Sep
20
2019
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Google is investing $3.3B to build clean data centers in Europe

Google announced today that it was investing €3 billion (approximately US$3.3 billion) to expand its data center presence in Europe. What’s more, the company pledged the data centers would be environmentally friendly.

This new investment is in addition to the $7 billion the company has invested since 2007 in the EU, but today’s announcement was focused on Google’s commitment to building data centers running on clean energy as much as the data centers themselves.

In a blog post announcing the new investment, CEO Sundar Pichai made it clear that the company was focusing on running these data centers on carbon-free fuels, pointing out that he was in Finland today to discuss with prime minister Antti Rinne building sustainable economic development in conjunction with a carbon-free future.

Of the €3 billion the company plans to spend, it will invest €600 million to expand its presence in Hamina, Finland, which he wrote “serves as a model of sustainability and energy efficiency for all of our data centers.” Further, the company already announced 18 new renewable energy deals earlier this week, which encompass a total of 1,600-megawatts in the U.S., South America and Europe.

In the blog post, Pichai outlined how the new data center projects in Europe would include some of these previously announced projects:

Today I’m announcing that nearly half of the megawatts produced will be here in Europe, through the launch of 10 renewable energy projects. These agreements will spur the construction of more than 1 billion euros in new energy infrastructure in the EU, ranging from a new offshore wind project in Belgium, to five solar energy projects in Denmark, and two wind energy projects in Sweden. In Finland, we are committing to two new wind energy projects that will more than double our renewable energy capacity in the country, and ensure we continue to match almost all of the electricity consumption at our Finnish data center with local carbon-free sources, even as we grow our operations.

The company is also helping by investing in new skills training, so people can have the tools to be able to handle the new types of jobs these data centers and other high-tech jobs will require. The company claims it has previously trained 5 million people in Europe for free in crucial digital skills, and recently opened a Google skills hub in Helsinki.

It’s obviously not a coincidence that the company is making an announcement related to clean energy on Global Climate Strike Day, a day when people from around the world are walking out of schools and off their jobs to encourage world leaders and businesses to take action on the climate crisis. Google is attempting to answer the call with these announcements.

May
30
2019
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Fintech and clean tech? An odd couple or a perfect marriage?

The Valley’s rocky history with clean tech investing has been well-documented.

Startups focused on non-emitting generation resources were once lauded as the next big cash cow, but the sector’s hype quickly got away from reality.

Complex underlying science, severe capital intensity, slow-moving customers, and high-cost business models outside the comfort zones of typical venture capital, ultimately caused a swath of venture-backed companies and investors in the clean tech boom to fall flat.

Yet, decarbonization and sustainability are issues that only seem to grow more dire and more galvanizing for founders and investors by the day, and more company builders are searching for new ways to promote environmental resilience.

While funding for clean tech startups can be hard to find nowadays, over time we’ve seen clean tech startups shift down the stack away from hardware-focused generation plays towards vertical-focused downstream software.

A far cry from past waves of venture-backed energy startups, the downstream clean tech companies offered more familiar technology with more familiar business models, geared towards more recognizable verticals and end users. Now, investors from less traditional clean tech backgrounds are coming out of the woodworks to take a swing at the energy space.

An emerging group of non-traditional investors getting involved in the clean energy space are those traditionally focused on fintech, such as New York and Europe based venture firm Anthemis — a financial services-focused team that recently sat down with our fintech contributor Gregg Schoenberg and I (check out the full meat of the conversation on Extra Crunch).

The tie between clean tech startups and fintech investors may seem tenuous at first thought. However, financial services has long played a significant role in the energy sector and is now becoming a more common end customer for energy startups focused on operations, management and analytics platforms, thus creating real opportunity for fintech investors to offer differentiated value.

Finance powering the world?

Though the conversation around energy resources and decarbonization often focuses on politics, a significant portion of decisions made in the energy generation business is driven by pure economics — Is it cheaper to run X resource relative to resources Y and Z at a given point in time? Based on bid prices for Request for Proposals (RFPs) in a specific market and the cost-competitiveness of certain resources, will a developer be able to hit their targeted rate of return if they build, buy or operate a certain type of generation asset?

Alternative generation sources like wind, solid oxide fuel cells, or large-scale or even rooftop solar have reached more competitive cost levels – in many parts of the US, wind and solar are in fact often the cheapest form of generation for power providers to run.

Thus as renewable resources have grown more cost competitive, more, infrastructure developers, and other new entrants have been emptying their wallets to buy up or build renewable assets like large scale solar or wind farms, with the American Council on Renewable Energy even forecasting cumulative private investment in renewable energy possibly reaching up to $1 trillion in the US by 2030.

A major and swelling set of renewable energy sources are now led by financial types looking for tools and platforms to better understand the operating and financial performance of their assets, in order to better maximize their return profile in an increasingly competitive marketplace.

Therefore, fintech-focused venture firms with financial service pedigrees, like Anthemis, now find themselves in pole position when it comes to understanding clean tech startup customers, how they make purchase decisions, and what they’re looking for in a product.

In certain cases, fintech firms can even offer significant insight into shaping the efficacy of a product offering. For example, Anthemis portfolio company kWh Analytics provides a risk management and analytics platform for solar investors and operators that helps break down production, financial analysis, and portfolio performance.

For platforms like kWh analytics, fintech-focused firms can better understand the value proposition offered and help platforms understand how their technology can mechanically influence rates of return or otherwise.

The financial service customers for clean energy-related platforms extends past just private equity firms. Platforms have been and are being built around energy trading, renewable energy financing (think financing for rooftop solar) or the surrounding insurance market for assets.

When speaking with several of Anthemis’ clean tech portfolio companies, founders emphasized the value of having a fintech investor on board that not only knows the customer in these cases, but that also has a deep understanding of the broader financial ecosystem that surrounds energy assets.

Founders and firms seem to be realizing that various arms of financial services are playing growing roles when it comes to the development and access to clean energy resources.

By offering platforms and surrounding infrastructure that can improve the ease of operations for the growing number of finance-driven operators or can improve the actual financial performance of energy resources, companies can influence the fight for environmental sustainability by accelerating the development and adoption of cleaner resources.

Ultimately, a massive number of energy decisions are made by financial services firms and fintech firms may often times know the customers and products of downstream clean-tech startups more than most.  And while the financial services sector has often been labeled as dirty by some, the vital role it can play in the future of sustainable energy offers the industry a real chance to clean up its image.

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