Big oil courts U.S. clean-energy startups in bid to speed green transition

Murata Manufacturing Co

05/10/2021 11:00

By Liz Hampton
    HOUSTON, Oct 5 (Reuters) - U.S. clean-energy startups are
booming as oil companies are giving them more attention and cash
in a bid to speed up their own green transitions.  
    Investors want oil producers to accelerate a move away from
fossil fuels by selling cleaner energy and developing technology
to eliminate climate-warming gases. 
    Entrepreneurs proposing to harness energy from offshore wind
and waves, generate hydrogen from waste gas and build fuel
storage networks from old wells are attracting attention from
Big Oil. 
    Oil companies are often partnering with and investing in new
enterprises that have started at clean-energy incubators. Some
oil firms have set up their own incubators and venture teams to
find and fund greentech.
    U.S. oilfield services firm Halliburton  HAL.N  works with 
eight clean-tech fledglings and is recruiting more for an
in-house startup accelerator that provides each $100,000 in seed
money.
    Baker Hughes  BKR.N  is collaborating with incubator
Greentown Labs to get a window into emerging technologies and
provide advice to startups. Oil majors Eni SpA  ENI.MI  and
Repsol SA  REP.MC  have approached U.S. clean-tech ventures
through investment arms.  
    There are roughly 20 clean-tech U.S. incubators tracked by
the Electric Power Research Institute. But that number likely
undercounts the total because of their rapid growth, said Julia
Travaglini, vice president of marketing for Greentown Labs.
    "We're seeing across-the-board an uptick in clean energy"
incubators, added Lindsay Schuenke, director of content at the
International Business Innovation Association, which works with
business development groups. 
    Crunchbase, which measures venture capital investments, says
clean-energy startups so far this year have taken in $11
billion, up from $5.6 billion for all of 2020. Startups still in
business after five years is a key measure of success, said
Chris Ilsley, chief executive of North Shore InnoVentures, a
12-year-old clean tech incubator outside of Boston.
    It and Greentown Labs say 80% to 85% of their fledglings are
still in business after that period, compared to just 20% of
startups overall. 
    Another measure is corporate interest in the companies. 
    One of the companies that spent a year at North Shore
InnoVentures developing a fast-charge battery, SES Holdings,
later won deals with automakers General Motors  GM.N  and
Hyundai Motors  005380.KS . Another, low-power semiconductor
designer Arctic Sand Technologies, was bought by Japanese chip
maker Murata Manufacturing for $68 million. 
    
    POWER FROM OLD WELLS
    Moonflower Technologies' subsidiary PowerWell, a startup
that proposes to convert abandoned oil wells into gravity-based
energy storage systems, hopes to turn its concept into a
commercial product, by winning support from Halliburton's
incubator. 
    The Houston-based venture also drew interest from energy
technology provider Baker Hughes, which has suggested helping
with efforts to source materials, said co-founder Carrie Criado.
Incubators have allowed it to “learn a lot and learn it faster
with the resources they offer,” she said.   
    Thiozen Inc, a Massachusetts startup developing a way to
turn a waste gas into a clean-burning fuel, talked to three
incubators before choosing North Shore InnoVentures, said
President Ryan Gillis. 
    Oil giant ENI recently agreed to help finance a pilot test
of Thiozen's technology to generate hydrogen from sour gases
that must be heavily processed. 
    Another startup, NanoTech Inc, aims to reduce energy waste
in oil, chemical and construction industries through a unique
fire-proofing and insulation coating. It won seed financing from
Halliburton Labs. 
     
    TOUGH TRANSITIONS 
    Established businesses gain from incubators because the
relationship "diversifies and distributes the risk" of new
technologies, said Thomas McNulty, a managing director at
business consultants ValueScope Inc.
    It lets internal R&D teams "focus on commercialization and
scale as the scouts find technologies out in the incubators,"
McNulty added. 
    But the risk for big oil companies looking to create new
revenue steams is that these ventures may not grow fast enough
or generate enough profit to replace declines in traditional
businesses. 
    "If history is a guide, they will not be successful," said
Chris Duncan, a research analyst at investment firm Brandes
Investment Partners. 
    
    FLOCKING TO INCUBATORS 
    That has not stopped energy companies including BHP,
Chevron, Engie or investment bank Tudor Pickering Holt & Co.
from partnering with Greentown Labs' Houston operation. 
    Baker Hughes sends staff to listen to technology pitches,
view work by researchers and to provide commercialization
advice, said Nigel Jenvey, a Baker Hughes executive for strategy
and growth initiatives.
    Roy Robinson, CEO of Excipio Energy, which designs floating
platforms that convert wind, ocean waves and tides to energy,
said the relationships formed are mutually beneficial. 
    "The energy companies see that there is a transition, and
that there is money to be made," said Robinson, a former Repsol
manager. 
    The payoff can include a stake in a promising new venture.
Halliburton gets a 5% share of startups that join its
accelerator, said one startup founder who met with its
executives. 



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 (Reporting by Liz Hampton in Denver, additional reporting by
Gary McWilliams in Houston; Editing by Cynthia Osterman)
 ((Liz.Hampton@thomsonreuters.com; +1 832 571 8115; Reuters
Messaging: Reuters Messaging: liz.hampton.reuters@reuters.net))