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Clean energy innovation Is unlocking private venture capital

Clean energy innovation Is unlocking private venture capital

Energy sector innovation and broader efforts to address climate change should resemble the best of the tech startups in the United States: fast; disruptive; exciting; and good for consumers. But the complexity of building and distributing hundreds of megawatts of power isn’t the same as downloading a new app on your phone.

Disjointed regulatory policies, incumbency advantages and limited financing options previously have stymied the adoption of cutting-edge, first-of-a-kind energy technologies. As policymakers mull measures to accelerate an economic recovery and invest in the country’s long-term infrastructure needs, policy should center on tackling the barriers to American ingenuity and entrepreneurship.

The financing landscape is particularly complicated. In the 2000s, there was an influx of cleantech venture capital investment, but the combination of the financial crisis, the rise of cheap natural gas and high-profile company failures dried it up. From 2011 to 2017, cleantech venture deal value declined by more than 40 percent.

Today, that paradigm is changing. Climate-relevant opportunities have investors’ attention, and the venture capital spigot has turned back on. Global venture capital and private equity investments in clean energy exceeded $10 billion in 2019 — the highest since the 2008 global financial crisis — but expect significantly more in the coming decades. A confluence of factors are reinvigorating investor interest.
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