The clean energy industry has seen substantial growth over the past decade — leading to a record $23.7 billion in private equity investments in the sector in 2020. Entrepreneurs are playing an increasingly important role in providing new technologies and business models to help achieve a clean energy future, including innovations to harness the power of ocean wave energy and developments in battery technology that drive down costs and make EVs more accessible. Small businesses are at the forefront of clean energy entrepreneurship, employing almost two out of three clean energy workers in America. Investments in the burgeoning U.S. clean energy industry empowers entrepreneurship and promotes innovation. 

Key Points

• In 2020, a majority of clean energy jobs (64.4%) were in establishments with between 1-19 employees.  
• Investors interested in energy are shifting away from fossil fuels and toward renewable energy as an industry prime for future growth and earnings. 

• Entrepreneurs are playing an increasingly important role in providing new technologies and business models to help achieve a net zero future.

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Small Businesses Power The Clean Energy Industry:

• In 2020, a majority of clean energy jobs (64.4%) were in establishments with between 1-19 employees.   
• In 2019, small businesses employed nearly two out of three clean energy workers in America.
  • Some 2.2 million clean energy workers were employed by businesses with less than 19 employees in 2019.
• In 2018 alone, over 2.3 million workers were employed by the energy efficiency economy, many of whom work for small operations.
• In March 2021, the Department of Energy announced $115 million for small businesses pursuing clean energy research and development (R&D) projects.
  • Eligible small businesses can apply for supplemental funds for research experiences for undergraduate and graduate entrepreneurs from underrepresented groups, including women and socially and economically disadvantaged individuals.
  • Previous awardees have developed technologies to aid in saltwater desalination, energy-efficient building design, and cloud connectivity for electric vehicles.
• In 2017, eight national laboratories received funding from the Department of Energy to partner with 38 small businesses across the country to advance their energy products and technology. In the first two rounds of the program, 12 DOE national labs received funding to partner with 76 small businesses. 

Private Capital Investments In Clean Energy Are Booming As Investors Recognize Renewables Are The Future:

• Global investment in renewable energy projects and companies totalled $174 billion in the first half of 2021 – the highest total ever recorded during the first half of a year, and 1.8% more than the first half of 2020.

• The first half of 2021 also saw record levels of venture capital and private equity commitments for renewable projects and companies.
  • New equity raised on public markets hit a record high at $28.2 billion in the first half of 2021, as did venture capital and private equity commitments to renewable energy companies at $5.7 billion.
• Global investments in solar projects were up 9% in the first half of 2021 compared to 2020 for a record of $78.9 billion.
• Total corporate funding for the solar sector rose 21%, from $6.7 billion in Q4 2020 to $8.1 billion in Q1 2021.
• Energy storage is drawing increased venture capital investments — with investments in battery storage, smart grid and energy efficiency companies up 410% from Q1 2020 to Q1 2021.
  • Companies within these three sectors raised a combined $1.3 billion in Q1 2021 compared to $252 million in Q1 2021.
  • Battery storage brought in $994 million in venture capital investment in Q1 2021. 
• Private equity investment in renewable energy in the U.S. hit a record of $23.7 billion in 2020. 
  • The falling costs of renewables, combined with private equity firms shifting more capital into ESG (environmental, social and governance) investing, are said to be driving the surge. 
• Private equity firms also invested over $11 billion last year in other clean tech applications, like energy conservation and water purification.
• Investors interested in energy are shifting away from fossil fuels and toward renewable energy as an industry prime for future growth and earnings. 
• The share of private equity funds allocated towards renewable energy has increased significantly since 2016, standing at about 80% of all energy investments made this year as of July 2021.
• As of July 2021, private equity investments dedicated to renewable energy were outpacing fossil fuel asset fundraising by a factor of around 25.

Clean Energy Is Driving Entrepreneurship & Innovation:

• Entrepreneurs are playing an increasingly important role in providing new technologies and business models to help achieve a net zero future.
  • For example, new innovations are being developed to harness the power of ocean wave energy.
• Developments in battery technology are driving down costs and making EVs more accessible: 
  • Over the last ten years, a surge in production of lithium-ion batteries has led to an 85% drop in prices for battery packs used in electric vehicles, making EVs and energy storage commercially viable.
  • BloombergNEF’s 2020 battery price survey found prices for lithium-ion battery packs fell 13% from 2019.
  • The cost of around $156 per kilowatt-hour in 2019 represents an 85% decline from 2010′s $1,100 plus/kWh cost.
  • Electric vehicles now outpace consumer electronics in the demand for lithium. S&P Global Platts expects lithium demand from the transportation and power sectors to increase nearly threefold over the next five years.
  • In October 2021, General Motors announced plans to expand the company’s battery technology operations and accelerate development and commercialization of longer range, more affordable EV batteries.
  • As automakers improve technology, decrease battery costs, and produce at scale, EVs will become more competitive. 
• Since 2010, utility-scale solar PV power has declined in cost by 82%, followed by concentrating solar power (CSP) at 47%, onshore wind at 39% and offshore wind at 29%.
  • Costs for solar and wind power technologies have continued to fall annually. Electricity costs from utility-scale solar PV fell 13% in 2019 to a global average of 6.8 cents (USD 0.068) per kilowatt-hour (kWh). Onshore and offshore wind both declined about 9%, reaching USD 0.053/kWh and USD 0.115/kWh. 

Government Investments Have A Proven Record Of Turbocharging The Clean Energy Industry:

• The 2009 American Reinvestment and Recovery Act made modest investments of more than $45 billion in clean energy programs, but generated strong returns in economic growth.

• The construction of new wind and solar generating capacity alone under the Recovery Act’s loan program was estimated to have created between $26 and $44 billion in economic output.
• The full ARRA (including green provisions and other stimulus) raised U.S. GDP by between 2 and 3 percent from late 2009 through mid-2011.

• The clean energy programs of the American Recovery and Reinvestment Act (ARRA) supported roughly 900,000 job-years (full-time jobs over one year) from 2009 to 2015.
• Prior to the COVID-19 pandemic, the clean energy industry was adding jobs 70% faster than the overall economy. 
  • In 2018 and 2019, America’s energy efficiency businesses led the nation’s energy economy in creating jobs.
• At the start of 2020, there were 3 times as many clean energy jobs as fossil fuel jobs, and 2.5 times as many renewable energy jobs as fossil fuel electric power generation jobs. 
• ARRA supported more than $40 million in total investment and leveraged approximately $150 billion in private and other non-federal capital for clean energy investments.
• ARRA supported the installation of more than 104,000 wind, solar, geothermal and biomass projects that provided more than 33 GW of power – enough to power more than 8 million homes each year. 
• The Recovery Act helped boost solar and wind production well above levels that were projected before the Act was implemented.
  • By 2011, wind production had already surpassed the Energy Information Agency’s predictions for installation by 2030. The nation surpassed the state’s collective 2020 renewable energy goal in 2018. 
  • ARRA propelled a dramatic increase in the share of domestically produced wind turbine components used in the U.S. – from 25% in 2006-2007 to 72% in 2012.
• In the decade following the Recovery Act, wind generation increased five fold and solar generation grew by a factor of 48.
  • From 2010 through 2020, the U.S. more than tripled its wind power generation capacity. Wind power accounted for 30% of utility-scale power capacity additions in the U.S. from 2009 through 2019.
  • In the last decade, U.S. solar has seen an average annual growth rate of 49%.
• Since 2009, the Advanced Research Projects Agency-Energy (ARPA-E) has provided some $2.93 billion in R&D funding for more than 1,270 transformational energy technology projects. 
  • 109 companies have been formed by ARPA-E projects, and 183 projects have attracted more than $7.6 billion in private-sector follow-on funding. 
  • 789 patents and 253 licenses have been issued for ARPA-E projects.
  • As of September 2021, ARPA-E has 17 exits with a total reported market valuations of $19.4 billion from mergers, acquisitions and IPOs.