Series Green Spotlight: Renewable Energy
Energy is the lifeblood of our entire economy. The diagram below is a visual representation of how approximately 100 quads (or 100 quadrillion BTUs) of energy flows throughout the US every year. We transform petroleum, natural gas, coal, nuclear and renewables (on the left) to power nearly everything, including our homes, cars, farms and more (on the right).
Renewable energy — or energy from naturally replenishing resources — includes solar, wind, geothermal, hydroelectric and biomass. For the first time ever in April 2019, renewables collectively surpassed coal in US power generation, reaching 23% over coal’s 20%. Renewables are critical to our economy’s decarbonization and are fortunately the fastest-growing segment of the energy industry, with renewable generation capacity expected to grow 50% by 2024.
To shed light on what the renewable transition looks like from a founder and funder perspective, Series Green brought Amy Francetic of Buoyant Ventures and Jonah Greenberger of Bright together for a conversation on the topic. Costs of renewable energy technology continue to decline, with solar photovoltaics (PV) and onshore wind now being the cheapest new power generation options in most geographies, but there remain a number of scaling challenges. Our speakers touched on how renewables in the US are being built to replace retiring coal plants rather than address an energy shortage, contributing to a lack of urgency in the space. And while renewables may be cost-effective to build, transmitting and distributing power to end-users is still inherently difficult and inefficient.
Electricity is also a commodity, averaging $0.10 per kWh in the US, so competing marginally on cost is unfortunately not enough. As seen across many venture-backed industries, innovations need to be an order of magnitude better or more than the existing solution to really take off. It also doesn’t help that governments continue to subsidize fossil fuels, with the US spending $649B on subsidies in 2015, ten times more than federal education spending that year.
Energy is just one exciting sector that we dove into. We were lucky enough to get some insight into our experts' thoughts around the broader Climate Tech market. While COVID-19 has been detrimental in some ways it has also brought about awareness around reduced emissions, our failing supply chain, and massive food insecurity in our country. Despite investors needing more traction and valuations decreasing, ESG specific investments are not slowing down. There’s a deeper understanding for the investments we need to make to heal our planet and society. As such, we continue to see funds entering the Climate Tech space and deploying capital.
Unfortunately, we’re also seeing many of these funds make the same mistakes some made during the Clean Tech 1.0 era. People lost during that time because investors expected the climate space to mimic other markets. If we’re going to solve the climate crisis in the necessary timeline we cannot afford to make these same mistakes. We must remember that while time to maturity may be longer, strong investments that will move the needle also need to have solid margins, 10x better product, and a fast GTM. We as investors also need a deep understanding of how both regulatory and politics come into play.
We are confident that despite some challenges there are massively successful and impactful businesses to be built. Other spaces that we discussed that excite us are:
- Agriculture
- Supply chain (we’re seeing how fragile it is right now)
- Food waste
- Smart appliances (need more automation here)
- Digital workforce education (we need to retain people to create more digital solutions)
If you’re an investor or founder powering the renewable energy transition, we’d love to talk to you. Please reach out to Shawn Xu at shawn@floodgate.com, Stephen Wemple at stephen@spero.vc, Priscilla Tyler at priscilla@trueventures.com or Jess Eastling at jessica@better.vc to chat.
Energy Startups Mentioned:
- Bright — residential solar provider based in Mexico
- Bloom Energy — public company that manufactures and produces electricity on-site
- Helioscope — solar design software
- Aurora Solar — solar software to design and sell advanced PV systems
- Sense — home energy monitoring + insights
- Span — home energy interface
Others Climate Tech Startups Mentioned:
- Pachama — carbon offset marketplace starting with reforestation
- EcoAir — air purification solutions
- Arable — analytics and insights for agriculture
- Imperfect Foods — imperfect grocery items to reduce food waste
- Full Harvest — rescued produce
- Aclima — environmental intelligence to reduce air pollution and climate-changing emissions
- Storm Sensor — creating smart urban watersheds
- Terrafuse — predictive AI technology for the planet
Relevant Energy Organizations:
- International Energy Agency (IEA)(World Energy Outlook 2019, Global Energy Review 2020)
- US Energy Information Administration (EIA)
- International Renewable Energy Agency (IRENA)
- National Renewable Energy Laboratory (NREL)
- The Advanced Research Projects Agency–Energy (ARPA-E)
Sources:
- 2020 Renewable Energy Industry Outlook, Deloitte 2019
- Renewables 2019, IEA 2019
- Renewable Power Generation Costs in 2018, IRENA 2019
- Electric Power Monthly, EIA
- Global Fossil Fuel Subsidies Remain Large: An Update Based on Country-Level Estimates, IMF 2019
