Companies, small and large, new and old, are experiencing delays, layoffs, and bankruptcies. The cleantech theme, like all industrial sectors of the economy, is impacted. Some of these short-term impacts include:
- A significant slowing of global supply chains, impacting manufacturing and operational capabilities
- Venture capitalists shifting focus to support the strongest portfolio companies, albeit while still looking for new deal flow
- Corporates reducing R&D expenditure, focusing on survival and strengthening existing assets
But despite the inevitable slowing in capital flows and eye watering valuations and round sizes, there are innovators across many different industrial areas which are pushing through, raising capital, signing partnership deals, and capitalizing on some of the opportunities Covid-19 has thrown up. Here is a flavor of some of the short-term impacts, and long-term opportunities for clean technology innovators across the industrial landscape.
Covid-19’s Impact on the Agriculture & Food Sector
The global food supply chain has been faced disruption at every stage. Consumers are focusing on basics, eating at home almost exclusively, and straining online retailing infrastructure. Unagile restaurant supply chains have failed to re-direct food to consumers, creating waste and loss. Processors, packers, and other mid-chain infrastructure are struggling to return to work on labor-intensive production chains. Agriculture and food investment is adjusting, with strong signals that the market will see a drop in funding opportunities. Capital availability for high risk early stage investment will reduce and venture capital funds will increase their attention on existing portfolio commitments in the nearer term.
However, there are many positive outcomes from the Covid-19 crisis. While there is likely to be a stark contrast of winners and losers in consumer products, where sales channels are critical at the moment, further upstream in agricultural technology there will be less fluctuation due to long R&D and sales cycles. In addition, a focus on essential services in the sector is giving way to new technologies and business models being sought to improve the resiliency of the food supply chain. A few key technologies include:
- Farm automation developers that support farm labor (Small Robot Company, Saga Robotics, Dogtooth Technology, DOT Automation)
- Indoor farming technology. Countries such as the UAE are betting on indoor farming to secure supply
- Shelf life improvement of fresh produce to ease supply chain pressure. (Hazel Technologies, Apeel Sciences, Cultiva).
- Supply chain optimization (Crisp, FoodlogiQ, Ripe.IO)
- Ag input Marketplaces to improve supply chain agility (DeHaat, WeFarm, Tridge).
- Food waste marketplaces and recovery solutions (Imperfect Foods, Full Harvest)
- Direct-to-Consumer business models (Nuggs)
Covid-19’s Impact on the Energy & Power Sector
Projections state the pandemic will likely have more financial damage on the energy sector than the 2008 financial crisis. The list of energy companies that have reduced or withdrawn their 2020 financial guidance is growing by the week, and energy companies such as Shell, ExxonMobil and BP have announced a reduction in capital expenditure between 10%-30%. However, many in the industry are seeing the crisis as an opportunity for accelerated efforts to decarbonize, seeing the economic recovery from Covid-19 and the transition to a sustainable and climate neutral economy as one and the same.. A recent US government report showed that the United States is on track to produce more electricity this year from renewable power than from coal for the first time on record.
Regionally, momentum is building around the campaign for a green European Covid-19 economic recovery. Established European sectors such as solar and wind, whose operations are dependent on global supply chains, are expected to bear the biggest brunt of short-term delays. However emerging technologies with high demand and strong project pipelines could maintain accelerated growth over the next couple of years. The European energy storage sector is one example, with market players such as Northvolt delivering their largest order of lithium-ion battery systems to date.
In addition, some innovators are a key part of the immediate short-term recovery efforts of Covid-19, with the ability to alleviate issues surrounding energy demand and financing. Some of these include:
- Players in the energy efficiency sector such as Tado, MiniBEMS and Kiwigrid can help to increase overall resiliency, and decrease building operational costs.
- Technologies such as demand response and flexibility management (GridBeyond, Kiwigrid, Piclo) will be crucial to managing grid frequency as energy demand has dropped by 10%-30% across Europe.
- Renewable Energy procurement marketplaces (WePower, Zeigo, LevelTen Energy) will alleviate some of the project delay issues due to energy supply chains and financing friction.
Covid-19’s Impact on the Resources & Environment Sector
With Covid-19, the use of single-use plastic bags and PPE has risen, while recycling facilities are severely disrupted, the demand for second-hand clothes has plummeted due to health concerns, while governments have paused policies such as single-use bans. The wider waste market has also seen disruption, with recycling facilities operating reduced services or stopping all together.
In the long-term, the under investment into waste and water infrastructure may be highlighted due to sanitation concerns. While infrastructure investment will improve efficiencies, funding may be diverted from circular initiatives. Many solutions meet both sanitation and circular aims like Topolytics’ live waste mapping platform or Cryptocycle’s mobile packaging tracking system, which would divert waste from centralized disposal . These solutions may garner investment for development.
Players in the geospatial climate risk analytics ecosystem like GreenAdapt, Cervest and HazardHub may also help business and governments with future resilience planning. Similarly, organizations which help companies to understand their supply chain risk like TrusTrace and Polytag may see an uptick in interest as companies want to understand and protect against future market shocks.
Covid-19’s Impact on the Material & Chemicals Sector
Production of biofuels, biochemicals and other non-fossil alternatives have been disrupted. The drop in oil price and drop in demand for commodity chemicals and fuels has lowered prices significantly and alternative fuels and chemicals are struggling for cost competitiveness. The impact on the bioethanol market was well reported and ethanol prices were at one point around 40% lower than pre-Covid levels. Prices have since climbed and several producers have pivoted from fuels to hand sanitizers.
The circular economy theme is poised to accelerate, to mitigate against the exposed fragilities of global supply chains. Alternative chemicals and fuels could benefit, especially in regions which import feedstock such as Europe. Companies producing chemical (and polymers) from waste, such as Carbios would stand to benefit. Advanced materials are somewhat tied to the recovery of other sectors such as energy, transport, and construction. A green recovery could see growth in companies developing materials for these sectors such as OCSIAL that produces graphene nanotube with numerous applications including in batteries and composites. Additive manufacturing (3D printing) companies such as 9T Labs may benefit since on-demand 3D printing e.g. of spare parts, can help to mitigate against supply chain issues.
Covid-19’s Impact on the Transportation & Logistics Sector
Due to shelter in place orders keeping around twenty percent of the global population at home, movement of people and goods has slowed tremendously. According to Shippeo, supply chain activity in Europe dropped to 30% capacity on April 14, with some sectors, such as construction and building materials and automotive components, dropping significantly as well.. According to Apple, requests for directions in Apple Maps have dropped 30% in the U.S., 21% in Germany, 60% in Italy and 62% in the UK. Public transit ridership has fallen 70%-90% in major global cities, and mobility service providers such as Lime have seen valuations fall off a cliff.
There are opportunities, however, and some technologies have been given a chance to prove their worth.
- Autonomous vehicles are becoming more than just futuristic technology – they are now a valuable means of contact-free delivery of goods and mobility services. Manna Aero, an Ireland-based drone company, will begin trials in Moneygall in May, with a focus on delivering medicine to the elderly.
- Supply chain disruption has made visibility and tracking platforms enabled by IoT and AI, such as Switzerland-based Arviem, necessities for complex supply chains to become more agile, flexible, and resilient.
The true measure of the impact of Covid-19 will play out over the next several years. It is clear many innovators, driven by new technologies and changing market dynamics, will succeed and capitalize on the opportunities Covid-19 has presented. For these start-ups, capital, partnerships, and growth will be attainable.