The Impact of COVID-19 on Energy Start-Up Companies: The Use of Global Financial Crisis (GFC) as a Lesson for Future Recovery

Abstract

Purpose: The study discusses COVID-19’s short-term impact on Israel’s renewable energy start-up sector from March to July 2020. Results and contributions: The interviewed companies were experiencing supply chain disruption, logistical issues, and restrictions in work access, all of which negatively impacted business operations. Moreover, companies reported revenue losses and difficulty in securing funding, interpreted here as financial distress. In some cases, companies cut back on staff. Insights from the literature on the global financial crisis (GFC) were used here to discuss patterns discerned from the interviews. Policy recommendations are presented at the end based on both the interpretation of data and a literature review. Methodology: This paper combined the qualitative research analysis of COVID-19’s impacts on energy start-up companies assessed by a questionnaire during interviews with a literature analysis on the previous GFC. Gap: This study aimed to clarify the issues experienced by the start-up companies in the renewable energy sector in Israel during the first months of the pandemic and contributes to the COVID-19 narrative in the energy sector, focusing on a topic that has not been thoroughly discussed at present. Relevance: The paper contains unique primary data on the short-term financial impact of COVID-19 on renewable energy start-up companies, and recommends policies to assist these companies and effectively respond to their financial needs in times of crisis. The paper points out that the absence of such a financial policy for start-up companies might pose risks to the companies’ growth and innovation, and have harmful consequences for the renewable energy sector, energy transition, and climate goals. The attention currently given to initial short-term measures should shift toward a more structural and long-term approach. Impact: The paper wants to capture the attention of policymakers and the research community in evaluating and adequately addressing the financial needs of the start-up sector, which is a crucial segment of the economy, and is indispensable for achieving long-term goals such as energy transition.