By: Nathan Rosenstein, Founder & CEO of twentytwo & brand.
What is resilient renewable energy and why should I care?
Energy resilience is about ensuring a business has a reliable, regular supply of energy and contingency measures in place in the event of a power failure. Power surges, weather, natural disasters, and climate change have all contributed to an unstable energy system, especially in the United States (US). Haven’t we all heard – July 2023 was the globe's warmest month on record. Moving to a resilient energy system means optimal contribution to social, economic, and environmental development across countries and communities.
This is where renewables come in. They come from a source that won’t run out, are natural, and have low to zero carbon footprint. Renewable energy is the key to building a more resilient and reliable electricity grid. And, the top renewable sources (solar energy, wind energy, bioenergy, and hydroelectric) are leading the way in installations, growth, and contribution to global power generation. According to the Energy Information Administration (EIA), renewable deployments are expected to grow by 17% to 42GW in 2024, accounting for almost a quarter of US electricity generation.
There are five major factors contributing to the vast increase in renewable projects and deployments:
Policies
The US Inflation Reduction Act (IRA) is just over one year old and has contributed to $110 billion in clean energy manufacturing investments to date. Its widespread coverage of providing incentives for communities, encouraging clean energy development and strong labor standards, and lowering the cost of energy-saving improvements make it a major incentive for investment in resilient energy sources.
Besides the US, countries like China and the European Union (EU) continue to make bold targets; China is hoping to increase renewable energy electricity generation to 33% by 2025 and the European Union’s target is 45% by 2030.
COP28 was another recent catalyst to increased adoption potential with 130 countries signing on to transition away from fossil fuels, emphasizing the importance of restoring land, moving away from greenhouse gas emitting practices, and commitments to triple renewables capacity and double energy efficiency by 2030.
Innovation
Distributed or decentralized energy is an area where I see a lot of investment going in 2024, taking advantage of $26 billion in available funding from the Department of Energy’s Grid Deployment Office. As the US grid continues to face challenges and will take time to shore up, we are also seeing more and more local communities move to a distributed model, allowing the flexibility needed to augment renewable energy sources like solar and wind with energy storage (via batteries) and demand response solutions (through monitoring and control).
Smart grids are another area of innovation helping to ensure a resilient and reliable supply of electricity. Balancing sustainable energy systems is complex and this will only continue but leveraging real-time data and applying advanced technologies like artificial intelligence (AI) and machine learning (ML) are two innovations worth keeping our eyes on. I see this taking shape in a couple ways - managing the uncertainties around weather events and proactively identifying issues with grid maintenance and uptime.
Corporate Engagement
Fortune 500 companies are realizing that in order to remain competitive, they need to not only create an Environmental, Social, and Governance (ESG) Plan, but they need to clearly define their goals as well. Without this, consumers won’t buy from them. Many of us took note of Patagonia’s pledge to be net-zero across its entire business by 2040, eliminate virgin petroleum fiber from its products by 2025, and ensure 100% reusable, compostable or renewable/recyclable packaging by 2025.
Beyond consumer brands, I’m also starting to see some early to mid-stage renewable energy companies create and evangelize their commitment to net zero. This is encouraging and is a competitive differentiator for those who are proactively working to go beyond Scope 1 and Scope 2 measurement and are focusing on how to tackle Scope 3, their supply chain, and opportunities to bring production in-house to ensure compliance and transparency.
Investment in Climate Tech
The capital stack for climate is diverse, with some areas like commercial debt and project finance at the top of the “complexity curve”. For that reason, I see venture capital as the sweet spot for early-stage companies and those with high growth potential. And, for later stage series C and D companies, mergers and acquisitions (M&A) or an IPO may be their best path to getting the necessary funding to achieve widespread adoption.
Venture capital (VC) investment in the US in 2023 was challenged by macro-environmental factors and higher interest rates but still saw $32 billion in investments, with most deals going to transportation (including batteries and autos), energy, and food and land investments. While the projected growth numbers for 2024 are murky, the sheer number of deals funded in 2023 (approximately 4,000) tells me that there will be a healthy mix of investment across the top sectors and to remain bullish.
The rise of the climate investment firm is also strong. Breakthrough Energy, founded by Bill Gates, invests in climate solutions that help reduce greenhouse gas emissions. Its investments focus on actual climate technologies to meaningfully reduce emissions, bringing public and private sectors together to spur innovation and advocating for public policies that incentivize investment in carbon-reduction technologies and drive down their associated costs.
Marketing Strategies
Established brands are searching for creative ways to tell their “sustainability” story. With 55% of US adults believing that a business should take a public stance on Climate, there is a significant push to develop a real strategy, publicly state reduction goals, and then determine the best execution plan. Consumers are no longer looking for what your brand is going to do, they want to know what you are doing, how you’re going to meet your goals, and by when.
Closer to home, I’m seeing our renewable energy and Climate Tech partners focus their marketing and communications strategies on value-driven storytelling. Stories that resonate are those that revolve around the collective good, a brand’s commitment to a sustainable future, and the ways in which its solutions support the longevity of our planet. It’s personally rewarding to help our partners in building broader brand awareness and reach, driving differentiation in the market to influence adoption, and cementing themselves as a leader in their specific sector to meet their next funding milestone.
With so many factors coming to a head at the same time, the momentum that it has created in the industry is exciting, exhilarating, and sometimes even exhausting. I could go on and on, but the bottom line is…now is the time to invest. The greatest minds have jumped on board to build a resilient renewable energy future that will lead us into the next few decades.
Our job and our goal at twentytwo & brand is to help these companies create a compelling brand by telling a unique story, expand reach through consistent messaging, and sing from the rooftops what makes them different.
Reach out to me if you’re interested in learning more.
