Steve Westly on the Accelerating Cleantech Opportunity
With cleantech investment skyrocketing from $2.9 billion in 2014 to over $100 billion today, Steve Westly, Managing Partner of The Westly Group, in this VX News interview unpacks the seismic shifts reshaping energy, mobility, and the built environment. He highlights the impact of AI on the power industry, the rise of EVs and battery technology, and also reflects on the Silicon Valley mindset infiltrating the federal government highlighting both the promise of innovation and the necessity of checks and balances. As he prepares to speak at VerdeXchange 2025, his message is clear: the transition to a clean, electrified future isn’t coming—it’s already here. The only question is, who will seize the opportunity?
“90% of all new power generation in the U.S. last year was renewable. This isn’t politics—it’s economics”
Steve, remind our readers of the Westly Group’s investment mindset and goals.
As background, we’re one of the most experienced long-term investors in the booming space of sustainable energy, mobility, and smart buildings. What sets us apart is our collaboration with 33 of the world’s largest industrial companies, all committed to achieving carbon neutrality—some by 2030, others by 2040 or 2050.
Our role is to help them reach these goals while maintaining profitability, because that’s what businesses want: to green the planet by bringing next-gen consumer products to market while staying financially sound. Thanks to the dramatic drop in solar energy costs, batteries, software, and automation, this transition is happening fast. Frankly, it no longer hinges on whether a Republican or Democrat is in office—the economics dictate the future.
Last year alone, despite conservative rhetoric, 90% of all new power generation in the U.S. was renewable. People are often surprised by this. But it’s not because utility CEOs have suddenly become environmentalists—it’s because they’re smart capitalists. Renewable energy is simply cheaper.
Building on that: when VX News last interviewed you in 2014, there was $2.9 billion in venture capital invested in clean tech. What’s that number today?
I believe it's over $100 billion, though I’ll need to confirm. But the sector’s growth is undeniable. As I said, no matter the political landscape in the U.S. or abroad, the world is moving toward renewables because costs continue to decline.
Beyond that, people can just look outside and see climate change in real-time—more wildfires, and extreme weather. Re-Insurance giants like Swiss Re and Munich Re are imposing higher premiums to pay for increasing climate risks and payouts, effectively taxing all businesses for those companies and countries who fail to adapt. No one understands this better than the citizens of LA.
In your 2018 remarks at VerdeXchange, you declared that the global fight between fossil fuels and renewables was over and that renewables had won. Does that remain view today?
I believe that more than ever.
Again, if you look at the U.S., 90% of all new energy added was renewable. In Europe, the numbers are nearly identical. And while people point to China’s coal expansion, here’s a key statistic: in 2024, China installed more solar and wind capacity than the rest of the world combined—twice over.
Here’s another important shift: global vehicle sales keep increasing as more people in India, Indonesia, Mexico, and Brazil can afford cars. So, the real question is: when will the number of internal combustion engine (ICE) vehicles sold each year start to decline? Because when that happens, we’ll see real pressure ease on oil prices. How soon do you think that tipping point will occur?
Most people estimate five, ten, or even twenty years. But the truth is, it already happened—seven years ago. ICE vehicle sales started declining slowly, and now they’re dropping fast. That trend will only accelerate.
Think about how the auto industry has evolved. Decades ago, Japanese manufacturers disrupted the market with affordable, fuel-efficient cars like the Honda Civic and Toyota Corolla. Now, a new wave is emerging—EVs from companies like BYD and SAIC selling for $12,000–$15,000. These are fully electric vehicles reshaping the industry. That’s why renewables have already won. The world is going electric.
With the Westly Group having raised and invested four funds and now preparing to raise its fifth—where do you see the biggest investment opportunities?
Great question. For the last hundred years, “energy” meant oil. That’s changing. Now, when we talk about energy, we mean electricity—powering EVs, data centers, and more. And here’s the game-changer: electricity demand, which once grew at 1% per decade, is now rising by 5% or more annually. Utilities can’t expand fast enough to keep up.
That’s why we see major opportunities in solar with battery storage, virtual power plants, and a next-generation, bidirectional power grid. The future isn’t just about producing electrons—it’s about managing them efficiently. That’s where the biggest financial opportunities lie.
Elaborate please on your investments in transportation, buildings, insurance, and water. Again, what opportunities offer the most reward?
There’s a lot to cover, but in simple terms: transportation is going electric and autonomous. Every automaker must recognize that they’re not just selling vehicles—they’re also managing one of the largest commodities in the world: power. Take Tesla—their fastest-growing division isn’t cars, it’s batteries. General Motors, Volkswagen, and others need to follow suit and collaborate with utilities. There’s a clear win-win in managing power demand. Autonomy is coming right behind electrification—not just for passenger cars, but for agriculture, mining, and construction equipment.
In water, the focus has shifted. It used to be all about recycling and municipal waste, which remains important, but now it’s increasingly about efficient distribution—getting water where it’s needed, when it’s needed, at the lowest cost. The challenge isn’t scarcity; it’s logistics.
And AI and robotics?
AI is transforming everything. We’ve just published three reports for our investors—AI for the power industry, AI for oil and gas, and AI for the auto sector.
I’ll share a quick story. I teach part-time at Stanford Graduate School of Business, and when AI tools first emerged, universities rushed to regulate them, warning students against misuse. Now, I tell my students: AI is your team of brilliant assistants—your job is to use them wisely and ensure the accuracy of their output, and we hope you'll monitor this strictly. Now I tell the students to make sure the answers they help you with are always correct.
And lab-to-grid opportunities?
It’s massive. The electrical grid is the largest machine in the world, but most people take it for granted. It needs a complete 21st-century overhaul, and labs are producing groundbreaking innovations to make that happen–it’s fascinating stuff.
We’re seeing more cutting-edge grid technology than ever before—especially in optimizing data centers. There’s a fortune to be made in this space, and it’s one of the most exciting frontiers in energy.
Steve, for context, more than ever there’s tremendous interest in how Elon Musk’s Silicon Valley mindset is impacting the public sector. Given that you’ve served on Tesla’s board and understand this perspective well—how would you characterize the approach Musk brings to government?
Well, I don’t want to dive into a political debate here, so let me try to just be as impartial as possible. He's brilliant. He's irascible, and sometimes he sees the future, but sometimes, not so much. If people ask if he overpromises, I’d generally say, only 100% of the time.
That said, he’s a master of first principles thinking. He knows how to accelerate progress, cut costs, and get things done. Many companies fail because they can’t control costs—Elon’s companies thrive because they do. Just look at SpaceX, where he bid to NASA at roughly half the cost of Boeing or McDonnell Douglas.
The flip side? He doesn’t know much about government. There will be mistakes, overpromising, and growing pains. If ever there was a time for America to flex its democratic checks and balances, this is it.
As the former State Controller and CFO of California, will the public sector remain strong and effective after DOGE?
Balance. In a democracy, balance is essential—especially now. Some people talk about a Trump landslide. But let’s be clear: he won by 1.7%. That’s no landslide. Nixon and Johnson won by over 20%. In Congress, especially the House, the Republican majority is razor thin.
The real test will come as Trump pushes the boundaries of democracy and tries to limit Congress’s constitutional powers. I remain hopeful—perhaps overly optimistic—but I believe more Republicans will stand up and say, “Wait a minute. That’s not legal. That’s not right. That’s not American.” It’s going to be a Profiles in Courage moment for many in the party. I suspect even Mitch McConnell is already wishing he’d spoken out sooner.
Before concluding—you’re speaking at VerdeXchange 2025 on April 7th. What message will you likely share?
I want the audience to recognize that we are in the midst of the most dramatic shift in energy, mobility, and buildings in our lifetimes. These industries are massive—among the biggest in the world—and they are transforming in real-time.
Technology is driving this shift, and many of the people leading the charge will be in that room at VerdeXchange. I’m just excited to be part of the conversation.