How climate-tech startups can stop climate change (with examples)
Technology innovation is responsible for the most significant transformations in our lives, from telco through banking and even entertainment. If the five “climate industries” will lean on startups, not only that we will stop climate change, we will enjoy significant improvement in life.
“My basic optimism about climate change comes from my belief in innovation”
This quote could have easily been a meaningless opinion, unless it has been said by the same entrepreneur who had made computing accessible to all humanity. Innovation, and more specifically technological innovation, is what’s behind countless revolutions in our lives. Brilliant low-cost inventions substitute hard and costly tasks. Algorithms that replicate themselves as needed, with negligible costs. This is how end-products improve rapidly, and their prices decrease. Thanks to the digital revolution of Gates, Page, and Jobs (and of course Cerf), we can populate our homes and offices with technologies that only a decade ago were deemed unimaginable or at least imagined as a cost-prohibitive dream, and pay an outrageously low price today, knowing that a year from now they will be worth half, both in price and capabilities. Technology innovation is responsible for the amazing quality of life of the twenty first century.
When Gates shares his optimism about climate change with us, he is actually saying something quite concrete: in order to stop climate change, we have to fundamentally transform old-fashioned industries in a very short time. It is a difficult task, tailored for technology innovation. Those who work in old-fashioned industries know, that they rarely go through technological changes, and when they do, it takes forever (give or take a decade). If we deploy 24 terawatt of wind and solar around the world tomorrow, and pull the plug on all the fossil fuel power plants in the world, the grid system will crash. Network components will blow up, large populated areas will be blacked out, and where electricity WILL be delivered, it will cost higher than a cellular data plan in 2009. On the other hand, if we substitute the power plants with renewable energy slowly and responsibly, we might be able to complete the energy transition when the sea level is already ten meters higher, and most of the world population had moved to Mars on Musk’s hoverboard.
Between fast, risky, and costly, and slow, safe, and cheap, in comes technology innovation as the bearer of of hope for fast, safe, and cheap transition. During the last decade, we have all witnessed transformations of entire industries, practically all of them were based on technological innovation. That same outrageous data plan in 2009 turned by now to a far memory. Today we watch live content in 4K resolution on a device that until recently has been classified as a super computer, without fearing hang-ups or exceeding data plan quota, and we pay a monthly fee that is lower than a lettuce salad dish in central Tel-Aviv. How is it possible? Ask the network people of the telecom operators. You will find deep overhauls of heavy and old network architectures, replaced with novel, agile, and low-cost software. You will also find that these corporations have extensive collaboration programs with startup companies. And how did I manage to mention startups without blinking? Just like any living cell in the body of a cheetah is built to support its speed, so does every cell in the body of a startup company is built to support its innovative traits. An industry that undergoes transformation leans on startups, masters of technological innovation. To stop climate change, five such industries need to transform: building, transport, heavy industries, food and agriculture, and of course the energy industry. And they all lean on startup technology innovation. The telco experience teaches us that not only that technological innovation will enable the desired industry transformations to stop climate change, it will also lead to cost reductions.
Last week I attended (and represented FEV as sponsor) the annual event of Israel’s energy-tech community “Ignite The Spark”, where the audience was energy startup companies from Israel, and relevant investors from anywhere in the world. Gates’ fund representative, Christina Karapataki, shared in its keynote the fund’s approach. According to this approach, clean energy has “green premium”. Meaning, transitioning to clean energy will eventually bring higher electricity fees for the end-customer. The price increase usually comes from grid network upgrade costs, new development projects, deployment of energy storage, and different investments. The green premium, says Gates, can be shrunk with innovation. That’s what his $2 billion fund is looking for. But innovation will not only lower the green premium. Part of that premium is investments in digitization, efficiency, and novel technologies, so in the long term it will derive even price reduction. Just like in cellular communications, so will the transition to renewable energy lead to low or even negligible electricity costs.
Here are some examples of startups that presented in the conference:
- Alteco AI can read the power data of every factory in the world, send it to the cloud for their advanced, proprietary, AI-based analysis, and output a detailed report of recommended actions that may allow the factory to be dozens of percentages more energy efficient. Alteco’s technological innovation can both reduce the load of factories on the power utilities, as well as save the factories electricity costs, which means reduce the production costs of almost anything we buy.
- SolOr solves two major solar energy concerns: photovoltaic panels take a lot of space to produce relatively little power, and making the solar panels is not environmental friendly. SolOr develops colloidal quantum dots, synthesized in the liquid phase, or in other words, photovoltaic paint. This pv paint can be applied on almost any surface, like buildings and cars. The SolOr paint takes practically no additional space, and is environmental friendly, with zero emissions. Just imagine that by using their paint to paint your electric car, doubles the range between charging.
- BTW, if your car has Sparkion’s technology incorporated, another startup that showcased in the conference, then your car range is already extended, since Sparkion’s algorithms allow the car to utilize the car batteries in a super optimal way. Extending an EV range makes it easier on utilities in their incredibly hard mission to support the demand, which is said to be multiplied 2–6 times after electrifying the “climate industries”.
- One of today’s most promising renewable energy technologies are the giant wind turbines, especially due to their high cost-efficiency. But the wind farms are dispersed in valleys and remote fields, and some of them off the shores, and maintaining them increases the cost of ownership. First Airborne presented a special-purpose lab-developed drone which can run all the required maintenance tasks in a wind farm, onshore and offshore, completely autonomously, i.e., with zero human intervention.
Plenty innovation, not enough investors
When the conference ended, I joined the audience at Startup Nation Central’s cocktail floor. As expected for a climate-tech investor, I was approached by many more entrepreneurs, telling me about innovative energy technologies, including solutions that will, ultimately, lower the price of renewable energy, increase its performance (eg a PV that generates power in the dark), reduce the costs of storage, and remove the barriers faced by the rising star, green hydrogen. Unlike other industries, the audience was filled with entrepreneurs, but we were only a few investors. This also needs to change.
So can we be optimistic?
The message here is twofold: the energy-tech innovation ecosystem in Israel is growing fast, and yields a critical mass of high quality startups. The second message is that this ecosystem of entrepreneurs and investors will not only be key to stopping climate change, but also answer the major concerns that are currently on the surface, like renewable reliability and cost of electricity. Climate-tech is the hot topic for the coming decade. So like Bill Gates, we can also believe in technological innovation, and be more optimistic about climate change.
* Kudos to the conference organizers — Eshel Lipman and Cody Norton, founders of Ignite the Spark.