Nov 23, 2019

Five things to look for in a clean energy partner 

Elena Bou, Innovation Director...
6 min
Elena Bou, Innovation Director at InnoEnergy, discusses the key factors that should be considered when selecting partners to drive growth in the energy sector
Every startup founder or CEO of a young company is in a hurry to succeed. The company is their life’s work; their hopes...

Every startup founder or CEO of a young company is in a hurry to succeed. The company is their life’s work; their hopes and ambitions all tied up in it alongside their capital. When that business is a clean energy business, there is added urgency: climate change doesn’t wait, and if this innovation can make a difference, there is a moral pressure to get it to market yesterday, if not sooner.

So, when the first VC makes an offer, the temptation to take the money is strong. Money in the bank this morning means investing in the business this afternoon, which means profit and environmental impact tomorrow. 

But picking the right investor can be a case of ‘more haste, less speed’. In fact, it may be that clean energy entrepreneurs eager to scale-up and make a difference are better served looking for something other than a pure investor -- something bigger. They may be better served picking a partner. Here’s what to look for.

 

1. Access to a network of partners

Cash is only one of the ingredients for a successful startup or scale-up. That recipe calls for any number of other things such as the right employees, first customers, researchers and marketing support. In the highly regulated world of energy, it can also require legal advice or even - when the business is doing something especially new and innovative - influence at the policy level. 

A good investor may be able to help with a handful of these aspects in addition to investment, but is unlikely to tick all the boxes. By contrast, a partner that takes commercialisation and scale-up support as its raison d'être is more likely to offer multifaceted support to a company looking to grow. 

For example, if a company’s founder is an inspirational engineer but not a natural CEO, a partner with a deep and broad network can help find the right person or team to supplement the leadership. After all, smart people should be building things. 

Or maybe a battery storage startup has everything it takes to thrive but suffers from an unclear regulatory status as a generator or consumer of energy - a partner plugged into Brussels’ corridors of power may be a vital component of success. For example, our network at InnoEnergy encompasses more than 400 partners and creates 45,000 connections per year between companies and startups.

What to look for: an extensive network throughout Europe that can connect a young company to all sorts of support they will need for success, including but not limited to capital.

 

2. A sustainable investing model for sustainable businesses 

Clean energy start-ups often face higher hurdles than counterparts in other industries. Energy is a highly regulated market with typically high capital costs and a longer average time to market than most. It is not the market to enter for entrepreneurs looking to make a quick buck. 

Clean energy entrepreneurs tend to understand this (without losing any sense of urgency), but it’s important to find a partner that does so too. Some investors are more patient than others, and the best fit partners will approach sustainable energy businesses with an equally sustainable long-term investment strategy. A strategy based on a relationship, not a transaction.

What to look for: a partner with a track record of long-term support - both financial and otherwise - rather than a quick-sale approach.

 

3. Global impact

There are some businesses, like Google or Facebook, that naturally transcend borders. There are others which are more grounded in their place. Energy companies can often fall in the latter category, with products or business models built according to the idiosyncrasies of their home market. In Europe, this can be especially challenging, as despite an impressively unified regulatory and policy framework, differences remain, compounded by language and cultural barriers.

But that doesn’t mean the innovations themselves can’t address pan-European or global needs. Far from it. Portuguese Pro-Drone for example, which helps wind farm operators cut inspection costs, has as much to offer asset owners in Scotland or Estonia as it does those in Portugal. Or take London and Valencia based Solaris Offgrid, which has provided clean electricity to more than 15,000 people in six countries since 2014. 

A partner with in-country expertise internationally can spot a concept originating in one market with a lot of potential in another,  and it can provide the expertise and network to make that international move happen. At InnoEnergy, our ecosystem spans 26 countries and provides access to 150 markets.

What to look for: an international partner which can both provide support internationally and supplement its own capacities with a broader network.

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4. Capital possibilities

Of course, though money isn’t everything, it does count for a lot. The right partner will also be a route to the vital funding that a young company needs to grow and succeed.

However, it would be a mistake to assume that means the entire investment must come from the partner itself. Look at the example of Northvolt -- the Swedish battery gigafactory opened by former Tesla VP Peter Carlsson. When Northvolt was looking for investment a few years ago, InnoEnergy invested its own capital, but more importantly facilitated an eight-figure deal with the European Investment Bank that made the difference. Though InnoEnergy did not make the full investment itself, it combined its capital and network to provide the most efficient route to funding.

What to look for: a partner that can both take a stake in the company itself while also opening up relationships with a broader set of investors. 

 

5. Low mortality and a track record of success

The most innovative entrepreneurs often go all-in on their businesses and stand to lose everything if they fail. The stakes are high. James Dyson famously took 5,127 prototypes and 15 years to arrive at the design that ended up changing the vacuum cleaner. By design 2,627 money was tight, and by 3,727 his wife was giving art lessons to make ends meet.

Dyson obviously survived -- securing a Japan-only license deal for his technology that generated just enough cash for him to set out on his own -- but startup mortality is a real concern. InnoEnergy startups enjoy a 97% survival rate, comparing favourably to MIT alumni startups at 80%. Perhaps, more than anything else, this is the number that tells an innovator whether a partner can help them fulfil their potential.

What to look for: a partner with low mortality and a demonstrable track record of success.

 

Picking a future

Investment is important, but success depends on so much more. For entrepreneurs and innovators in a sector as difficult, complex and important as clean energy, success often means looking beyond the number of zeros on a cheque to what else a partner can invest. 

EIT InnoEnergy has issued its first ever global call for startups across the entire sustainability value chain. The call is open to startups worldwide in areas including but not limited to: renewable energy, energy efficiency, heat and transport, to solve the decarbonisation challenge. To find out more and apply, visit here. Applications close on December 19 2019.

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Jun 25, 2021

UK must stop blundering into high carbon choices warns CCC

climatechange
Energy
Netzero
UK
Dominic Ellis
5 min
The UK must put an end to a year of climate contradictions and stop blundering on high carbon choices warns the Climate Change Committee

The UK Government must end a year of climate contradictions and stop blundering on high carbon choices, according to the Climate Change Committee as it released 200 policy recommendations in a progress to Parliament update.

While the rigour of the Climate Change Act helped bring COP26 to the UK, it is not enough for Ministers to point to the Glasgow summit and hope that this will carry the day with the public, the Committee warns. Leadership is required, detail on the steps the UK will take in the coming years, clarity on tax changes and public spending commitments, as well as active engagement with people and businesses across the country.

"It it is hard to discern any comprehensive strategy in the climate plans we have seen in the last 12 months. There are gaps and ambiguities. Climate resilience remains a second-order issue, if it is considered at all. We continue to blunder into high-carbon choices. Our Planning system and other fundamental structures have not been recast to meet our legal and international climate commitments," the update states. "Our message to Government is simple: act quickly – be bold and decisive."

The UK’s record to date is strong in parts, but it has fallen behind on adapting to the changing climate and not yet provided a coherent plan to reduce emissions in the critical decade ahead, according to the Committee.

  • Statutory framework for climate The UK has a strong climate framework under the Climate Change Act (2008), with legally-binding emissions targets, a process to integrate climate risks into policy, and a central role for independent evidence-based advice and monitoring. This model has inspired similarclimate legislation across the world.
     
  • Emissions targets The UK has adopted ambitious territorial emissions targets aligned to the Paris Agreement: the Sixth Carbon Budget requires an emissions reduction of 63% from 2019 to 2035, on the way to Net Zero by 2050. These are comprehensive targets covering all greenhouse gases and all sectors, including international aviation and shipping.
     
  • Emissions reduction The UK has a leading record in reducing its own emissions: down by 40% from 1990 to 2019, the largest reduction in the G20, while growing the economy (GDP increased by 78% from 1990 to 2019). The rate of reductions since 2012 (of around 20 MtCO2e annually) is comparable to that needed in the future.
     
  • Climate Risk and Adaptation The UK has undertaken three comprehensive assessments of the climate risks it faces, and the Government has published plans for adapting to those risks. There have been some actions in response, notably in tackling flooding and water scarcity, but overall progress in planning and delivering adaptation is not keeping up with increasing risk. The UK is less prepared for the changing climate now than it was when the previous risk assessment was published five years ago.
     
  • Climate finance The UK has been a strong contributor to international climate finance, having recently doubled its commitment to £11.6 billion in aggregate over 2021/22 to 2025/26. This spend is split between support for cutting emissions and support for adaptation, which is important given significant underfunding of adaptation globally. However, recent cuts to the UK’s overseas aid are undermining these commitments.

In a separate comment, it said the Prime Minister’s Ten-Point Plan was an important statement of ambition, but it has yet to be backed with firm policies. 

Baroness Brown, Chair of the Adaptation Committee said: “The UK is leading in diagnosis but lagging in policy and action. This cannot be put off further. We cannot deliver Net Zero without serious action on adaptation. We need action now, followed by a National Adaptation Programme that must be more ambitious; more comprehensive; and better focussed on implementation than its predecessors, to improve national resilience to climate change.”

Priority recommendations for 2021 include setting out capacity and usage requirements for Energy from Waste consistent with plans to improve recycling and waste prevention, and issue guidance to align local authority waste contracts and planning policy to these targets; develop (with DIT) the option of applying either border carbon tariffs or minimum standards to imports of selected embedded-emission-intense industrial and agricultural products and fuels; and implement a public engagement programme about national adaptation objectives, acceptable levels of risk, desired resilience standards, how to address inequalities, and responsibilities across society. 

Drax Group CEO Will Gardiner said the report is another reminder that if the UK is to meet its ambitious climate targets there is an urgent need to scale up bioenergy with carbon capture and storage (BECCS).

"As the world’s leading generator and supplier of sustainable bioenergy there is no better place to deliver BECCS at scale than at Drax in the UK. We are ready to invest in and deliver this world-leading green technology, which would support clean growth in the north of England, create tens of thousands of jobs and put the UK at the forefront of combatting climate change."

Drax Group is kickstarting the planning process to build a new underground pumped hydro storage power station – more than doubling the electricity generating capacity at its iconic Cruachan facility in Scotland. The 600MW power station will be located inside Ben Cruachan – Argyll’s highest mountain – and increase the site’s total capacity to 1.04GW (click here).

Lockdown measures led to a record decrease in UK emissions in 2020 of 13% from the previous year. The largest falls were in aviation (-60%), shipping (-24%) and surface transport (-18%). While some of this change could persist (e.g. business travellers accounted for 15-25% of UK air passengers before the pandemic), much is already rebounding with HGV and van travel back to pre-pandemic levels, while car use, which at one point was down by two-thirds, only 20% below pre-pandemic levels.

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