Creating the energy future requires bold thinking, and High Alpha Innovation's recent Energy Summit was a conduit to build new companies that disrupt traditional energy supply chains through new climate tech ventures.

Along with other leaders and entrepreneurs in the industry, we discussed, mapped, and identified areas for innovation. The throughline is that we have commercialized significant science and technology; we now need new business models to break through current barriers to scale.

The energy industry is complex. The massive scale of the companies, high regulation, capital intensity, and the complex supply chain mean solutions involve many stakeholders with varying incentives and capital requirements.

The energy industry, in particular, can only implement and scale new ideas with the support of current producers and distributors. These nuances require us to think differently about how we solve problems, introduce new solutions to the market, and collaborate across energy verticals.

Venture capital investors, entrepreneurs, and corporations agree that "there is a role for both major incumbent companies and new ventures in advancing the clean energy economy. It is truly an all hands on deck moment," per Axios.

Why new business models? Corporations, by design, are effective at allocating resources, advancing a model, and ultimately making money. However, they are bound by corporate incentive structures and regulatory pressures that inhibit the ability to move fast enough to seize transformational opportunities.

On the other hand, startups are built for rapid learning and experimentation, best for capturing the opportunities that may compete against the core business (or disrupt it).

In the energy sector, where major transformation is already happening, we believe the success of corporations will be determined by the quality of their engagement with startups.

The opportunities for climate tech innovation are vast

After thoroughly analyzing the challenges across the energy value chain we have identified three key themes that can drive progress toward net zero emissions. Within each of these high-level themes, we highlight specific areas ripe for innovative new ventures to make an impact.

• ‍Zero-Carbon Power: Generate and deliver an abundance of affordable zero-carbon power to consumers, primarily via renewables
• ‍Electrify End-Uses: Convert significant end uses of energy to electricity while managing energy usage
• Carbon Management: Monitor and control carbon capture, usage, and storage efforts

Theme 1: Zero-Carbon Power

The energy transition is undoubtedly happening. Renewable energy already generates almost 20% of all U.S. electricity, and that percentage continues to grow, according to the Department of Energy.

Moreover, worldwide the amount of renewable capacity added from 2021 to 2026 is expected to be 50% higher than from 2015 to 2020, International Energy Agency research shows.

Renewables, mainly solar and wind, are well-understood technologies and cheaper than fossil fuel equivalents in many regions. However, there are still significant challenges with connecting these generation sources to the grid due to intermittent demand and transmission capacity.

Demand Forecasting & Matching

The utility industry has spent over 100 years making generation follow/match the demand coming from customers in real time. When we electrify our primary machines, such as buildings and vehicles, we increase the amount of electricity we use by roughly three times.

This surge in energy demand is already putting extreme stress on our grid, designed to deal with a steady and reliable energy supply. The U.S. Grid can't handle the electrification of transportation, heating systems, and industrial processes without doing things smarter.

Innovation Opportunities

• Predictive Control: Create, iterate, and deploy state-of-the-art energy data models for forecasting, optimization, and simulation of distributed energy systems
• Demand Flexibility: Predict which loads are flexible to toggle with the right customer incentives
• Cost Transparency: Develop a load management platform to enable customers to view and make decisions about power usage based on cost and carbon footprint
• Customer Engagement: Give utilities a customer engagement platform to help them see analytics of the energy they use and enroll them into energy-efficient programs

Green Energy Integration & Transmission

As leading economies pivot towards renewables, for many, the challenge lies in balancing the required power mix on an aged and under-pressure grid – all while maintaining availability and factoring in an ever-unpredictable climate.

While positive, the transition presents many challenges in integrating these new energy producers into existing grids. The root cause of these bottlenecks is transmission capacity, planning, permitting, and asset efficiency.

Investment Opportunities

• Energy Asset Management: Help producers/distributors manage their renewable energy assets. Provide maintenance and monitoring of renewable energy production to increase efficiency, including analytics on expected life, usage, and ROI
• Project Management: Installation and construction of renewable energy infrastructure is complex. Reduce effort spent on design, engineering, and development with purpose-built project management software
• Permitting Management: Increase the speed of the permitting process, which is often very manual and ad-hoc. Expand permitting to serve utilities, commercial buildings, and E.V. infrastructure
• Enhanced Battery Storage: Help producers/distributors/energy consumers understand storage capacity options based on battery performance analytics

Theme 2: Electrify End-Uses

The call to action on climate change has advanced over recent years, with companies facing more pressure than ever before to develop and execute a meaningful net-zero strategy.

One of the essential efforts in reducing emissions is the electrification of energy use cases currently powered by combustion and an application layer to better manage that electricity use.

Commercial and residential power consumers are the natural places to start.

Energy Efficiency for Major Power Consumers

Today's industrial base will need to electrify and decarbonize as much as possible. Manufacturing — how we transform raw materials into more useful ones — accounts for 24% of global emissions.

Even for companies without a manufacturing footprint, opportunities for electrification and increased efficiency are significant. Corporations need data to enable optionality in meeting their short and long-term climate goals.

Investment Opportunities

• Building Design: Tools to help contractors better understand and plan where and how to improve business design to construct more energy efficient buildings
• Building Controls: Commercial energy management: Similar to residential, many commercial heating/cooling and other appliances are API-capable but not leveraged to their full potential
• Construction: Source renewable resources for EPC (engineering, procurement, construction) contractors. Reduce emissions during the building process
• Heat Delivery: New heat pump technology and deployment. Potential for a social equity models where efficient units are financed and provided to those without means of purchase

Residential Energy Management ‍

The residential sector accounted for about 18% of total U.S. energy consumption in 2022, the U.S. Energy Administration found. The average household in the U.S. consumes 11,000 kilowatt hours a year, leading to an average annual electricity bill of $1,452.

Residential energy production continues to rise, making forecasting less reliable than ever before. Educating and incentivizing consumers is essential; most need to learn how to read their bills and understand why they should change their current energy consumption behavior.

Innovation Opportunities

• Consumption Analytics: There is a need to aggregate consumption behavior data across intelligent energy systems to better manage sales and profitability
• Clean Energy Ecosystem as a Service: Offer in-depth 'close-to-meter' decision tools, APIs, and analytics to streamline partnerships, drive presumption adoption, and increase returns for utility companies and prosumers
• Managed Trade Networks: The decentralized prosumer networks need cross-network energy sale and demand tracking technologies to meet shifting energy demands for communities
• Financing: Financial vehicles, subsidies, and incentive programs (savings/credit) could address considerable barriers to entry for prosumer prospects deterred by the high upfront costs to participate

THEME 3: CARBON MANAGEMENT

There are two methods to get zero carbon emissions from the 40 gigatons emitted per year today: reducing carbon emissions in the first place, and removing carbon from the atmosphere after it’s emitted.

In the energy industry, most carbon reduction efforts are done by deploying abundant zero-carbon power and electrification. However, carbon capture, utilization, and storage (CCUS) play a significant role.

This technology can be retrofitted to existing power and industrial plants, allowing their continued, cleaner operation.

Decarbonization

Large energy consumers are committing to decarbonization, and while zero-carbon power and electrification will support these goals long term, there are inevitably both existing processes that require carbon capture and offsetting needed from emissions in supply chains. Investing in carbon capture requires understanding your carbon emissions, an unsolved problem for many parts of the economy.

Innovation Opportunities

• Vertical Carbon Accounting: Understanding carbon output is the first step to mitigating it, so industry-specific software solutions to track and manage carbon emissions and offsets are critical
• Carbon Data as a Service: Offer time and location emissions data as a service to both carbon emitters and carbon reduction service providers for sales and prospecting
• Customer Acquisition: Help existing carbon capture businesses target viable prospects for carbon capture and storage (CCS) with abundant zero-carbon power available
• Underwriting as a Service: Provide commercial energy consumers financing to invest in carbon capture efforts by underwriting their future availability of zero-carbon power more efficiently

Build your climate tech with High Alpha Innovation

The path forward is clear:

We must rapidly transition to an abundant zero-carbon energy system through collective innovation.

There are ample opportunities across the energy value chain for entrepreneurs and corporations to work together to deploy technologies and business models that accelerate this transition. The technology exists, the economics increasingly make sense, and the policy momentum is building.

What's needed now is bold thinking and accelerated execution. The future of energy is bright if we choose to seize the moment.

At High Alpha Innovation, we co-create advantaged startups to solve compelling problems.

Our process is designed to surface important and unmet problems that impact our world in real ways and to create solutions that address those problems. We are excited about the opportunities for energy innovation.

We have already worked with some incredible companies like Elanco Animal Health to launch Athian, a carbon-credit marketplace aligned with the company's industry-leading sustainability strategy to decarbonize the livestock value chain.

We're seeking partners across the energy value chain who share our excitement to build in response to the following innovative opportunities.