Investment opportunities in clean energy are enormous, writes Clean Growth Fund's Beverley Gower-Jones
The opportunities for investors in clean energy are enormous, if you have the deep sector expertise to understand what you are looking at. This is the next 'industrial revolution' and it's the first one that is up against a ticking clock, so there are advantages and rewards for investors who act swiftly and decisively to invest in technology solutions.
It is not enough for institutional investors, pension funds and those with listed assets to work only with their existing portfolios to decarbonise over time. To benefit from the energy transition, investors need to look elsewhere and fund new innovative technology solutions that enable net zero.
Everywhere you look there are amazing innovations taking place in every industry - and its humbling to see the entrepreneurial community rise to the net zero challenge. At the Clean Growth Fund, our primary role is to identify, evaluate and invest in the companies that will make superior returns for our investors and have the biggest impact on net zero in the shortest timeframe. We have invested in a wide range of solutions from technology that enables flexibility on the power grid, electric solutions to heat buildings, industrial biotechnology to synthesise clean chemicals, software to optimise solar farms and heavy industrial processes, renewable energy integration into logistics transport and technologies designed to capture CO2 from the air.
Our sister company, Carbon Limiting Technologies, continues to work with and help our portfolio companies to scale and grow, in order to commercialise their products and services to market as soon as possible.
It is only by commercialising these new technology solutions that we achieve net zero. Low carbon solutions cannot have a massive impact without being commercially successful. In order to achieve this, we need a significant ramp up of venture capital investment into:
- Early-stage technology solutions - climate tech often has a hardware component which means that typically it needs more capital and time to bring it to market.
- And 'first of a kind demonstrator projects' - these often need hybrid funding and a combination of venture and debt, which makes financing more complex, combined with the fact that everybody wants to do number two or three but nobody wants to be first.
Technology commercialisation sits within an ecosystem. It needs all parts of that system to be aligned for mass adoption, so we all have a critical part to play in breaking down barriers - and it needs to happen fast…
- Corporates: we need customers for clean solutions who are incentivised to pioneer, trial and support their deployment. Ask yourself how can you use your position to support clean technologies and how can clean technologies support your business towards a sustainable future?
- Regulators and policy makers: we need the right incentives and rules, to create an environment where clean energy solutions can accelerate to market and we need investment into critical national infrastructure. For example, in the UK decoupling the electricity price from the gas price would enable a massive acceleration of electric heating solutions in UK homes - how can you enable the rollout of clean technologies through the rules you make?
- Individuals: we need a skilled workforce covering all functions of a business to drive clean and climate tech companies to be successful. We also need consumers who will make sustainable choices, and show corporates and investors that there is demand for sustainable options - what do you want to do for your next job and how can you use your influence?
- Financing: we need more - how can you increase your allocations to ESG, and to clean technologies within ESG?
Net zero is a challenge but it is achievable... if all players act now and do the absolute maximum possible to achieve it.
Beverley Gower-Jones is an independent member of the UK government's Net Zero Innovation Board.
She is also founder and managing partner of Clean Growth Fund, which is a partner of the Net Zero Festival.
Clean Growth Fund is a UK venture capital fund dedicated to investing in the UK's very best early-stage clean tech companies (www.cleangrowthfund.com)