Technology & SaaS 03.01.24

The Current State Of Green Energy VC Funding & Its Future

As concerns around the climate emergency continue to intensify, the green energy sector has experienced soaring demand in recent years.

As concerns around the climate emergency continue to intensify, the green energy sector has experienced soaring demand in recent years.

Global renewable power capacity has continued to expand, with regulatory changes leading to huge advancements in various green energy projects. Unsurprisingly, this has also contributed to a surge in VC funding for clean energy companies.

Not only does the renewable energy market present long-term investment opportunities, but the industry is also packed with cutting-edge technology and ambitious innovators. This has created a very appealing proposition for investors - in fact, it’s estimated that a staggering $1.4 trillion will be invested annually in renewable energy through 2050.

While profitability is key for VC funds, these investments are crucial for green energy businesses looking to develop the eco-friendly, sustainable solutions of tomorrow. In other words, there are plenty of high stakes involved in VC funding for renewable energy.

So how are investors impacting the current green energy market? And what are some of the most exciting VC funds and energy businesses making their mark in the sector?

In this post, we’ll be taking a closer look at the current state of green energy VC funding -and exploring what the future may hold for this pivotal industry.

How are government policies changing the green energy sector?

Changes in government policy have played a huge role in fueling the growth of the green energy sector - and, in turn, opening investment opportunities for VC funds.

The Inflation Reduction Act of 2022, for example, was the most impactful piece of climate legislation ever introduced in the US. The act unlocked billions of dollars in loans/funding for green energy projects, as well as launching several initiatives and incentives to speed up the journey towards a sustainable economy.

More recently, The Department of Energy awarded $275m to seven projects it said will “strengthen domestic supply chains for clean energy businesses and accelerate the sector’s growth in communities that had formerly been dependent on coal for their livelihood.”

Nanoramic Laboratories (an industry-leading energy storage company) is leading one of these clean energy projects, building a new facility to produce lithium iron phosphate battery electrodes for grid storage. The growing momentum behind green energy policies has been hugely beneficial for companies like Nanoramic Laboratories, enabling them to expand operations and reduce national reliance on fossil fuels.

Plus, as policies shift in favor of the clean energy market, VC funds are pursuing more investment opportunities in this space. Total VC funding in green energy startups has skyrocketed in recent years, increasing from $1.9bn in 2019 to $12.3bn in 2022.

What are some of the most exciting technologies &businesses in the green energy market?

A combination of progressive government legislation and increasing VC funding is creating a sense of optimism for the future of green energy.

But what are some of the most exciting technologies emerging in the clean energy sector? And which businesses are at the forefront of innovation here?

Carbon capture, use, and storage

Carbon capture allows for the mitigation of harmful carbon dioxide (CO₂) emissions from large sources like power plants and industrial facilities. This is achieved by capturing and permanently storing CO₂, meaning it’s prevented from entering the atmosphere - the carbon dioxide can then be used for other applications, or injected into deep rock formations.

A big innovator in this sector is CarbonCure. Construction generates almost 40% of annual greenhouse gas emissions, but CarbonCure’s cutting-edge technology enables concrete producers to inject captured CO₂ into fresh concrete during mixing. Not only does this help to reduce building emissions, but it also strengthens the concrete through mineralisation!

Aether Diamonds is another major player in the carbon capture space. The jewelry industry is notorious for environmental harm throughout the supply chain, but Aether Diamonds creates climate-positive diamonds made from 100% captured carbon - a brilliantly innovative, sustainable approach in a sector where it’s much needed.

Solid-state batteries

Solid-state batteries can decrease the carbon footprint of electric vehicles by up to 39%. Not only do these batteries offer greater capacity than their lithium-ion equivalents, but they’re also faster to recharge and require fewer materials during manufacturing.

Huge advancements in solid-state battery technology have been made in Boston through MIT. Researchers are working towards the creation of solid-state batteries that are more durable, economical, and efficient - and this could be a game-changer for clean energy.

Electric mobility & charging

Electric vehicles are one of the promising technologies to emerge in the green energy sector, and there is a constant push for innovation behind the manufacturing, maintenance, and charging of these products.

Many different businesses are finding unique ways to bring electric mobility to the market, and there’s a lot to be excited about in this space.

Highland Electric Fleets, for example, has launched the largest electric school bus fleet in North America - the company is backed by $253m in funding and could revolutionize the way students are transported. SparkCharge is another electric mobility innovator, pioneering mobile EV charging stations that are convenient, speedy, and accessible.

Finally, Voltpost is the third fast-rising business to watch in the EV market. The brand transforms lamposts into smart EV charging stations and recently closed a $3.6m seed round, with big plans for the future.

Exciting VC funds to watch in 2024

VC funds play a crucial role in supporting and financing some of the most successful green energy businesses on the planet. In 2024, we expect to see many more exciting technologies emerge in this industry, backed by future-facing investors.

Below are just a few VC funds to keep an eye on in 2024:

1) 8090 Industries: 8090 Industries identifies the juggernauts of tomorrow in the energy and industrial spaces. They’ve funded businesses such as Cemvita and Infinium, which look to bring eco-friendly solutions to heavy industries.

2) Clean Energy Ventures: Clean Energy Ventures supports growing climate-tech start-ups, with a mission to fight back against climate change. The fund has invested in many pioneering green companies, such as Boston Materials and ClearFlame Technologies.

3) Energize Capital: Energize Capital is a climate software investor, funding businesses across the renewable energy, industrial operations, and electrification sectors. The fund has a broad portfolio of eco-friendly brands like Amperon, Banyan Infrastructure, and Monta.

4) ReGen Accelerator Program (with Kaplak Ventures): The ReGen Accelerator is an accelerator program designed to support growth-focused, climate-tech start-ups. In 2024,the fund will invest in 10 seed-stage businesses as part of a three-month initiative.

The green energy industry is a constant work in progress, but the future is incredibly bright for this sector. Innovative, daring businesses are partnering with forward-thinking VC funds to develop transformative products that could change the clean energy landscape forever.

As sustainability continues to become a priority conversation on the world stage, energy start-ups and VC funds will play a critical role in identifying problems and creating solutions.

If you are green energy start-up looking to recruit across finance or operations, please get in touch with Will at [email protected]

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