Hello and welcome back to class.
Our focus today is on the financial opportunities in renewable energy.
What you're looking at here is a few highlights from
a study on the global revenues in advanced energy.
Now, this includes renewable energy as well as energy efficiency.
Note that of the 1.4 trillion of annual revenues,
only 200 billion come from the US,
the rest of course spread across the world.
And note that this 1.4 trillion number is twice the revenue of the airline industry,
almost the same as worldwide apparel sales,
and roughly equal to the pharmaceutical industry.
So again, this is not a, not an inch.
Consider commitments from major financial institutions.
So Citi, Goldman Sachs, and Bank of America,
three of the largest financial institutions in America have committed
roughly 375 billion US dollars by 2025 to the renewable energy and low carbon sector.
Again, these are of course not for profit solutions,
these are done for financial reasons.
Solar wind get a lot of attention as they should...
roughly 1.5 trillion US dollars has been
invested in these projects since 2009 and
these are essentially infrastructure project, power generation projects.
This is not referred to technology investments.
Also, note importantly, that the cost to build these projects has
fallen roughly 75% since 2009.
It's fallen a little more for solar and for a little less for wind,
and even the CEO of Shell,
large oil and gas giant, is on record,
as saying that solar is likely to be
the backbone of the global energy system in the years to come.
So, look you can't say next year,
to be fair, but, in the years to come.
So, when you have a CEO of a company like that making
a statement about the power of renewables,
I think it's time to take it closer look at the financial opportunities.
Energy storage is coming soon.
Maybe, not quite yet.
So, here, again, repeating a statistic that,
we also have another video,
because it is so powerful.
The energy storage market is projected to grow over 100X from 2013 to 2022,
becoming a $250 billion market by 2040.
So, just consider a few other related statistics.
There are over 70 different battery,
chemistry has been tested or deployed in the field today,
now, many of those will not work.
Some could be game changers.
Lithium ion for sure is the family of chemical energy storage that is dominant.
It'll make it roughly 80% of all the battery market through 2025,
is probably a larger percentage of the market today.
The costs are also falling dramatically.
Roughly 15% per year.
But the Tesla with their Gigafactory partnership with Panasonic projects
a 50% drop in the cost of their batteries between say 2015 and 2020.
Although a lot of capital is flowing to this sector,
a lot more investment is needed.
Here are some research in a report called investing in
the clean energy economy with Michael Bloomberg and others supporting the research.
About 210 to 410 billion additional US dollars of investment are need
per year between now and 2050 to address the most serious forms of climate change.
And note that these are not investments without a return.
And it is hard to predict, of course,
what's going to happen that many years out, but,
the above referenced investments are expected to
save up to a potential of $700 billion per year.
So there is some return on these investments.
Most returns, I would think,
do deliver market returns.
Some do not, and therefore you have kind of a blending of return.
Some led by the government sector with low return are hard to calculate financial return,
others more private sector driven.
So, again, why are there more opportunities,
financial opportunities and in renewables going forward?
Well, in part because future generations want it.
Now, that that future includes folks like me and those those younger.
Here's some research from Boston College,
their Center on Wealth and Philanthropy.
Between 2007 and 2016,
$59 trillion of wealth is
expected to be transferred from the Baby Boomer generation to their kids.
And research, as we see it again,
another video shows the children of that Baby Boomer generation,
those roughly in their 20s and 30s tend to care more about businesses impact on society.
Billionaires see opportunity.
Now, some of the billionaires investing in this space may be doing so for legacy reasons,
for brand reasons, but my guess is that most are doing it for financial reasons,
for diversification reasons because they see a high growth sector.
Here, I'm referencing the breakthrough Energy Coalition,
a group of billionaires which recently committed $1 billion
to an investment fund to grow innovative clean tech companies.
This is unique because the fund has a 20 year life,
unlike most venture capital funds where it could be 7-10 years.
A buddy of mine just went over to join as the CTO from Duke University.
So, we're all very excited to see what comes of this initiative.
Some key conclusions.
We are likely witnessing one of the greatest transformations of
the $6 trillion global energy industry in history.
So please, don't just be a witness.
Right? Be an active player in this transformation.
Number two, funding in renewable energy startup or corporate initiative may be
easier today than a decade ago due to growing investor interest.
That trend is likely moving in a positive direction,
with this, this should last for some time.
Third, the renewable energy sector varies greatly by country,
utility region, project size,
and type of energy.
So needless to say,
there are many options for you to find your business niche.
Finally, questions for you.
Again, after I read through these please pause it,
get up that pen and paper and start to digest and process this information.
Number one, will your startup focus on technology innovation with moderate to
high risk or on project installations or asset finance,
of course, with less risk?
And why are you choosing one versus the other?
Number two, given that the US makes up only $200 billion of the
global $1.4 trillion in annual revenues for the advanced energy economy,
where else could you look for entrepreneur opportunities?
Maybe that's the country that you live in,
or maybe it's not.
Finally, how will you better understand the wants and needs of
investors interested in renewable energy?
What will you read? What are they reading?
How often will you study this?
To better understand, again,
the right fit between investor and what you're seeking to pursue and
have them be along for the ride as partners for you endeavor.
With that, we'll see you in the next video.
Chris WeddingFaculty
