HOUSTON, Oct.5 (Reuters) – U.S. clean energy startups are booming as oil companies give them more attention and money in a bid to accelerate their own green transitions.
Investors want oil producers to accelerate their shift away from fossil fuels by selling cleaner energy and developing technologies to eliminate greenhouse gases.
Entrepreneurs proposing to harness offshore wind and wave energy, generate hydrogen from waste gas and build fuel storage networks from old wells are attracting the attention of Big Oil.
Oil companies often partner up and invest in new businesses that have started in clean energy incubators. Some oil companies have set up their own incubators and venture capital teams to find and finance green technologies.
US oil services company Halliburton (HAL.N) is working with eight cleantech newbies and recruiting more for an in-house startup accelerator that each provides $ 100,000 in seed capital.
Baker Hughes (BKR.N) collaborates with incubator Greentown Labs to open a window on emerging technologies and provide advice to startups. The oil majors Eni SpA (ENI.MI) and Repsol SA (REP.MC) have approached American clean technology companies through investments.
There are approximately 20 US cleantech incubators monitored by the Electric Power Research Institute. But that number likely underestimates the total because of their rapid growth, said Julia Travaglini, vice president of marketing for Greentown Labs.
“We are seeing a widespread increase in clean energy incubators,” added Lindsay Schuenke, director of content at the International Business Innovation Association, which works with business development groups.
Crunchbase, which measures venture capital investments, says clean energy startups have so far earned $ 11 billion this year, compared to $ 5.6 billion for all of 2020. still in business after five years is a key measure of success, said Chris Ilsley, managing director of North Shore InnoVentures, a cleantech incubator established 12 years ago outside of Boston.
She and Greentown Labs say 80-85% of their startups are still in business after this time, compared to just 20% of startups overall.
Another measure is the interest of companies in companies.
One of the companies that spent a year at North Shore InnoVentures developing a fast-charging battery, SES Holdings, subsequently won deals with automakers General Motors (GM.N) and Hyundai Motors (005380.KS ). Another low-power semiconductor designer, Arctic Sand Technologies, was bought by Japanese chipmaker Murata Manufacturing for $ 68 million.
POWER OF OLD WELLS
Moonflower Technologies subsidiary PowerWell, a startup that offers to convert abandoned oil wells into gravity-fed energy storage systems, hopes to turn its concept into a commercial product, by securing support from the Halliburton incubator.
The Houston-based company has also attracted interest from energy technology provider Baker Hughes, who has suggested helping with materials sourcing efforts, said co-founder Carrie Criado. The incubators have allowed her “to learn a lot and learn it faster with the resources they offer,” she said.
Thiozen Inc, a Massachusetts startup developing a way to turn waste gas into clean-burning fuel, spoke to three incubators before choosing North Shore InnoVentures, President Ryan Gillis said.
Oil giant ENI recently agreed to help fund a pilot test of Thiozen’s technology to generate hydrogen from acid gases that need to be heavily processed.
Another startup, NanoTech Inc, aims to reduce energy waste in the petroleum, chemical and construction industries with a unique flame retardant and insulating coating. He got start-up funding from Halliburton Labs.
Established businesses benefit from incubators because the relationship “diversifies and spreads the risk” of new technologies, said Thomas McNulty, managing director of Business Consultants ValueScope Inc.
It allows internal R&D teams to “focus on commercialization and scale as scouts discover technologies in incubators,” McNulty added.
But the risk for big oil companies looking to create new sources of revenue is that these companies won’t grow fast enough or generate enough profits to replace declines in traditional activities.
“If history is a guide, they won’t be successful,” said Chris Duncan, research analyst at investment firm Brandes Investment Partners.
FLOCKING TO INCUBATORS
That hasn’t stopped energy companies like BHP, Chevron, Engie or investment bank Tudor Pickering Holt & Co. from partnering with Greentown Labs operations in Houston.
Baker Hughes sends staff to listen to technology presentations, see the work of researchers and provide marketing advice, said Nigel Jenvey, Baker Hughes senior executive for strategy and growth initiatives.
Roy Robinson, CEO of Excipio Energy, which designs floating platforms that convert wind, ocean waves and tides into energy, said the relationships formed are mutually beneficial.
“Energy companies see that there is a transition and that there is money to be made,” said Robinson, a former director of Repsol.
The gain may include an interest in a promising new business. Halliburton gets a 5% share of startups that join its accelerator, said a startup founder who has met with his executives.
Reporting by Liz Hampton in Denver, additional reporting by Gary McWilliams in Houston; Editing by Cynthia Osterman
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