WEBVTT 1 00:00:04.280 --> 00:00:07.120 With La Launce Segle and from London and Gerard read 2 00:00:07.200 --> 00:00:07.839 from Berlin. 3 00:00:08.320 --> 00:00:11.320 This is redefining energy Today. 4 00:00:11.519 --> 00:00:17.719 On Redefending Energy Joad, we're going to talk about climate tech. 5 00:00:17.280 --> 00:00:21.920 Whether it's alive, dead or it's gone through a huge transformation. 6 00:00:22.160 --> 00:00:24.719 But first of all, from our partner, A b Loco 7 00:00:24.839 --> 00:00:28.559 Energy is Europe's premier leaser of ten food container mobile 8 00:00:28.600 --> 00:00:30.600 batteries built in Europe. 9 00:00:30.239 --> 00:00:35.119 With COTL best LFP cells. A Bloco Energy serves fourteen 10 00:00:35.280 --> 00:00:40.600 European countries, including France, Germany and the UK. 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Make your 14 00:00:50.520 --> 00:00:52.960 life easier, make your business more flexible. 15 00:00:53.240 --> 00:00:56.280 Back to the show, and for that we have a 16 00:00:56.320 --> 00:01:00.399 fantastic guest, a person we've been following four years, Tim Zoo. 17 00:01:01.000 --> 00:01:06.760 She's a leading climate tech analyst, founder, investor, and she 18 00:01:06.840 --> 00:01:14.439 has co founded Sideline Climate formerly called CTVC, which provides 19 00:01:14.599 --> 00:01:19.239 data research and market intelligence to tens of thousands of organizations. 20 00:01:19.719 --> 00:01:20.959 Fantastic guests. 21 00:01:21.480 --> 00:01:23.359 Yeah, let us and I've been following them since they 22 00:01:23.359 --> 00:01:27.319 started up and they did great analysis, great reports, and 23 00:01:27.599 --> 00:01:29.200 it's a pleasure to have her on board. 24 00:01:29.719 --> 00:01:31.040 Let's bring it on the show. 25 00:01:31.879 --> 00:01:34.120 Where came listen, It's a pleasure having you on the show. 26 00:01:34.239 --> 00:01:35.680 Really looking forward to this conversation. 27 00:01:36.200 --> 00:01:40.000 Excited to be on the show. Longtime listeners, Kim, I'm. 28 00:01:39.799 --> 00:01:44.519 Going to ask a very simple question, what is climate 29 00:01:44.519 --> 00:01:45.959 tech into twenty six? 30 00:01:46.879 --> 00:01:50.640 Simple question, not so simple answer. We started a newsletter 31 00:01:50.799 --> 00:01:53.400 on climate tech at the beginning of twenty twenty, right 32 00:01:53.439 --> 00:01:56.000 before the pandemic, where I would say the definition for 33 00:01:56.040 --> 00:01:59.040 climate tech is quite different. Historically, the way we've looked 34 00:01:59.079 --> 00:02:05.480 at it is technology solutions mitigating the climate crisis from mitigation, adaptation, 35 00:02:06.079 --> 00:02:09.919 removal standpoint, with the understanding that the demand driver is 36 00:02:09.919 --> 00:02:14.240 really around decarb getting to net zero. That definition as 37 00:02:14.280 --> 00:02:18.280 a whole hasn't necessarily changed, But I think the underlying 38 00:02:18.439 --> 00:02:21.479 demand driver for what's driving a lot of these verticals 39 00:02:21.479 --> 00:02:23.879 and sectors that we call climate tech. We really think 40 00:02:23.919 --> 00:02:27.080 of climate tech as a theme, not an industry. It's energy, 41 00:02:27.159 --> 00:02:29.639 it's builds environment, it's transport, it's food and ad, it's 42 00:02:29.639 --> 00:02:32.400 a lot of these core verticals. But now the demand 43 00:02:32.479 --> 00:02:35.840 driver for these solutions are no longer purely net zero 44 00:02:35.879 --> 00:02:39.560 purely decarb. In my mind, the demand drivers really come 45 00:02:39.840 --> 00:02:44.680 down to where we see physical supply shortages relative to demand, 46 00:02:45.159 --> 00:02:49.120 and that today is happening in primarily power driven by 47 00:02:49.319 --> 00:02:53.439 AI and data centers. We're seeing that in some manufacturing 48 00:02:53.560 --> 00:02:57.639 and resources related sectors like crotopriminerals, and we're also seeing 49 00:02:57.680 --> 00:03:01.919 that in areas like manufacturing robot and we're actually seeing 50 00:03:02.000 --> 00:03:05.240 a lot of investment going into those solutions like nuclear, 51 00:03:05.759 --> 00:03:10.159 like grid tech, but it's no longer because of decarb 52 00:03:10.319 --> 00:03:12.719 net zero that's driving those investments. 53 00:03:13.319 --> 00:03:15.759 Begs the question why do we even use the phrase 54 00:03:15.800 --> 00:03:16.840 climate anymore? 55 00:03:17.719 --> 00:03:21.280 I mean, it's a question I ask myself not every day, 56 00:03:21.439 --> 00:03:23.960 but often, because I do think we helped coin this 57 00:03:24.039 --> 00:03:26.240 term climate tech back at the start of twenty twenty. 58 00:03:26.240 --> 00:03:28.159 There's been clean tech one point zero. There's been many 59 00:03:28.159 --> 00:03:31.439 iterations of clean and climate tech, and I think often 60 00:03:31.520 --> 00:03:36.120 this word climate tech can isolate the key players that 61 00:03:36.159 --> 00:03:40.000 we need to drive these industries forward. There's an inherent 62 00:03:40.080 --> 00:03:43.800 assumption that in climate tech, the reason we're talking about 63 00:03:43.800 --> 00:03:47.759 these technologies, these solutions is because of climate, when in reality, 64 00:03:48.120 --> 00:03:51.360 the way the world works, these solutions that fall under 65 00:03:51.479 --> 00:03:54.400 this climate tech umbrella it's not driven because of climate. 66 00:03:54.520 --> 00:03:57.960 It's driven because there's a need from a security standpoint, 67 00:03:58.039 --> 00:04:05.000 from an affordability standpoint, and also from a sustainability standpoint cheaper, better, faster, cleaner, 68 00:04:05.520 --> 00:04:08.800 and just having that climate label on it all, just 69 00:04:08.879 --> 00:04:11.680 having the assumption that everything is because of cleaner can 70 00:04:11.759 --> 00:04:16.079 sometimes isolate a lot of the investors, the corporates, the 71 00:04:16.120 --> 00:04:20.680 policymakers who want these solutions to scale. That's a lot 72 00:04:20.720 --> 00:04:23.040 of what the industry that we've been tracking has been 73 00:04:23.040 --> 00:04:25.920 coming to terms with over the last two years that 74 00:04:26.839 --> 00:04:29.399 just purely looking at this from a climate standpoint no 75 00:04:29.480 --> 00:04:32.879 longer really helps the solutions scale. In fact, sometimes it 76 00:04:33.160 --> 00:04:34.639 harms these solutions. 77 00:04:35.319 --> 00:04:37.759 Well, I'm sort of hearing and I don't have the answer, 78 00:04:37.759 --> 00:04:39.639 but I'm going to give you a challenge, which has 79 00:04:39.839 --> 00:04:42.079 come up with a new phrase, we move from clean 80 00:04:42.160 --> 00:04:44.959 tech to climate tech. And I think it's just you 81 00:04:45.079 --> 00:04:47.199 set it yourself there there's a need for a new phrase. 82 00:04:47.879 --> 00:04:52.120 If I look at the story of investing in that 83 00:04:52.240 --> 00:04:54.879 there are my perception and you're going to tell me, 84 00:04:54.920 --> 00:04:56.920 because you are doing the research with the ring numbers, 85 00:04:56.959 --> 00:05:00.560 if my perception is good or not. Is that in 86 00:05:00.600 --> 00:05:05.560 the capital location people used to go big on green molecules, 87 00:05:05.759 --> 00:05:09.040 so they would put money in biofuels, or in hydrogen 88 00:05:09.879 --> 00:05:14.560 or the most absurd and stupid and ridiculous and one 89 00:05:14.680 --> 00:05:19.800 hundred percent share of burning money carbon management, whether it's 90 00:05:19.879 --> 00:05:23.560 burning shareholders money or burning government money, because this is 91 00:05:23.600 --> 00:05:29.160 a continuous scam. Two green electrons. So that's my perception. 92 00:05:29.319 --> 00:05:32.240 So you have the numbers or just just me babbling. 93 00:05:33.079 --> 00:05:36.839 When we look at climate tech investment in twenty twenty 94 00:05:36.879 --> 00:05:40.680 five relative to the prior years, a pretty surprising, at 95 00:05:40.720 --> 00:05:43.839 least on paper surprising start is there is a big 96 00:05:43.959 --> 00:05:46.199 increase in climate tech investment. And when I say climate 97 00:05:46.199 --> 00:05:48.920 tech investment, I'm talking mostly about venture and growth a 98 00:05:49.000 --> 00:05:52.439 police in mostly looking at private markets. Twenty twenty twenty 99 00:05:52.480 --> 00:05:54.839 twenty two, we saw a massive boom from like thirty 100 00:05:54.879 --> 00:05:58.319 billion up to sixty billion, doubled year every year. Then 101 00:05:58.639 --> 00:06:03.319 twenty three onwards that investment has really decreased, come back 102 00:06:03.360 --> 00:06:06.879 down to kind of thirty forty billion. Surprisingly, in twenty 103 00:06:06.920 --> 00:06:09.879 twenty five, we saw an eight percent uptick from twenty 104 00:06:09.879 --> 00:06:13.319 twenty four, which on paper, you're like, wait, a second 105 00:06:13.600 --> 00:06:16.759 policy has not been favorable to climate. How has investment 106 00:06:16.759 --> 00:06:20.639 in climate tech increase, and the majority of that increase 107 00:06:20.800 --> 00:06:25.519 has come from the energy and specifically the electrons side 108 00:06:25.519 --> 00:06:29.439 of the equation. It's coming from this new demand driver 109 00:06:29.720 --> 00:06:33.560 AI data centers, six hundred and sixty billion dollars of 110 00:06:33.639 --> 00:06:37.199 hyperscalar capex going into needing to build out the data 111 00:06:37.199 --> 00:06:40.319 center and compute layer, which means that we need more 112 00:06:40.360 --> 00:06:45.639 electrons both from a generation and from a transmission distribution standpoint. 113 00:06:45.800 --> 00:06:47.839 And so we're seeing all of that uptick right now 114 00:06:48.000 --> 00:06:51.560 in climate tech investment coming from the green electron side. 115 00:06:52.079 --> 00:06:56.800 Historically there was a lot coming from the green molecule side, hydrogen, 116 00:06:57.000 --> 00:07:00.839 low carbon fuels, really focusing on the transfer rotation side 117 00:07:00.920 --> 00:07:05.720 of energy. Now it's all flowing into the electron side 118 00:07:05.879 --> 00:07:08.360 of energies. So I think we've seen a real shift. 119 00:07:08.399 --> 00:07:11.439 And my personal take here is it also just makes 120 00:07:11.439 --> 00:07:15.079 a lot more sense. If we're using this framework of better, cheaper, faster, 121 00:07:15.160 --> 00:07:18.879 cleaner electrons, you can check a lot of those boxes 122 00:07:19.240 --> 00:07:21.720 a lot faster than molecules. 123 00:07:22.240 --> 00:07:24.720 By the way, you mentioned the hydrogen there did not 124 00:07:24.720 --> 00:07:26.639 not blow up about one hundred years ago with the 125 00:07:26.680 --> 00:07:27.199 Hinden work. 126 00:07:27.720 --> 00:07:31.279 Oh man, I think we're in like every ten years 127 00:07:31.480 --> 00:07:35.319 due to the hydrogen. Hydrogen it kind of dissipated, let's 128 00:07:35.319 --> 00:07:38.600 call it in twenty twenty five. So yeah, twenty thirty five, 129 00:07:38.879 --> 00:07:44.160 we could have a looking forward, all right, we'll have 130 00:07:44.199 --> 00:07:45.199 a tenure date. 131 00:07:46.199 --> 00:07:48.959 For hydrogen right now. There is one project that makes 132 00:07:48.959 --> 00:07:52.240 a lot of sense. It's in Paraguay, is to make 133 00:07:52.319 --> 00:07:56.439 green ammonia from the Equosu dam because I know the 134 00:07:56.480 --> 00:07:59.439 story of the construction and the financying of the equest Sudam. 135 00:07:59.600 --> 00:08:03.639 In fact, Paraguay as an allotment of that dam, but 136 00:08:03.680 --> 00:08:06.199 they never use it because it's such a small economy 137 00:08:06.519 --> 00:08:09.839 and they're going to produce really rereneumonia there and they 138 00:08:09.839 --> 00:08:12.399 have a bush and everything that's very serious and that's 139 00:08:12.439 --> 00:08:16.000 going to replace fertilizer. But that's the exception. Will most 140 00:08:16.079 --> 00:08:21.399 confirm the rule now question and regard numbers because we're 141 00:08:21.399 --> 00:08:24.120 going to talk about numbers. We love numbers here. But 142 00:08:24.199 --> 00:08:27.959 for instance, when you have twenty thousand R and D 143 00:08:28.160 --> 00:08:32.120 engineers at COTL, when you have one hundred and ten 144 00:08:32.200 --> 00:08:37.440 thousand engineers at BYD, do you account for their R 145 00:08:37.480 --> 00:08:41.919 and D budget or what you're tracking. It's really like 146 00:08:42.039 --> 00:08:46.080 more external sources because there's a lot of research in 147 00:08:46.600 --> 00:08:50.320 climate tech going inside those Chinese giants. 148 00:08:50.960 --> 00:08:54.000 We're doing a lot more coverage on China. I'm also Chinese, 149 00:08:54.000 --> 00:08:57.879 so I do feel personally interested in this topic. Last 150 00:08:57.879 --> 00:09:01.639 November went on a trip and visited this atl MBID 151 00:09:02.039 --> 00:09:05.559 companies and factories, and you go to these factories and 152 00:09:05.600 --> 00:09:10.000 they have walls and walls of patents that they've developed 153 00:09:10.120 --> 00:09:14.320 across batteries, across solar, across evs, all these things. And 154 00:09:14.679 --> 00:09:16.519 even to me, like last time I was in China 155 00:09:16.600 --> 00:09:20.240 was in twenty eighteen, that was a surprise. Historically, the 156 00:09:20.279 --> 00:09:23.720 Western narration of clean tech and climate tech has been 157 00:09:24.120 --> 00:09:28.000 all the innovation happens in the West and then China 158 00:09:28.200 --> 00:09:31.279 takes it and scales it or copies it, depending on 159 00:09:31.320 --> 00:09:34.600 who you speak to. That to me has fundamentally changed. 160 00:09:35.320 --> 00:09:39.159 China is no longer just the world's factory focusing on 161 00:09:39.320 --> 00:09:42.360 the kind of ten to one hundred. They're making a 162 00:09:42.480 --> 00:09:45.559 very dedicated effort and they're succeeding, especially in a lot 163 00:09:45.559 --> 00:09:48.960 of these clean tech climate tech sectors and going further 164 00:09:49.039 --> 00:09:51.759 upstream into the zero to one. And to your point, 165 00:09:51.879 --> 00:09:56.159 it's not venture capital, it's not VC investors in China 166 00:09:56.200 --> 00:09:59.080 that are funding most of this, it's a combination of 167 00:09:59.519 --> 00:10:03.320 government capital, local government capital, industry funds that they'd set up. 168 00:10:03.679 --> 00:10:07.200 It's a combination of state owned enterprises and a combination 169 00:10:07.480 --> 00:10:11.639 of these corporates plus some private markets capital that's really 170 00:10:11.679 --> 00:10:14.919 funding this stuff. So in our climate tech investment numbers, 171 00:10:14.960 --> 00:10:18.080 we're not tracking corporate R and D, we're not tracking 172 00:10:18.240 --> 00:10:22.399 that type of capital. We're mostly looking at private markets investment, 173 00:10:22.519 --> 00:10:25.159 so we're not looking at government capital at least in 174 00:10:25.200 --> 00:10:28.320 those numbers. But if you were to look at where 175 00:10:28.360 --> 00:10:32.039 a lot of the innovation in China is happening, it's 176 00:10:32.120 --> 00:10:36.120 really stemming down from the five year plans. The government 177 00:10:36.159 --> 00:10:39.279 at the top is setting the national goals over the 178 00:10:39.320 --> 00:10:43.480 next five years, and from twenty twenty to twenty twenty five, 179 00:10:43.919 --> 00:10:47.240 during the pandemic years, there were a lot of dedicated 180 00:10:47.279 --> 00:10:53.159 goals centered around new energy EVS, solar batteries, those are 181 00:10:53.159 --> 00:10:55.759 the big three, and from twenty twenty to twenty twenty five, 182 00:10:56.559 --> 00:11:00.440 the Chinese private markets, Chinese vcs had some of the 183 00:11:00.519 --> 00:11:05.279 best outcomes, the best exits with COTL, with a couple 184 00:11:05.320 --> 00:11:10.000 other companies including a battery storage company, and to them 185 00:11:10.240 --> 00:11:14.039 that was the big clean tech climate tech years. And 186 00:11:14.080 --> 00:11:17.320 most of that innovation has now been happening at these 187 00:11:17.320 --> 00:11:21.320 companies like CTL and Buid and others, as opposed to 188 00:11:21.600 --> 00:11:24.440 startups that are necessarily building the innovation. 189 00:11:25.279 --> 00:11:27.399 Can we jump on that point? There is an interesting 190 00:11:27.440 --> 00:11:31.639 one because if I look at say Europe, we actually 191 00:11:31.759 --> 00:11:35.080 formerly probably had the Chinese approach, which was innovation took 192 00:11:35.159 --> 00:11:39.320 place in these big businesses and big institutes. That model 193 00:11:39.320 --> 00:11:41.360 as sort of I don't know, as maybe it's broken 194 00:11:41.440 --> 00:11:44.480 down and we're now moving to this I call it 195 00:11:44.519 --> 00:11:47.519 this American approach, but that ain't working for us either. 196 00:11:47.720 --> 00:11:50.159 So I'd be very interested just to hear your approach 197 00:11:50.200 --> 00:11:53.159 on Europe and how you see Europe in between that, 198 00:11:53.639 --> 00:11:56.879 the American approach to innovation and the Chinese approach. 199 00:11:57.320 --> 00:11:59.559 It's funny because I've been privileged to be able to 200 00:11:59.559 --> 00:12:02.759 straddle some of these geographies, like born and raised in 201 00:12:02.799 --> 00:12:05.559 the US, have lived in London for the last three years, 202 00:12:05.639 --> 00:12:08.559 and then parents and family from Asia, so have been 203 00:12:08.600 --> 00:12:11.120 able to kind of get a glimpset at these different 204 00:12:11.120 --> 00:12:13.960 markets and how they operate. I think the advantage of 205 00:12:13.960 --> 00:12:16.919 the US is capital, no doubt, right. The advantage of 206 00:12:16.960 --> 00:12:19.600 the US is that there's just a lot of capital there. 207 00:12:19.639 --> 00:12:22.679 There's a lot of private markets capital there. In particular, 208 00:12:23.120 --> 00:12:25.720 the birth of private equity was in the US, and 209 00:12:25.759 --> 00:12:29.879 so that's their advantage, along with Silicon Valley and bottoms 210 00:12:29.879 --> 00:12:35.159 of innovation. I think unless you have that advantage of 211 00:12:36.200 --> 00:12:40.200 endless capital, it's really hard to go only the kind 212 00:12:40.240 --> 00:12:44.639 of purely capitalistic private markets route, private innovation route. On 213 00:12:44.679 --> 00:12:46.720 the other hand, China is the other end of the spectrum, 214 00:12:46.759 --> 00:12:50.159 where it's more socialist, communist in nature, and they can 215 00:12:50.200 --> 00:12:52.919 go the top down government approach where they say, okay, 216 00:12:53.000 --> 00:12:55.679 over the next ten years, we're just going to focus 217 00:12:55.720 --> 00:12:59.159 on doing these three things really well, and then everyone 218 00:12:59.240 --> 00:13:02.000 underneath bottom up will kind of rise to the moment. 219 00:13:02.559 --> 00:13:06.080 But it doesn't create that more organic innovation, that more 220 00:13:06.159 --> 00:13:08.679 organic scientific R and D. And that's why I think 221 00:13:08.919 --> 00:13:11.559 some of these Chinese markets have struggled to do that 222 00:13:11.679 --> 00:13:14.480 zero to one because it's been so top down that 223 00:13:14.759 --> 00:13:19.679 there isn't that encouragement of that scientific, almost academic R 224 00:13:19.720 --> 00:13:22.240 and D that you do have in US and that 225 00:13:22.600 --> 00:13:25.639 you do have in Europe that don't always meet the 226 00:13:25.679 --> 00:13:28.559 goals of what the governments, what the national has said. 227 00:13:29.159 --> 00:13:32.879 I think Europe's advantage here is that it can bridge 228 00:13:32.919 --> 00:13:36.039 between these two. It doesn't have to pick one or 229 00:13:36.039 --> 00:13:39.120 the other. I think Europe has the advantage of really 230 00:13:39.159 --> 00:13:43.840 fantastic academic innovation, really fantastic scientific innovation. You look at 231 00:13:43.879 --> 00:13:48.159 some of the universities here in the UK, Cambridge, Oxford, Imperial, 232 00:13:48.279 --> 00:13:50.679 you look at EAT Zurich. There's a ton of incredible 233 00:13:50.679 --> 00:13:54.799 innovation happening at these universities. There is the private markets 234 00:13:54.840 --> 00:13:56.480 here as well, although it's not as scaled up as 235 00:13:56.519 --> 00:13:59.480 the US. But I also think there's a lot more 236 00:14:00.399 --> 00:14:04.480 to have that top down, longer term government focus than 237 00:14:04.519 --> 00:14:06.399 in the US, which is kind of behold into these 238 00:14:06.399 --> 00:14:09.519 four year election cycles that now swing back and forth. 239 00:14:09.960 --> 00:14:12.519 So in my mind, can eure ap step up to 240 00:14:12.559 --> 00:14:15.679 seeing the advantages of how the China model has worked 241 00:14:15.799 --> 00:14:18.200 as well as seeing the advantages of that bottoms up 242 00:14:18.240 --> 00:14:21.720 innovation and sort of academic ecosystem that the US has 243 00:14:21.799 --> 00:14:24.559 midwork and come up with its own version that takes 244 00:14:24.600 --> 00:14:25.960 the best of both worlds. 245 00:14:26.480 --> 00:14:29.519 I like the way you think, and you introduced without 246 00:14:29.559 --> 00:14:34.000 even knowing it the powerful driver of serend deputy, and 247 00:14:34.039 --> 00:14:36.399 there's a lot of R and D which comes a 248 00:14:36.399 --> 00:14:39.559 bit by accident or just people meeting each other and 249 00:14:39.679 --> 00:14:43.440 not necessarily a dog cut. How clever it is. You 250 00:14:43.440 --> 00:14:45.320 know in the ministry say okay, we're going to do this, 251 00:14:45.399 --> 00:14:47.919 We're going to do that. But even sera deputy works 252 00:14:47.919 --> 00:14:50.080 in China because you know, we took to a Chinese 253 00:14:50.120 --> 00:14:52.480 expert and they said that the electric two and three 254 00:14:52.480 --> 00:14:56.759 wheelers were not in the plan. So they say, okay, 255 00:14:56.799 --> 00:15:00.519 we're not doing it. But some guys, entrepreneurs, they found 256 00:15:00.519 --> 00:15:02.919 out that the economics were great and it was developed 257 00:15:02.960 --> 00:15:05.559 outside the plan. And sometimes I mean you see the 258 00:15:05.600 --> 00:15:07.720 plan for new Care and they are five years late, 259 00:15:07.799 --> 00:15:09.759 and you see the plan for if it's there are 260 00:15:09.799 --> 00:15:12.399 five years ahead. So I mean the plan, yeah, we 261 00:15:12.480 --> 00:15:17.000 can debate for hours. Now you talk about players, okay, 262 00:15:17.080 --> 00:15:19.759 because we are talking about hundreds of billions of dollars. 263 00:15:19.840 --> 00:15:23.559 So what are the players? Always the same new names? 264 00:15:23.720 --> 00:15:25.120 So what's the ecosystem? 265 00:15:25.799 --> 00:15:30.639 The players that have been driving this climate tech innovation 266 00:15:30.799 --> 00:15:35.000 and deployment cycle has definitely shifted over the last six years. 267 00:15:35.360 --> 00:15:39.320 When we started tracking the space in twenty twenty, we 268 00:15:39.320 --> 00:15:42.759 were really looking at the emergence of these climate tech vcs. 269 00:15:42.799 --> 00:15:45.360 I mean we literally called the newsletter Climate Tech vc 270 00:15:45.879 --> 00:15:48.279 back in twenty twenty to twenty twenty two, we saw 271 00:15:48.279 --> 00:15:50.799 this big emergence of this new kind of player that 272 00:15:50.840 --> 00:15:54.519 came to the table of venture investors, primarily early stage 273 00:15:54.559 --> 00:15:59.399 venture investors who wanted to back companies, startup solutions that 274 00:15:59.480 --> 00:16:03.240 were working on this climate challenge. Then twenty twenty two 275 00:16:03.320 --> 00:16:06.759 to twenty twenty four, i'd say we saw the emergence 276 00:16:06.919 --> 00:16:12.600 of the growth and more infrastructure stage emerging for this 277 00:16:12.720 --> 00:16:18.039 category investors like just Climate General Atlantics, Beyond zero fund 278 00:16:18.480 --> 00:16:23.360 Decarbonization Partners between Tamassa and Black Rock tpgu guys. So 279 00:16:23.480 --> 00:16:26.120 you started to see this emergence of the more growth 280 00:16:26.159 --> 00:16:30.039 infrastructure asset class. Brookfield included in that that weren't just 281 00:16:30.080 --> 00:16:33.000 investing in solar and wind, but looking at some of 282 00:16:33.039 --> 00:16:36.159 these more emerging solutions. And that was also when we 283 00:16:36.200 --> 00:16:38.639 started Siteline, when we went from just being a newsletter 284 00:16:38.919 --> 00:16:42.720 to being a broader market intelligence company tracking these capital flows, 285 00:16:43.120 --> 00:16:46.720 helping to advise a lot of these investors. But also 286 00:16:46.759 --> 00:16:50.840 increasingly now this new wave we're seeing is more of 287 00:16:50.879 --> 00:16:56.159 the corporate and also government stack coming into play. We're 288 00:16:56.200 --> 00:17:00.240 at this period in climate tech where it's less about 289 00:17:00.360 --> 00:17:04.079 backing a lot more of the same innovation. Do we 290 00:17:04.119 --> 00:17:09.240 need another SMR reactor type? Do we need another hydrogen electrilizer? 291 00:17:09.400 --> 00:17:09.599 Right? 292 00:17:10.119 --> 00:17:12.359 Like we've been at it for six years, it's less 293 00:17:12.400 --> 00:17:16.400 about funding early stage investment and innovation in some of 294 00:17:16.440 --> 00:17:20.359 these existing solutions that have been able to scale over 295 00:17:20.359 --> 00:17:23.160 the last six years, and it's more about, Okay, what 296 00:17:23.480 --> 00:17:27.240 of these markets are actually needed, Where is their demand, 297 00:17:27.240 --> 00:17:30.200 where is their willingness to pay, and what of these 298 00:17:30.359 --> 00:17:35.400 solutions actually have the cost curve, the scalability, the deployment 299 00:17:35.640 --> 00:17:38.640 models to meet the problems we have today. And so 300 00:17:38.880 --> 00:17:42.920 where we're seeing the players come to it's more the corporates, 301 00:17:43.079 --> 00:17:47.839 the policy makers, the infrastructure investors that are needed to 302 00:17:47.880 --> 00:17:50.559 take these solutions to scale. And that's actually what we 303 00:17:50.640 --> 00:17:54.079 saw in our recent Capital Staff report, where we oftentimes 304 00:17:54.160 --> 00:17:58.440 track the capital allocators and how LPs are starting to 305 00:17:58.480 --> 00:18:03.279 deploy capital inn to these gps. And one really interesting 306 00:18:03.319 --> 00:18:06.599 step that came out of that was in twenty twenty five, 307 00:18:06.799 --> 00:18:11.839 we saw that pool of overall funding the asset allocators 308 00:18:12.160 --> 00:18:15.640 go from twenty percent to VCS to then eight percent 309 00:18:15.799 --> 00:18:19.759 to VCS, So a lot more capital now is flowing 310 00:18:19.799 --> 00:18:22.920 into the infrastructure side of the equation than the early 311 00:18:22.960 --> 00:18:26.400 stage innovation and VC side of the equation. These infrastructure 312 00:18:26.440 --> 00:18:29.759 investors aren't just looking at solar and wind anymore. They're 313 00:18:29.799 --> 00:18:33.000 looking at nuclear, They're looking at things adjacent to data centers. 314 00:18:33.440 --> 00:18:36.079 And so it's not that everything's going to get funded 315 00:18:36.279 --> 00:18:38.799 from climate tech from what the VC is backed, but 316 00:18:38.880 --> 00:18:42.000 we're going to see some solutions emerge. Geothermal is a 317 00:18:42.000 --> 00:18:43.920 good example of that as well. OK. 318 00:18:44.240 --> 00:18:46.160 I like what you say here because that's what I 319 00:18:46.200 --> 00:18:47.000 see in practice. 320 00:18:47.079 --> 00:18:48.000 What I see is. 321 00:18:48.240 --> 00:18:52.279 It's not about technologies anymore. It's about scaling these technologies. 322 00:18:52.759 --> 00:18:54.839 And actually the good news is because Iron myself with 323 00:18:55.000 --> 00:18:57.720 Lurano being veterans in this space, and I've obviously seen 324 00:18:57.720 --> 00:19:00.960 the seen tech one point zero and the blow up 325 00:19:00.960 --> 00:19:04.519 of that. But the difference now is really these technologies 326 00:19:04.559 --> 00:19:08.759 are low cost obviously batteries solar, but there's a whole 327 00:19:08.799 --> 00:19:11.880 pile of other technologies in and around that that are 328 00:19:11.920 --> 00:19:15.279 doing that. I'd love to get your view on what 329 00:19:15.480 --> 00:19:18.480 excites your most about these Like, if you look at technologies, 330 00:19:19.039 --> 00:19:20.759 which one you sort of say the one to look 331 00:19:20.759 --> 00:19:22.480 at the next five years is this? 332 00:19:22.720 --> 00:19:26.720 What is it? Please before you answer, don't say the 333 00:19:26.799 --> 00:19:35.319 one that excites job the most which Areta center in space. 334 00:19:37.680 --> 00:19:40.480 Love it. In my mind, those were cool. I don't 335 00:19:40.480 --> 00:19:43.359 know if it excites me just yet. Here's my thesis 336 00:19:43.519 --> 00:19:46.160 over the next couple of years, when we look at 337 00:19:46.319 --> 00:19:50.039 the clean tech wave solar wind batteries, it's amazing how 338 00:19:50.039 --> 00:19:51.920 those have come down the cost curve and in a 339 00:19:51.960 --> 00:19:54.400 way like that was the lower hanging fruit when we 340 00:19:54.440 --> 00:19:58.079 think about overall decarbonization and net zero. Now we're in 341 00:19:58.119 --> 00:20:00.880 a period of not just decarbonization net zero, but we're 342 00:20:00.880 --> 00:20:03.119 also in a period of growth or not just trying 343 00:20:03.119 --> 00:20:05.079 to bring this stuff down or trying to bring this 344 00:20:05.079 --> 00:20:09.720 stuff down while so growing the overall pie, nuclear geothermal, 345 00:20:09.720 --> 00:20:12.920 those are exciting because you have like new interest in 346 00:20:13.440 --> 00:20:17.559 clean firm generation sources. But where I get really excited 347 00:20:17.759 --> 00:20:19.759 is not just the generation side of the pie, but 348 00:20:19.880 --> 00:20:23.680 really the transmission, distribution and demand side of the pie. 349 00:20:23.960 --> 00:20:27.799 And before starting SITELINE and CTBC, I was an investor 350 00:20:27.839 --> 00:20:32.279 at Energy Impect Partners, which has a coalition of primarily 351 00:20:32.400 --> 00:20:35.279 utilities that they work with in order to invest in 352 00:20:35.279 --> 00:20:39.319 this space. And I remember five years ago bringing technologies 353 00:20:39.480 --> 00:20:44.480 like advanced conductors VPPs to ers, dynamic line ratings like 354 00:20:44.519 --> 00:20:47.079 stuff that weren't that cool back in the day to 355 00:20:47.119 --> 00:20:49.519 the utilities and they would say, this is cool, but 356 00:20:49.640 --> 00:20:52.279 the risk return ratio isn't here for me. Why would 357 00:20:52.279 --> 00:20:55.319 I deploy or do a pilot with a new grid 358 00:20:55.359 --> 00:20:59.079 tech company or a new conductor technology when I'm just 359 00:20:59.079 --> 00:21:02.440 worried about keeping the light Now they're worried about keeping 360 00:21:02.480 --> 00:21:05.000 them lights on, but they're also worried about all this 361 00:21:05.119 --> 00:21:08.319 demand coming to the table, primarily driven by data centers 362 00:21:08.319 --> 00:21:12.119 in AI, and they have a higher return ratio and 363 00:21:12.160 --> 00:21:16.279 a higher risk ratio. So they're actually interested now in 364 00:21:16.359 --> 00:21:20.720 piloting some of this demand flexibility grid tech type technology 365 00:21:20.759 --> 00:21:23.920 because there's just so much capacity coming online and they 366 00:21:23.920 --> 00:21:27.119 don't want to have to spend only billions of CAPEX 367 00:21:27.440 --> 00:21:30.440 to build out all the transmission and distribution infrastructure, and 368 00:21:30.480 --> 00:21:34.960 that also obviously increases electricity prices, increases rates. That's what 369 00:21:35.079 --> 00:21:39.200 accts me right now. It's this demand and distribution side 370 00:21:39.480 --> 00:21:43.240 of the electronic equation that I think people care about 371 00:21:43.240 --> 00:21:44.160 now because they have. 372 00:21:44.079 --> 00:21:48.240 To Kim Sideline is following the growth of data center 373 00:21:48.279 --> 00:21:51.960 on a very granular basis. So you have like so 374 00:21:52.160 --> 00:21:55.880 much fantastic data, what do you see opening in the 375 00:21:55.920 --> 00:21:59.519 next eighteen months because we've seen crazy number of flowing 376 00:22:00.759 --> 00:22:02.680 you know the rat what is the railt? 377 00:22:03.519 --> 00:22:06.000 The reality is, so we've been tracking at a very 378 00:22:06.000 --> 00:22:10.519 granular level every single data center globally coming online, with 379 00:22:10.599 --> 00:22:12.920 a pretty big focus candidly on the US because that 380 00:22:12.960 --> 00:22:14.519 is where a lot of the growth is right now. 381 00:22:15.000 --> 00:22:19.079 And we have tracked in twenty twenty six about sixteen 382 00:22:19.200 --> 00:22:22.920 gigawatts of announced data center load supposed to come online. 383 00:22:23.160 --> 00:22:26.640 Now twenty twenty five, we tracked five gigawatts of data 384 00:22:26.640 --> 00:22:29.319 center load that actually came online. When you look at 385 00:22:29.319 --> 00:22:33.079 that sixteen gigawatte pipeline though for twenty twenty six, about 386 00:22:33.480 --> 00:22:38.640 six gigawatts is actually under construction today, and know that 387 00:22:38.759 --> 00:22:42.160 it takes at least twelve to eighteen months to fully 388 00:22:42.279 --> 00:22:44.720 construct a data center, even after you had the interconnection 389 00:22:44.759 --> 00:22:48.359 in the permitting. So how realistic is it really for 390 00:22:48.519 --> 00:22:51.119 all sixteen gi wots to come online? A three x 391 00:22:51.240 --> 00:22:54.279 increase really in the pipeline. When we did our own 392 00:22:54.319 --> 00:22:59.200 analysis building a d REST methodology for all the components 393 00:22:59.240 --> 00:23:02.880 you need to bring data center online, the powering, the permitting, 394 00:23:03.119 --> 00:23:07.640 secure and credible tenants, we've estimated that out until twenty thirty, 395 00:23:07.960 --> 00:23:11.720 about roughly forty percent are actually likely to come online. 396 00:23:12.200 --> 00:23:15.480 There's a lot of speculative announcements today. Everyone is trying 397 00:23:15.480 --> 00:23:18.319 to sell to the hyperscalers, and so there's a lot 398 00:23:18.359 --> 00:23:21.240 of paper projects, we call them, where people have said 399 00:23:21.319 --> 00:23:23.400 we're going to do a data center, or people have 400 00:23:23.519 --> 00:23:26.680 filed to go into the interconnection queue. That being said, 401 00:23:26.839 --> 00:23:30.400