The U.S. Department of Energy (DoE) has just launched a new department-wide initiative to drive the public and private sectors’ engagement with clean energy technology. This follows commitments made in last year’s Inflation Reduction Act (IRA) climate policy. And there are big plans for clean tech across several energy sectors, with huge amounts of funding being pumped into innovation and development. But with the collapse of the Silicon Valley Bank (SVB) already threatening some of this development, what will happen in the booming U.S. clean tech industry?
This week, the DoE announced it was launching its Pathways to Commercial Liftoff, a set of reports that reflect the organisation’s initiative to enhance engagement between the public and private sectors to drive forward innovation, development, and adoption of clean energy technologies. This supports the Biden administration’s Bipartisan Infrastructure Law (BIL) and IRA, to achieve the U.S. climate targets of 100 percent clean electricity by 2035 and a net-zero emissions economy by 2050.
U.S. Secretary of Energy Jennifer M. Granholm stated of the new reports, “As we combat the climate crisis and race towards an equitable clean energy future, public and private partnerships will be more important and critical than ever before.” Granholm added, “The Liftoff reports will help drive engagement between government and industry to unlock exciting new opportunities and ensure America is the global leader in the next generation of clean energy technologies.”
Supported by its new climate policies, the U.S. plans to pump billions of dollars of public funds into the large-scale demonstration and deployment of clean energy technologies. This investment is expected to attract trillions in funding from private companies as the country invests in a decarbonised future. The purpose of the Liftoff reports is to provide insights to guide private investments in clean energy tech and advance the sector. The anticipated spill-over effect of this sectoral growth includes job creation, improved supply chains, greater energy security, global competitiveness, and the acceleration of the green transition.
The reports determined that investments in the sector must increase from a projected $40 billion at present to $300 billion by 2030, across the hydrogen, nuclear, and long-duration energy storage sectors, with investments continuing to grow until 2050 to achieve U.S. decarbonisation aims. The Liftoff reports will be used as ‘living documents’ to inform investment opportunities in the sector and will be regularly modified as the technology and outlook change. The DoE plans to gather knowledge from industry, investors, and other stakeholders to inform these documents and drive investment in the sector.
The principal technologies outlined in the reports continue to face major challenges, which the DoE hopes greater funding in innovation will help to overcome. For example, long-duration battery storage requires a decrease in price by around 50 percent, while also aiming for enhanced performance. Meanwhile, Jigar Shah, director of DOE's Loan Programs office emphasised that advanced nuclear deployment would require orders for 10 new reactors of the same design by 2025 to supplement clean energy projects in the green transition. He highlighted the worries of many utilities around cost overruns and abandonment risk.
The DoE’s Office of Clean Energy Demonstrations (OCED) has already begun to help clean energy tech companies such as Parsons Corporation, which received $14 million for the development of technical, programme, and project management support in nuclear energy. Jon Moretta, President of Engineered Systems for Parsons, stated “We have supported DOE in advancing new sustainable technologies from development to commercialization for decades and are eager to work with OCED in promoting projects to facilitate the global energy transition and spur economic growth. This work, which is underpinned by IIJA funding, is accelerating the creation of a decarbonized energy system and is an important step in our collective efforts to deliver a better, cleaner world.”
While the announcement of DoE funding alongside roadmaps for investment in the sector mark a major step forward for the clean energy tech industry, business has been hit hard in recent weeks by the collapse of the Silicon Valley Bank (SVB) and Signature Bank. Clean energy start-ups and companies across the U.S. could face challenges in gaining access to funding, which could slow anticipated advancements that were spurred by the IRA and BIL. The IRA offers around $370 billion in climate and clean energy funding. However, the collapse of the SVB has caused a banking sector scare and led tech start-ups to reassess their vulnerabilities. They could now face higher interest rates and may look for funding opportunities in major banks rather than regional financial institutions to better guarantee their financing. This could slow progress as companies take longer to assess financing opportunities and gain approval.
Afsaneh Beschloss, the founder and CEO at investment firm RockCreek, explained that the IRA was expected to drive clean energy opportunities in low-income communities and “one of the biggest places that was supposed to happen was through local community banks . . . That is going to be hugely impacted.” SVB had 1,550 clean technology firms as clients and the collapse has sent a threatening message to other potential clients of local banking institutions.
The DoE’s new Liftoff reports are expected to support new U.S. climate policies and spur investment in the clean energy tech sector. The DoE will adapt advice provided in the reports with the evolution of technology across several sectors, aimed at attracting greater financing from the private sector. However, as the collapse of the SVB recently stalled progress by clean energy start-ups, we could see a de-acceleration in the sector while these companies assess safe funding opportunities.
By Felicity Bradstock for Oilprice.com
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