Can Wall Street rescue clean energy?

Big Wall Street investors are betting that a surprisingly strong economy and improving interest rates will usher in a clean energy technology renaissance — at a moment when climate tech companies could really use the boost.

Large firms have committed to pouring billions into capital-intensive projects such as offshore wind installations, battery storage plants and hydrogen production facilities. That is raising hopes for the climate technology sector, which has seen investments drop by 58 percent since 2021 because of high interest rates, writes Corbin Hiar.

“They’ve woken up to something we’ve been talking about for 10 years, and they’ve woken up because we proved it makes money,” said Scott Jacobs, CEO of the private equity firm Generate Capital. “We need more money flooding this market. There’s no shortage of opportunity.”

Last week, private equity firm Brookfield Asset Management announced it had raised $10 billion to invest in projects that could accelerate the transition to net-zero emissions.

The same week, startup Graphyte began operating what it says will soon be the largest carbon removal facility in the world thanks to funding from Bill Gates’ Breakthrough Energy Ventures.

The influx of cash could help startups avoid the so-called valley of death — the point when companies need more money than what venture capitalists can offer to produce at a commercial scale. What these projects need now, Corbin writes, is “backers with large balance sheets and a willingness to take risks.”

A systematic failure to help clean energy technology companies reach commercial viability led to an economic bubble in the 2010s, analysts say. The International Energy Agency estimated in 2021 that more than 80 percent of energy startups failed to meet investors’ expectations.

Investors hope that the Biden administration — flush with hundreds of billions of dollars in congressionally approved clean-energy subsidies — can help climate-tech projects survive the gantlet.

The Energy Department’s Loan Program Office, for example, has lent over $6.1 billion to four companies since Jigar Shah became its head in March 2021. The office still has about $219 billion it can lend as of last month.

Biden’s signature infrastructure and climate laws could further bolster clean energy technology through a series of other subsidies and tax incentives. With those laws in hand, DOE officials are meeting with Wall Street investors to sell them on the strong economic potential of clean energy technologies.

There’s “a lot of dry powder and momentum now building up” for climate infrastructure projects, said Kim Zou of market research firm Sightline Climate.

It’s Tuesday — thank you for tuning in to POLITICO’s Power Switch. I’m your host, Christian Robles. Power Switch is brought to you by the journalists behind E&E News and POLITICO Energy. Send your tips, comments, questions to [email protected].

Today in POLITICO Energy’s podcast: Zack Colman breaks down details from new research that finds climate change could reverse decades’ worth of progress in the U.S. on air quality.

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