The last clean energy boom turned to bust. Will this time be any different?
April 23, 2021. Summarized by summa-bot.
Compression ratio: 23.8%. 2 min read.
Wind turbines at a wind farm near Highway 12 in Rio Vista, California, U.S., on Tuesday, March 30, 2021. President Biden's $2.25 trillion infrastructure and stimulus blueprint he is set to unveil today, meant to catalyze investments in a clean energy economy and encourage low-emission technology necessary to constrain global warming, would give a 10-year extension to tax credits that have been a boon to wind and other renewable energy projects. Photographer: David Paul Morris/Bloomberg via Getty Images
Investors who back upstart companies are known for their optimism. But when it comes to the wall of money pouring into clean energy, their enthusiasm is tinged with concern.
"I always worry something is going to happen and it will suck the wind out of the market," said Craig Lawrence, who led energy and clean tech investing at Silicon Valley's Accel Partners between 2008 and 2010.
The WilderHill New Energy Global Innovation Index, which tracks shares in 125 global companies that aim to address climate change, hit an all-time high earlier this year.
The cost of producing renewable energy has dropped dramatically, making wind and solar power competitive with fossil fuels, while investors, governments and top companies, from Amazon (AMZN) to JPMorgan Chase (JPM), are injecting billions of dollars into sustainable projects.
Between 2006 and 2011, venture capital firms anticipating major growth put over $25 billion into clean energy technology, according to a 2016 report published by the MIT Energy Initiative.
"There was a sort of hubris among venture capitalists in treating the energy industry like they treated the tech industry," Lawrence said.
"When you hit these major bumps in the road, it gets scary," said Carmichael Roberts, who serves on the investment committee at Breakthrough Energy Ventures.
This month alone, JPMorgan Chase (JPM) said it would finance or facilitate investments of $2. 5 trillion over 10 years to support solutions that address climate change and contribute to sustainable development, while Apple (AAPL) announced a $200 million investment fund designed to remove carbon emissions from the atmosphere and support sustainable forestry.
The wider investment community is also rushing in, as clients push fund managers to create sustainability-focused portfolios, and spectacular growth for companies like Tesla (TSLA) sparks enthusiasm among everyday investors.
Breakthrough Energy Ventures — which was launched by Bill Gates and other wealthy investors in 2016 as a $1 billion fund — has raised an additional $1 billion after investing in more than 50 startups that could help the world approach net-zero emissions.
According to PitchBook data, 16 companies focused on clean, sustainable energy have been taken public via SPACs since 2020 — up from just four in 2019.