The CleanTech landscape: innovation and investment

In the dynamic global setting, nations are setting bold targets to combat climate change. The United States’ $369b allocation via the Inflation Reduction Act, coupled with China’s focus on solar, battery, and electric vehicle technologies, are notably shaping the CleanTech industry. To stay competitive, the UK needs to align its efforts with these global strides, fuelling innovation in both the public and private sectors. Central to this is the UK government’s Net Zero Strategy, which has been presented as an ambitious blueprint that outlines a comprehensive pathway to decarbonise every facet of the nation’s economy to achieve net-zero emissions by 2050. However, a series of announcements by Prime Minister Rishi Sunak in September 2023 saw a delay in the ban on new petrol and diesel cars to 2035 and relaxed targets for households to switch from fossil fuel boilers. This policy overhaul has generated debate about the UK’s commitment to reaching net-zero emissions by 2050. Against this backdrop, UK cleantech businesses are raising record investment from domestic investors and receiving increased international attention. Regardless of the political approach, many CleanTech entrepreneurs are forging towards a low-carbon future.

In an exciting update to Deloitte’s Fast 50 awards, the CleanTech Winners is a new category. The CleanTech companies are geographically diverse, covering regions from Scotland and Wales to the South West. However, London remains a hub for these innovators, largely due to the city’s strategic advantages, such as resource accessibility and strong academic partnerships.

Topping the list in the CleanTech category is Hypervolt, a London-based enterprise established in 2018. The company specialises in the manufacturing of electric vehicle chargers and tailored software solutions for a range of stakeholders, from energy suppliers to end-users. Their mobile application adds another layer of convenience, connecting directly to the charger to enable users to schedule their charging, monitor real-time costs, and even control the charger’s solar functionality.

Also making waves in the CleanTech space is Utopi, based in the West of Scotland. This firm offers a unique digital ESG consultancy service. Utopi’s platform pulls together ESG data from smart devices and application programming interfaces (APIs) into a cohesive framework. Its app provides a one-stop-shop for viewing a building’s ESG metrics, thereby empowering tenants and property owners to minimise both their energy consumption and carbon footprints. Founded in 2019, Utopi has already garnered significant investment of £6.44m and broadened its international presence to include the US, Scandinavia, and Australia.

Equity investment into CleanTech

The UK’s high-growth CleanTech sector received significant support via equity investment over the last few years. The total value of deals has risen from £569m in 2018 to £2.74b in 2022. In the same time period, the number of deals has nearly doubled from 272 to 507. The sector witnessed record equity investment figures in 2022, showing remarkable strength amid a wider economic downturn and investors taking a step back following the high levels of market participation seen in 2021.

In the first three quarters of 2023, the sector secured 386 equity investment deals. This includes a deal by zero-emission hydrogen fuel producer GeoPura, which raised £36m in February 2023. Recycleye, which develops waste management technology utilising artificial intelligence, also secured £14m in equity investment in the same month. The UK’s later-stage CleanTech companies have also been securing funding, with 2022 Fast 50 winner EO Charging receiving £64.4m in equity from Zouk Capital and Vortex Energy in February 2023. The Suffolk-based firm develops and manufactures smart charging technology for electric vehicles.

One of this year’s Fast 50 winners, Bramble Energy, has raised significant equity investment. The company develops and manufactures fuel cells, utilising hydrogen as the fuel source. It has raised £45.9m through four equity investment rounds, including a single raise of £40m in 2022.

Alongside domestic activity, there has been a notable surge in the involvement of foreign investors in UK CleanTech ventures. Starting at 19.8% in 2018, the proportion of UK CleanTech deals involving foreign investors reached an impressive 35.5% in 2022. This substantial increase in foreign participation underscores the attractiveness of the UK’s CleanTech ecosystem on a global scale, which has been of increasing importance since its departure from the EU. Countries such as the United States, Germany, France, and Japan have emerged as frequent investors in the UK’s CleanTech sector. Their keen interest can be attributed to several factors, including the strength of the UK’s research and education institutions, its favourable regulatory landscape, and its commitment to innovation in clean and sustainable technologies. Rovco is one firm that has received notable levels of equity investment, including foreign investment. The Bristol-based company has raised £47.3m via nine rounds of fundraising, including a £17.8m raise in 2022, partly funded by Norwegian fund Equinor Ventures and US fund IQT, alongside a host of British funds. It provides offshore tech services to the oil field decommissioning and renewable energy sectors. It also produces underwater surveying equipment, as well as remotely operated vehicles.

These shifts in international interest and flows of energy deals into CleanTech ventures are naturally closely aligned with the global energy transition and are reflective of a fundamental change in investment priorities. The rise of CleanTech underscores the necessity of innovation within the private sector to achieve net zero. As societies increasingly recognise the imperative of reducing carbon emissions and mitigating climate change, CleanTech investments become instrumental in driving this vital energy transition.