As the world accelerates efforts to combat climate change, hardware innovations are critical. From renewable energy storage to large scale carbon capture and use, we are going to need a million new hardware products.
The Australian climate tech sector attracted $609M in funding in 2024 and while some of that went to hardware companies, it was not nearly enough for the industry or the environment. We have made a start, with some good momentum but a lot of work to do and a lot of lessons to learn.
⚙️ The Power of Hardware in Climate Tech Solutions
Hardware innovations are addressing some of the most pressing environmental challenges.
📡 IoT
- Not complex hardware, but smart devices are needed in all industries.
- Air quality sensors, soil monitors, and water pollution detectors revolutionise how we track and address environmental issues.
- Companies like Farmbot in agriculture monitoring and Conry Tech in HVAC are building next level solutions
🔋 Renewable Energy Storage
- Breakthroughs in battery technology, including solid-state and flow batteries, enhance renewable energy grid reliability.
- Australian company MGA Thermal is scaling incredibly fast with a long duration energy storage solution. Allegro, Sicona, Relectrify and Novalith are also doing well.
🌫️ Technology Based Carbon Capture
- Direct Air Capture (DAC) hardware removes CO₂ from the atmosphere on an industrial scale.
- Australian firm Kapture is quickly growing its technology for CCU.
🚜 Sustainable Agriculture Technology
- Solar-powered irrigation systems and autonomous farming drones optimise agricultural practices while reducing environmental impact.
- SwarmFarm Robotics in Australia is advancing autonomous, sustainable farming technologies.
These advancements demonstrate how hardware turns climate ambitions into scalable, real-world solutions.
🚧 The Challenges of Hardware Innovation
While hardware plays a critical role in sustainability, it also faces significant obstacles:
- High Capital Costs: Developing and scaling hardware requires massive investment, creating barriers for startups.
- Finding First Customers: Australia is not a big or fast moving market. So developing tech in a lab or workshop and then stepping out into a pilot locally is hard. But doing it globally is hard too. Where to target? How to get a first customer there? Moving your team? Local funding limits? It's tough.
- Timing Risks: There is a lot of belief in the need for these products, the big unknown is when. Environmentally the answer is yesterday. But actual deployment in a complex world is much harder. It could take a year or it could take ten, and that unknown makes the risk so high that it can make a company uninvestible. This is a bit of a venture issue, but also a general financing challenge.
- Complex Financing: All these points suggest that venture capital is unlikely the answer for most hardware based climate tech. Companies need to look at non-dilutive grants, co-funding with customers, debt, infrastructure and project financing. This needs different skills early to plan the roadmap and prepare these companies for scale.
🤖 AI + Hardware: A Winning Combination
The intersection of hardware and AI is driving smarter, more efficient solutions. Here’s how:
- Smart Grids: AI-powered hardware ensures renewable energy grids operate reliably and efficiently, reducing energy waste.
- AI-integrated battery systems predict demand surges and stabilise energy distribution.
- Precision Agriculture: AI-equipped drones and sensors analyse crop health and adjust resources in real-time.
- XAG’s AI-powered drones optimise irrigation and fertilisation to minimise environmental impact.
- Environmental Monitoring: AI-enhanced satellite hardware provides high-resolution data on deforestation, pollution, and biodiversity loss.
- Planet Labs uses AI-driven satellite systems to track land-use changes globally.
- Floodmapp has AI driven hydrology to prepare, survive and recover from floods.
📈 What do we do from here?
Hustle patiently.
💸 Australia’s startup ecosystem is uniquely positioned to capitalise on global hardware innovation opportunities. Known for its ability to "do more with less," Australian startups are attracting foreign investment and building revenue-generating solutions with international impact.
🔍 More specifically, my belief is that by focusing on the 10-20 companies that are approaching significant global growth ($10m revenue or $500m valuation) are key to showing the industry and those watching it that this can work. Investors yes, but also government, corporates, researchers and the entrepreneurs deep in the trenches on the way.
🚀 It's going to be hard. We need to be prepared for that. The playbook that's worked in Australia for startups and investors won't work here. B2B SaaS focusing on the US market covers less than 2% of climate tech. We need to write a new playbook and the only way to do that is to do it. To take a company, work it out, grow it, make it successful and say "See, here is what you do." And then do it again...
🌬️ The good news is that there are tailwinds supporting this. Regulation, an increasing desire from customers, big investors and employees to be climate positive and genuine momentum in the whole climate solutions industry is moving us forward. Yes, we're also getting hit by the head winds of geo political, fossil fuel funders and general naysayers. They are pushing back harder because we're close to a breakthrough. The battle is coming to a nexus.
📈 Keep going. We will prevail. We must.
Photo by Mike Hindle on Unsplash
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