As funding for coal- and gas-fired power generation continues to decline, investors long leery of so-called "clean tech" plays are taking a shine to renewable-energy start-ups and other carbon-reducing technologies.
According to reports from the International Energy Agency, electricity investments are flowing toward renewables, networks and flexibility, while at the same time more than 100 globally significant financial institutions have implemented policies restricting investments in carbon-intensive fossil fuels like coal.
That's got investors — from major global investment banks to billionaire philanthropists such as Bill Gates, Jeff Bezos and Jack Ma — looking at renewable energy differently than they did just a few years ago. Shifts in energy market trends, investment patterns and the global mindset toward climate change are creating new rationales for investments in companies and projects in the clean energy space.
But the technologies themselves — which range from more efficient means of generating renewable energy to distributed grid storage systems and better battery technology — have also evolved substantially since the last renewable investment boom tapered in the wake of the 2008 financial crisis.
"In the last few years, the number of technologies ripe for investment has expanded dramatically," said Ravi Manghani, research director for energy storage at Wood Mackenzie, an energy research and consultancy firm. "It's no longer just three or four technology verticals."
That's why Gates, Bezos, Ma and dozens of other high-net-worth individuals (including Michael Bloomberg and Richard Branson) launched Breakthrough Energy Ventures (BEV). The $1 billion fund will forgo near-term returns on investments, providing much-needed time and operating capital to researchers and companies solving difficult technical problems in the capital-intensive renewable energy space. The fund currently lists 14 companies in its portfolio, ranging from startups working on battery and grid storage technologies to companies developing better geothermal and even fusion energy generation systems. Investments range from $200,000 to $20 million, depending on each company's needs and stage of development.