Cleantech Investing Trends to Watch
Clean technology, or cleantech for short, is gaining more traction these days. With increased awareness about the climate crisis, initiatives for reducing the carbon footprint keep springing up rapidly.
More companies are engaging in decarbonization and utilizing renewable energy, many of them backed by venture capitalists.
If you’re looking to invest in the cleantech industry, but you still haven’t found the right opportunity, these cleantech investing trends might give you an idea.
Electric buildings may sound like something from a sci-fi movie, but they’re relatively easy to create.
Those are decarbonized buildings that use only renewable energy, such as wind and solar, to create zero-carbon electricity.
New York City is one excellent example of regional programs that support electric buildings. Buildings in New York get grades for energy efficiency, which incentivizes owners to electrify and decarbonize.
The buildings that don’t implement solutions to reduce their carbon footprint will face hefty fines.
The program currently focuses only on large commercial buildings, but it might also spread to other real estate properties in the future.
Dozens of cities in the US are also developing initiatives to ban new natural gas hookups. They’re creating local policies that will force electricity in residential and commercial buildings while also ensuring the source of electricity comes from renewables.
According to the Global Electric Vehicle Outlook 2020, global electric car sales surpassed 2.1 million in 2019, making 7.2 million electric vehicles worldwide.
It will be years until EVs flood all the streets in the world, but we’re getting there.
However, some problems need addressing. The most obvious one is a shortage of charging stations.
Toronto is one of many cities that are doing something to solve this issue. The city’s strategy to make all Toronto transportation electric by 2050 includes upgrading the street infrastructure to install public charging stations.
That way, people won’t revert to the old gas-powered car, and many others will be encouraged to switch to electric.
A bigger problem with EVs is that they consume a lot of electricity and strain the state power grids. This problem leads us to the next major cleantech investing trend.
Long-Duration Energy Storage
Both EVs and electric buildings can challenge the electricity grid, which still relies on fossil fuels. Now, there’s a problem.
How to allow for more power to charge EVs and electrified buildings? The solution might lie in energy storage.
If there were distributed energy resources that would generate and store energy, there would be more power to meet demands during peak periods.
So, grid operators are looking into the trend of adding more capacity into their T&D (Transmission & Generation) systems to lessen the load on the grid.
Some are even thinking about implementing distributed electricity storage solutions near charging stations for EVs.
A Toronto-based startup, PeakPower, developed an innovative EV-charging solution.
During the day, EVs can use their batteries to power up the buildings during peak times, thus reducing the grid’s strain and cutting electricity bills.
However, one problem remains. Lithium-ion batteries can’t store energy for long. There needs to be another solution capable of storing energy in bulk over extended periods.
Long-duration energy storage solutions are essential, and there have been significant advances to implement them.
Wind and Solar Energy
When talking about renewable energy, wind and solar usually pop to mind first.
Utilizing wind and solar energy is one of the most critical cleantech investing trends that many countries worldwide follow.
Lots of major companies are joining forces to reach carbon-emission goals by generating energy via these carbon-neutral sources.
One excellent example is the partnership of Greenlots and Volvo Trucks. The two giants have developed EV charging installations for heavy-duty fleets to use solar power to charge Volvo’s electric commercial trucks.
Another example is SolarEdge’s EV charger with inverter technology. Combining solar and grid power can charge an electric vehicle up to six times faster than a regular charger; powered by HD-Wave technol, it ensures 99% efficiency.
Renewable Hydrogen Energy
Renewable hydrogen could be one of the best solutions for long-duration energy storage.
However, it should come from renewable sources, such as wind, solar, and geothermal, instead of natural gas.
Maine is one of the US states proposing the use of renewables to convert electricity into storable gas. The state is developing a project for creating a hydrogen energy storage system that would eliminate the need to upgrade the state’s T&D system.
It has many other renewables in the plan, including solar, wind, biogas, and biomass.
Key Attributes of the Cleantech Industry to Consider When Investing
As a venture capitalist, you need to consider many factors before investing in a cleantech company, whether it’s a startup or a small business looking to expand.
One of the crucial factors is capital efficiency. You need to know how a company will use its capital and if it will require ongoing investments going forward.
You’ll also want to check profit margins and financial projections to have an insight into an estimated cash flow.
You need to know how long the company’s sales cycle is or will be, what its unique selling proposition is, what their competitive advantage is, and what their competitive landscape looks like.
Other essential factors are proof of early traction, intellectual property (e.g., any kind of patented technology), and total addressable market (TAM) that offers excellent opportunities.
Taking all these factors into consideration will help you choose the right investment opportunity that leads to profitability.
These cleantech investing trends are just some of many that venture capitalists are eyeballing these days. Have you found your favorite yet?
Sales Synergy Consulting can help you prepare for any potential investment opportunity. With our expert help, you’ll be able to realize your goals quickly and supercharge your ROI and profit.
Get in touch with us today to get a quote.