Breakthrough Energy Catalyst Takes Next Step to Committing Funds
Key points: Breakthrough Energy’s Catalyst (BEC) programs with the EU, US and UK issued RFPs in December ‘21/January ’22, the next step in BEC’s blended finance investment ambitions of >US$2.5 Billion. To reach the targets, BEC’s and governments’ commitments must be matched by other private investment; the EU aims for a private-to-public funds ratio of 3:1.
BEC seeks to catalyze blended finance in specific technologies assessed to be at “scaling up” stage. BEC is specifically focused on scaling up, and thus lowering the cost of, four areas: sustainable aviation fuel, green hydrogen, direct air capture and long-duration energy storage. These four have been targeted because technology solutions exist but are currently on a development/commercialization trajectory that appears too slow to assist in meeting global Net Zero ambitions. BEC is employing a blended finance model, with contribution from 1) its own fundraising, 2) BEC corporate partners (see below), 3) government and 4) independent capital raise (see graphic for EU relationship).
BEC anchor partners are companies agreeing to co-invest. BEC has thus far announced that its partners include American Airlines, Arcelor Mittal, Bank of America, Blackrock, BMO Financial Group, Boston Consulting Group, Builder’s Vision, Citi, General Motors, HSBC and Microsoft. BEC notes that investment can take several forms, including grants, equity, quasi-equity, and purchase commitments.
BEC’s agreements with the US, EU and UK. While establishing a commitment to mobilize US$15B in total, BEC has reached specific agreements to mobilize over US$2.5B by 2026 in blended finance:
- US: An agreement to jointly mobilize up to US$1.5B by 2025. An RFP for investment candidates was issued in December 2021
- EU: An agreement to mobilize up to US$1B by 2026. An RFP for investment candidates was issued in January 2022. The public funds are to be directed through the European Investment Bank and sourced from the continent’s Horizon Europe and Innovation Fund. Private funds are to be sourced from BEC and its corporate partners and independent sources. See graphic for stipulated contributions by entity.
- UK: An agreement to mobilize up to £200MM in private sector funding by 2031. An RFP for investment candidates was issued in January 2022. The public funds are to come from the country’s £1B Net Zero Innovation Portfolio.
BEC is a part of Breakthrough Energy, an investment platform led by Bill Gates. Comprised of (very) high net worth individuals, Breakthrough Energy also includes a Ventures arm, which has invested in over 50 energy-related companies, a Fellows Program, which supports earlier stage innovators and businesses, and a policy development/advisory arm.
2/15/2022