Expansion into a new country is a logical aspiration for small business owners and entrepreneurs seeking organic growth. For years this was reserved for larger companies that had built up surplus capital or taken on investment and were ready to take on the risk of breaking into a new market as well as the logistics of managing an international branch of their company. But these days interest in new market expansion is feasible even at the midmarket B2B level, especially to the US, which is particularly open to new market entrants. What's sweetening the deal?
Tax Breaks
In 2022, President Biden signed the US climate change bill, offering tax breaks up to 40% for clean and renewable energy companies willing to set up and produce in the US. That’s a massive incentive and European renewable companies have taken notice. Competing incentives offered to EU member states weren't nearly as attractive.
Many large European companies have already taken advantage, including Volkswagen, BMW, Italian energy group Enel, and Norwegian battery group Freyr. Asian companies want in too. South Korea's LG is planning on opening a $5.5 billion battery manufacturing plant in Arizona.
Inflation Reduction Act
The Inflation Reduction Act is the largest bill of its kind ever created in the United States, offering $340 Billion for companies and people willing to shift to low carbon energy consumption. Despite that enormous financial carrot and even counting the major investment that the US has received already, only 10% of the money has been disbursed as of the time of this publishing. Additionally, the program does not phase out until 2032 or until when the US electricity sector’s carbon dioxide emissions are equal to or less than 25% of 2022 levels, , which some say won't happen until the 2040's. So there is still funding and time for others to hitch their wagon.
We believe foreign-headquartered renewable energy companies will have a big growth opportunity, courtesy of these incentives, because of Europe’s massive head start in this sector. European and Asian companies are well-positioned with the critical mass, funding and green energy technology required to scale in the US clean energy market. The technology to build batteries and renewable energy equipment has been developed over decades in Europe, as well as Asian countries, so they are well-positioned to reap the rewards sooner than many domestic producers, so long as they have or are willing to establish, a US production footprint.
Available Funding
Startups in the US were able to obtain $345 Billion in venture capital funding in 2021 alone, which is more than half of all global venture capital investment. VC funding for renewables globally has jumped from $2 Billion to $12 Billion in the past two years, with 57% of that attributed to North American investors.
Why is venture capital so popular as a startup funding mechanism in the US? Though not a uniquely American phenomenon, it was invented by Americans and some say it could only have been invented by Americans due to the high risk involved, the need for absolute growth and the willingness to promote, fund and grow emerging industries
Forecasted Market Growth
The current renewables market is performing well under its potential in the US. Given the recent policy pushes for more clean energy, soon renewables will not only be popular as investment mechanisms but necessary for all of us. Economic predictive models forecast that the U.S. low-carbon electricity numbers will grow to 54% in 2030, 73% in 2040, and over 80% in 2050. This gives renewable energy companies that are willing to enter the US market a rewarding head start. Having operations and facilities set up ahead of the demand surge that is sure to come will allow those companies to readily take advantage of the growth and reap the benefits.
Who Will Come Out On Top?
Renewables companies are poised for some big wins in the coming decades in the US market. Considering the large financial incentives from so many sources, it's a carrot that's hard to ignore. The International Energy Agency predicts that renewable power will overtake coal as the leading source of electricity globally by 2025, with China the clear global leader. For America to catch up and level the playing field will take funding and the importing of expertise and knowledge from other leaders around the world.
About Us
Your B2B Marketing is the leading communications and marketing agency for overseas-headquartered midmarket companies seeking growth in the US and American midmarket companies that need to work across borders. We offer end-to-end marketing strategy and execution that fits your budget, drives ROI and supports growth.
