Antenna Group Cleantech team members spend thousands of hours each year monitoring and dissecting industry trends to advance cleantech narratives and global growth.
Despite all of the craziness of 2020, Cleantech’s momentum out the gate in 2021 is palpable with significant political tailwinds, large funding announcements, growing appetites in public markets, and corporations doubling down on their renewable energy and decarbonization commitments. All of this is getting a lot of air time, and as media people, we’re not complaining!
As always, we’ve polled some Ants about the year ahead and are pleased to share our crystal ball predictions for 2021.
1. Biden’s Exuberance Meets Washington Reality
It has been fascinating to see the conversation on how Joe Biden’s administration will govern on cleantech and the climate crisis when the new president is sworn in at noon on January 20. The energy media ecosystem and Energy Twitter are flush with varying degrees of optimism and pessimism.
To me, it depends on how you set your expectations.
On the legislative front, it is generally best to set your expectations for Congress low. Congress barely got out of town for its winter break before they could agree on a COVID economic stimulus package that is being roundly seen as the bare minimum. If there is one glimmer of optimism in this bipartisan agreement, it is that tax credits for renewables were extended. In our polarized political climate, there is apparently still political value in bringing home the bacon. And even with the narrowest of majorities in the Senate after sweeping runoffs in Georgia, there are still legislative climate wins to be had through budget reconciliation. But the filibuster will still be an insurmountable barrier for more substantive action.
A razor thin majority in the Senate will allow Biden to staff his administration with his first choice picks. That may not sound consequential, but staffing reflects policy preference and drives policy outcomes. Aside from congressional action, the next best opportunity for meaningful policy changes will come through executive action. Biden has sent strong signals with his choices for staffing, bringing in former Secretary of State John Kerry to represent the president’s climate efforts internationally, former Michigan governor Jennifer Granholm to lead the Department of Energy, and former EPA Administrator Gina McCarthy to act as the administration’s “climate czar.”
A well-staffed, climate-focused Biden Administration can take meaningful executive action on auto emission standards, electrifying the federal fleet of vehicles, expedited permitting renewable energy on public lands, raising energy efficiency standards of household appliances, changing the reporting requirements of climate risk for publicly traded companies, and more.
But the new president’s list of tasks is long and it begins with the immediate challenge of vaccinating hundreds of millions of Americans against covid-19 and stemming the economic catastrophe looming over countless families. Presidents can only do so much, so it remains to be seen how much of President-elect Biden’s ambitious climate agenda will come to fruition.
2. To SPAC, or not to SPAC? That is the question
One of the megatrends that we witnessed in 2020 was Wall Street’s embrace of the cleantech sector after many years of neglect. Solar and EV stocks are popping! There are a combination of variables that have played into this, including but not limited to Tesla’s meteoric rise in valuation, the SPAC craze, increased emphasis on corporate ESG investment and divestment from fossil fuels and consumer preferences, among others.
Wall Street’s embrace of cleantech combined with the accessibility of public markets through SPACs has created an interesting choice for cleantech startups heading into 2021: pursue traditional capital sources or test public markets. The latter is a tempting proposition but one that we think will come back to bite companies in the year ahead.
The majority of cleantech founders that we speak to today have had several conversations with bankers about SPACs. In many cases, we believe that these companies are not ready to go public, have long and complex commercialization timelines and will face backlash from impatient investors once this SPAC bubble bursts.
There’s a strong and rapidly growing ecosystem of strategic investors that can and will nurture the next crop of cleantech market leaders in a far more impactful way than the retail investors looking to make a few bucks on Tesla’s coattails. Color me nervous about the SPAC attack in 2021.
3. VPPs will (sort of) go mainstream
Virtual power plants or VPPs started making headlines in earnest in 2020, with many new partnerships forming between technology companies, distributed energy resource management (DERMs) providers, utilities and other stakeholders. AutoGrid and Sunrun collaborated to manage a national fleet of residential batteries, Swell Energy announced a $450 capital partnership to deploy residential solar and battery storage VPPs across three utility service areas and household names like Generac are making strategic acquisitions to launch their own VPP fleets. In 2021, the results of these types of partnerships and the evolving smart technology ecosystem will help VPPs go mainstream in commercial and residential markets.
An increasingly diverse and accessible fleet of smart technologies—from smart thermostats to residential solar+storage to electric vehicle charging systems—will inform VPP growth. Or, as is the case with Logical Buildings’ GridRewards platform, entire buildings will become VPP assets. Ultimately, more resources that can deliver more grid services are becoming available to more residential and commercial consumers. End-users are seeking opportunities to support a cleaner and more reliable energy and transportation system. Adoption rates of technologies that serve VPPs will expand because they address these priorities while also directly benefiting customers with rewards programs or zero-cost installations.
Some key challenges here will be around customer education, since market awareness is still low and these aren’t easy projects to sell. A complicated regulatory environment where fewer than a dozen states are offering incentives and pilot programs to help this market mature is another major hurdle. Deployment sizes are still small and it remains to be seen how quickly all of these new entrants will be able to build meaningful market share.
4. The electrification of everything that moves
The electric vehicle industry had a banner year in 2020, but market adoption didn’t exactly grow in lock-step with all the industry hype. That said, all of the 2020 momentum combined with some significant market shaping activities will help the EV adoption curve spike in 2021 and will create new opportunities for electrification across other segments of the transportation system.
Right now, there is still a shortage of EV options that many consumers would consider accessible in price. But in 2021, many new models are expected to hit the market, including the Nissan Ariya, Volkswagen ID.4, Volvo XC40 Recharge, Hyundai IONIQ Electric, Ford Mustang Mach-E, and the Mazda MX-30, to name a few. Many of the new EV models will be at, or close to, price parity with internal combustion engine (ICE) vehicles. The increased roll-out of EV options in the marketplace will satiate a curious market looking to make their first EV purchases.
Beyond electric vehicles, an impressive field of startups are making headway into building electric airplanes, such as Eviation, Joby, ZeroAvia, Ampaire, KittyHawk and Wright Electric, while companies like SW/TCH Maritime are getting ready to launch zero-emission commuter ferries.
Some key factors that will accelerate momentum in 2021 include improvements in battery performance that will extend travel range between charges, reduction in battery costs, upcoming bans on the production and sale of ICE vehicles, new policies to incentivize EV adoption, large public and private fleets electrifying, economies of scale in EV manufacturing and a new administration with ambitious climate goals and supportive Secretaries of Energy and Transportation.
All of this electrification won’t come without its headaches. It will require accelerated rollout of fast-charging stations, which has proven challenging due to costly grid infrastructure upgrades and inefficient permitting processes. To get around some of these burdens in 2021, we expect to see EV chargers coupled with batteries becoming the new normal as well as more vehicle-to-grid (V2G) projects to help manage the influx of electric vehicles on the grid.
5. The Green Hydrogen economy will become real
Renewable energy is at the center of the transition to a low-carbon energy system, but there are several industries like shipping, aviation and chemical manufacturing that can’t electrify quickly enough to reach globally agreed upon decarbonization timeframes. Green hydrogen has re-emerged as a viable and now ready solution to this problem over the past year. In 2021, these projects are coming to life.
Goldman Sachs predicts that green hydrogen will become a $12 trillion industry by 2050. At Antenna Group, we’re witnessing the rapid acceleration of the green hydrogen economy first-hand. We have several client partners that are phasing out fossil fuels in particularly hard-to-abate sectors, such as Heliogen, which is using concentrating solar power to produce heat that can be used to create green hydrogen for fuels or other industrial processes.
In addition, the Shell Gamechanger Accelerator Powered by the National Renewable Energy Laboratory (GCxN) will soon announce their first cohort of early-stage renewable electrochemical startups developing highly efficient, cost-effective and environmentally friendly green hydrogen and carbon capture technologies.
As the quantity of low-cost renewable energy continues to grow and technologies to produce green hydrogen advance, we are anticipating more green hydrogen production, which will play a vital role in the decarbonization of energy, transportation and heavy industries.
How’d our predictions fare in 2020?
A quick look back at our crystal ball predictions from 2020 to see if we were on target. The list:
- New regional programs support a more efficient and electrified economy
- A more mature community solar sector will break into the mainstream
- Symbiotic solutions at the intersection of EVs and renewables
- Drawing the line at a linear economy
- Oil and gas companies feel the pressure to invest in renewable energy
From our five predictions last year, we would give ourselves a 4.5/5.0. While we think the community solar market has matured in many ways, it hasn’t quite had that “mainstream moment” that we predicted in 2020.
Craving more? Catch-up on our Cleantech Trends to Watch posts from the past three years: