Life Cycle Diligence to Shore Up Mission Critical Supply Chains

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A New Approach to an Increasingly Fickle Problem.

Although venture capital firms often hoover up headlines for making flashy cleantech bets, later stage financings are arguably more intriguing and more impactful. In 2023, as venture firms touted their $5.5b in North American cleantech investments, $135b were quietly deployed into the same sector by private equity in the form of debt and tax equity financing, meaning that for every dollar invested by venture capitalists, $25 were invested in clean energy projects. Cleantech manufacturing commands massive investment as well: globally, investors poured over $180b into PV and battery manufacturing in 2023, a 70% increase over 2022.

Because manufacturing and project investing require patient capital and are reliant on complex supply chains, they face significant supply chain risk which must be managed. While VC exit timelines are typically less than 7 years, infrastructure payback periods can take up to 10 years, while battery manufacturing plants may see payback periods of 8 to 13 years. Together, these asset classes are exposed to supply chain risk as a function of scarcity and geopolitical uncertainty.

The key challenge for project and manufacturing investors over the next decade will be derisking access to key materials. This means that cleantech investors need a reliable method for ensuring supply chains are sustainable and derisked from climate-related disruption. Life Cycle Diligence, which combines Life Cycle Assessment and Techno-Economic Analysis, is an effective way of doing this.