The Industrial Internet of Things FEATURE NEWS

Financing the Future of Sustainable Energy: Innovative Financing for Innovative Technologies

By Arti Loftus April 13, 2021

There is a global trend towards green energy and mitigating the effects of fossil fuels on the environment. The U.S. is planning to rejoin the 2016 Paris climate agreement, pledging, along with 190 other countries, to limit global temperatures of pre-industrial ranges within 2 degrees Celsius on average.

 According to the International Energy Agency, renewable energy is expected to make up 30 percent of the world’s energy by 2024, which has created an urgency for public, private, and non-profit organizations to address climate change. As a result, investment in sustainable energy represents approximately 33 percent of all capital being deployed.

The energy sector is reinventing itself as a result of this mega-trend, as it becomes increasingly necessary for innovation in both the fossil fuel industry – which has been historically slow to adopt change – and the clean energy sector, challenging the incumbent providers.

In the North American oilfield service industry, over 180 firms declared bankruptcy between 2015 and October 2019, and the producers who see the future are investing billions into renewable energy technology, including Royal Dutch Shell, British Petroleum, and others.

Kelly Belcher, a managing director for SVB and leader of the Energy & Resources Innovation (ERI) team in Texas, Boston, and New York, has keen insights at the intersection of innovation and investment, responsible for setting the strategic vision for the Bank’s Energy practice vertical.

Because the energy sector has been extremely slow to adopt change, Kelly is particularly interested in how his work will help advance technologies within the industry. He is passionate about clean energy technologies, climatech, food and agriculture, and traditional energy technologies—all working together to make energy production, distribution, and consumption more equitable and environmentally conscious for the global populace and will be speaking at The Frontier Conference, being held virtually this week.

“Using technology associated with Industry 4.0, the energy sector has witnessed massive increases in efficiencies, increased production, a small carbon footprint, and overall positive environmental impact,” Belcher said. “They have also driven corporate value, for shareholders and stakeholders, while making a major difference in the future of the planet and society.”

For example, in the oilfield industry, companies that use traditional business models currently command a 1.64x multiple, whereas companies following the technological model in the same business earn valuations of 3.66x, according to comparable transactions from 2018-2020.

Investment in renewables is expected to rise above $10 trillion by 2050, and with the economic stimulus package, which includes federal government investment in more sustainable energy and related technologies, as well as job creation and the advancement of competitive American companies, it is clear these forecasts are on solid ground.

“There is so much that can be done to improve the built and digital worlds,” Belcher said, “which is why Silicon Valley investors are so active in the space. AI and Digital Twins are two examples of software and platform innovation in the Industrial IoT world that are driving more precision and better outcomes by generating data at the edge of any oilfield, tanker, a pipeline across the entire supply chain. Efficiency gains are proven, as are benefits including the measurement of carbon and other factors.”

“As we continue to see the proliferation of wind and solar energy projects, the need for efficient energy storage is vital,” Belcher explained. “AI is helping to bring stability to these systems, and are increasingly important in the efficient storage and use of energy. This has driven energy storage costs down dramatically over the last ten years.”

AI using IoT sensors is becoming vital to control the costs and improve the quality of maintenance and field service across energy infrastructure, including power plants, while predictive maintenance and failure detections are driving increased safety.

“Energy distribution companies are able to better understand energy waste in transmission distribution,” Belcher explained. “This will help companies reduce energy waste and drive practices that are more energy-efficient, including remote asset monitoring. Using blockchain, we can unify the energy sector by using trusted, decentralized networks and simpler, smart contracts.”

The use of smart contracts between firms, energy suppliers, consumers, etc., can help reduce waste and middleman costs, increasing transparency. Cybersecurity to protect energy infrastructure is also vitally important and a growing investment category.

“Given petroleum has long been a significantly traded commodity, blockchain has the ability to enable traders to directly work with one another, reducing costs and complexities associated with traditional middlemen.”

In an industry notorious for its stubbornness to change, industrial technologies such as IoT, AI, and Blockchain offered through our current industrial revolution 4.0 offer the energy and oil and gas industries incredible opportunities.

Continued investment into the energy sector, particularly the renewable energy sector, will result in greater implementation and use of these technologies to suit our world’s need for both energy and climate stability.

Belcher’s entire career has been spent in various roles within the energy industry, the fifth generation of his family to work in oil and gas, having spent the summers of his youth working for his father in the oilfield. Prior to joining SVB, he worked in financial operations and asset management for a private equity-backed E&P company. This included directing commercial activity, a role in which he witnessed the day-to-day operations of drilling and producing crude oil and natural gas.

It was also via this experience that he gained knowledge and respect for protecting the environment and its finite natural resources.

Belcher launched his career as a financial analyst for Northwestern Mutual and later worked for Merrill Lynch. At Texas Tech University, he earned a bachelor’s degree in finance and economics, a master’s degree in business administration, and a master’s degree in financial planning.

In his free time, Kelly volunteers in fundraising efforts for a variety of organizations. These include the Ironman Foundation, supporting local, regional, and global non-profit initiatives; the Houston MS 150, a bike ride in support of multiple sclerosis; and the Houston Marathon Foundation, which supports running programs for community and youth.

On April 14, Belcher will be speaking virtually at The Frontier Conference 2021 on the following panel: Financing Industrial Innovation: Fireside Chat with VCs and CVCs, sponsored by Silicon Valley Bank.
Arti Loftus is an experienced Information Technology specialist with a demonstrated history of working in the research, writing, and editing industry with many published articles under her belt.

Edited by Erik Linask
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