Green Gold: How Welsh Cleantech startups can jumpstart our economy
Have you ever thought about the Welsh renewable energy startup sector? Is it even that important? If you haven’t you wouldn’t be alone. But this sector, once in relative obscurity, may have just landed a golden ticket.
Last month, the Welsh Government confirmed it would be establishing two new freeports, focusing on marine and low carbon energy, to build a “green energy corridor” in the South West.
These zones, offering favourable tax and custom rules, aim to attract 20,000 jobs and £5bn of investment into Wales.
This is hand in hand with the plans to develop powerful wind turbines in the Celtic Sea, bringing a tidal wave of new money and talent to the climate-tech ecosystem.
In the spirit of this full-throttle commitment, there’s no better time to highlight the value of one of Wales’ greatest, and under discussed assets – cleantech startups. It is the growing and fostering of this ecosystem, where Wales’ greatest potential for Net Zero return on investments (ROIs) lie.
The potential for Wales to become a clean energy hub is clear. We have 1,600 miles of Atlantic-facing coastline, over 80 operational wind farms, some of the strongest wind and tidal resources in Europe and 90% of our total land area is used for agriculture.
With these incredible natural resources, here’s how the renewable energy startup sector stands today.
We estimated that the value of the Welsh clean energy startup ecosystem is an eye-watering £332m. This is over £100m more than the Higher Education budget, or enough to fully fund the entire Social Justice System twice.
Together, startups have raised over £75m, with an average of £3m per company, despite a relatively small workforce averaging nine employees each.
It’s promising to note that 40% of those startups were still in seed stage, meaning their capacity for high-growth and scaling is huge.
This fairly small number of startups, already worth a third of a billion, have the chance to catapult Wales into the gold standard for achieving Net Zero.
From tidal power in Swansea, to the Gwynty y Môr wind farms in the north coast, Wales should target the development of specialist clusters.
Doing so, with startup innovation at the heart would propel our transition to Net Zero, create high-paid jobs and attract world-class talent and investment.
Priming Wales to be a hub for clean energy growth can be done in a few ways. Local government can improve access to finance and markets, acting as an intermediary between startups and potential partners.
They can provide a single entry point for grant funding, as well as create a critical mass of startups which are more easily visible to potential investors.
Town planning considerations, such as integrating co-working spaces and incubators, are fantastic for fostering innovation. Placing these in a geographic location close to some of these natural resources would provide a boost for startups.
Not only would they provide the essential space and infrastructure to start a business, they can also provide the kind of wraparound support that founders value including mentoring, guidance and a business community.
Creating and facilitating more networks also allows founders to be exposed to more like-minded businesses and investment opportunities.
The Welsh Government has pledged to generate at least 70% of its energy consumption from renewable sources by 2030.
One of the most effective ways in both pursuing this, and measuring our progress, is through the growth of our cleantech startups. If 25 startups are valued at £332m now, imagine the economic impacts of 100 cleantech startups.
Welsh coal drove the Industrial Revolution, but it’s Welsh wind that will drive the Climate Revolution – let’s not blow it.
Elis Thomas is the Policy Lead for the Coalition for a Digital Economy (Coadec), an independent not-for-profit advocacy group that serves as the policy voice for Britain’s technology-led startups and scale ups. It represents the startup community on the Government’s Digital Economy Council, and the UK on the Board of the international organisation Allied for Startups.
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