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Energy & Sustainability

$4 Billion for Clean Energy Innovation

Peter Lougee

Energy Columnist, 1776

There is little doubt in most circles that the development of clean and renewable sources of energy should be of paramount importance to the future efforts of government and business alike. Yet, despite this, there has yet to be a concerted national-level campaign to fund the research and development necessary to achieve the goal of clean energy. With current Congressional leadership unlikely to take up clean energy as a domestic spending priority, options for development have been sparse. That may be about to change, however.

On June 16th, the Obama Administration announced that it had reached an agreement to harness “the power of the federal government” and “the ingenuity of America’s entrepreneurs.” The Administration effort, known as the Clean Energy Investment Initiative, resulted in a private-sector commitment of $4 billion to invest in the development of clean and renewable sources of domestic energy production. In remarks delivered by Vice President Biden, the Administration outlined the diversity of the organizations brought together, which ranged from Goldman Sachs to the Sierra Club. The breadth of the participating organizations highlights not only the renewed commitment of the Clean Energy Investment Initiative – original estimates forecast $2 billion in investments, not four – but illustrates the broad range of consensus on the need for clean energy and to combat climate change within the private sector.

In conjunction with the investments from the private sector partnerships, the Administration also announced a collection of “executive actions” that will accompany the Clean Energy Investment Initiative to encourage further private sector investments: the launching of the Clean Energy Impact Investment Center within the Department of Energy to “make information about energy and climate programs accessible…to the public”; an effort to facilitate charitable foundation investments in clean energy through the Treasury Department; and “improving financing options” through the U.S. Small Business Administration.

Although the Administration-lead Initiative should be applauded for its efforts, how does it all work in reality? GreenBiz reports that the overall goal was to “fill the void between conceiving of a promising clean technology and selling a commercial version of that technology at a profit.” With that in mind, what the Clean Energy Investment Initiative provides is a model on how to realize large-scale investments in clean energy technology development without relying on either large, tax-payer funded efforts such as the DOE’s loan program to companies such as Solyndra, or the short-term profit minded approach traditionally associated with technology investors. To this end, the Clean Energy Initiative can boast an immediate commitment of $1.1 billion from private investors, with an additional $2.5 billion over the next five years serving to drive future cycles of innovation.

This has resulted in new coalitions and venture capital firms, Fortune writes. For example, the Clean Tech Syndicate, which pools $60 billion from 11 “family office” investors, has announced that it will merge with the CREO Network, a similar family office focused investment firm to create the CREO Syndicate. The new CREO Syndicate announced that it will work closely with the new Confluence Philanthropy, an umbrella group representing 200 individual foundations, to focus on large scale investments in clean technology and energy. This is combine with the formation of two new non-profit organizations whose mission is to “pool the funds of foundations and other groups” toward the Clean Energy Investment Initiative. Also of note are the clean energy and technology accelerators that are participating in the Initiative, such as the Cyclotron Road and the Chicago Clean Energy Trust. Although these accelerators are “relatively small” their participation ensures knowledge of the “front lines of finding and cultivating” energy entrepreneurs will not be lost on the broader Initiative efforts.

Although the precise results of the Clean Energy Investment Initiative won’t be felt years to come, the Natural Resources Defense Council has noted that policies such as the Initiative from the Administration have succeeded in driving down the cost of renewable energy in the United States previously. Thus, for startups seeking to enter the clean energy space, the details of the investments taken by the private sector partners of the Initiative should be of immediate importance. As the strategies and specific interests of both the industry stalwarts and the newcomers become clearer within the members of the Initiative, startups seeking to break into the clean energy market can and should position themselves to align with those strategies and interests if they seek to reap both the monetary rewards, but also the recognition that will come with being funded through such a high profile campaign.

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Peter Lougee

Energy Columnist, 1776

Peter is a Washington, D.C.-based freelance writer with a Master's Degree in Public Policy from American University. In addition to startups, Peter likes coffee, books and whiskey.