Bill Gates Has Billions in Green Startups. He Shares the Early Winners and Long Shots.

It is the blessing that can help determine a climate startup’s fate: backing from Bill Gates, one of the biggest investors in efforts to transform the world’s energy use.

Since 2015, Breakthrough Energy, the climate-investment firm founded by Gates, has lavished $2.2 billion on more than 160 startups and other initiatives, seeking both returns for investors and emissions reductions. He has also made investments separately outside the firm.

Some of those startups are pursuing relatively straightforward solutions, such as sealants that make heating systems more efficient. Others are working on ideas that might sound far-fetched, such as burying plant waste to remove carbon dioxide from the atmosphere.

In an interview, the Microsoft co-founder looked at the road ahead for the young companies he has invested in.

The startups poised to emerge as early winners

The surest bets, Gates said, are the companies that find ways to make existing systems more efficient. “They are, in a sense, just making a better product,” Gates said.

Among the examples he cited was TS Conductor, which makes a power cable that weighs less and carries more electricity than conventional wires. That lets utilities add power to congested grids without building new transmission lines.

As demand for TS Conductor’s technology grows rapidly, a company representative said it is deciding where to put a new U.S. manufacturing site with 10 times the capacity of its first one in Southern California.

Another startup Gates cited is Aeroseal, which identifies leaks in heating and cooling systems, then releases sealant-containing mist to plug them. The technology has been used in hundreds of thousands of homes and more than 10,000 commercial buildings, according to the company.

Gates also predicted success for KoBold Metals, a mineral-exploration company that uses artificial intelligence to identify deposits of metals used in batteries, power lines and other gear needed for the energy transition. KoBold said this year it discovered a vast copper deposit in Zambia after conducting drilling tests at the site since 2022.

Many startups still need to reduce costs

A big reason many green technologies aren’t catching on more quickly is that they cost more than the polluting option.

“The Breakthrough Energy theory is to get to a point where there is no green premium,” Gates said.

That isn’t the case yet for green hydrogen, which could help decarbonize steelmaking and other industries that rely heavily on fossil fuels. Green hydrogen is made by splitting water using renewable electricity, but still costs far more than hydrogen produced from natural gas.

Electric Hydrogen, a Gates-backed startup that says it has developed a better electrolyzer, which splits water, is among those trying to bring costs down. The company raised $380 million from BP, United Airlines and others last year and opened a factory in Massachusetts this spring.

One area where Gates said the cost gap is narrowing is heat batteries, which convert electricity into heat for industrial processes. Rondo Energy, backed by Breakthrough, is working with Diageo, the liquor company, at sites in Kentucky and Illinois and this week announced deals in Europe.

Some investments are far from paying off

It will likely be many years before some technologies can be commercialized, but Gates said his investing approach is “unusually patient.”

Since 2008, for example, he has poured more than $1 billion into TerraPower, a company he founded to develop nuclear reactors that are smaller and cheaper than conventional nuclear power plants. TerraPower recently broke ground on its first project in Wyoming, which the company hopes will come online in 2030.

“As long as that looks promising to me, I’ll make sure that it’s financed,” he said.

Those next-generation reactors aren’t the biggest long shot in Gates’s portfolio. Breakthrough has also backed startups working on nuclear fusion, which could theoretically provide abundant carbon-free power. But even optimists agree that the first fusion power plant is years away.

Gates called it “maybe the hardest thing we work on.”

Startups working to remove carbon dioxide from the air are also still in their relatively early stages. The methods include giant fanlike machines that suck carbon from the air, and the spreading of carbon-absorbing rocks on soil. Gates said he pays $600 per metric ton of carbon dioxide to offset his emissions; Breakthrough has backed a startup that says it can remove carbon for less than $100 a ton by burying plant waste.

Gates said costs will need to fall further for carbon removal to play a major role in curbing climate change.

A bet that didn’t work out

Delays, setbacks and failures aren’t surprising when trying to develop new technologies. One disappointment for Gates came in May with the chapter 11 bankruptcy of Ambri, a developer of liquid-metal batteries.

Ambri is one of many startups trying to develop cheaper or longer-lasting alternatives to lithium-ion batteries, which power electric vehicles and store wind and solar power for when it is needed on the grid.

An Ambri spokesman said the company is on course to exit bankruptcy next month and will push to license its technology after it didn’t secure enough investment for its manufacturing plans. Gates is part of a creditor group that is on course to acquire the company out of bankruptcy.

Gates, who invested through his Gates Frontier firm, said Ambri didn’t bring down costs as hoped. He predicted that most startups in that area will struggle to gain traction.

“Given the large number of battery companies, the majority of those technologies will be outcompeted,” he said.

Write to Ed Ballard at [email protected]