At this year’s Collision event, a clear message emerged from industry experts: cleantech is no longer a niche market, but a mainstream investment opportunity with significant growth potential.
The sector has evolved beyond early stage venture capital funding, now encompassing a wider range of investment channels. From infrastructure projects like modernizing power grids and developing sustainable transportation systems, to energy storage solutions and eco-friendly buildings, the cleantech sector is poised for a new era of investment.
In a panel discussion at Collision, which ran from June 18 to 20 in Toronto, Canada, Andrew Beebe, managing director at Obvious Ventures, compared cleantech’s early days to those of the internet — there wasn’t much investment interest. In fact, he recalled, venture capitalists initially didn’t even know what the internet was.
“And then like two years later, they all had internet funds. And then two years after that, they stopped calling them internet funds, because they were just funds, they were just technology — because the internet was clearly going to be part of the global fabric of our economy. And I think the same thing is happening in climate,’ he said.
DCVC partner Rachel Slaybaugh noted that mainstream investment in climate solutions is increasing as the economic benefits become clearer. She pointed to electric vehicles (EVs) as a compelling example, saying they offer a lower total ownership cost and a positive driving experience. In her opinion, this shift reflects a growing understanding of the economic viability of climate solutions, moving beyond early adopters driven by a desire for impact.
Chante Harris, founder and managing partner at Eunoia, echoed that statement during a separate panel. “When I think of conscious investments, I think about how we are building both towards returns and impact,” she said.
Harris went on to say that in recent years there has been a surge in venture capital funding for cleantech.
“Seventy percent of all venture capital last year went into climate technology, a huge win for the space. At the same time, two-thirds of that actually went into hardware,’ she told listeners at the conference.
This surge in venture capital funding has coincided with various policy and market drivers; Harris said that in the US over US$300 billion has been committed to climate solutions through the Inflation Reduction Act, the Chips Act and the Bipartisan Infrastructure Law, which contain provisions that could indirectly lead to environmental benefits.
She also highlighted the importance of cleantech for corporations seeking to achieve net-zero goals, emphasizing that they are essential for companies to meet their objectives.
5 cleantech investment opportunities to watch
1. Nuclear energy and hydrogen
Among the cleantech investment opportunities discussed at Collision was nuclear fission, especially micro and small modular reactors, which will be able to help fill growing demand for clean power.
Slaybaugh noted that Amazon’s (NASDAQ:AMZN) recent purchase of a nuclear-powered data center exemplifies this shift. In addition, she pointed to hydrogen as a potentially transformative clean fuel source due to the simplicity of extracting it from the ground compared to building electrolyzers.
“If we can make it work, there’s a real chance to have the economics of hydrogen be really transformative,” she said.
2. Hydro power
Curtis VanWalleghem, co-founder and CEO of Canadian energy storage startup Hydrostor, highlighted the challenges associated with wind and solar energy while showcasing his company.
He emphasized their unpredictable nature, which can lead to curtailment during periods of surplus and intermittency when wind or solar energy isn’t available. He identified a need for new long-duration storage solutions.
“Historically, people think of storage (and) they think of lithium-ion batteries and pumped hydro. And those are the two kinds of leading storage solutions, but they do have limitations. Lithium-ion batteries degrade, they’re pretty costly to build and they have a short life. Pumped hydro, on the other hand, uses a lot of water, a lot of space and it’s very challenging to find sites where you can build additional ones,” he told the audience at Collision.
Hydrostor’s Advanced Compressed Air Energy Storage technology uses water pressure to store compressed air, releasing and combining it with stored heat to generate electricity. “The big advantage versus lithium-ion is our system lasts 100 years and never degrades, and to add an hour costs US$50 per kilowatt hour of storage capacity. A lithium-ion costs about US$300, it lasts 10 years and fades every year that it’s operating,” said VanWalleghem.
The firm has an operational facility in Ontario, and in a few months will begin construction of a plant in Australia that will power a small mining town with 100 percent renewable energy. Projects are also set to begin in California next year.
“Our business plan has us in the next 15 years contracting and starting construction on 100 of these Advanced Compressed Air Energy Storage facilities,” VanWalleghem said.
3. Electric vehicles
While emerging clean technologies are gaining traction, established cleantech solutions are also seeing continued advancements. John Rizzo, chief technical officer at InductEV, highlighted how his company is developing wireless EV chargers to address insufficient charging infrastructure, which is hindering widespread adoption.
“Our approach is to charge the vehicles wirelessly while they’re going about their route. Imagine a bus that’s going about its route stopping at a bus station, or imagine a loading truck going to a loading dock, stopping for 45 minutes, and it’s charging then,’ he said, noting that this allows for much more flexibility.
Tom Guy described how Etc., an incubation arm of BT Group (LSE:BT.A,OTC Pink:BTGOF), is piloting a project to repurpose decommissioned street cabinets that used to store broadband and telephone cables into EV charging ports.
“We’ve got power in the right places,” he said about his company. “So what we’re doing now is learning how to control the power and create a charging network across the (United Kingdom).”
4. eVTOL aircraft
Archer Aviation (NYSE:ACHR), a company at the forefront of developing electric vertical takeoff and landing (eVTOL) aircraft, also took to the stage. Chief Regulatory Affairs Officer Billy Nolen described his company’s forthcoming plans to offer affordable urban air mobility as a sustainable, efficient alternative to traditional aviation.
“We’re one of only two companies in the US to receive what we call our airworthiness criteria from the Federal Aviation Administration. We have received our Part 135, which allows us to operate commercially; we received our Part 145, which allows us to repair our own aircraft, and this year we are moving into what we call our four credit flight testing with the Federal Aviation Administration,’ he explained at the conference.
Speaking about the Archer Midnight, which has been described an an electric air taxi, Nolen emphasized how its distributed propulsion — six five-blade motors on the front and six two-blade motors on the back — results in a significantly reduced failure rate compared to helicopters, which have just two motors.
The Archer Midnight will be able to transport a pilot, four passengers and their bags, will reach speeds of up to 150 miles per hour and will have a range of up to 100 miles. The company plans to enter the market with a price structure comparable to that of Uber (NYSE:UBER) Black, with the ultimate goal of driving costs down to a price point similar to Uber X. The company has aggressive growth plans in place, with visions of affordable urban air mobility by 2028.
“I expect that over the next six months, nine months, 12 months, you’ll see eVTOLs in the news all the time because we will begin to do more flying or testing,” said Nolen. The company is initially launching its service in New York City in collaboration with United Airlines (NASDAQ:UAL), aiming to provide air taxi travel from Newark Airport or JFK Airport to midtown Manhattan, which typically takes one to two hours by car due to traffic. According to Nolen, the trip could be completed in just 15 to 20 minutes with Archer Midnight. Similar services are planned for Chicago, and the company recently established a network in San Francisco. Service is expected to begin sometime in 2025.
Nolen also revealed that Archer is working closely with the United Arab Emirates, with a contract in place to start service there with the Archer Midnight in 2026. The company also plans to establish service in India, and has announced a deal with Korea’s version of Uber, called KakaoMobility.
Investor takeaway
Discussions at Collision highlighted the increasing mainstream interest and investment in cleantech. The growing demand for viable clean energy solutions is driving significant venture capital funding into the market, with a focus on clean sources of fuel and transportation, as well as innovative energy storage solutions.
The emergence of new investment opportunities in cleantech underscores the shift toward sustainable and impactful investments that not only aim for returns, but also contribute to environmental benefits.
As the world continues to prioritize environmental sustainability and climate action, it’s evident that cleantech is becoming an integral part of global investment strategies. The ongoing commitment to advancing climate solutions and the development of innovative technologies will play a crucial role in shaping a more sustainable future.
Securities Disclosure: I, Meagen Seatter, hold no direct investment interest in any company mentioned in this article.