Green Technologies Get Boost from EU’s Venture Capital Funds

There’s good news for green technologies these days. Last year, 2016, marked the largest increase in investments in green technologies by European venture capitalists in 9 years. Venture capital funds from Europe targeting clean energy are reported to have reached $834 million last year. Green technologies of interest include everything from anaerobic digesters to rooftop solar panels. But why has there been a shift in the focus of European venture capital funds towards this industry?

Specialists in venture capital and startups, such as Henner Diekmann of Diekmann Associates, judge that this shift in interest is tied to an opening of the green energy market due to the fact that private equity is seeking the next big boom. Research shows that 2010 was marked by a large funnelling of funds towards green technologies, pioneered mostly by private investors. However, since 2014, venture capitalist funds have started to grow steadily, funding the green technology market after the private equity interest dropped off. 

Now the investments venture capitalists are making are more targeted, seeking to support niche investments that come with smaller scales and bigger risks. Mainstream investment isn’t as attracted to these offers, leaving them open to VC. Basically, venture capitalist firms are filling an investment need that has great potential, but isn’t the right one for private or mainstream investors.

Let’s take a look at some examples of what some main venture capitalist firms are working on:

Terra Firma Capital Partners

This London based company is focusing on big green technologies including wind and solar power. However, the twist is that Terra Firma is looking to markets on continents other than Europe such as Africa, Asia and Latin America. According to a senior advisor, they are no longer looking to invest in Western Europe. The trend of looking abroad is one many others are following.

Oxford Capital Partners

This venture capital firm based in Oxford is focusing its investments on batteries, solar and anaerobic digestion. Specifically, the firm is interested in solar panels that will go on rooftops. One of the unique projects the firm is working on is an anaerobic digestion plant using farm waste to make electricity. 

Octopus Investments

In addition to investing in wind and solar, Octopus is also considering batteries. A part of their interest is linked to the enhanced frequency response tender that the National Grid in the UK is using. 

Zouk Capital

Taking a different approach, this venture capital firm based in London is focusing on investing in projects that address resource efficiency. In their eyes, solar and wind power are now more mainstream. These electricity makers now rely on gaining economies of scale. With resource efficiency, the firm hopes to invest in projects that recover materials that would otherwise be wasted, and use them to create energy.

As you can see, one of the key new areas that firms are interested in is batteries. What does this have to do with renewable or green energy? Solar and wind power are great, but they tend to be relatively unstable or unpredictable. You can’t be sure you’ll get the same amount of solar or wind energy each day; it’s just not constant. So, batteries are the solution for keeping grids steady even on a second to second basis. The National Grid in the UK says that flexibility is a principal concern and need as they move towards using more renewable energy. Batteries appear to be filling this need. 

The staples of wind and solar power also continue to attract investment. It’s only natural that this is the case as by 2040, it’s estimated that wind and solar energy will account for the majority of the UK’s power generating capacity, led by wind. This suggests that the industry is going to grow, a lot. According to the predictions, both solar and wind will at least double what they currently produce.

Anaerobic digesters are another technology that venture capitalists are interested in. Food waste turned into energy is a pretty exciting prospect. In addition to turning waste into energy, using anaerobic digesters is also more economically attractive than getting rid of food waste in landfills and incinerators. 

There are many other smaller technologies and projects that venture capital is supporting, giving green technology an overall boost within the UK and abroad. In this case, venture capital is working for the future of the planet, financing the energy revolution that we desperately need. This trend towards financing green technologies could very well change many aspects of our daily lives, helping eliminate harmful energy production strategies and moving towards a renewable future.

Are you interested in venture capital or green technology? Tell us how you see venture capital shaping the future of renewable energy in the comments below.