- The coronavirus pandemic has stalled growth in the solar and wind industries, but the transition to clean energy is still on track.
- Three sectors stand to benefit in the mid-to-near term, according to Hans Kobler, the CEO of Energy Impact Partners.
- Those are cybersecurity, intelligent operations, and energy infrastructure.
- Electric mobility will be hit the hardest in the near term, with analysts projecting that electric-vehicle sales will fall by nearly half this year.
- Visit Business Insider’s homepage for more stories.
These days, Hans Kobler has a new item on his agenda — pitch meetings over Zoom where energy startups present their business plans to him and a handful of utilities.
“It seems to be working, but we’re still getting used to it,” Kobler, the CEO of the utility-backed investment firm Energy Impact Partners, said of digitizing the pitching process.
Turning pitch events (which Kobler calls “Utility Shark Tank”) virtual is just one of the many changes energy investors face today — especially those like Energy Impact Partners, a $681 million fund that supports the transition to clean energy.
Though the pandemic has spared few industries, clean energy has been hit especially hard. The research firm Wood Mackenzie slashed its 2020 forecast for solar installations by 18% and trimmed its wind-energy projections by 6.5%. And as many as500,000people in the clean-energy industry could also lose their jobs — which is about 15% of the workforce.
But the industry isn’t just shrinking in response to the pandemic. It’s being reshaped as priorities change.
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Utilities are racing to digitize everything
For one, there’s a large push to digitize and automate everything, Kobler said, which is good news for energy-digitization startups like Urbint and Innowatts.
His firm’s partners — which include huge names like National Grid and Xcel Energy — “see this as a starting sign to have to do things differently,” Kobler said.
In a recent conversation with Business Insider, the chief executive of the utility CMS Energy, Patti Poppe, said investing in digital infrastructure, such as tools to automate restoration schedules, has enabled the utility to go remote right away.
“We didn’t foresee how much that would benefit us today,” she said. “Nobody has to talk to anybody because we have machine learning in place, and every estimate is better than the last one.”
Energy resilience takes center stage
During the coronavirus pandemic, there’s also a much larger focus on energy resilience and reliability, Kobler said.
“God forbid we have a power outage and the hospitals cannot operate,” he said. “People will focus more on backup power, on reliability, and on grid infrastructure.”
That’s likely to give companies that operate in those areas a boost, he said, pointing to two categories: energy infrastructure and cybersecurity.
In the past couple of weeks, so-called prepping has gone up 200%, according to Energy Impact Partners’ research, which could fuel industries like rooftop solar and storage,Business Insider previously reported.
“You have to put the infrastructure in place that allows the energy to work and work securely,” he said.
Utilities double down on cybersecurity
Along with infrastructure and innovation, cybersecurity also has to be a priority, Kobler said — and it’s not hard to imagine the value it provides for energy utilities.
“We’re liable if factories stop or the grid stops because of cyberattacks, so cybersecurity is very important for us to invest in,” Heriberto Diarte, who runs Schneider Electric’s venture arm, said.
And it’s not just energy infrastructure that cyberattacks put at risk.
“We are all moving completely to online videoconferences on very sensitive topics from home,” Kobler said, adding that “would just heighten the need for cybersecurity security across the board.”
Renewable-energy infrastructure will benefit from low interest rates
While Kobler is concerned about funding for clean energy in a recession, he’s still bullish on renewable-energy infrastructure.
“There is a major opportunity for large infrastructure investments given low interest rates and potential stimulus funding,” he said.
Government funding for clean energy is far from certain. But in a note on Friday, analysts at Morgan Stanley said there was “potential for financial support for the industry as part of future upcoming legislation, such as through an infrastructure bill.”
The banking giant said support, which could arrive as soon as this summer, would most likely be directed toward extending renewable-energy tax incentives, energy storage, and carbon-capture and sequestration technologies.
A bleak outlook for electric cars
If there’s one sector that Kobler is most worried about, it’s electric transportation.
Wood Mackenzie projected that sales for electric vehicles would fall by almost half this year, in part because of low oil prices and a wait-and-see buyer mentality.
“The transportation sector is suffering a lot,” Kobler said. “Many of the charging stations are already not very profitable, for starters. Many of those are not being used at all right now. Absent some strong incentives from the government, it will be slowing down.”
But when he was asked about the clean-energy sector more broadly, and what the pandemic means, those worries quickly faded away.
“In the mid-to-long term, we are very, very bullish about the sector,” he said. “Even in the near term, we are very bullish about investors that start investing now.”