"We're not debating whether climate change is occurring. We know it is and we have the capabilities to do something about it and move toward a cleaner energy future," said Ron Pernick, co-founder of Clean Edge.
Gov. Arnold Schwarzenegger's efforts to launch a "greenrush" in California with a law to fight global warming also has focused more attention on Silicon Valley.
Schwarzenegger and New York City Mayor Michael Bloomberg praised a new fuel cell start-up--Bloom Energy--during a tour of the company last fall to tout their green credentials and strike a partnership to improve the environment.
Business can make more money by switching to energy-efficient systems and developing clean technologies. New jobs will sprout from a burgeoning service industry to cater to companies' green demands, Schwarzenegger said.
Beyond the buzz about environmentally friendly technology, Silicon Valley's most important contribution could be to shift existing managerial talent from Web and computer companies into building new energy businesses, Khosla said.
Echelon, a developer of "smart" electric meters to measure energy efficiencies, taps hardware and software managers and engineers who have built digital communications networks at earlier Silicon Valley companies, said Jeff Lund, the company's vice president of business development.
And even old dogs can learn new tricks. Forty-year-old Applied Materials, the biggest supplier of tools for making microchips, added solar cell manufacturing to its repertoire last year, and is equipping its Sunnyvale research center in Silicon Valley with one of thein the United States.