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Investors are betting on gas to meet the U.S.’s growing electricity demand. Turbine manufacturers, however, have other plans.
Thanks to skyrocketing investment in data centers, manufacturing, and electrification, American electricity demand is now expected to grow nearly 16% over the next four years, a striking departure from two decades of tepid load growth. Providing the energy required to meet this new demand may require a six-fold increase in the pace of building new generation and new transmission ― hence bipartisan calls for an energy “abundance” agenda and, where the Trump administration is concerned, dreams of “energy dominance.” This is the next frontier in the fight between clean energy and fossil energy. Which one will end up fueling all of this new demand?
Investors are betting on natural gas. If these demand projections aren’t just hot air, the energy resource fueling all this growth will be, so to speak. Where actually deploying new gas power is concerned, however, there’s a big problem: All major gas turbine manufacturers, slammed by massive order growth, now have backlogs for new turbine deliveries stretching out to 2029 or later. Energy news coverage has mentioned these potential project development delays sometimes in passing, sometimes not at all. But this looming mismatch between gas power demand and turbine supply is a real problem for the grid and everyone who depends on it.
Taking a closer look at the investment plans of GE Vernova, the U.S.’s leading gas turbine manufacturer, suggests that, even as energy demand ramps up, these delays will persist. Rather than potentially overinvest in the face of rising demand and suffer the consequence of falling prices, GE Vernova and its competitors are committed to capital discipline, lengthening their order book, and defending shareholder value. Their reluctance to invest, while justified in some part by the nature and history of the industry, will threaten policymakers’ push for energy abundance ― to say nothing about economic growth or innovation.
Meanwhile, supply chain shortages will constrain the growth of clean energy generation. Inadequate investment in gas and an insufficient buildout of renewables in the face of unprecedented demand growth ― these are a toxic cocktail for the American energy system. Forget visions of an all-of-the-above energy strategy. How about none of the above?
Energy project developers, utilities, and investors have already started adjusting their gas buildout expectations and timelines. NextEra CEO John Ketchum stated in an earnings call that new gas projects “won’t be available at scale until 2030, and then only in certain pockets of the U.S.” That’s due not only to turbine queues, but also to an historically sluggish and increasingly expensive gas project development environment. “The country is starting from a standing start,” he added. “This is an industry that really hasn’t seen any active development or construction in years … all of that puts pressure on cost.”
Even in Texas, where lawmakers created the Texas Energy Fund to provide $10 billion of concessional financing to new gas power plants, delays are biting developers’ balance sheets. Just last week, private developer Engie withdrew two loan applications for gas peaker plant projects due to “equipment procurement constraints.” There’s no other way to spin it — the turbines are the problem.
Given that wait times and reservation payments drain developers’ liquidity and increase their financing costs, energy giants are trying to cut the line. Chevron is partnering with GE Vernova to develop up to 4 gigawatts of gas power plants for data centers. NextEra also announced a partnership with GE Vernova, through which the two companies will co-develop and co-own “multiple gigawatts” of natural gas power plants.
It’s safe to say that GE Vernova’s power division is riding high. The company’s investor materials suggest a heady growth trajectory. Gas turbine equipment orders rose 66% between 2023 and 2024, from 41 turbines to 68 turbines. Those 68 turbines represented about 20 gigawatts of capacity, double 2023’s order book. Developers reserved 9 gigawatts more of turbines; those reservations will turn into contracted production orders by 2026. At this point, 90% of GE Vernova’s total order volumes are in its backlog; for its power division, that represents almost $74 billion of equipment delivery and service contracts.
The company plans to invest $300 million into its gas power business in the next two years. And CEO Scott Strazik is pitching investors on continued growth. “Given our expansion plans to produce 70 to 80 heavy-duty gas turbines per year beginning in the second half of 2026, up from 48 this year, we are positioning to meet this demand. We expect to grow our gas equipment backlog considerably in 2025, even as we ramp to ship approximately 20 gigawatts annually starting in 2027, and expect to remain at that level going forward,” he said on the company’s Q4 earnings call.
That last sentence should give readers pause: GE Vernova has plans to build no more than 20 gigawatts of turbines per year, and developers that miss the cutoffs will just have to queue up for the next year’s order book. Why the limit?
Strazik laid out two key reasons. First, he’s looking for developers’ “receptivity to pay for what I will call premium slots” in 2028 and 2029, to “capture every dollar of price with the precious slots available,” as he told investors during a different presentation in December. GE Vernova’s annual report, which it released in February, refers to this strategy ― inviting desperate developers to bid up the price of scarce turbines ― as “expanding margins in backlog.” Second, the company remains hampered by supply constraints, particularly on ramping up its new heavy-duty and H-class turbines. There are real limits to how much more GE Vernova can build, and how quickly.
But over the longer term, it looks like GE Vernova is intentionally committing more to capital discipline rather than to broader capacity expansion. The company has $1.7 billion in free cash flow, a third of which it will return to shareholders through dividends and stock buybacks. And Strazik wants to avoid using the rest to underwrite what he sees as dangerous overcapacity that could threaten GE Vernova’s profitability. “I think we have to be very thoughtful to make sure that we don't add too much capacity, even though we are starting to sell slots into 2029,” he said during the investor update. “We're going to continue to be very sequential on how we invest.”
Strazik’s current strategy prioritizes productivity and efficiency improvements at GE Vernova’s existing plant in South Carolina over building new manufacturing facilities. Some capacity expansion, sure ― but no new plant. “Concrete's expensive, cranes are difficult,” he told investors. The company’s main competitors abroad, Mitsubishi and Siemens, have the same backlogs, and Mitsubishi, at least, is responding with a similarly measured strategy. Mitsubishi CFO Hisato Kozawa is open to some degree of capacity expansion, but maintains that Mitsubishi can only increase capacity “in a very planned manner with discipline. And if we need more capacity, we may want to first improve the rotation of the capacity.”
To the CEOs of all three companies, history would likely seem to justify this discipline. In 2017 and 2018, years of investment into capacity expansion coincided with a near-total collapse in global demand for gas turbines. This market crash was most likely the combined effect of low energy demand growth, energy efficiency improvements, continued use of coal power across Asia, the growing share of renewable energy on the grid, and investors’ realization that solar and wind energy could meaningfully undercut gas on price. All three companies laid off tens of thousands of employees, and the crash contributed to the complete breakup of General Electric and its partial spin-off into GE Vernova last year.
These gas turbine manufacturers are also some of the world’s leading wind turbine blade manufacturers, and a similar fate befell that sector in the past decade. Large-scale capacity expansion and competition for contracts drove down costs and margins across the supply chain — only for those to move sharply in reverse when supply chains froze up during the pandemic and interest rates shot up in 2023. Now offshore wind projects are plagued with problems and, at least in the U.S., President Trump’s de facto moratorium on offshore wind development has further reduced the sector’s ability to bounce back. These companies have been burned before. It only makes sense not to repeat past mistakes.
Combined-cycle gas turbines are complex machines, similar to airline engines in their intricacy and in the extensive global supply chains required to produce them. But their leading producers, afraid of getting over their skis, won’t undertake the massive upfront investments required to increase their long-term production capacity. Where does this leave the energy transition?
Bankers and energy project developers alike can see the writing on the wall. Beth Waters, managing director for project finance at Japanese bank MUFG, has insisted that “renewables have to be part of the electricity mix. It cannot just be gas-fired.” NextEra’s Ketchum has said the same: “Renewables are here today,” he stated during the latest earnings call — unlike gas. Jigar Shah, the head of the Department of Energy’s Loan Programs Office under President Biden, wrote on LinkedIn about his confidence that “batteries will be deployed at 10X the capacity of combined cycle natural gas units over the next 4 years.” Major utility companies, for their part, still have large clean energy procurement targets in their integrated resource plans. The smart money is clearly betting that an “all-of-the-above” energy deployment strategy will be better than eschewing any particular energy source.
They’re being optimistic. Not only does new utility-scale renewable energy take years to build, there’s also not yet enough transmission and longer-term energy storage on the grid to balance the variance in existing solar and wind resources. That prevents solar and wind from providing the kind of 24-hour stable power that corporate and industrial customers demand. Expanding energy storage and transmission resources will depend not just on regulatory reforms to permitting and interconnection, but also on resolving the severe bottleneck in grid transformers, where analysts believe capacity expansion has also failed to meet roaring demand, resulting in wait times of three to four years. (GE Vernova and Siemens build grid transformers too.) The status quo has left hundreds of gigawatts of clean energy projects across the country stuck in a regulatory and financing limbo, and the grid issues that tie up clean energy development will further constrain gas power growth.
To be sure, President Trump’s “energy dominance” agenda seems to favor the development of clean firm energy resources, such as nuclear and enhanced geothermal, to cut through the literal gridlock. The gas turbine manufacturers, all of which build steam turbines for nuclear power, stand to benefit from interest in restarting and upgrading now-shuttered plants. But building new nuclear projects currently takes at least 10 years, if not more. The singular new nuclear project built in the U.S. in the past three decades was completed seven years late and almost $20 billion over budget.
Enhanced geothermal might fare somewhat better ― its drilling technology comes straight from the fracking sector, and the pilot projects of companies like Fervo are achieving impressive heat and electricity production targets. Still, to turn heat into electricity, Fervo needs turbines, too. While enhanced geothermal projects need organic Rankine cycle turbines, as opposed to the combined-cycle gas turbines used in gas power plants, commodity market strategist Alex Turnbull theorizes that the commonalities between the two will threaten geothermal developers with the same delays and bottlenecks. (Fervo’s turbine supplier is an Italian subsidiary of Mitsubishi.)
The tech giants building data centers are already investing in new power ― but if neither nuclear nor geothermal can be deployed at scale in the absence of massive policy support, then that leaves tech companies paying for whatever energy sources their regional electricity grid relies on in the meantime. As Cy McGeady, a fellow at the Center for Strategic and International Studies, told Heatmap last year, “Nobody is willing to not build the next data center because of inability to access renewables.” But drawing so much from existing resources ― mostly gas, but also nuclear ― without building sufficient new power leaves less for every other energy consumer.
Policymakers on both sides of the aisle have their work cut out for them to avoid a crisis born of a failure to build any energy resource adequately: They must execute a thorough grid overhaul while also punching through the specific supply chain bottlenecks that prevent energy generation from being built quickly. Regardless of energy demand projections, these are goals worth pursuing. They advance grid reliability, energy affordability, and decarbonization, as well as accommodate any necessary energy supply growth.
Still, it’s worth questioning the prevailing narratives around load growth. It’s not clear how much energy data centers in particular will actually require. Not only have innovations like DeepSeek challenged market assumptions about tech companies’ investment requirements, but recent research also suggests that load growth projections could fall significantly if data centers’ energy demand were more flexible. Not to mention that data center developers often make duplicate interconnection requests with different utilities to maximize their chance of securing a power agreement.
Our energy grid will need a lot less hot air if data center demand goes up in smoke ― and that would be a relief for American consumers and the climate alike. But courting a gas turbine crisis should itself give policymakers pause. The fact that our energy system is at a point where neither turbines nor transformers nor transmission is available in sufficient capacity to meet any policymaker’s vision of energy abundance suggests that our leaders must reorient the government’s relationship to industry. During periods of economic uncertainty, capital discipline might appear rational, even profitable. But the power sector’s profits are, through rising energy bills and more frequent climate disasters, revealed to be everyone else’s costs. Between clean energy and fossil fuels — between what Americans need and what private industry can provide — the energy transition is shaping up to be, quite literally, a power struggle.
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Current conditions: Yosemite could get 9 inches of snow between now and Sunday • Temperatures will rise to as high as 104 degrees Fahrenheit in Ashgabat, Turkmenistan, as Central and Southeast Asia continue to bake in a heatwave • Hail, tornadoes, and severe thunderstorms will pummel the U.S. Heartland into early next week.
It was a busy week of earnings calls for the clean energy sector, which, as a whole, saw investment dip by nearly $8 billion in the first three months of the year. Tariffs — especially as they impact the battery supply chain — as well as changes to federal policy under the new administration and electricity demand were the major themes of the week, my colleague Matthew Zeitlin wrote.
Like companies across many different sectors, inverter and battery maker Enphase, turbine manufacturer GE Vernova, Tesla, and the utility NextEra all mentioned the tariffs in their earnings reports and calls. Enphase, for one, is bracing for as much as 8% knocked off its gross margin by the third quarter, while Tesla’s highly-anticipated call managed expectations for the rest of the year, with the company citing the difficulty measuring “the impacts of global trade policy on the automotive and energy supply chains, our cost structure, and demand for durable goods and related services.” Meanwhile, on Thursday, Xcel Energy — which recently reached settlements for its role in the ignition of the most destructive wildfire in Colorado history and the largest wildfire in Texas history — reported missing first-quarter estimates and feeling the squeeze of high interest rates at a time of soaring, data-center-driven electricity demand.
The Department of Justice’s lawyers warned the Department of Transportation that its case against New York City’s congestion pricing program is likely a loser. We know this because someone mistakenly uploaded the DOJ’s memo into the court record for the Metropolitan Transportation Authority’s lawsuit challenging Transportation Secretary Sean Duffy’s actions. Whoops.
As my colleague Emily Pontecorvo reports, the leaked memo was dated before Duffy announced “he would put a moratorium on any new federal approvals for transit projects in Manhattan until the state shut down the tolling program.” But as Emily goes on to say, the memo “warns that continuing down this route could open up both the department and Duffy personally to further probes.” The New York Times adds that the DOT has since replaced the DOJ lawyers who authored the memo and plans to transfer the case to the civil division of the Justice Department in Washington.
More than 100 new cars and vehicles are expected to debut at the 2025 Shanghai Auto Show, which began on Wednesday and runs through next Friday. Of the approximately 1,300 total vehicles on display, 70% are new energy vehicles, according to Gu Chunting, the vice chairman of the Council for the Promotion of International Trade Shanghai, one of the event’s organizers.
The show is already off to an exciting start. Volkswagen is showcasing 50 new models, including three electrified concept vehicles specifically targeted at the Chinese market: the ID. Aura sedan, the ID. Evo SUV, and ID. Era three-row SUV, a hybrid with over 621 miles of range. BYD’s Denza line also premiered its Z, a luxury electric vehicle designed to compete with Tesla and Porsche. “Beauty is in the eye of the beholder, of course, but most people will find the Denza Z to be drop dead gorgeous,” Clean Technica raved.
That’s not all. The Faw Group, a Chinese state-owned car manufacturer, showed off a flying vehicle with a range of 124 miles, while fellow Chinese automaker Changan Automobile announced an autonomous flying car that reportedly already has government approval to transport passengers, per IoT World Today. France’s Le Monde was wowed by China’s innovations all around: “Gone are the days when the vast exhibition space had one hall dedicated to foreign brands and another for Chinese ones. Today, each Chinese group occupies a hall, showcasing domestic brands and leaving only some space for foreigners around the edges.”
Volkswagen
In a private ceremony Thursday night, President Trump signed an executive order to “unleash” deep-sea mining. The order — which directs the secretaries of Interior and Commerce to accelerate “the process of renewing and issuing seabed mineral exploration licenses and commercial recovery permits” for the U.S. Outer Continental Shelf and “areas beyond national jurisdiction”— is an attempt to offset China’s dominance of the critical minerals supply chain. Deep-sea mining operations harvest “nodules” that take millions of years to form and contain minerals like nickel, copper, cobalt, and manganese necessary for lithium-ion batteries for electric vehicles, among other applications. “For too long, we’ve been over reliant on foreign sources, and today this historic announcement marks a big step in the right direction to onshore these resources that are critical to national homeland security,” a senior administration official told reporters on Thursday, as reported by CNN.
Deep-sea mining is controversial due to how little we know about the ocean’s abyss, including the potential impact of large-scale mining operations on marine biodiversity and carbon sequestration. The United States has largely abstained from the deliberations of the United Nations’ International Seabed Authority, which determines whether and how to mine the seabed for critical minerals. The industrial mining of international waters, as cued up by Trump’s executive order, is opposed by “nearly all other nations,” The New York Times writes, and is “likely to provoke an outcry from America’s rivals and allies alike.”
It has already been a tragic year for wildfires, with more than 57,000 acres of Los Angeles and the surrounding hillsides burned in January. Now, AccuWeather is predicting that fires in the U.S. could “rapidly escalate” and burn up to 9 million acres total this year, well above the historic average of 7 million acres and close to the 8.9 million acres that burned in 2024.
Specifically, AccuWeather predicts an extreme fire season in the Northwest, northern Rockies, Southwest, and South Central states, particularly as late summer and fall approach. “There was plenty of rain and snow across Northern California this winter. All of that moisture has supported a lot of lush vegetation growth this spring,” AccuWeather’s lead long-range expert, Paul Pastelok, said. “That grass and brush will dry out and become potential fuel for wildfires this fall,” when any “trigger mechanism … could cause big wildfire problems.”
AccuWeather
Slate Auto, a three-year-old Jeff Bezos-backed startup, has announced an EV truck that will cost less than $20,000 after the federal tax credit and before customization. “It’s the Burger King of trucks,” writes Car and Driver, because “it’s affordable” and “lets customers ‘have it their way’ with a lengthy accessory list, including one that turns this pickup into an SUV.”
Three weeks after “Liberation Day,” Matador Resources says it’s adjusting its ambitions for the year.
America’s oil and gas industry is beginning to pull back on investments in the face of tariffs and immense oil price instability — or at least one oil and gas company is.
While oil and gas executives have been grousing about low prices and inconsistent policy to any reporter (or Federal Reserve Bank) who will listen, there’s been little actual data about how the industry is thinking about what investments to make or not make. That changed on Wednesday when the shale driller Matador Resources reported its first quarter earnings. The company said that it would drop one rig from its fleet of nine, cutting $100 million of capital costs.
“In response to recent commodity price volatility, Matador has decided to adjust its drilling and completion activity for 2025 to provide for more optionality,” the company said in its earnings release.
In February, Matador was projecting that its capital expenditures in 2025 would be between $1.4 and $1.65 billion.This week, it lowered that outlook to $1.3 to $1.55 billion. “We’re very open to and want to have reason to grow again,” Matador’s chief executive Joseph Foran said on the company’s earnings call Thursday. “This is primarily a timing matter. Is this a temporary thing on oil prices? Or is this a new world we live in?”
Mizuho Securities analyst William Janela wrote in a note to clients Thursday morning that, as the first oil exploration and production company to report its earnings this go-round, Matador would be “somewhat of a litmus test for the sector: we don't believe the market was expecting E&Ps to announce activity reductions this soon, but MTDR's update could signal more cuts to come from peers over the next few weeks.”
West Texas Intermediate crude oil prices are currently sitting at just below $63, up from around $60 in the wake of President Donald Trump’s “Liberation Day” tariff announcements. While the current price is off its lows, it’s still well short of the almost $84 a barrel crude prices were at around this time last year.
The price decline could be attributable to any number of factors — macroeconomic uncertainty due to the trade war, production hikes by foreign producers — but whatever the cause, it has made an awkward situation for the Trump administration’s energy strategy.
The iShares U.S. Oil & Gas Exploration & Production ETF, which tracks the American oil and gas exploration industry, is down 9% for the year and more than 13% since “Liberation Day,” while the rest of the market has almost recovered as the Trump administration has indicated it may ease up on some of his more drastic tariff policies.
If other drillers follow Matador’s investment slowdown, it could imperil Trump’s broader energy policy goals.
Trump has both encouraged other countries to produce more oil (and bragged about lower oil prices) while also exhorting American drillers to “drill, baby, drill,”with enticements ranging from kneecapping emissions standards to a reduced regulatory burden.
As Heatmap has written, these goals sit in conflict with each other. Energy executives told the Federal Reserve Bank of Dallas that they need oil prices ranging from $61 to $70 a barrelin order to profitably drill new wells. If prices fall further, “what would happen is ‘Delay, baby, delay,’”Wood Mackenzie analyst Fraser McKay wrote Wednesday. “We now expect global upstream development spend to fall year-on-year for the first time since 2020.”
A $65 per barrel price “dents” margins for drillers, meaning “growth capex and discretionary spend will be delayed,” McKay wrote.
Matador also announced that it had authorized $400 million worth of buybacks, and itsstock price rose some 4% on the earnings announcement, indicating that Wall Street will reward drillers who pull back on drilling and ramp up shareholder payouts.
“We’ve got the tools in the toolbox, including the share repurchase, to make Matador more value quarter by quarter,” Foran said. Rather than “blindly” pouring capital into growth, Matador would aim for a “measured pace,” he explained. “And if you mean what you say about a measured pace, that means when prices get a little lower, you take a few more moments to think about what you’re doing and don’t rush into things.”
At San Francisco Climate Week, everything is normal — until it very much isn’t.
San Francisco Climate Week started off on Monday with an existential bang. Addressing an invite-only crowd at the Exploratorium, a science museum on the city’s waterfront, former vice president and long-time climate advocate Al Gore put the significance and threat of this political moment — and what it means for the climate — in the most extreme terms possible. That is to say, he compared the current administration under President Trump to Nazi Germany.
“I understand very well why it is wrong to compare Adolf Hitler’s Third Reich to any other movement. It was uniquely evil,” Gore conceded before going on: “But there are important lessons from the history of that emergent evil.” Just as German philosophers in the aftermath of World War II found that the Nazis “attacked the very heart of the distinction between true and false,” Gore said, so too is Trump’s administration “trying to create their own preferred version of reality,” in which we can keep burning fossil fuels forever. With his voice rising and gestures increasing in vigor, Gore ended his speech on a crescendo. “We have to protect our future. And if you doubt for one moment, ever, that we as human beings have that capacity to muster sufficient political will to solve this crisis, just remember that political will is itself a renewable resource.”
The crowd went wild. Former House Speaker Nancy Pelosi took the stage and reminded the crowd that Gore has been telling us this for decades — maybe it’s time we listen. But I missed all that. Because just a few miles away, things were getting a little more in the weeds at the somewhat less exclusive venture capital-led panel entitled “The Economics of Climate Tech: Building Resilient, Scalable, and Sustainable Startups.” Here, I learned about a new iron-sodium battery chemistry and innovations in transformers for data centers, microgrids, and EV charging infrastructure.
I heard Tom Chi, founding partner of At One Ventures, utter sentences such as “parity dies because of capex inertia,” referring to the need to make clean tech not only equivalent to but cheaper than fossil-fuels on a unit economics basis. Such is the duality of climate week during the Trump administration — occasionally lofty in both its alarm and its excitement, but more often than not simply business-as-usual, interrupted by bouts of heady doom or motivational proclamations.
Some panels, like the one I moderated on the future of weather forecasting using artificial intelligence, made it a full hour without discussing Trump, tariffs, or tax credits at all. So far, that’s held true for a number of talks on how AI can be a boon to climate tech. It makes sense — the administration is excited about AI, and there’s really no indication that Trump has given any thought to either the positive or negative climate externalities of it.
But rapid data center buildout and the attendant renewables boom that it may (or may not) bring will certainly be influenced by the administration’s fluctuating policies, an issue that was briefly discussed during another panel: “AI x Energy: Gridlocked or Grid Unlocked?” Here, representatives from Softbank, Pacific Gas & Electric, and the data center builder and operator Switch touched on how market uncertainty is making it difficult to procure energy for data centers — and to figure out the cost of building a data center, period.
“There is a lot of refiguring and rereading contracts and looking at the potential exposure to things like the escalation in the cost of steel for construction projects,” Skyler Holloway of Switch said. Pinning down a price on the energy required to power data centers is also a bottleneck, Gillian Clegg, vice president of energy policy and procurement at PG&E explained. “For projects that want to connect between now and 2030, any kind of uncertainty or delay means that the generation doesn't get to the market,” Clegg said. “Maybe the load gets there first, and you have an out of balance situation.”
Everyone acknowledges that uncertainty is bad for business, and that delays related to funding, contracts, and construction can kill otherwise viable companies. But unsurprisingly, nobody here has admitted that said uncertainty might put them out of business, or even deeply in the red.Every panel I attend, I find myself wondering whether a founder or investor is finally going to raise their voice, à la Al Gore, and tell the audience that while their company’s business model is well and good, the Trump administration’s illogical antipathy towards green-coded tech and ill-conceived trade war is throwing the underlying logic — sound as it may have been just a year ago — into disarray.
None of the seven energy, food, and agricultural startups that presented at the nonprofit climate investor Elemental Impact’s main show, for instance, discussed the impacts of the administration’s policies on their businesses. Rather, they maintained a consistently upbeat tone as they described the promise of their concepts — which ranged from harnessing ocean energy to developing plant-based fertilizers to using robotics for electronics recycling — and the momentum building behind them. Nuclear and geothermal companies, seemingly poised to be the clean tech winners of Chris Wright’s Department of Energy, have been especially optimistic this week.
But really, what else can climate tech companies and investors be expected to do right now besides, well, rise and grind? It’s not like anybody has answers as to what’s coming down the policy pike. In a number of more casual conversations this week, a common sentiment I heard was that it’s not necessarily a bad time to be an early-stage startup — keep your head down, focus on research and prototyping, and reassess the political environment when you’re ready to build a pilot or demonstration plant. As for later-stage companies and venture capital firms, they’re likely working to ensure that their business models and portfolios really aren’t dependent on government subsidies, grants, or policies — as they keep assuring me is the case.
Even that might not be enough these days though. Chi said he’s always tailored his investments with At One Ventures towards companies that are viable based on unit economics alone, no subsidies and no green premium. So he wasn’t initially worried about his portfolio when Trump was elected. “None of our business models were invalidated by the election,” he said. “The only way that we could be in trouble is if they mess it up so bad that it ruins all of business, not just climate …”
Oops.
If there’s one dictum that I would expect to hold, though, it’s that the startups that make it through this period will likely be around for the long haul. I’ve been hearing that sentiment since the election, and Mona ElNagger, a partner at Valo Ventures, echoed it once again this week. “Microsoft and Apple were founded in the mid 1970s, which was a time of severe recession and stagflation. Amazon started at the tail end of a big recession in the early 1990s,” ElNagger reminded the audience at the Economics of Climate Tech panel, which she moderated. “Companies that survive and actually thrive in such periods share a common thread of resilience.”
As that panel wrapped up, things got existential once more as Chi’s talk moved from describing his investment thesis to the moment at large. “This time period in history is going to bring us tragedy after tragedy, and it’s really that moment that we’re going to understand the deep underlying structure of half of the world that we’ve built, and also the character of who we are,” Chi told the audience. It was unclear whether we were even talking about climate tech anymore. Chi continued, “It’s in that time period that we are going to step up and become whatever we are meant to be or not at all.”
The crowd sat there, a little stunned. Were we, in this very moment, becoming who we were meant to be? I took a bite of my free sushi as the networking and hobnobbing began.