Climate Tech view - systematic issues are starting to hold back wind energy
Climate Tech view - systematic issues are starting to hold back wind energy
The key inflection point for renewable energy was price. Over the last 10 years wind generated energy started to demonstrate it was cheaper than most other energy sources – dropping 15% on average just in 2021. The resulting take-up has been incredible with global capacity at 840 gigawatts and wind energy now growing at 21% CAGR for the foreseeable future. Renewable energy from wind is one of the key pillars of the Climate Tech fight against climate change.
One of the main strategies of the wind industry has been larger and larger turbines which in turn create much better efficiencies in installation, maintenance, and production. At the same time the physical locations of turbines are becoming more challenging – moving from offshore wind farms in the stable rock bed of the North Sea to potentially less stable seabed locations in Asia for example, with complexities around both geology and extreme weather.
Bloomberg also recently wrote about a swathe of breakdowns that have bedevilled wind operators in the US and Europe. As turbines are getting bigger with ever larger generation capacity - this industry is at the limit of human knowledge in terms of engineering and historical operation. Operating issues have recently added millions of dollars to the costs of turbine makers such as GE, Vestas and Siemens Energy. Insurance policies are also being hiked. For example, Vesta wind systems saw warranties double from 600m USD in 2019 to 1.2 billion USD in 2021 (Bloomberg). A lack of confidence in creditors and insurers are driving up costs and fundamentally slowing deployments of one of the biggest weapons in the climate change armoury.
The key drivers behind the wind energy market moving forward are a structured liquid insurance market, a stable investment landscape and much more efficient test and inspection costs for turbines which improve uptime and reduce maintenance costs for the lifetime of the assets.
On this note we are very excited to be supporting 2 Climate Tech businesses focused on the wind energy markets in our next raise.
Perceptual Robotics uses robotic drone technology to gather data from live turbines faster and more effectively than incumbents. Therefore being able to facilitate inspections at a fraction of the cost with no down time. Perceptual Robotics also offers market leading data analytics which more accurately measure wear and tear on blades, and this improves the longevity of the hardware. The company has a large market opportunity in both the inspection space and the data as a service space for wind and other markets such as solar moving forward.
Renew Risk is an early-stage insurance risk modelling company that will allow insurers and lenders to analyse physical risk to turbines globally for the first time using concrete data and models. The potential impact of the company is enormous in terms of bringing insurance for the industry in line and providing stable risk data to lenders.
For more information on the OnePlanetCapital Climate Change EIS March raise please contact Declan.