<aside> 💡 After a first general deep dive on Climate Tech trends, we’re now focusing on a key sector to decarbonize the energy mix: renewable energies mainly solar, wind and geothermy.

Wishing you an insightful reading,

Raphaël Cattan, Alexandre Dewez, Maryam Mahla, Charlotte Pratt & Henri Courdent.

PS: You are a climate company at Seed or Series A, operating in Europe and curious about how Eurazeo can help you ? Please reach out on Linkedin or drop us an email ar [email protected], [email protected] or [email protected]

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Introduction

• Energy is today the most important source of carbon emissions. Energy is whats make us move, heat and manufacture goods. Limiting global warming to 1.5°C will require us to shift from fossil fuels to renewable energy sources and nuclear power.
• The market momentum is here the current boom in gas prices coupled with the cost reduction in solar panels and batteries is unlocking demand. Beyond climate change issue**,** the business case for renewable energies is now beyond doubt, making the shift to renewable energies a no-brainer in many business cases.
• Not all European countries are the same: because each European countries have different energy mix with different production costs, amount of sunshine and wind (the UK is not Spain) and banking systems, renewable energies may be more competitive and affordable in one place than in another.
• The growth of this market is quite certain: according to the the IEA, worldwide wind capacity should go from 900,000 to 3,100,000 MW in the next 10 years, becoming a significant part of the energy mix in many countries. Solar PV market should grow by 20% in Europe in the next 5 years.
• We’ll focus here on three renewable energies: solar (often coupled with batteries) that can be installed in residential buildings, condos or in large-scale plants, wind power and geothermal energy.

Solar & Wind

Innovative Hardware

The past investments and subsidies in solar energy in the last 20 years are now making this energy scalable, affordable and competitive. This performance is largely due to innovative hardware and early successes of solar hardware companies in the years 2000.

Several solar tech startups have indeed reached massive success in the last 10 years:

• Created in 2006, Enphase (US, $42bn market cap) and Solar Edge (Israel, $17bn market cap) was for instance the first company to successfully commercialize an inverter, which converts the direct current (DC) power  into grid-compatible alternating current (AC), adapted to residential solar. They now control 80% of the US Residential solar inverter market.
• Sonnen (Germany, acquired by Shell for €500m in 2019) is one of the first company building a battery for independent homeowners with PV systems. Having a battery coupled with PV allow homeowners to consume their own electricity and strongly reduce their energy bills. This is also what Tesla has done with its Powerall, complementing its offer of solar panels (through SolarCity) and EV charging wallbox (sold with Tesla cars).

To unlock the deployment of solar panels, startups have been focusing on 3 main areas: planning & design, scaling the installation of solar panels by making them affordable and easy to use, and operations and maintenance.