‘People have forgotten’ about climate adaptation, says Lightrock’s Puri

The growth firm has just invested in AiDash, which helps utilities company's manage the climate risks posed to their power infrastructure.

A focus on reducing GHG emissions has led to a lack of focus on climate adaptation from private markets investors, according to Lightrock partner Ashish Puri.

Lightrock is a growth equity impact investor formed from parts of LGT Group. It has an €860 million climate fund, which closed in October 2022.

“When you think about climate change, people have been focusing a lot on how to reverse climate change,” Puri tells New Private Markets. “So, we’re talking about fuels, we’re talking about energy, we’re talking about every way we consume, and how we decarbonise industries. But many people have forgotten about adaptation, which is equally important because, no matter what, we are seeing climate change happen in front of us.

“The infrastructure that we use, we cannot just rip it out and replace it tomorrow. It will take a couple of decades before the necessary changes are fully reflected. So, we have to ensure that the infrastructure that we use today continues to operate the way it should despite the adverse conditions that are affecting it now.”

The data supports Puri’s stance: despite the climate crisis growing more acute, the adaptation finance gap is widening and now stands at between $194 billion and $366 billion per year, according to a report from the UN Environmental programme. A 2021 report from the Climate Policy Initiative found that climate adaption initiatives receive just 7 percent of climate-related investment.

As a result, Lightrock has been considering the investment opportunities on offer in the space, says Puri: “We’ve been trying to understand what technologies can help strengthen our infrastructure. Increasingly, we’ve been studying the technologies that can operate at a scale and help you understand what infrastructure is going to be affected and how. We’re seeing a range of technologies that can aid with this, but the most obvious for us is satellite-based technology.”

This research led the firm to take the lead in the $50 million Series C funding round of software-as-a-service company AiDash last month. AiDash uses satellite technology to help utilities companies manage interruption to their power lines caused by vegetation. The company claims it can reduce vegetation-caused power outages during storms by 15 percent, boost grid reliability by 5-15 percent, and deliver operations and maintenance cost efficiencies of 10-20 percent.

“One thing which has accelerated in many areas is the growth of trees and plants because there’s a lot more sunshine, there’s a lot more heat, resulting in an environment that is more favourable for plant growth,” Puri says. “So the approach has to evolve from time-based monitoring of vegetation taking place every four or five years to a more risk-based approach.

“At the same time, we’re seeing more adverse weather events happening. The satellite data can help you model how a storm or tornado is likely to affect the vegetation surrounding your power lines.”

In other news, Lightrock has also invested in sustainable aviation fuel technology company Velocys. Read the press release here.