Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Technology

Death of a Climate Bank

More than 60 percent of community solar financing nationwide involved Silicon Valley Bank.

Silicon Valley Bank.
Heatmap Illustration/Getty Images

The United States witnessed its largest bank failure since 2008 on Friday, as Silicon Valley Bank ran out of cash and was taken over by the Federal Deposit Insurance Corporation.

True to its name, the bank was central to the technology ecosystem and Northern California economy; it claimed half of the country’s venture-backed startups as customers.

But what hasn’t received as much attention is that Silicon Valley Bank was particularly important to the climate-tech sector.

“Silicon Valley Bank was an integral part of the early-stage climate tech community and I hope that they survive in some form to continue that role,” Gabriel Kra, a managing director at Prelude Ventures, told me on Friday.

Silicon Valley Bank served as a banker to dozens of climate and energy-tech companies, holding their cash on a day-to-day basis and issuing billions of dollars in loans in support of the type of large-scale, one-off projects that are essential to the sector.

The bank’s website bragged about its particular support of solar, hydrogen, and energy-storage companies. It provided more than half a billion dollars in revolving credit to Sunrun, the country’s largest residential solar company. (Sunrun did not respond to a request for comment by press time.)

And more than 60 percent of community solar financing nationwide involved SVB in some capacity, the bank claimed on its website.

The bank also published influential annual reports on the climate-tech sector, and it sponsored events for climate VCs and startups — including one at the Lake Tahoe Ritz Carlton as recently as last week.

“They were careful, thoughtful, and willing lenders to early-stage companies,” Kra said. “As a bank, they were focused on that segment of the ecosystem and they understood the risks they were taking more than a bank that wasn’t focused.”

As news of the bank’s downfall spread, at least one venture firm extended emergency support so that companies could still pay their employees.

“The downfall of SVB will launch a thousand tweet threads, but right now our focus is securing payrolls for the Lowercarbon portfolio companies whose cash is tied up so they can keep up their planet-healing work,” Clay Dumas, a founding partner at Lowercarbon Capital, a climate-focused venture fund, told me in an email.

SVB’s collapse “has consumed the time of every founder I know for the last 36 hours,” Tim Latimer, the CEO of Fervo Energy, a geothermal company based in Texas and California, said on Twitter in a response to this story.

The bank’s recent problems weren’t connected to its climate-tech or startup lending, although they did stem from its broad lack of diversification away from the startup sector and Bay Area economy. In 2020 and 2021, the bank’s clients had more cash than they knew what to do with, and the bank chose to buy bonds and other securities to earn a higher yield on deposits. But over the past few months, as startups and the tech sector writ large faced a choppier economy, many of its depositors withdrew their money — and the bank had to sell its assets, which had lost value.

Because of its large number of corporate clients, most of its clients kept balances at the bank in excess of the $250,000 in deposit insurance provided by the federal government. That means many startups are now stuck in a potentially months-long line to get their money back — if they get it at all.

“Startups need cash — they’re not run in the same way that Fortune 500 companies are run,” Kra said. “Losing access to their cash balance for potentially several months can have catastrophic effects. And a small portion of companies in the space are probably looking at that possibility and figuring out how to avoid it.”

This article was updated at 11:35 PM EST on Friday to incorporate new details and quotes.


To receive Robinson Meyer's articles directly in your inbox, sign up for Heatmap Daily:

* indicates required
  • Blue

    You’re out of free articles.

    Subscribe to access Heatmap’s expert analysis of energy, climate change, and sustainability, including coverage of our regular survey research. Save $57 on an annual subscription, just $156 $99/year.
    To continue reading
    Create a free account or sign in to unlock more free articles.
    or
    Please enter an email address
    By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
    Electric Vehicles

    Maybe Don’t Rent an EV in Europe

    There are lots of reasons why that might seem like a good idea, but I urge you to learn from my mistakes.

    A gas can with stickers on it.
    Heatmap Illustration/Getty Images

    All I wanted was to drive an electric car to the solar eclipse. But after the third consecutive charging port RFID reader wouldn’t accept my credit card and finding that the employees inside the attached Spanish hotel restaurant mostly didn’t speak English, I began to feel as though, just maybe, this hadn’t been my best idea.

    Opting for an EV as a rental car can be an attractive proposition. For a longtime electric driver like me, it’s the opportunity to avoid car emissions even when on holiday, and to try out the experience in another country. For others, it could be a way to save money while on vacation in countries with even more expensive gasoline than America’s, or perhaps to try out electric driving before taking the plunge on buying an EV back home.

    Keep reading...Show less
    AM Briefing

    Thirst Trap

    On steel, uranium, and roof tiles

    Lake Powell.
    Heatmap Illustration/Getty Images

    Current conditions: Tropical Storm Moke sideswiped Hawaii yesterday just weeks after a weakened Hurricane Lala became the first major storm to hit the Big Island in decades • On the western fringe of the United States’ Pacific borders, Typhoon Saudel struck Guam and the Northern Mariana Islands over the weekend, bringing heavy rain and flooding • Temperatures in Khorramshahr, on Iran’s border with Iraq, are topping 118 degrees Fahrenheit, rendering the southwestern port city the hottest place on Earth.


    THE TOP FIVE

    1. Trump administration orders Arizona, California, and Nevada to cut water use

    With water levels in reservoirs across the American West at record lows, the Trump administration has directed Arizona, California, and Nevada to cut back on how much water they use from the Colorado River over the next two years. On Friday, the Department of the Interior imposed the reductions via a series of documents detailing a two-year and a 10-year plan to salvage the supplies from the drought-stricken river fed by snowmelt from Colorado’s stretch of the Rocky Mountains. As climate change has shifted snow patterns, levels on the river have dropped. Yet the seven states that depend on the water — the aforementioned three in the Lower Basin, and Colorado, New Mexico, Utah, and Wyoming in the Upper Basin — could not come to agreement among themselves on how to divvy up the dwindling supply. Instead, the Interior Department came up with a proposal that forced the Lower Basin states to pare back first. As you may recall, Arizona’s Democratic governor called the cuts “draconian” when the administration released its proposal in early August. The plan, which imposes short-term cuts while leaving a larger split for later, sets the stage for what E&E News predicted would be “a behemoth legal fight.”

    Keep reading...Show less
    Red
    Adaptation

    A Chat With Massachusetts’ First Heat Resilience Officer

    The only other U.S. state to have a chief heat officer? Arizona.

    A Massachusetts thermostat.
    Heatmap Illustration/Getty Images

    The past three months will go down in the books as the hottest meteorological summer on record in Boston — but that is not a record that’s likely to stand long. At 3.5 degrees Fahrenheit of warming since 1970, Massachusetts has outpaced the national average by half a degree; by 2050, researchers expect the state will see more than two-dozen 90-plus-degree days every year. According to a 2023 climate report, that could result in as many as 400 excess deaths in the Commonwealth annually.

    Now it’s someone’s job to do something about it. In mid-August, Massachusetts Governor Maura Healey announced the appointment of the state’s first heat resilience officer, making the Commonwealth only the second state in the country to have such a position — after the much more obvious choice, Arizona. (Healey is up for reelection this year, but the race is largely expected to be uncompetitive.) The inaugural role has gone to Katie Schlick, who most recently headed the resilience portfolio at the U.S. Climate Alliance and previously served as a special assistant to Ali Zaidi, the White House’s national climate advisor under Joe Biden.

    Keep reading...Show less