You’ve probably seen the news: Late last month, the Department of Energy canceled $3.7 billion in government support for clean energy projects.
Why? The projects “failed to advance the energy needs of the American people, were not economically viable, and would not generate a positive return on investment of taxpayer dollars,” the Trump administration said. The $3.7 billion in cuts followed an internal agency proposal to shut down the $27 billion clean energy office, too.
There were the big deals that lost their funding this time around—$331 million to an Exxon Mobil hydrogen project, $170 million to Kraft Heinz for clean energy projects, $500 million to Heidelberg Materials for a low-carbon cement effort, etc.—but those massive payouts aren’t the whole story.
That money—along with much of the energy funding and tax credits currently hanging in the balance as Congress works toward a reconciliation bill—also funds startups working toward the energy future. Because a good idea can only get you so far. Startups need programs, communities, and resources to scale. And often, early startups rely on money from the government to develop proof of concept.
So how are smaller startups faring given today’s funding uncertainty? It’s tough, but there’s a path toward viability—that’s according to experts at this year’s Urban Future Forum, put on by NYU Tandon’s Urban Future Lab.
The Energy Central team was at the forum last week, speaking with leaders across utilities, clean energy, and the startup ecosystem. Here’s what we heard about the case for optimism—no matter what happens next in DC.
Play to your strengths.
The government hasn’t totally turned off the funding spigot, speakers said, but it has gotten more selective. Projects in nuclear and geothermal, for example, are still getting funded. Startups that can demonstrate their relevance in these niche parts of the industry might have an easier time tapping into financial resources.
There is still ample money available, but it’s not marketed as aggressively. It’s a situation of “if you know, you know,” experts explained. They key?
Don’t wait for information to find you—do your own research and get aggressive. Track and follow the money. What’s actually getting funded right now? Is it startups in a certain kind of community? Or a certain sector? How can you look at real dispersals as a source of inspiration for your own efforts to fund your work?
Lean into diversity.
The effort to win money from venture capitalists and other private sector investors is getting more competitive without the flow of government funding the energy industry has become accustomed to. So diversifying your sources of funding—not just VC, not just grants—helps to ensure you still get a piece of the pie, said La-Toya Niles from the Sustainable Cities Fund.
Leverage your community work.
Earning buy-in from your community sets you up for success in bankrolling your project, forum speakers noted. How? “Nothing attracts funders like FOMO and strong partnerships,” climate tech investor Jack Fritzinger said.
There’s a lot of money diverted only to nonprofits, so it behooves startups to align and partner with those nonprofits to access that funding—a great example of why community buy-in matters, experts explained.
If you read the Energy Central Daily Newsletter, you know how many energy startups are still getting funded—across generation, T&D tech, and more. Are you hoping to be one of them? Hit the comments to share your perspective on today’s funding climate.
Is it impossible to scale your business without government grants and funding?
Can you supplement your top line or shift expenditures to meet the moment?
What do you expect to come next for energy funding?
I’d love to hear what you have to say.