Was 2021 the Year of EVs, Hydrogen, or Energy Storage? And What to Expect in 2022
If you've paid attention to the cleantech news cycle this year, you know it's been a roller-coaster ride. I've been in the cleantech/energy transition sector for 20 years and wrote the first history on the term cleantech 15 years ago. I've seen the many ups and downs surrounding the industry. Today's current playing field is a success dividend and natural evolution of the cleantech explosion of the past two decades.
COMMENTARY
We've seen a dramatic improvement in, and lower costs, across the cleantech sector in the past two decades. The development of world-class industries from renewables to EVs and biofuels to smart grids has accelerated as cleantech has penetrated through early adopter markets, and exceeded cost parity with conventional sources and technologies. From significant investments and bills passed, 2021 solidified that cleantech is here to stay.
Neal DikemanI've seen tremendous and unrelenting growth across the board in the last year alone. 2021 brought:
The Year Climate Policy Tries to Catch Up - Driven by a new U.S. administration and an explosion of activity around COP26, climate policy was in the news again, trying to catch up to the corporate and voluntary response. China signals that it may try to peak its emissions in 2030. Carbon market talk got hot again. The U.S. passes an infrastructure bill.
The Year of the Low Carbon Business Unit - The boards of every energy company and their brothers announced or launched a low-carbon business unit. Favorite strategies included carbon capture and utilization, hydrogen anything, and geothermal. 2022 is the year they figure out what to do with them.
The Year of Energy Storage - This was when storage came into its own. Battery manufacturers were back-ordered, AES created the grid-scale storage market a decade ago, IPO'd its Fluence energy storage division, and Tesla restricted Powerwall sales to keep its EVs shipping. Meanwhile, the world's energy capital, Texas, hit 30 GW in storage projects and saw the first grid-scale projects come online. SPACs in storage also exploded, and every early-stage storage startup with more than three employees raised money from venture capitalists.
The Year Hydrogen Heats Up - For the first time in 15 years, hydrogen is hot again. Only 27 of us are left to balefully explain to the newbies where all the hydrogen bodies are buried. What's changed? Ultra-low-power prices and gig scale opportunities. What hasn't? Hydrogen storage and figuring out who is going to buy it all. Look for those a-ha moments in 2022.
The Year CCS Quietly Becomes CCU - The energy world finally realized that carbon capture is expensive and sequestration doesn't make you money. We are seeing a shift in the industry's attention to turning carbon into something it can sell, rather than spending lots of money to push it down a hole.
Reflecting on the past year, I can boil down what to expect in 2022 to a few words: exponential growth and high volatility.
If 2021 showed us anything, it's that nothing is certain. From surprise methane deals at COP26 (here's looking at you, China, and the U.S.) to a year stuck on a supply chain roller coaster, 2022 is sure to be an exciting ride.
What I'd Bet on in 2022Resiliency - We're going to see more announcements in resiliency. With extreme weather events continuing to wreak havoc on the power grid, energy companies that have the capacity, and are business savvy, will find a way into this industry. The grid is in desperate need of revitalization. The 2021 infrastructure bill includes $73B to revitalize power grid infrastructure. How companies choose to play with this money will be a must-see.
Solar + Storage - Every solar and storage company that hasn't already become a solar + storage company with an EV strategy will probably make a move. The global energy storage as a service market (ESaaS) is predicted to reach $2.7B by 2028, as energy consumption and power demand in commercial and residential industries continue to increase. Solar + storage go together for a reason, but an integrated EV strategy will seal the deal.
Tesla finally has a fight on its hands - Ford (and possibly Rivian) will finally roll out an EV product that may take the EV crown from Tesla. The Ford 2022 F-150 Lightning is positioned as a mass-market move with its strategy to electrify one of its high-volume models. With bullish support from Wall Street and Amazon, Rivian might be in the driver's seat in the new year.
Oil prices will move around - Predictions are all over the place, with some saying prices will either decrease, become volatile, or find balance. But the inconsistencies simply show that oil prices will always be in flux - and we may end up short hydrocarbons before we are long hydrocarbons.
What I will be closely tracking in 2022How Hydrogen Performs - There are a few questions to ask on the rise of hydrogen energy. Where exactly is the demand for green Hydrogen, and at what price? Is new technology needed? How much will costs fall as the market grows? 2022 could be another massive year for Hydrogen. Only time will tell.
What happens to CO2 - Will 2022 be the year all the new CO2 businesses formed in 2021 get hot? Or cool off?
Will Texas fix its grid? - As a Texan who faced the last winter power outage, I'm keeping my eye on my home state. We're the energy capital of the world. This is not hard, people.
Regardless of the passing of the US $1.2 trillion infrastructure bill bolstering the move to a more sustainable future, the economics of cleantech will continue to win out in 2022. We will continue to see massive growth across solar + wind, transportation electrification, and energy storage sectors because they win on pure economics and simpler technology. The world is awash with capital looking for good projects to make the next-gen infrastructure in energy and climate cheaper and better than ever before. 2022 is looking bright.
-Neal Dikeman is a partner in Energy Transition Ventures, an early-stage venture capital firm investing in startups that drive or benefit from the energy transition. As chairman of Cleantech.org, he leads a network dedicated to bringing together scientists and entrepreneurs to commercialize cleantech and fight climate change. He was the Libertarian Party's candidate for U.S. Senate from Texas in 2018.
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