For climate tech entrepreneurs, the global energy transition presents a powerful opportunity—especially in developing nations rich in renewable energy potential. As these countries look to build sustainable economies, they also face unique energy delivery challenges that tech startups can help solve.
Take Kenya, for example. The East African nation is positioning itself as a hub for direct air capture. Meanwhile, the Middle East eyes a resurgence in manufacturing powered by clean energy. Then there’s Chile and Namibia—two countries with small populations, booming transition metal industries, and bold ambitions to become global leaders in green hydrogen exports.
But there’s a challenge slowing things down: energy prices remain high despite the surge in renewable generation.
The Real Issue Behind Soaring Energy Costs
Even as solar and wind get cheaper, electricity prices are climbing. That’s because delivery costs—what it takes to get power from the source to the user—are rising faster than generation costs are falling. In the U.S., for instance, while generation costs have dropped by 33%, delivery costs have jumped by 65%. Similar trends are playing out across the globe.
This disconnect largely stems from outdated grid infrastructure. Roughly 70% of the U.S. electric grid is over 25 years old, and in Europe, nearly 40% has passed the 40-year mark. These aging systems can’t handle the influx of renewable energy without major upgrades.
Chile offers a clear example. Its limited transmission network is holding back renewable energy growth, leading to a 150% year-over-year increase in curtailment—wasted clean power. Experts estimate that upgrading Chile’s grid could cut electricity prices by 12% and deliver investor returns within six years. Namibia, facing similar challenges, is investing in new transmission lines with World Bank support to unlock its vast solar potential.
5 Game-Changing Opportunities for Climate Tech Startups
As an energy-focused VC, I’ve spoken with dozens of climate tech founders looking to deploy their technologies in renewables-rich countries like Chile. Many assume the biggest hurdle—delivery—will be solved. But the reality is, these regions need innovative, low-cost solutions now.
Here are five key areas where startups can make a real impact:
1. AI-Powered Grid Digitization
Grid management tools powered by artificial intelligence are emerging as vital players in cutting delivery costs. Startups building grid monitoring systems, virtual power plants, or vehicle-to-grid solutions can help modernize outdated infrastructure. For example, peer-to-peer energy trading platforms—guided by AI—can optimize local solar generation and usage, reducing the need for long-distance transmission. In countries like Chile, where solar is abundant, neighbors could share excess power locally, slashing costs and avoiding curtailment.
2. Affordable Grid-Enhancing Technologies (GETs)
Reinforcing existing power lines is often more efficient than building new ones. Technologies like advanced conductors and dynamic line rating can cost up to 50% less and still meet 80% of future transmission needs. Climate tech founders with GETs solutions have a major role to play in countries like Namibia, where boosting grid capacity is key to scaling hydrogen production.
3. Relocating Energy-Intensive Operations
With power demand soaring and interconnection queues growing in the U.S., some startups may need to shift operations abroad. Developing nations with surplus renewable resources offer a compelling alternative. Founders building data centers, carbon capture facilities, or e-fuel plants should consider expanding into regions where clean energy is cheaper and more accessible—especially if U.S. policy shifts under future administrations create uncertainty.
4. Utility-Scale Behind-the-Meter (BTM) Projects
Rather than waiting years to connect to overloaded grids, some developers are deploying behind-the-meter systems to generate and use electricity on-site. Google recently committed $20 billion to co-located renewable projects for its data centers, citing the challenges of sourcing clean energy. Founders and developers should look to replicate this model in countries like Chile and Namibia—home to the world’s top solar resources. Setting up gigawatt-scale industrial projects directly at renewable sites can sidestep costly transmission entirely.
5. Distributed Energy Solutions for Local Needs
Distributed energy resources (DERs), such as rooftop solar, are booming globally because they help users bypass high delivery charges. Startups in this space may face growing resistance or policy changes at home, but in developing countries, DERs remain a largely untapped market. Founders can bring proven models to areas where energy access is limited, and the economic case for solar is even stronger.
Why the Future Looks Bright for Renewables in Developing Nations
While policy support, skilled labor, and financing remain important, the long-term viability of energy-intensive industries depends on one factor above all: cheap, reliable energy.
Countries like Kenya, Namibia, and Chile are set to benefit from rapidly falling renewable generation costs. Solar, for instance, is expected to become 55% cheaper by 2030. If delivery challenges are addressed, these nations could become ideal hubs for clean manufacturing and tech innovation.
For climate tech founders, this presents a dual opportunity—to unlock new markets while driving global decarbonization. With the right strategies and technologies, startups can help transform the energy future of developing nations—and thrive while doing it.
