European green energy companies are often underfunded

LONDON – Jacob Bitner left Russia for Germany with his parents and sister when he was 7 years old. After 28 years, he is ready to tackle a troubling green-energy problem that could help Germany end its dependence on imported energy from Russia or anywhere.

Problem: How to provide wind and solar energy 24 hours a day, seven days a week, even when there is no sunlight or wind.

The company he co-founded in Munich in 2016, VoltStorage, has had some success selling European home storage battery packs for solar energy. Now the company is building much larger batteries – the size of each shipping container – based on a chemical process that can store and discharge electricity for hours, like today’s most popular battery technology.

These ambitions to overcome the unreliable nature of renewable energy fit perfectly with Europe’s goals of reducing dependence on fossil fuels. But Mr Bitner’s company faces a depressing reality that threatens to undermine Europe’s plans and creates a larger challenge in the global fight against climate change: a lack of funds to get the job done.

The development of VoltStorage requires “significant” more money Its new battery technology, says Mr. Bitner. In 2020 and 2021, the company raised 11 million euros or $ 12 million. Now, it is trying to raise up Another € 40 million this summer.

“While we have the support of great early-stage investors from Germany and Europe, it has been very difficult for us to raise the tickets we need at the moment,” Mr Bitner said, referring to private investment.

Europe offers a preview for the rest of the world. The European Union has aggressive goals to reduce greenhouse gas emissions and has widespread political support for tackling climate change. The block has poured public money into grants for the development of new technologies.

But after receiving initial start-up funding, businesses are struggling to raise funds for innovative, large-scale projects needed to complete the transition from a carbon-spying energy source. The gap in funding means that Europeans face deficits or more energy shortages from ambitious climate targets and the potential for increased spending.

The solution lies in giving a financial incentive, experts say. According to the International Energy Agency, emissions to meet the net zero target by 2050 will be reduced by almost half from their current infant technology. Theoretically, there is a lot of capital available worldwide for multi-trillion-dollar work to finance this transformation into green energy.

The war in Ukraine has made the transformation of Europe more urgent. The European Union has said it will cut Russia’s imported natural gas by two-thirds this year and completely by the end of this decade. Although some of that supply will be imported from other countries, such as the United States and Qatar, the expansion of internal renewable energy capacity is an important pillar of this plan.

But it is difficult to attract investors to projects that seek to move beyond mature technologies such as solar and wind power. Venture capitalists, once green energy cheerleaders, are increasingly attracted to cryptocurrencies and start-ups that deliver groceries and beer in minutes. Many investors are closed by capital-intensive investments. And governments have muddied the water with inconsistent policies that undermine their bold commitment to reducing carbon emissions.

Tony Fadel, an executive at Apple and founder of Nest who has spent much of his career trying to turn emerging technologies into mainstream products, says that despite the risks of global climate change, less urgent developments in cryptocurrency are flooding money, selling so-called metaverts and Is 6 According to Pitchbook, last year, entrepreneurial capitalists invested $ 30.1 billion in global renewable energy compared to cryptocurrencies and $ 11.9 billion compared to blockchain.

Of the $ 106 billion invested by venture capitalists in European start-ups last year, only 4 percent went to energy investments, according to Pitchbook.

“We have to be realistic,” said Mr Fadel, who now lives in Paris and offered the French government ideas on energy policy. “A lot of people are investing in things that are not going to solve the problems of our existence. They’re just investing fast. “

It didn’t help that the industry had previously been burned by the Green Tech boom. About 15 years ago, environmentally conscious start-ups were seen as the next big thing in Silicon Valley. Kleiner Perkins Coffield & Buyers, one of the premier venture capital firms, made former vice president Al Gore a partner and promised that Clean Energy would eventually make up at least one-third of its total investment. Instead, Kleiner becomes a cautionary tale about the risks The reason for investing in energy-related companies is that the company has missed the initial support of social media companies like Facebook and Twitter.

There is evidence that this old fear is diminishing. Two years ago, a venture capital firm based in 360 Capital, Paris and Milan, which operates in early stages of investment, launched a dedicated fund to invest in clean energy and sustainability companies. The firm now plans to open the fund for more investors, expanding it from € 30 million to € 150 million.

There is a growing number of funds dedicated to energy investment. But even then, companies tend to be software developers, which is considered less risky than the makers of larger energy projects. Of the seven companies backed by 360 Capital’s new funding, four are artificial intelligence companies and software providers.

Still, the situation has changed since the company’s first major green-energy investment in 2008, says Fausto Bonnie, the firm’s founder. “We see a lot of money coming into this sector and we have a lot of problems to overcome 15 years ago,” he said. But the availability of large investments needed to help companies expand in Europe is still lagging behind, he added.

Breakthrough Energy Catalyst, backed by Bill Gates, is trying to fill the void. It was formed in late 2021 to move promising technology from development to commercial use. In Europe, this is a 1 billion initiative To support four types of technologies – long-term energy storage, clean hydrogen, sustainable aviation fuel and direct air capture of carbon dioxide – with the European Commission and the European Investment Bank, which need to be measured quickly.

In Europe, “there are significant difficulties with the scaling up phase,” said Ann Metler, vice president of Breakthrough Energy Europe and former director general of the European Commission. There is money for start-ups but when companies are reasonably successful and a little bigger, they are often acquired by American or Chinese companies, he said. It focuses on the less independent companies in Europe that they set out to solve energy problems.

Companies that make complex – and often expensive – hardware, such as the long-term energy storage of Mr. Bitner’s batteries, have a hard time finding particularly risky investors. After a few rounds of investing, companies are looking for a safe place to keep large amounts of cash, too large for initial investors but too small to apply to institutional investors.

“If you look at general climate technologies like wind and solar and even lithium-ion batteries, they’ve taken more than four decades to move from initial research and development to large-scale commercialization and cost competition,” Ms. Metler said, referring to research and development. “Four decades – which we obviously don’t have.”

There are some signs of improvement, including more funding focusing on clean energy or sustainability, and more companies securing larger investment rounds. But there is a sense of frustration as investors, companies and the European government agree that the innovation and adoption of new technologies to dramatically reduce carbon emissions by 2030 will happen more quickly.

“You will not find a place in the world that meets more needs than Europe,” said Mrs. Mettler. “It’s not because of ambition or lack of vision – it’s hard.”

But investors say government policy could help them further. Despite climate promises, regulations and laws have not created a strong enough incentive to invest in new technologies.

Industries such as steel and concrete need to be forced to adopt a greener mode of production, said Mr Bonnie, founder of 360 Capital.

For energy saving, hydrogen, nuclear power, and other large-scale projects, the government should allow, reduce taxes, and provide joint funding, according to Mr. Fidel, who has shaped his personal fortunes in the future by supporting start-ups. Social challenges.

“There are some investors who are willing to deposit $ 200 million or $ 300 million,” Mr Fadel said. “We need to know the government is on our side.”

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