My Cleantech Journey: From California to Texas and Beyond

I have been told that blogs somehow have more importance and greater connection when written in first person. I often tire of writing “analysis pieces” that seem cold, dry, and impersonal even though they are incredibly important. I somehow have been bottling up the need to write my personal perspective on where cleantech is today and why my opinions and actions in it are as well. It pretty much comes down to this…

I dedicated my entire career since business school to helping bring technologies to market and towards the birth and growth of the clean technology. I have been incredibly fortunate to have learned from the best at MIT in how to bring ideas from lab to market and got to work alongside some of the best technologies and companies while there in learning this trade. I then got to practice this in Silicon Valley with some of the best venture capitalists, best research universities and national labs, and was motivated by my experience being stuck in NYC on 9/11 to make my priority clean technology. I was fortunate to band together with like minds to form durable organizations, policy, and funding mechanisms that popularized and accelerated the growth of cleantech. I have led an enchanted life in being one of the early innovators and actors in this sector. But it was not enough.

I have long stated that technology innovation alone was not going to solve our shift to a clean energy infrastructure. My Silicon Valley compatriots, especially the ones that could risk their limited partner’s money into an arena they had no experience investing into, thought that if they built a cleantech company, it would be adopted as widely, quickly, and capital efficiently as their semi, software, and semi investments. Unfortunately this was a naïve assumption and I quickly harkened back to my Texas roots upon realizing this. The fact was that Texas is the energy expert and energy capital and that if the energy capabilities in Texas weren’t leveraged – project capital, project development, infrastructure deployment, industrial scalability, energy trading, and energy risk management – then we would not have sufficient expertise or capital to make this transition. So, I went back to Texas to see if I could bridge this divide. My tagline became “If Texas becomes a renewable energy state, then there’s hope for the planet.” So if we can show traditional energy companies and investors how to make money in new energy, they would move more of their money and expertise there.

I was well on my way to doing this when I took a side trip to Colorado with the invitation of Kleiner Perkins to be their Entrepreneur in Residence at the National Renewable Energy Laboratory. What I found at KPCB were the excesses of the Silicon Valley that I was trying to shift away from. It was a portfolio that had limited prospects for success and an attitude that “Texas doesn’t matter” – that (before the economic downturn) there would be so much follow-on capital that the masters of Silicon Valley alone could re-make the energy marketplace. At NREL on the other hand, there was tremendous resistance to want to commercialize technologies. I found there that indeed there were a tremendous set of incremental innovations that could lower the cost of renewables, but these should be broadly licensed to industry (an quickly and freely) in order to bring down their costs. There was a limited set of “disruptive” innovations that were potential game-changers in the energy marketplace, but needed 5-15 years each to mature to a point of being competitive. There were no venture capital firms at that time, including my employer at the time, that were organized and capitalized to invest into the long haul for these applications.

What to do? To fill the gap, I intended to set up a firm that crossed the divide between innovation and deployment, between California and Texas, leveraging maturation centers like NREL, Pecan Street Project, and others to accelerate demonstration and deployment. Unfortunately, we hit the market window at the worst time possible and I faced a divorce in the process. Therefore, this fund never came into existence. The beauty in this is self-reflection. For those of you who have been given the opportunity to completely re-evaluate everything in life through a traumatic life event, I found clarity, beauty, focus, and realization…

My realization was this: Technology investing alone was not going to turn the corner on averting climate catastrophe. What was needed were more large scale economic demonstrations that renewables are more cost effective today than coal, gas, or nuclear energy. I was fortunately invited by a friend and one of the architects of the Pickens Renewable Energy Plan to form a new renewable energy development firm called Brightman Energy. We quickly modeled and demonstrated that a fully-depreciated coal plant in Texas could be replaced at a lower cost (and with greater long term price stability) with a well-designed, geographically dispersed renewable energy portfolio. This also led me to realize that renewables should be the baseload energy of choice in almost any geography in the US with natural gas providing the balancing or storage mechanism (at least until DSM, efficiency, and other storage solutions became cost effective with natural gas). I also realized that Texas is the deregulated market of choice to demonstrate and scale these solutions – with the most advanced nodal market, transmission infrastructure, system wide preference for generation efficiency, efficient renewable energy trading market, and its own grid, Texas had already created the ideal market for renewables and had already become the largest renewable market in the US.

So where do I go from here? With Brightman, we are building the case and project portfolio for integrated renewable deployment at a scale that can replace coal or natural gas plants (or could take advantage of the latter in order to balance increasing levels of renewables). At the same time, I continue to look at other scalable business models, financial models, and deployment models that will accelerate renewable energy and clean technology deployment – things that will take huge slugs out of our carbon emissions and hopefully avert climate catastrophe. And, yes, I still love disruptive technology – I continue to watch the ones that I think will make the greatest difference on the planet, because they will and they will replace the first generation of massive renewable deployment at an even lower cost more pervasively.

Cleantech Success Formula = EE + ROI + 0 Capex

Cleantech Growth for Energy Efficiency, Smart Grid, Distributed Solar

metro la rooftop1 300x217 Cleantech Growth for Energy Efficiency, Smart Grid, Distributed SolarBy John Addison (11/5/10)

Energy Efficiency with Fast ROI Voted Most Likely to Succeed

Venture capitalists, cleantech executives, and technology experts gathered this week for GreenBeat 2010, hosted by SSE Labs of Stanford University andVentureBeat.

John Doerr, Partner KPCB, is optimistic about cleantech. He is one of the most successful venture capitalists of all time, backing Google, Amazon, and my alma mater Sun Microsystems. He has made six new cleantech investments this year. KPCB cleantech investmentsinclude Silver Springs Networks, Amyris, Mascoma, Ausra, Bloom Energy, and Fisker Automotive with ambitions to surpass Tesla.

Mr. Doerr is enthusiastic about cleantech in California, where voters this Tuesday defeated proposition 23, effectively showing that 60 percent of voters favor California’s climate cap-and-trade program. The oil industry proposition threatened hundreds of cleantech companies and ultimately hundreds of thousands of future jobs.

Nationally, however, the voters sent a clear message that they want fiscal responsibility and an economy that creates jobs.  Projects that need billions in federal funds or billions in loan guarantees are likely to go nowhere including nuclear, so-called clean coal, and utility-scale solar.

Distributed Solar and Energy Efficiency

Solar experts from SunRun, Sungevity, and SolarBridge observe that business is growing rapidly for distributed solar, confirming our solar energy report that distributed solar will grow over 40 percent annually. Commercial rooftops can support 100 kW to 20 MW solar projects located where power is consumed. Distribution investment is minimized. In contrast, utility-scale solar in the desert is more expensive to site, according to the industry panel, requires major high-voltage line and distribution investment, and can face years of NIMBY opposition. All this adds cost, risk, and project finance difficulty. These same factors can allow local solar, more expensive per kWh, to compete against remote coal and natural gas. A cap-trade fee for carbon emissions provides added distributed solar advantage over fossil fuel plants.

Negawatts are cheaper than megawatts. The biggest opportunities are in helping commercial customers and consumers reduce their electricity and heating bills. The Empire State Building will save over $4 million per year through energy saving initiatives such as installing 6,500 dual pane windows from Serious Materials whose CEO, Kevin Surace, reports that he already has 400 employees and is adding jobs.

Optimal energy savings occurs where energy technology converges with information technology to manage everything in buildings and homes from HVAC to lighting. Energy savings of 10 and 20 percent were reported without asking people to change behavior. Customers want these savings without capital expenditure (capex). Innovative companies that provide solutions as services win. Even better is when they implement demand response solutions that make the customer money.

Smart Grid to Grow to Billions of Nodes

Smart grid technology will ultimately be used to manage billions of points of energy generation and consumption. The first payoff of smart grids is allowing electric utilities to be more efficient and avoid payroll costs of manual meter readers and technicians that turn-on home power. So far, the utilities are saving and the ratepayers are footing the bill for smart meters. Consumers are starting to benefit as they get information about where they are losing energy money. Bill Weihl, Green Energy Czar for Google reports a large number of users, with hundreds commenting about saving money.

The “killer app” for the smart grid may be electric cars. By charging cars off-peak, utilities will find a home for electricity generated in power plants that like to run 24/7. Consumers, using smart charging and friendly charging apps and net tools, will save with low time-of-use rates for nighttime charging instead of expensive trips to the gas station.

Ten cleantech start-ups presented to a panel of venture capitalists at GreenBeat 2010. The winner was Redwood Systems, an intelligent lighting provider. Redwood is already saving money for giant customers like Flour. Redwood provides LED lighting networked with sensors and software for monitoring, control, and automated lighting. The VCs liked that Redwood addressed the need for energy efficiency with a high ROI, low barriers of entry in the built environment, and no big capex decision by the customer.