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April 29, 2024

Water Security for a Changing Planet: Dispatch from the Global Water Summit 2024

Ginger Rothrock, Senior Director at HG Ventures

Ginger Rothrock has led HG Ventures’ investments in a number of water-focused startups, and has built a reputation as a leading expert in the field. Ginger was invited to attend and speak at the Global Water Summit in London, and here summarizes some of the key issues and trends in that sector.

“I want security, yeah

Without it I had a great loss, oh now

Security, yeah

And I want it at any cost, oh now”

       – Otis Redding, “Security”, 1964

In April 2024, the public and private sectors convened in London to discuss the rising challenges and opportunities of deploying technologies that may help them adapt and build resilience to the changing climate, manage growing demand, and ensure water quality: At least 69% of the impact of climate change is expressed through the water cycle. The Global Water Summit, “where water meets money,” was the ideal place to convene and converse about capital strategy and market trends.

HG Ventures has been investing in water-related technologies since our inception. Our focus has been in the industrial sector, where The Heritage Group’s environmental services businesses work with large companies to create sustainable manufacturing and waste reuse practices. Wastewater valorization, in-facility water reuse, and the treatment of contaminants such as PFAS are key areas of innovation and opportunity.  I attended the Global Water Summit this year to develop and build relationships with financial partners for our venture team, and potential customers for our portfolio companies looking to make water actionable.

Corporate risk from water insecurity and the opportunity within

Businesses use twice as much water as households, which is a tremendous opportunity for innovation and deployment but also a point of insecurity. Most industrial processes use water as an input, and those industries that spend the most on managing water are also the ones most exposed to water risk.

Ginger was a speaker in the Financing Water Security session, moderated by Christopher Gasson from Global Water Intelligence.

The largest volumetric water users are industries familiar to The Heritage Group – power generation, oil and gas, chemicals, and mining. Other significant users are food & beverage, textiles, and CPG–and businesses in many of these sectors are Heritage Group customers.

Global Water Intelligence (GWI) reports that currently around 3% of corporate capital expenditure goes towards water-related infrastructure and systems. But that figure is likely to grow as natural disasters such as drought and flood become more prevalent.

Technology driving increased information around water quality and associated human health are leading to regulations, requiring investment. The capital markets play an important role in financing a sustainable water system and will shift to backing businesses with effective water security.

Specifically, the venture capital sector can benefit from investing in solution providers. GWI predicts that the total capital employed in water security-related assets will rise from $3.8 trillion today to $12.6 trillion in the next ten years, an increase of more than 300%.

Key themes and opportunities for water security

We see strong momentum for the water sector and for innovations that build water security and resilience. Some of the key themes and opportunities voiced by water leaders across the corporate world include:

  • Water availability: Water reuse and fresh water “creation” from desalination have the potential to make clean water unlimited. GWI reported that $10 billion is spent every year on running desalination plants, with more plants commissioned every month. We know from our customers that in-plant water reuse has financial benefits beyond the sustainability story: The water used from processing can be more easily controlled, additives in the water can be used more frequently, and the costs associated with treatment and discharge decrease dramatically.

    HG Ventures has invested in automated solutions that monitor and treat contamination, enabling the compliant discharge and economical recycling of industrial water: Electramet removes heavy metals from process water using an automated membrane-free and chemical-free process. ZwitterCo, meanwhile, is deploying fouling-resistant membranes that treat challenging organic and salty streams, focusing on product purification and chemical reuse.

  • Water process efficiency: Hardware and software solutions can improve the productivity of water management and treatment systems as well as proactively provide cost avoidance.

    HG Ventures portfolio company, Transcend was in attendance at this year’s Summit, showcasing its software that automates the engineering design process for water treatment facilities. Design automation was a hot topic at the Summit among the public and private sectors; asset owners want to understand and weigh options in risk, carbon footprint, and cost before they build facilities. Another hot topic was the circular economy (one of my favorite investing themes). Wastewater can be valuable to mine for energy (from heat or emitted gasses), excess raw materials, or additional manufactured product.

  • Water quality: With the first national drinking water standard for PFAS released just days prior, the Summit was abuzz with discussion around the new rules that test the limits of detection, capture, and treatment technology.

    Those in the water ecosystem are increasingly concerned about the purity of water for industrial processes, as well as for public consumption. Maintaining and measuring good quality water is essential. For PFAS alone, GWI estimated an investment of $250 billion in Europe and North America to eliminate these substances in drinking water down to the detection limit. Alternative new technologies that can cost-effectively remove and destroy PFAS are necessary to bring that cost down to attainable levels. HG Ventures portfolio companies Puraffinity (PFAS capture) and Aclarity (PFAS destruction) are focused on meeting that challenge. In truth, there will be many different technologies needed to eradicate PFAS and other emerging contaminants across the multitude of streams.

Water as an emerging asset class

The conference provided ample opportunities for groups across the ecosystem to debate the scale of the opportunity and financial challenges of the sector.

Attendees participated in roundtables to discuss 40 Crucial Questions for Water in 2024.

The climate crisis has resulted in attention and investment in the sustainability sector, thus far concentrated largely on decarbonization and energy, while water has historically been an inexpensive, consistent utility, viewed by many as a human right rather than a threat or opportunity. But that can no longer be said to be the case.

No one player will have the solution for water security. Water is inherently a local problem that must be solved with a mix of technology, policy, and investment; integration and collaboration across the markets of water, energy, food, waste and finance is necessary to ensure a sustainable future.

We intend to continue to be a part of that.

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March 4, 2024

Destroying ‘forever chemicals’… forever: Why we invested in Aclarity

HG Ventures recently participated in a $16M funding round for Massachusetts startup, Aclarity, a company focused on the destruction of PFAS. The investment expands our portfolio of water startups, and here, senior director Ginger Rothrock outlines our investment rationale.

Ginger Rothrock, Senior Director, HG Ventures

The issue of PFAS (Per- and Polyfluoroalkyl Substances, colloquially referred to as ‘forever chemicals’) is not new, but has increased in awareness as more has been uncovered about their widespread occurrence, growing numbers, and potential impact on public health.

Entrepreneurs are increasingly responding to the challenge of micropollutants, and the technical challenges associated with finding, capturing, and destroying PFAS have captured the minds and resources of many. Earlier this year we increased our investment in Puraffinity, a London-based startup that develops precision technology for the removal of PFAS across water treatment applications. Aclarity, meanwhile, provides a proprietary, cost-effective technology for PFAS destruction.

A growing need

The most widely used solution for PFAS destruction today is incineration. However, government regulations, costly lawsuits, and public pressure are increasingly driving organizations to find solutions for the capture and destruction of PFAS and alternatives to products and processes that use these chemicals.

Destroying hazardous fluorinated compounds in wastewater is top of mind for many organizations, including The Heritage Group and our environmental operating companies. Currently, we manage PFAS-contaminated waste streams at the hazardous incinerator for destruction, but with the growing demand, capacity is an issue, so an effective (and cost-effective) alternative is very attractive.

Aclarity’s best-in-class destruction technology obviates the need for incineration. It centers on a proprietary anode that attracts PFAS in water and breaks down the core carbon-fluorine bond into carbon dioxide, fluorine, and hydrogen fluoride. Once decomposed, the PFAS constituents become inert and easy to manage.

A number of other destruction technology routes are being explored by different companies, but most are still in early development or beginning pilot trials, and do not offer validated total destruction of PFAS compounds. By contrast, Aclarity’s decentralized electrochemical PFAS destruction technology has already been successfully piloted with prominent industry players, and our analysis indicates that the company is well positioned to emerge as a leader in this field: With growing public concern and increasing regulations, the PFAS remediation market is estimated to grow to $6.15 billion by the end of this decade, and Aclarity’s technology lends itself to multiple verticals within this field, including landfill leachate, municipal drinking water and industrial wastewater.

Experienced leadership

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Earlier this month, Julie Bliss, Aclarity CEO, visited The Center, the headquarters of The Heritage Group. She met with the HG Ventures team and leaders across THG and several operating companies.

As with all of our investments, we are backing the leadership team just as much as we are backing the technology itself. CEO and co-founder, Julie Bliss Mullen developed Aclarity’s primary technology as a PhD candidate at UMass, and previously worked in engineering and policy development at the EPA’s Drinking Water Unit. COO Pamela Lynch, meanwhile, has 20 years of experience spanning engineering management, operations, supply chain, quality, and programs; and CSO, Dr. Orren Schneider previously worked as Manager of Water Technology in R&D for American Water.

We are excited to be working with Julie, Pamela, Orren and the wider team, as they apply truly innovative thinking to tackle the serious and growing issue of PFAS.

“HG Ventures has proven to be an invaluable partner in Aclarity’s pursuit to tackle PFAS destruction. Their unwavering support and strategic investment has significantly contributed to our success, making them an exceptional ally in our journey towards environmental sustainability.” – Julie Bliss Mullen, Founder and CEO of Aclarity

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August 16, 2023

Unicorns, puppies and pieces of pie: A guide to venture capital and trends in sustainable investment

HG Ventures’ senior director, Ginger Rothrock recently delivered a keynote address at the SP Innovation Summit, organized by the automotive industry’s Suppliers Partnership for the Environment. Here, Ginger outlines some of the insights into the world of venture capital that she shared with the Summit’s delegates.

Ask me what we do at HG Ventures and you will have a hard time getting me to stop talking.

It is easy to forget that not everybody inhabits the same world, where scientific innovation meets venture capital, so it is sometimes necessary to boil things down to their essence:

  • We buy a piece of the pie, with the aim of growing the pie: Most entrepreneurs get to the point where they need an injection of capital in order to scale their business, and that’s where venture capital comes in. In the simplest of terms, we buy a share of the business, based on a current valuation and an assessment that by putting that capital to use, that business will eventually grow to become much larger. Everybody wins.
  • High reward often comes with high risk: We are looking to invest in businesses that have the potential to deliver a high return on our initial investment. Generally speaking, that means taking a risk, and very often the higher the risk, the greater the reward.
  • They are called unicorns for a reason: In the world of venture capital, a ‘unicorn’ is a venture-backed business with a valuation of $1B or more. Needless to say, these are exceptionally rare; for every 1,000 deals done, less than 1% will go on to achieve that sort of valuation. Less than 1% will exit between $500 million and $1 billion; another 100 or so have some sort of exit that at minimum returns an investor’s capital. That leaves us 900 companies.
    Yes, nine out of ten VC-funded companies fail. But the ones that succeed make up for all the failures.
  • Entrepreneurs are our customers: The entrepreneur is the creator of all the value in the venture capital business.  If there were no entrepreneurs, there would be no venture capital. So we treat the entrepreneur like our customer; we are in the services industry, and invest heavily to make sure entrepreneurs get appropriate attention and resources.
    That said, HG Ventures has probably 20 new deals a week out of over 100 inbound that are relevant to our investment interests.  We invest in about five per year, which means about 995 entrepreneurs (customers) are turned away.
    We work hard to make quick decisions and be forthcoming on reasons why we pass.  Often our response includes a “not now” – we never want to close the door to possibly investing in an entrepreneur in the future. You can easily see how the ratio of companies inbound to companies funded makes for a challenge in customer relations.
  • Startups are like puppies: Just like adopting a puppy (which our family recently did – see gratuitous puppy picture with my youngest daughter), we must actively nurture and support startups. At HG Ventures we do everything we can to help, providing our investments with access to our resources, our contacts and our customers. Anyone can make an investment; generating a meaningful return by growing and exiting an investment is the tough part.

Bouncing back from a tough year

Valuations of venture-backed startups have mostly declined since Q1 2022, causing VCs to be a lot more discerning about how, where and when they invest.

But 2023 is shaping up to be different from 2022. Every stage, from seed to series D, saw the median pre-money valuation rise this last quarter (according to Carta). And four of those stages (seed, A, B, and C) have valuations above or just below Q1 2021.  I’m optimistic; however, the volume of deals is still considerably down from 2021 and early 2022.

There still remain startups that were funded during the “good times” that are now struggling with their inflated burn rate, have not really found product-market fit, have challenges achieving positive unit economics, or other factors.

These startups will struggle to raise capital, and most of them will fail. Yes, they are part of that 90%.

 Myths and facts about investing in hard tech

“Hardware is hard”, say investors, LPs, and even founders in this sector.

There are plenty of quips around the trials associated with building and funding companies commercializing physical objects and applied science; and that this sector is a much harder path than building software. Of course, HG Ventures believes that today’s scientist and engineer entrepreneurs are creating the next generation of unicorns. Happily, other investors are starting to align with this idea.

Over the past four years, B2B SaaS has dominated, accounting for 42% of all VC investment in priced rounds in 2019 and 30% in 2023. Consumer and fintech also were significant categories in 2019; both categories have experienced a decline in percent of invested capital through 2023.

On the uprise over the period of 2019 to 2023 are (according to Carta):

  • Energy (primarily cleantech) – which rose from 2% to 11%
  • Hardware – rising from 6% to 10%
  • Pharma and biotech – at 15% of all investment into startups, an increase over 12%

What of climate tech?

Well, the Inflation Reduction Act (IRA) will flow billions of dollars of capital into climate tech over the next decade, much of it matching and augmenting VC investment. Many leading VC firms have dedicated climate funds now, and we see these funds as new co-investors in the sectors in which we focus.

All in all, this is a great time to be innovating in climate tech.

What trends are driving innovation and investment?

As we see it, there are four key trends driving increased investment in the area of climate and sustainability tech:

  • Economics: Investing in sustainability has to be a “yes and…”. It cannot be just about being environmentally conscious; there must be a strong alignment of sustainability with economic incentives too, for successful investments.
    Automation plays into the economics of it, too, not just in traditional applications like automotive manufacturing, but also in adopting automation for in-plant circularity, wastewater treatment, and packaging processes, for example.
    The concept of decentralization is also gaining momentum, especially in the context of the circular economy, where the focus is on reusing materials, reducing supply chain uncertainties, cutting costs, and minimizing costly waste streams.

    And energy economics cannot be ignored, especially with the increasing discussions about the transition to electric vehicles (EVs) and alternative energy sources becoming mainstream (or cheaper).

    Future risks, such as the pricing of carbon and water (both increasing), are also on our radar, and we actively consider these factors in our investment decisions, avoiding water or carbon-intensive processes where possible.

  • Technology: In today’s fast-paced world, tools and technologies have become more powerful, user-friendly, and affordable than ever before. As an example, the growing popularity of ChatGPT showcases the capabilities of language models that can assist us in everyday tasks, like finding a recipe based on available ingredients. This is applicable in the realm of sustainability, too, where technology plays a crucial role in green chemistry. I mentioned during the conference the existence of a vast database containing every known chemical reaction, which enables us to explore more eco-friendly alternatives, such as using “available ingredients” like biobased feedstocks with low CO2 emissions.
    The advent of cloud storage, computing clusters, and democratization of machine learning further accelerates innovation and accessibility.
    When it comes to manufacturing, automation is just one piece of the puzzle; the industry is witnessing a transformative phase with the development of toll manufacturing, 3D printing, and other just-in-time manufacturing options. The possibility of outsourcing an entire supply chain, as demonstrated by the example of our portfolio company ZwitterCo, offers exciting potential for sustainable practices and efficient operations. Additionally, biotech and electrochemistry are now equipped with powerful tools like CRISPR, allowing scientists to move faster in their research and development. And the availability of affordable, user-friendly robotics makes it easier for startups to build and operate without the need for specialized engineers.
    And we recognize the value of investing in companies that align with the values and desires of Generation Z – to engage in meaningful work with autonomy while collaborating with like-minded individuals. We seek out startups where people are excited to work, knowing that passion and dedication are vital drivers of success.
  • Policy and Public Perception: The world of policy and public perception is constantly evolving, offering both opportunities and challenges in the sustainable investment landscape. Increased public awareness of air, water, and pollution issues has led to greater transparency and accountability from companies. Media attention on concerns like PFAS and water quality has drawn public attention to the state of drinking water across the country, driving more consumers to seek information about their local utility’s water quality.
    At the local level, communities are becoming more aware of the environmental impact of carbon-producing industries, pressuring cities, counties, and states to take action against environmentally concerning activities.
    Public companies are also responding to public opinion by setting carbon reduction and ESG-related targets, aligning with the growing interest in sustainability; 96% of the S&P 500 published a sustainability report in 2022.

    As we move forward, there’s a clear trend of decarbonization and sustainability mandates trickling down the supply chain. Companies like Intel are already requiring their suppliers to report on and improve their manufacturing, logistics, and waste practices to adhere to sustainability goals. Moreover, initiatives like the Inflation Reduction Act (IRA) provide a roadmap for the country’s decarbonization strategy through the 2020s, further influencing investment decisions in the renewable energy sector and beyond.

How do we make money?

That’s a fundamental question in any venture, and in the world of sustainable hard tech investments, it’s essential to understand the different strategies that can lead to profitable outcomes:

  • Taking more capital upfront for long-term gains: Investing in sustainable hard tech often requires a more substantial upfront capital investment, compared with traditional ventures. However, this upfront investment comes with significant benefits. One of the key advantages is the creation of Intellectual Property (IP) and establishing a competitive moat. Sustainable innovations often involve cutting-edge technologies and unique solutions, leading to the development of valuable IP. This, in turn, provides companies with a competitive advantage in the market, making it challenging for others to replicate their offerings easily.
  • Exploring capital-efficient models: Founders in the sustainable hard tech space are continuously exploring innovative and capital-efficient business models. They recognize the need to replace traditional software returns with solutions that align better with sustainability goals. One emerging concept is “{blank} as a service,” where companies offer a service-oriented approach to address specific sustainability challenges. Such models focus on providing sustainable solutions in a more cost-effective and resource-efficient manner, ensuring long-term viability for both the company and its customers.
  • Embracing smaller scale innovations: As supply chain disruptions and logistics challenges increase, there is a growing trend towards local solutions and smaller-scale innovations. Companies are exploring ways to integrate recycling processes within their facilities, reducing reliance on overseas supply chains. By producing input materials on-site from locally sourced raw materials, businesses can ensure greater control over their supply chain, increase resilience to external disruptions, and create a more sustainable and circular approach to production.
  • Leveraging the circular economy: By investing in companies that adopt circular economy principles, investors can tap into the growing market demand for sustainable products and services. The circular economy not only benefits the environment but also presents promising opportunities for revenue generation and cost savings.
  • Navigating the market transition: The market is undergoing a significant transition, driven by the increasing focus on sustainability and the urgency to address environmental challenges. Investors who can navigate and capitalize on this transition stand to gain substantial returns. As traditional industries face disruptions, sustainable alternatives offer attractive solutions. Investing in companies that lead the way in sustainable practices and eco-friendly innovations positions investors to capitalize on changing market dynamics and emerging opportunities.

Where we are investing

We continue to invest across a broad range of industries, but here are some of the key areas that were of interest to the participants in the conference focused on sustainable innovation in the automotive supply chain:

  • Sustainable Materials – Circular Economy: Investing in companies that contribute to the circular economy is a key focus. Examples of our investments in this area include Pretred, a company that repurposes waste tires into construction blocks and highway barriers. By diverting tires from landfills and finding new applications for them, Pretred not only reduces waste but also contributes to sustainable infrastructure development.
    Another promising investment is Vartega, a company specializing in carbon fiber recycling. Vartega’s innovative recycling process allows for the reuse of valuable waste carbon fiber, making it an essential player in the sustainable materials industry.
    Additionally, there are biobased materials companies like Biosynthetic Technologies, which produces biodegradable base oils and lubricants, providing environmentally friendly alternatives to traditional petroleum-based products.
  • Electrification: Investing in the electrification sector offers compelling opportunities to promote clean energy and reduce carbon emissions. A prominent company in this portfolio is Battle Motors, a leader in selling electric trash trucks. By electrifying waste management vehicles, Battle Motors contributes to cleaner and quieter communities while reducing greenhouse gas emissions.
    Another area of interest lies in technologies related to electric vehicle (EV) battery reuse and recycling. Companies like Titan Advanced Energy Solutions utilize ultrasound technology to measure the state of health and state of charge of EV batteries, enabling efficient battery management and extending their lifespan.
    Currents, meanwhile, operates an exclusive marketplace for original equipment manufacturer (OEM) battery packs, facilitating the recycling and repurposing of these essential components.
  • Environmental: Investing in companies that address environmental challenges is vital to creating a sustainable future. For instance, Puraffinity specializes in capturing per- and polyfluoroalkyl substances (PFAS) from water, addressing a significant water pollution issue.
    In the industrial wastewater treatment sector, companies like ElectraMet focus on the recovery of valuable materials like copper and chrome from industrial waste streams, promoting resource efficiency and reducing waste.
    Circulor is making strides in traceability solutions for supply chains, starting with battery materials. By providing transparency and accountability, Circulor helps ensure the responsible sourcing of materials and promotes sustainable practices across industries.
  • Infrastructure software solutions: Investing in software plays in infrastructure presents innovative ways to enhance sustainability and optimize asset management. Avenew, for instance, is pioneering road asset management plans, using software to optimize infrastructure maintenance and repair. By employing data-driven insights, Avenew enables better decision-making and resource allocation, leading to improved infrastructure efficiency and reduced environmental impacts. Such investments in infrastructure software contribute to building more resilient and sustainable urban environments.

There is an incredible amount of innovation taking place throughout the world, in many fields that have the potential to improve sustainability and mitigate the impact of the climate crisis.

Small wonder then, that if you ask about what we do at HG Ventures, it is hard to stop me.


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August 10, 2023

Building a greener future: Why we invested in Material Evolution

In June 2023, HG Ventures increased its investment in UK materials science firm, Material Evolution, as part of that company’s £15M Series A round. Here, senior director, Ginger Rothrock explains why we doubled down.

There are few construction materials as ubiquitous as cement. Global production is around 4.1B metric tons annually, and while this material is incredibly versatile, its manufacture is also highly carbon-intensive, accounting for 8% of the world’s CO2 emissions. For context, if cement were a country, it would be the world’s third largest emitter of CO2 (the U.S. produces 4.7B tonnes of CO2 annually).

So the search for ways to reduce or offset those carbon emissions has been on for some time. And while most of the discourse has been around cements that capture carbon, when we first met the founders of Material Evolution in 2020, they had a very different idea.

Cement, but not as we know it

Dr. Elizabeth Gilligan Headshot
Dr. Elizabeth Gilligan, Material Evolution CEO

Dr Elizabeth Gilligan had yet to complete her PhD at Queen University, Belfast, when she applied to participate in the Heritage Group Accelerator. The ‘business’ was really little more than an idea at that stage. There was no product. But she did have a groundbreaking idea: Manufacturing cement from recycled waste materials and no heat.

Material Evolution’s patented process takes waste materials from industrial byproducts (the first market is the metal and mining industry), and uses alkaline fusion, rather than traditional calcination and clinkerization, which requires heating the powder from crushed limestones to temperatures of 1,450°C (2,642°F). Material Evolution’s method results in an 85% reduction in CO2 emissions.

Elizabeth spent three months in our accelerator program, during which time she benefited from access to experts from Heritage Research Group and Milestone Contractors, who helped to validate their concept.

Following her return to the UK, we introduced Elizabeth to other investors, Playfair Capital and At One Ventures, and before long Material Evolution was a reality, with a scaling production facility and, crucially, contracted customers.

Building a greener future

We did not need any convincing to join those other investors in Material Evolution’s recent funding round. Not only is the traditional method of cement production highly carbon-intensive, it also uses a vast amount of raw materials – limestone, shale, gravel – which all have to be mined. The ability of Material Evolution to use materials that would otherwise go to waste is just one more benefit of their groundbreaking process.

The market for lower-carbon cement is enormous, and we are confident that Material Evolution has the potential to capture a significant share. We are excited to be on that journey with them.

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June 22, 2023

The Future’s So Bright, We Gotta Wear Shades: Why HG Ventures Invested in SOLARCYCLE

In March 2023, HG Ventures co-led a $30M investment round in SOLARCYCLE, a company that recycles and repurposes end-of-life solar panels. HG Ventures’ senior director, Ginger Rothrock outlines the rationale for this investment, and the potential of the solar recycling market.

To the uninitiated, the recycling of solar panels may seem like a niche field. After all, how many can there be? How quickly do they wear out? And why would you bother to recycle them?

This is exactly why the HG Ventures team and I are so excited about SOLARCYCLE: The potential is huge, not just in commercial terms, but also in terms of the contribution to the circular economy.

Market Potential

We estimate that by 2030 there will be 400 million solar panels for recycling, totaling 8 million tons. And with an increasing focus on renewable energy the world over, this is likely to grow to 80 million tons worldwide, by 2050. Given this volume, it is staggering to learn that most solar panels reaching their end of life are currently sent to landfill. That is not because of negligence on the part of those needing to replace panels, but because it is cheap to do so, and there is not a wealth of viable alternatives.

Even more astonishing is that end-of-life panels that are being sent to landfill still have value. The National Renewable Energy Laboratory (NREL) estimates a value of $2 per panel. But we independently estimate it to be many times that, because of the value of the materials within them, which include aluminum, glass, copper, silver, and silicon. Based on our analysis, the US market alone could be worth almost $5B by 2030.

Given these data points, the opportunity for a scalable recycling solution quickly becomes clear.

Why Recycle?

Given that the cost of sending retired panels to landfill can be as little as $1 per panel, why should a business transition to the more expensive option of recycling?

We identified a number of regulatory, economic and social tailwinds that indicate the pendulum is swinging in favor of sustainable solutions:

  • Regulation: In Europe, companies are required to have a clear end-of-life strategy for solar panels, and we are seeing evidence of similar regulations being introduced in the US. California, which leads the way in many green energy policy initiatives, has a Bill in draft that the Solar Energy Industries Association (SEIA) hopes to use as a model for legislation for other States. As more regulation is introduced, companies will have to adopt sustainable end-of-life strategies, or risk losing their license to operate.
  • Corporate ESG: Publicly traded European companies are already required to report on Environmental, Social and Governance policies (ESG), and those with solar plants in the US tend to harmonize their policies to bring them into line with the EU. And the US may yet adopt similar ESG reporting requirements for all public companies.
  • Economics: Market dynamics suggest that an increase in the volume of panels recycled, coupled with the value of the material recovered in the recycling process , will reduce the cost of recycling over time, while landfill costs are likely to increase.
  • Public sentiment and market differentiation: As corporations’ sustainability policies increasingly inform brand perceptions and consumer preferences, the recycling of solar panels may become a differentiator, or an expected policy akin to those around land and water use.

A Nascent Market

With the average lifespan of a solar panel being 13 years, the issue of how to handle them as they reach end-of-life is only now emerging in a meaningful way.  Large solar energy companies recognize that landfilling is not a sustainable long-term solution for an industry that survives based on its “clean and green” reputation, even without the regulatory and economic factors outlined above.

This is the opportunity that SOLARCYCLE has identified: It is the only company in the US currently able to recycle solar panels at scale, with a business model and technology focused on driving down the cost of recycling and driving up the value of materials extraction.

Contributing to the Circular Economy

The re-use of those embedded materials makes this an important contributor to the circular economy, as well as an attractive commercial opportunity.

Currently, SOLARCYLE’s automated recycling systems is able to extract and recycle 90% of each solar panel’s composition: Aluminum, glass, batteries and precious metals. And once a solution is found for the plastic that makes up the remaining 10%, this will be a zero-waste process.

A Valuable Partnership

When considering any investment opportunity, one of the first questions we ask is: How can we help?

In most cases, we are able to offer something that no other investor can: access to The Heritage Group’s operating companies and immense scientific, technical and research capabilities.

That is the case with SOLARCYCLE. Our decades of experience managing industrial waste streams through the Heritage Environmental and Envita Solutions operating groups enable us to provide connections and insight to SOLARCYCLE navigating the complex waste and material reuse supply chains. Our Heritage Research Group is currently testing alternative uses for the plastic generated in the recycling process, helping SOLARCYCLE achieve a zero-waste process. Cirba Solutions, the largest battery recycler in North America, is partnered with SOLARCYCLE to recycle the batteries and inverters collected from the solar ecosystem.

We are further able to support the leadership team through the knowledge and expertise of my HG Ventures colleague, Kip Frey, who takes a seat on the SOLARCYCLE board. An entrepreneur and veteran of the VC world, Kip has steered many high growth companies to success, and now applies that wealth of experience to this business.

With our investment, and that of other funding partners, SOLARCYCLE plans to double the capacity of its first facility in Odessa, Texas, to enable it to support the recycling of up to one million solar panels per year. And that’s just the start.

The future is bright indeed.