The Breakthrough Energy Coalition, an influential group of investors and institutions led by Bill Gates that is committed to investing in technology to solve energy and climate challenges, on Monday committed more than $1 billion to back emerging technologies.
The Seattle-based coalition’s Breakthrough Energy Ventures (BEV) chaired by Gates includes 28 private investors from around the world that are plowing seed money into energy research and development.
“Our goal is to build companies that will help deliver the next generation of reliable, affordable, and emissions-free energy to the world,” the co-founder of Microsoft said. Gates’ willingness to invest $1 billion of his money separately into the coalition helped him convince 20 governments to double their research and development within five years.
The coalition expects it will take up to 10 years to develop two or three breakthrough technologies and another two decades after that before they become a core of the current global energy system.
The investors’ mission, experience and global networks allow the fund to “attract the best scientists, entrepreneurs and private sector experts,” the coalition said. The venture fund “is not confined to any segment of the investment pipeline” but rather is to “build companies, engage in traditional venture investment and have the ability to invest for growth as innovations mature.”
The coalition, launched last year alongside an international collaboration called Mission Innovation, wants to accelerate the pace of energy innovations through “smart government investment.” Government research, however, is not enough, said the sponsors.
“We must also add the skills and resources of leading investors with experience in driving innovation from the lab to the marketplace. The private sector knows how to build companies, evaluate the potential for success, and take the risks that bring innovative ideas to the world.
“But the risk-reward balance for early-stage investing in potentially transformative energy systems is unlikely to meet the market tests of traditional angel or venture capital investors until the underlying economics of the energy sector shift further toward clean energy. Experience indicates that even the most promising ideas face daunting commercialization challenges and a nearly impassable Valley of Death between promising concept and viable product. Neither government funding nor conventional private investment can bridge this gap.”
Houstonian John Arnold, who amassed a fortune as a natural gas trading wunderkind first at Enron Corp. and then at the Centaurus Energy Master Hedge Fund, serves on the coalition’s board.
“The dearth of venture funding for clean energy technologies threatens to create a valley of death for the industry, with emerging ideas unable to find the necessary capital to reach commercialization,” said Arnold, who now co-chairs the Laura and John Arnold Foundation. “As an investor-led effort, BEV is designed as a source of patient capital to spur innovation to meet the growing demand for low-cost, clean energy solutions.”
Board member Jack Ma, executive chair of the Alibaba Group, said, “Too often we let what we think we know limit what is possible. When it comes to energy, people say you cannot make money, meet demand, and also benefit the environment. But we can, and we will.
“This effort will combine technological innovation and scientific knowledge with the investment expertise needed to transform energy markets. Together, we’ll remind the world that visionary ideas make wonderful realities.”
Reliance Industries Ltd. Chairman Mukesh Ambani, who also serves on the coalition’s board, said energy “is one of the critical drivers for economic growth. Several parts of the developing economies still do not have access to affordable and reliable energy. It is an immediate need to find and provide new energy sources that are affordable, clean and reliable for every person on our planet.”
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