Solar energy panel photovoltaic cell and wind turbine farm power generator in nature landscape for … [+] production of renewable green energy is friendly industry. Clean sustainable development concept.
In the adoption cycle of any new technology, there is a tipping point that must be overcome before it cascades to mainstream use. This is the most difficult part of a company or market’s growth. Enter, Geoffrey Moore’s “Crossing the Chasm” assessment.
Geoff Moore’s Chasm Assessment
The adoption of clean technology is greatly accelerating toward mainstream adoption and large-scale usage. Software and smart technology eliminate cost and reliability concerns, allowing clean technology to disrupt the market. It’s time for investors to put their money in companies with disruptive innovations, both to accelerate the adoption cycle, but also to maximize their own benefit on this substantial market opportunity.
Let’s explore why.
One major lesson we have learned from the COVID-19 pandemic is our capacity to adapt and innovate when needed. When circumstances drastically shifted, we embraced major changes in the way we operated and the technology we used in our daily lives. This power to embrace change was refreshing. In the post-pandemic world, one thing we can expect is for society to be more welcome to change, and more willing to adapt. This will result in more governments, companies, and consumers adopting smart, clean technologies and innovations earlier. With the substantial market potential, investors will quickly get on board.
The Disruptive Nature of Clean Tech
The key to a new technology being adopted at scale, as Jeffrey Bussgang notes, is its delivery of a major competitive advantage. With this competitive advantage, the technology can disrupt the traditional market structure. Clean technology provides this necessary advantage with smart software.
In 2011 Marc Andreessen suggested that “software is eating the world” and predicted software would continue to transform and take over many aspects of the economy. Well, he was right, and smart software technology is giving cleantech firms a key competitive advantage. Smart technology allows companies to remotely manage and operate their solar panels and batteries, for example, efficiently. This enhances the reliability of the technology, while substantially reducing its costs. Considering that reliability and costs are the two main concerns contributing to renewable energy hesitancy (as was the case in the cleantech bubble of the early 2000s), eliminating these concerns through smart technology grants a competitive advantage.
This competitive advantage creates an immense opportunity for investors and will help cleantech disrupt the energy sector. By providing power reliably and at lower costs, more people will shift from traditional methods and adopt clean technology. Therefore, the disruptive potential of cleantech will lead to its adoption at scale.
Government policy has the potential to tip the scales in favor of clean technology. As mentioned in a previous blog post, President Joe Biden’s climate plan will help accelerate the growth of clean technology and renewable power. As more governments push toward net-zero emission targets, cleantech will inevitably benefit from this. As of now, 132 countries have made pledges to reach net-zero emissions by 2050. Policies like these will drive more consumers, and companies to adopt clean technologies early in their lifecycle, helping to cross the chasm.
More specifically, President Biden recently announced an ambitious infrastructure deal. The deal includes $73 billion to upgrade the electricity grid and improve access to clean energy. Although this is still a long way from being passed into law, its proposal inspires confidence for future investment and growth in the cleantech industry. Overall, the Biden administration aims to invest $2 trillion in clean energy to reach its decarbonization goal. Policies such as these will supercharge the adoption of clean technologies in mainstream society.
The Takeaway: A Major Market Opportunity
As suggested, the market potential for clean technology is immense. According to the Report from Canada’s Economic Strategy Tables, the global market for clean technology is expected to reach over $2.5 trillion by 2022. While the clean technology market is made up of several sub-markets, this is an enormous, rapidly growing opportunity. As previously mentioned, there is untapped demand in the African telecommunications market. This presents a major opportunity for investors as Africa’s population is expected to double by 2050, and already 871 million people across Africa do not have access to the internet. Due to population growth, billions of people will likely need connectivity. By investing in cleantech early, investors can support bridging the digital divide, and help cleantech cross the chasm. In the end, they will be better off for it.
Ultimately, clean technologies are rapidly moving toward mainstream adoption. Our increased capacity to embrace change, the disruptive nature of cleantech, and the increasing green policies of governments are all influencing the diffusion of clean technology innovations. Also, there is immense market opportunity in clean technology. So, investors should invest more in early-stage companies with disruptive technology to accelerate the adoption cycle, as well as maximize their own benefit.