The role of digital technologies for SDG 7
In 2015, the United Nations defined a roadmap to reach an equitable sustainable society by 2050. The 17 Sustainable Development Goals or SDGs look at climate and biodiversity, health and life quality, food and water, energy, economic growth, and social equality. SDG 7 aims to ensure access to affordable, reliable, sustainable and modern energy for all.
According to the 2021 report of PwC, the production, transport and use of energy account for almost 3/4 of global GHG emissions. There is a lot of potential in this area to tackle the effects of climate change. Not only nature, but also humans' health would benefit: 9 out of 10 people breathe in polluted air, and when we fully switch to wind, water and solar energy, we could every year avoid 4 to 7 million deaths from air pollution.
In 2019, the share of renewables in the total global energy consumption was only 17.7%. When taking only electricity production into account, it was 26%. Researchers expect the share of the electricity production to grow to 30% in 2024, and it could be increased to 100% worldwide in 2050 if policymakers and investors give their full support, according to the World Economic Forum.
Thanks to earlier research and investments, renewable energy is one of the more mature fields of climate tech. Between 2010 and 2019, a total of $2.6 trillion was invested in renewable energy, led by China with $758 bn. Between the 2nd half of 2020 and the 1st half of 2022, already $17 bn has been raised, and it is estimated that this decade $3.4 trillion will be invested. 25% of climate tech investors have participated in energy deals since 2020, but the sector has a few big dedicated VCs, such as Energy Impact Partners and Breakthrough Energy Ventures.
Renewable energies take many forms: solar, wind, hydroelectric, geothermal, and nuclear. Each energy form has its advantages and disadvantages, but together they can provide a secure and clean energy grid. 2021 showed a new record in installations, with a growth of 6%, and in 2022 it's expected to rise to 8%. Of this annual growth, solar is expected to account for 60%, the World Economic Forum predicts.
There still remain challenges: the offer of renewables doesn't always match the demand of that moment, and the recycling of photovoltaic panels is at the moment underutilized. Especially now the first generation of photovoltaic panels will reach the end of their lifecycle and the demand for raw materials will grow, companies will have to improve these processes.
Transportation is often taken into account when considering energy. The sector is one of the biggest contributors to GHG emissions worldwide. It's therefore no wonder many start-ups work on sustainable mobility solutions, and the industry is one of the most funded in climate tech.
Besides electric transportation, alternative fuels are developed. The most known example is green hydrogen. Hydrogen is color-coded based on the electric source of production. Green hydrogen is created by electrolysis of water molecules. Renewable energies are used to power the process, which means there are no GHG emissions during the process. Fuel cells afterwards convert the hydrogen and oxygen into electricity and water. Gray hydrogen on the contrary works with fossil fuels. Another option is blue hydrogen, which uses fossil fuels as well, but collects 90% of the produced emissions through carbon capture and storage. Currently, 90% of hydrogen produced is gray and thus not clean.
To scale the production of green hydrogen, we need to make the production process more efficient, so it would cost less and produce more energy than it consumes. Another upcoming challenge is the unequal demand: it is expected that North-America, Europe, and Asia will account for 65% of the hydrogen demand, which means 2/3 of hydrogen will need to be shipped. Because of the potential of hydrogen, investments have surged: in Europe alone, hydrogen start-ups brought in $437m in funding, a 592% increase compared to the 66.5m of 2020, Sifted reports.
It's not only important to generate clean electricity and other energy forms, but also to store it. Start-ups work on batteries to store unused generated energy, both on industrial and private level, or work on recycling lithium-ion batteries to improve their lifecycle. Batteries can also be used for hydrogen storage, and the wave of electric cars and micromobility solutions would not be possible without batteries.
Smart grid management is necessary to manage all the different sources, but can for example also allow neighbors to share their energy with each other. There is also interest in waste heat capture and conversion: between 15 and 55% of generated heat is wasted, so there is a lot of potential to turn this waste heat into a new energy source.
Investors also see new opportunities in solar, such as:
- Solar management software
- Agrivoltaics, the simultaneous use of land for food production and power generation
- Cleaning, maintenance, and recycling of solar panels
- Perovskite cells
- And new ways of financing solar and clean energy, such as payment plans and PV systems rental
Other energy opportunities can be found here.
Digitalize to optimize
Energy is essential to keep the world running, but it shouldn't be at the expense of our planet and health. It's a well-established part of the climate tech industry, and a full transition will help us reach net-zero by 2050.
Our software solutions aim to help with this transition. If you would like to know more about the possibilities, reach out to us here. Because if you succeed, we all succeed.