There is no doubt that many cleantech companies and sectors will be hurt by the pandemic but it is not a death sentence. Even during an unprecedented public health and economic crisis, there are many reasons to remain optimistic about cleantech’s future. In this post, I’m going to outline some of the dynamics that will provide some short and medium-term relief to these industries as well as some of the longer-term implications.
Everyone can get behind jobs & economic opportunities
Whether it’s called a “green recovery” or a continuation of the status quo, we’re slowly but surely moving in the direction of bipartisan consensus that the investments in the clean economy should keep moving forward. This might not be as apparent in the national conversation because of presidential politics, but cleantech industries are thriving at the state and local level. The economic development and job creation argument alone is enough to sway both sides of the aisle during the COVID recovery. Add in energy independence, national security and climate action and the argument is that much stronger. One strong indication to support this case include the new right-leaning organizations, such as Clean Energy Forward, that are popping up to support cleantech’s mission.
The money still likes cleantech
As my colleague Josh wrote in our previous post, the underlying attractiveness of cleantech investments has hooked VCs, project finance investors and big corporate commitments. Over the past two years, these entities have earmarked many billions of dollars that will still be deployed during COVID and provide what amounts to a private sector-led stimulus for cleantech. Many cleantech investors have been public with their commitment to double down on their investment strategy. Clean Energy Ventures, for example, published an open letter to the startup community that was co-signed by 40+ cleantech funds, pledging to support all of their portfolio companies through the pandemic.
People are looking for ways to save money
It’s a great time to be a cleantech company offering ways for individuals and businesses to reduce expenses and save money now. For example, subscription-based energy services like community solar are a no-brainer for renters or homeowners who are trying to save a few bucks every month while they spend almost all of their time at home. For businesses such as real estate owners or energy-intensive enterprises, it’s a perfect time to be investing in energy efficiency or renewables that will reduce their monthly operating expenses. These businesses won’t want to put down big money upfront which should provide a nice opportunity for the companies providing zero-down project financing.
Infrastructure stimulus & investment bump
The COVID recovery will spur investments in smart infrastructure upgrades that will benefit some emerging areas in cleantech, such as the technologies that are focused on industrial decarbonization and the circular economy. There are a plethora of companies that will benefit from these investments. For example, AMP Robotics is charging forward with their AI-driven robotic recycling technology and can look to new funds such as the Alphabet spinout Sidewalk Infrastructure Partners that are looking to finance these tech-centric infrastructure projects at scale. The next government stimulus package(s) will likely include some pockets of opportunity for cleantech infrastructure projects but don’t expect it to come in the form of what has become a highly politicized solar ITC extension.
Climate awareness is at an all-time high… and kind of sexy
The money has been flooding into cleantech because it’s suddenly economic and en vogue with the majority of the population. Ever since Greta Thunberg catapulted the climate change conversation on the global stage, climate awareness and the pace of action has accelerated at an unbelievable pace. If wildfires, hurricanes, droughts and other natural disasters weren’t enough to help demonstrate the impact of climate change, the pandemic has certainly helped demonstrate the impact of reducing emissions and shown the world what is possible with collective action. People seem to be enjoying cleaner air, clearer skies and quieter streets.
The Big Picture
Working together, there are interesting market dynamics at play that will offer some short and medium-term relief for cleantech industries during what could be a long recovery and these efforts will also positively contribute to the long-term outlook for a robust, thriving clean economy.