The Energy Sector is Just Beginning to be Disrupted

By Lisa Lambert, Chief Technology & Innovation Officer, National Grid and Founder & President, National Grid Partners

We move into the new year amid uncertainty about the global economy. Yet somehow I’ve never felt more optimistic.

Silicon Valley layoffs have grabbed headlines of late, but in most cases, “big tech” is simply resetting staff to become more cash efficient and invest in new technology. History usually shows growth in capital markets after recessions, and with a soft landing from the Federal Reserve, innovative companies will be even more confident to spend – spurring a breakout 2023.

It’s exciting times to be an investor in technology, especially energy tech. The Infrastructure Investment & Jobs Act (IIJA) and Inflation Reduction Act are poised to infuse hundreds of billions of dollars into the sector. This new technology spending will target climate change, upgrade the electric grid and ensure energy security.

Meanwhile, venture capital firms, private equity funds and corporations from a spectrum of industries are getting ready to deploy trillions of investment dollars, mindful of deadlines to meet net-zero carbon emissions in the next few decades.

Here at National Grid Partners, for example, we closed five new deals in 2022 along with numerous follow-on rounds for existing companies. These newcomers make solutions that, among other things:

let cameras see in the dark in real time, a game-changer for safety and critical infrastructure security;
give infrastructure owners X-ray vision to reduce accidents, construction delays and greenhouse gases;
and dramatically speed complex construction projects through artificial intelligence while decreasing the need for power outages.

More than 80 percent of our portfolio companies have strategic engagements with our parent, National Grid. That number’s so high we were recently invited to share tips with Laurene Powell Jobs’ environmental accelerator.

We also saw a trio of exits in 2022, bringing our total to seven that have generated more than $80 million in only three years. And the percentage of unicorns (worth $1 billion or more) in our portfolio is among the highest in the venture industry, according to PitchBook data.

Trends like these will help National Grid continue to invest in decarbonization while keeping costs down for customers. But the climate challenge is too big for one company to solve. That’s why, in late October, we hosted the first summit of the NextGrid Alliance, our network of senior executives from nearly 100 worldwide energy utilities.

As I recently told podcast host Max La Manna about the NGA: “Startups are ready, willing and able to engage. We’re not going to get to clean energy by mid-century in silos.” Developing and deploying the next wave of solutions hinges, we believe, on combining the creative power of startups with the scale and experience of utilities.

But startups and utilities often don’t know how to work together; one side’s mantra is “move fast,” while the other is heavily regulated. The NextGrid Alliance is a translator of sorts, providing insights and brokering introductions.

Make no mistake: Energy titans will be born during this downturn, just as Amazon and Netflix fought through the dot-com crash (and disrupted established industries in the process). Or, more recently, as Nest survived the Cleantech 1.0 bubble to reap a $3.2 billion acquisition from Google.

I’ve spent decades as a venture investor studying industries in transition, and believe me: The energy sector is just beginning to be disrupted.