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 today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
    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
    Podcast

    Shift Key Summer School: How Does a Power Plant Work?

    Jesse and Rob go back to basics on the steam engine.

    A power station.
    Heatmap Illustration/Getty Images

    Just two types of machines have produced the overwhelming majority of electricity generated since 1890. This week, we look at the history of those devices, how they work — and how they have contributed to global warming.

    This is our second episode of Shift Key Summer School, a series of “lecture conversations” about the basics of energy, electricity, and the power grid for listeners of all backgrounds. This week, we dive into the invention and engineering of the world’s most common types of fossil- and nuclear-fueled power plants. What’s a Rankine cycle power station, and how does it use steam to produce electricity? How did the invention of the jet engine enable the rise of natural gas-generated electricity? And why can natural gas power plants achieve much higher efficiency gains than coal plants?

    Keep reading...Show less
    Yellow
    Politics

    Trump Opened a Back Door to Kill Wind and Solar Tax Credits

    The Senate told renewables developers they’d have a year to start construction and still claim a tax break. Then came an executive order.

    Trump burning a calendar.
    Heatmap Illustration/Getty Images

    Renewable energy advocates breathed a sigh of relief after a last-minute change to the One Big Beautiful Bill Act stipulated that wind and solar projects would be eligible for tax credits as long as they began construction within the next 12 months.

    But the new law left an opening for the Trump administration to cut that window short, and now Trump is moving to do just that. The president signed an executive order on Monday directing the Treasury Department to issue new guidance for the clean electricity tax credits “restricting the use of broad safe harbors unless a substantial portion of a subject facility has been built.”

    Keep reading...Show less
    Sparks

    Trump Says He’s Going to Slap a Huge Tariff on Copper

    “I believe the tariff on copper — we’re going to make it 50%.”

    Donald Trump.
    Heatmap Illustration/Getty Images

    President Trump announced Tuesday during a cabinet meeting that he plans to impose a hefty tax on U.S. copper imports.

    “I believe the tariff on copper — we’re going to make it 50%,” he told reporters.

    Keep reading...Show less
    Green