renewable energy
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Regenerative agriculture is the next great ally in fight against climate change
It seems that every week a new agribusiness, consumer packaged goods company, bank, technology corporation, celebrity or Facebook friend announces support for regenerative agriculture.
For those of us who have been working on climate and/or agriculture solutions for the last couple of decades, this is both exciting and worrisome.
With the rush to be a part of something so important, the details and hard work, the incremental advancements and wins, as well as the big, hairy problems that remain can be overlooked or forgotten. When so many are swinging for the fences, it’s easy to forget that singles and doubles usually win the game.
As a managing partner and founder of DBL Partners, I have specifically sought out companies to invest in that not only have winning business models but also solve the planet’s biggest problems. I believe that agriculture can be a leading climate solution while feeding a growing population.
At the same time, I want to temper the hype, refocus the conversation and use the example of agriculture to forge a productive template for all business sectors with carbon habits to fight climate change.
First, let’s define regenerative agriculture: It encompasses practices such as cover cropping and conservation tillage that, among other things, build soil health, enhance water retention, and sequester and abate carbon.
The broad excitement around regenerative agriculture is tied to its potential to mitigate climate impact at scale. The National Academies of Sciences, Engineering, and Medicine estimates that soil sequestration has the potential to eliminate over 250 million metric tons of CO2 per year, equivalent to 5% of U.S. emissions.
It is important to remember that regenerative practices are not new. Conservationists have advocated for cover cropping and reduced tillage for decades, and farmers have led the charge.
The reason these practices are newly revered today is that, when executed at scale, with the heft of new technology and innovation, they have demonstrated agriculture’s potential to lead the fight against climate change.
So how do we empower farmers in this carbon fight?
Today, offset markets get the majority of the attention. Multiple private, voluntary markets for soil carbon have appeared in the last couple of years, mostly supported by corporations driven by carbon neutrality commitments to offset their carbon emissions with credit purchases.
Offset markets are a key step toward making agriculture a catalyst for a large-scale climate solution; organizations that support private carbon markets build capacity and the economic incentive to reduce emissions.
“Farming carbon” will drive demand for regenerative finance mechanisms, data analytics tools and new technology like nitrogen-fixing biologicals — all imperatives to maximize the adoption and impact of regenerative practices and spur innovation and entrepreneurship.
It’s these advancements, and not the carbon credit offsets themselves, that will permanently reduce agriculture emissions.
Offsets are a start, but they are only part of the solution. Whether generated by forestry, renewable energy, transportation or agriculture, offsets must be purchased by organizations year after year, and do not necessarily reduce a buyer’s footprint.
Inevitably, each business sector needs to decarbonize its footprint directly or create “insets” by lowering the emissions within its supply chain. The challenge is, this is not yet economically viable or logistically feasible for every organization.
For organizations that purchase and process agricultural products — from food companies to renewable fuel producers — soil carbon offsets can indirectly reduce emissions immediately while also funding strategies that directly reduce emissions permanently, starting at the farm.
DBL invests in ag companies that work on both sides of this coin: facilitating soil carbon offset generation and establishing a credit market while also building fundamentally more efficient and less carbon-intensive agribusiness supply chains.
This approach is a smart investment for agriculture players looking to reduce their climate impact. The business model also creates demand for environmental services from farmers with real staying power.
Way back in 2006, when DBL first invested in Tesla, we had no idea we would be helping to create a worldwide movement to unhinge transportation from fossil fuels.
Now, it’s agriculture’s turn. Backed by innovations in science, big data, financing and farmer networking, investing in regenerative agriculture promises to slash farming’s carbon footprint while rewarding farmers for their stewardship.
Future generations will reap the benefits of this transition, all the while asking, “What took so long?”
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Two European companies are mapping a future service for direct air capture to sequestration of CO2
The Swiss-based, venture capital-backed, direct air capture technology developer Climeworks is partnering with a joint venture between the government of Norway and massive European energy companies to map the pathway for a business that could provide not only the direct capture of carbon dioxide emissions from air, but the underground sequestration and storage of those emissions.
The deal could pave the way for a new business that would offer carbon capture and sequestration services to commercial enterprises around the world, if the joint venture between Climeworks and the newly formed Northern Lights company is successful. It would mean the realization of a full-chain carbon dioxide removal service that the two companies called a necessary component of the efforts to reverse global climate change.
Northern Lights was incorporated in March as a joint venture between Equinor, Shell and Total to provide processing, transportation and underground sequestration services for captured carbon dioxide emissions. The business is one of the lynchpins in the Norwegian government’s efforts to capture and store carbon emissions safely underground under a plan called The Longship Project.
“There is growing awareness of the need to build capacity to remove CO2 from the atmosphere to achieve net zero by 2050. We are enthusiastic about this collaboration with Climeworks. Combined with safe and permanent storage, direct air capture has the potential to get the carbon cycle back in balance,” said Børre Jacobsen, the managing director of Northern Lights, in a statement.
The two companies are hoping to prove that Northern Lights facilities combined with Climeworks direct air capture technologies can prove to be a part of a push toward negative emissions technologies that allow companies in non-industrial sectors to become either carbon neutral or carbon negative.
There are a number of caveats to the project, which reveal both the potential promise and pitfalls of direct air capture initiatives and sequestration and monitoring projects.
The first issue is the need to set a global price for carbon dioxide emissions that would make the projects economically viable.
“There is one legislation worldwide that is paying for direct air capture of CO2 and that is the Low Carbon Fuel Standard in California,” said Christoph Gelbad, the co-chief executive and co-founder of Climeworks. “It’s paying up to $200 per ton… this price range is the price range that will be needed to make this full chain, really going from the atmosphere to direct air capture to underground storage and monitoring. That will be the price range needed to build up the infrastructure and finance it.”
A breakdown of the costs associated with different carbon capture technologies. Image Credit: Climeworks
That price is on the highest end of any that world leaders have discussed as a potential cost for carbon-emitting industries (and it’s well below the price that China has set for carbon emissions, which is important to note, given the scale of China’s contribution to the production of greenhouse gases that cause global warming).
Beyond any pricing concerns associated with making these direct air carbon capture and storage solutions viable, there’s the scale at which these projects would need to be developed to make a real dent in global emissions.
Here again, Gelbad offers a clear-eyed assessment of his company’s capabilities and the size of the problem.
“The numbers given by science 10 to 20 billion tons of CO2 for removal,” Gelbad said. “Direct Air Capture will need to grow at a gigaton scale. This [potential] site will be in the megaton scale. [But] this is the range where our journey together with Northern Lights definitely could go. We see it going into the megaton ranges.”
Climeworks uses renewable energy and waste heat to power modular collectors that can be stacked into machines at any size. The only limit to the company’s ability to capture carbon dioxide is the availability of power, according to Gelbad.
The company already has a collaboration with an Icelandic company called Carbfix, where the Climeworks technology is used to capture carbon dioxide and store it in mineralized basalt. The company said in a statement that it’s looking globally for other opportunities for permanent carbon dioxide storage and that the Northern Lights solution of deep geological sequestration in an offshore saline aquifer under the North Sea represents an ideal alternative site.
To develop its technology, Climeworks has raised more than $150 million from investors, including the Swiss lender Zuercher Kantonalbank.
For its part, Northern Lights is already planning on capturing carbon dioxide from industrial point sources in the Oslo region, which will then be shipped to an onshore terminal on the Norwegian coast. A facility there will transport the liquefied carbon dioxide by pipeline to an offshore storage location 1.62 miles below the seabed in the North Sea.
“Northern Lights is offering carbon capture and sequestration as a service. From the idea of doing this project and from the early days of working with the ministry … my biggest surprise was the level of interest in [carbon capture and sequestration] among emitters in Europe,” said Jacobsen. “This awareness. This interest. And the need to find a solution is accelerating. We are talking about what are the possibilities and what are the solutions. Northern Lights offers a great part of the value chain.”
Some companies are already interested in becoming early customers for the project, Jacobsen said. “We have a number of MOUs and confidentiality agreements with customers and letters of support. Big interest in discussing with us. The key will be that we have to bring conversations into agreements so that we can bring this business forward.”
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Corporate sustainability initiatives may open doors for carbon offset startups
Commitments to carbon neutrality keep coming from all corners of the business world — over the past few weeks, companies ranging from the fast-casual restaurant chain Sweetgreen to the security-focused networking IT company Palo Alto Networks to the online craft retailer Etsy committed to net-zero carbon emission plans.
As the companies look for ways to reduce their energy consumption, they’re turning to carbon offset programs as a stopgap measure until the energy grid decarbonizes, they implement technologies to reduce their energy consumption, or both.
This push toward corporate sustainability is creating all kinds of strange bedfellows and startup opportunities, with major corporate offset programs and the establishment of new startups focused on offsets creating channels for sustainable technologies to get to market.
The latest example of a company leveraging a sustainability angle to tie a corporate partner even closer to their business is the agreement between Delta and Deloitte, which involves the accounting and consulting firm paying Delta for renewable jet fuel to offset the emissions of its corporate travel.
To be clear, a better policy for Deloitte would be to cut back on non-essential travel significantly and focus on doing as much remote work as possible to reduce the need for flights. But in some cases business travel is unavoidable, and most folks want to get back to a pre-pandemic normal, which — at least in the U.S. and other countries — will include significantly ramping up air travel for a percentage of the population.
As the BBC noted, air travel accounts for roughly 5 percent of the emissions that contribute to global climate change, but only a small percentage of the world actually uses air transport. According to one analysis from the International Council on Clean Transport, just 3 percent of the world’s population flies regularly. And if everyone in the world did fly, aircraft emissions would top the CO2 emissions of the entire U.S.
Which brings us back to Deloitte and Delta and startups.
Delta’s deal to buy sustainable aviation fuel that would offset a portion of the carbon emissions associated with Deloitte’s business travel is one small step toward greening the airline industry, but the question is whether it’s a significant first step or just an attempt to greenwash the unsustainable travel habits of a consulting industry that prides itself on such perks.
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Geothermal startups get another boost from Chevron as the oil giant backs a geothermal project developer
The U.S.-based oil major Chevron is doubling down on its investment in geothermal power by investing in a Swedish developer of low-temperature geothermal and heat power projects called Baseload Capital.
Oil companies are under pressure to find new lines of business as the world prepares for a massive shift to renewable energy resources to power all aspects of industry in the face of mounting climate-related disasters caused by greenhouse gas emissions warming the temperature on the planet.
Joining Chevron in the investment was the ubiquitous billionaire-backed clean energy investment firm Breakthrough Energy Ventures and a Swedish investment group called Gullspang Invest AB.
The investment into Baseload follows closely on the heels of another commitment that Chevron made to the geothermal technology developer Eavor and a recent Breakthrough Energy Ventures investment in the Google-affiliated company, Dandelion Energy (a spinout from Google’s parent company’s moonshot technology development business unit, called X).
Dandelion and Eavor are just two examples of a groundswell of startups working to leverage the knowledge from the oil and gas industry to tap geothermal resources for applications ranging from baseload energy to home heating and cooling.
They’re joined by businesses like Fervo Energy, GreenFire Energy and Sage Geosystems, who’re all leveraging heat to generate power.
As Chevron noted in its press release, heat power is an affordable form of renewable energy that can be harnessed from either geothermal resources or waste heat.
The investments in Baseload and Eavor are financed by CTV’s Core Venture fund, which identifies companies with technology that can add efficiencies to Chevron’s core business in operational enhancement, digitalization and lower-carbon operations, the company said in a statement.
Together the two businesses are planning pilot projects to test technology and could look to current Baseload operations in Japan, Taiwan, Iceland or the United States to develop projects.
Financial terms of the deal were undisclosed.
“In August, we announced that we were looking for a new strategic investor to help us accelerate deployment in our key markets,” said Baseload’s Chief Executive Officer Alexander Helling. “We couldn’t have asked for a better one. Chevron complements our group of owners and adds expertise in drilling, engineering, exploration and more. These assets are expected to accelerate our ability to deploy heat power and strengthen our way of working.”
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Volta Energy Technologies raises over $90M of a targeted $150M fund to back energy storage startups
Volta Energy Technologies, the energy investment and advisory services firm backed by some of the biggest names in energy and energy storage materials, has closed on nearly $90 million of a targeted $150 million investment fund, according to people familiar with the group’s plans.
The venture investment vehicle complements a $180 million existing commitment from Volta’s four corporate backers — Equinor, Albermarle, Epsilon and Hanon Systems — and comes at a time when interest in energy storage technologies couldn’t be stronger.
As the transition away from internal combustion engines and hydrocarbon fuels begins in earnest, companies are scrambling to drive down costs and improve performance of battery technologies that will be necessary to power millions of electric cars and store massive amounts of renewable energy that still needs to be developed.
“Capital markets have noticed the enormity of the opportunity in transitioning away from carbon,” said Jeff Chamberlain, Volta’s founder and chief executive.
It was born of an idea that began in 2012 when Chamberlain began talking with the head of the Department of Energy under the Obama administration. What began when Chamberlain was at Argonne National Lab leading the development of JCESR, the lead lab in the U.S. government’s battery research consortium, evolved into Volta Energy as Chamberlain pitched a private sector investment partner that could leverage the best research from National Laboratories and the work being done by private industry to find the best technology.
Support for the Volta project remained strong through both public and private institutions, according to Chamberlain. Even under the Trump administration, Volta’s initiative was able to thrive and wrangle some of the biggest names in chemicals, utility, oil and gas and industrial thermal management to invest in a $180 million fund that could be evergreen, Chamberlain said.
According to people with knowledge of the organization’s plans, the new investment fund, which is targeting $150 million but has a hard cap of $225 million, would complement the existing investment vehicle to give the firm more firepower as additional capital floods into the battery industry.
Chamberlain declined to comment specifically on the fund, given restrictions, but did say that his firm had a mandate to invest in technology that is battery and storage related and that “enables the ubiquitous adoption of electric vehicles and the ubiquitous adoption of solar and wind.”
Back during the first cleantech boom the brains behind Volta witnessed a lot of good money getting poured into bad ideas and vaporware that would never amount to commercial success, said Chamberlain. Volta was formed to educate investors on the real opportunities that scientists were tracking in energy storage and back those companies with dollars.
“We knew that investors were throwing money into a dumpster fire. We knew it could have a negative impact on this transition to carbon,” Chamberlain said. “Our whole objective was to help guide individuals deploying massive amounts of their personal wealth and move it from putting money into an ongoing dumpster fire.”
That mission has become even more important as more money floods into the battery market, Chamberlain said.
The SPAC craze set off by Nikola’s public offering in electric vehicles and continuing through QuantumScape’s battery SPAC through a slew of other electric vehicle offerings and into EV charging and battery companies has made the stakes higher for everyone, he said.
Chamberlain thinks of Volta’s mission as finding the best emerging technologies that are coming to market across the battery and power management supply chain and ensuring that as manufacturing capacity comes online, the technology is ready to meet growing demand.
“Investors who do not truly understand the energy storage ecosystem and its underlying technology challenges are at a distinct disadvantage,” said Goldman Sachs veteran and early Volta investor Randy Rochman, in a statement. “It has become abundantly clear to me that nothing happens in the world of energy storage without Volta’s knowledge. I can think of no better team to identify energy storage investment opportunities and avoid pitfalls.”
The new fund from Volta has already backed a number of new energy storage and enabling technologies, including: Natron, which develops high-power, fire-safe Sodium-ion batteries using Prussian blue chemistry for applications that demand a quick discharge of power; Smart Wires, which develops hardware that acts as a router for electricity to travel across underutilized power lines to optimize the integration of renewable power and energy storage on the grid; and Ionic Materials, which makes solid lithium batteries for both transportation and grid applications. Ionic Materials’ platform technology also enables breakthrough advancements in other growing markets, such as 5G mobile, and rechargeable alkaline batteries.
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Use today’s tech solutions to meet the climate crisis and do it profitably
Five years ago I landed the Solar Impulse 2 in Abu Dhabi after flying around the globe powered solely by solar energy, a first in aviation history.
It was also a milestone in energy and technology history. Solar Impulse was an experimental plane, weighing as little as a family car and using 17,248 solar cells. It was a flying laboratory, full of groundbreaking technologies that made it possible to produce renewable energy, store it and use it when necessary in the most efficient manner.
The time has come to use technology again to address the climate crisis affecting us all. As we enter the most crucial decade of climate action — and most likely our last chance to limit global warming to 1.5°C — we need to ensure that clean technologies become the only acceptable norm. These technologies exist now and they can be profitably implemented at this crucial moment.
Hundreds of clean tech solutions exist that protect the environment in a profitable way,
Here are just four innovations from our solar-powered plane that the market can start using now before it’s too late.
From insulating the cabin to insulating our homes
The building sector is one of the largest energy consumers in the world. Next to a reliance on carbon-heavy fuels for heating and cooling, poor insulation and associated energy loss are among the main reasons.
Inside Solar Impulse’s cockpit, insulation was crucial for the plane to fly at very high altitudes. Covestro, one of our official partners, developed an ultra-lightweight and insulating material. The cockpit insulation performance was 10% higher than the standards at the time because the pores in the insulating foam were 40% smaller, reaching a micrometer scale. Thanks to its very low density of fewer than 40 kilograms per cubic meter, the cockpit was ultra-lightweight.
This technology and many others exist. We now need to ensure that all market players are motivated to make hyperefficient building insulation their standard operating procedure.
From propelling an electric aircraft to propelling clean mobility
Solar Impulse was first and foremost an electric airplane when it flew 43,000 km without a single drop of fuel. Its four electric motors had a record-beating efficiency of 97%, far ahead of the miserable 27% of standard thermal engines. This means that they only lost 3% of the energy they used versus 73% for combustion propulsion. Today, electric vehicle sales are soaring. According to the International Energy Agency, when Solar Impulse landed in 2016, there were approximately 1.2 million electric cars on the road; the figure has now risen to over 5 million.
Nevertheless, this acceleration is far from enough. Power sockets are still far from replacing petrol pumps. The transport sector still accounts for one-quarter of global energy-related CO2 emissions. Electrification must happen much more quickly to reduce CO2 emissions from our tailpipes. To do so, governments need to boost the adoption of electric vehicles through clear tax incentives, diesel and petrol engine bans, and major infrastructure investments. 2021 should be the year that puts us on a one-way road to zero-emission vehicles and puts thermal engines in a dead end.
An aircraft microgrid can work for off-grid communities
To fly for several days and nights, reaching a theoretically endless flight potential, Solar Impulse relied on batteries that stored the energy collected during the day and used it to power its engines during the night.
What was made possible with Si2 on a small scale should guide the way to future-proofing power-generation systems that are made up entirely of renewable energy. In the meantime, microgrids, like those used in Si2, could benefit off-grid systems in remote communities or energy islands, allowing them to abolish diesel or other carbon-heavy fuels already today.
On a larger scale, we are looking at smart grids. If all “stupid grids” were replaced by smart grids, it would allow cities, for example, to manage production, storage, distribution and consumption of energy and to cut peaks in energy demand that would reduce CO2 emissions dramatically.
Energy efficiency in the air and on the ground
Solar Impulse’s philosophy was to save energy instead of trying to produce more of it. This is why the relatively small amount of solar energy we collected became enough to fly day and night. All the airplane parameters, including wingspan, aerodynamics, speed, flight profile and energy systems, had therefore been designed to minimize energy loss.
Unfortunately, this approach still stands out against the inefficiency of most of our energy use today. Even though the IEA found energy efficiency improved by an estimated 13% between 2000 and 2017, it is not enough. We need bolder action by policymakers to encourage investors. One of the best ways to do so is to put strict energy efficiency standards in place.
For example, California has set efficiency standards on buildings and appliances, such as consumer electronics and household appliances, estimated to have saved consumers more than $100 billion in utility bills. These measures are as good for the environment as they are for the economy.
Si2 was the future; now, it should define the present
When we used all these different innovations to build Solar Impulse, they were groundbreaking and futuristic. Today, they should define the present; they should be the norm. Next to the technologies mentioned above, hundreds of clean tech solutions exist that protect the environment in a profitable way, many of which have received the Solar Impulse Efficient Solution Label.
Just as for the Si2 technologies, we must now ensure that they enter the mainstream market. The faster we scale them, the faster we will set our economy on track to achieve the Paris Agreement goals and attain sustainable economic growth.
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EV charging stations, biofuels, the hydrogen transition and chemicals are pillars of Shell’s climate plan
Royal Dutch Shell Group, one of the largest publicly traded oil producers in the world, just laid out its plan for how the company will survive in a zero-emission, climate conscious world.
It’s a plan that rests on five main pillars that include the massive rollout of electric vehicle charging stations; a greater emphasis on lubricants, chemicals and biofuels; the development of a significantly larger renewable energy generation portfolio and carbon offset plan; the continued development of hydrogen and natural gas assets while slashing oil production by 1% to 2% per year; and investing heavily in carbon capture and storage.
These categories cut across the company’s business operations and represent one of the most comprehensive (if high level) plans from a major oil company on how to keep their industry from becoming the next victim of the transition to low emission (and eventually) zero emission energy and power sources (I’m looking at you, coal industry).
“Our accelerated strategy will drive down carbon emissions and will deliver value for our shareholders, our customers and wider society,” said Royal Dutch Shell Chief Executive Officer Ben van Beurden in a statement.
To keep those shareholders from abandoning ship, the company also committed to slashing costs and boosting its dividend per share by around 4% per year. That means giving money back to investors that might have been spent on expensive oil and gas exploration operations. The company also committed to pay down its debt and make its payouts to shareholders 20% to 30% of its cash flow from operations. That’s… very generous.
Image Credits: Bryce Durbin
The Plan
Shell is a massive business with more than 1 million commercial and industrial customers and about 30 million customers coming to its 46,000 retail service stations daily, according to the company’s own estimates. The company organized its thinking around what it sees as growth opportunities, energy transition opportunities and then the gradual obsolescence of its upstream drilling and petroleum production operations.
In what it sees as areas for growth, Shell intends to invest around $5 billion to $6 billion to its initiatives, including the development of 500,000 electric vehicle charging locations by 2025 (up from 60,000 today) and an attendant boost in retail and service locations to facilitate charging.
The company also said it would be investing heavily in the expansion of biofuels and renewable energy generation and carbon offsets. The company wants to generate 560 terawatt hours a year by 2030, which is double the amount of electricity it generates today. Expect to see Shell operate as an independent power producer that will provide renewable energy generation as a service to an expected 15 million retail and commercial customers.
Finally the company sees the hydrogen economy as another area where it can grow.
In places where Shell already has assets that can be transitioned to the low carbon economy, the company’s going to be doubling down on its bets. That means zero emission natural gas production and a trebling down on chemicals manufacturing (watch out Dow and BASF). That means more recycling as well, as the company intends to process 1 million tons of plastic waste to produce circular chemicals.
Upstream, which was the heart of the oil and gas business for years, the company said it would “focus on value over volume” in a statement. What that means in practice is looking for easier, low-cost wells to drill (something that points to the continued importance of the Middle East in the oil economy for the foreseeable future). The company expects to reduce its oil production by around 1% to 2% per year. And the company’s going to be investing in carbon capture and storage to the tune of 25 million tons per year through projects like the Quest CCS development in Canada, Norway’s Northern Lights project and the Porthos project n the Netherlands.
“We must give our customers the products and services they want and need – products that have the lowest environmental impact,” van Beurden said in a statement. “At the same time, we will use our established strengths to build on our competitive portfolio as we make the transition to be a net-zero emissions business in step with society.”
Money or finance green pattern with dollar banknotes. Banking, cashback, payment, e-commerce. Vector background. Image Credits: Svetlana Borovkova / Getty Images
Money talk
For the company to survive in a world where revenues from its main business are cut, it’s also going to be keeping operating expenses down and will be looking to sell off big chunks of the business that no longer make sense.
That means expenses of no more than $35 billion per year and sales of around $4 billion per year to keep those dividends and cash to investors flowing.
“Over time the balance of capital spending will shift towards the businesses in the Growth pillar, attracting around half of the additional capital spend,” the company said. “Cash flow will follow the same trend and in the long term will become less exposed to oil and gas prices, with a stronger link to broader economic growth.”
Shell set targets for reducing its carbon intensity as part of the pay that’s going to all of the company’s staff and those targets are… eye opening. It’s looking at reductions in carbon intensity of 6-8% by 2023, 20% by 2030, 45% by 2035 and 100% by 2050, using a baseline of 2016 as its benchmark.
The company said that its own carbon emissions peaked in 2018 at 1.7 giga-tons per year and its oil production peaked in 2019.
The context
Shell’s not taking these steps because it wants to, necessarily. The writing is on the wall that unless something dramatic is done to stop fossil fuel pollution and climate change, the world faces serious consequences.
A study released earlier this week indicated that air pollution from fossil fuels killed 18% of the world’s population. That means burning fossil fuels is almost as deadly as cancer, according to the study from researchers led by Harvard University.
Beyond the human toll directly tied to fossil fuels, there’s the huge cost of climate change, which the U.S. estimated could cost $500 billion per year by 2090 unless steps are taken to reverse course.
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New York’s David Energy has raised $4.1 million to ‘build the Standard Oil of renewable energy’
“We intend to build the Standard Oil of renewable energy,” said James McGinniss, the co-founder and chief executive of David Energy, in a statement announcing the company’s new $19 million seed round of debt and equity funding.
McGinniss’ company is aiming to boost renewable energy adoption and slash energy usage in the built environment by creating a service that operates on both sides of the energy marketplace.
The company combines energy management services for commercial buildings through the software it has developed with the ability to sell energy directly to customers in an effort to reduce the energy consumption and the attendant carbon footprint of the built environment.
The company’s software, Mycor, leverages building demand data and the assets that the building has at its disposal to shift user energy consumption to the times when renewable power is most available, and cheapest.
It’s a novel approach to an old idea of creating environmental benefits by reducing energy consumption. Using its technology, David Energy tracks both the market price of energy and the energy usage by the buildings it manages. The company sells energy to customers at a fixed price and then uses its windows into energy markets and energy demand to make money off the difference in power pricing.
That’s why the company needed to raise $15 million in a monthly revolving credit facility from Hartree Partners. So it could pay for the power its customers have bought upfront.
Image Credits: Getty Images
There are a number of tailwinds supporting the growth of a business like David Energy right now. Given the massive amounts of money that are being earmarked for energy conservation and energy efficiency upgrades, companies like David, which promise to manage energy consumption to reduce demand, are going to be huge beneficiaries.
“Looking at the macro shift and the attention being paid to things like battery storage and micro grids we do feel like we’re launching this at the perfect time,” said McGinniss. “We’re offering [customers] market rates and then rebating the savings back to them. They’re getting the software with a market energy supply contract and they are getting the savings back. Bringing that whole bundled package together really brings it all together.”
In addition to the credit facility, the company also raised $4.1 million in venture financing from investors led by Equal Ventures and including Operator Partners, Box Group, Greycroft, Sandeep Jain and Xuan Yong of RigUp, returning angel investor Kiran Bhatraju of Arcadia and Jason Jacobs’ recently launched My Climate Journey Collective, an early-stage climate tech fund.
“Renewable energy generators are fundamentally different in their variable, distributed, and digitally-native nature compared to their fossil fuel predecessors while customer loads like heating and driving are shifting to electricity consumption from gas. The sands of market power are shifting and incumbents are poorly-positioned to adapt to evolving customer needs, so there’s a massive opportunity for us to capitalize.”
Founded by McGinniss, Brian Maxwell and Ahmed Salman, David Energy raised $1.5 million in pre-seed financing back in March 2020.
As the company expands, its relationship with Hartree, an energy and commodities trading desk, will become even more important. As the startup noted, Hartree is the gateway that David needs to transact with energy markets. The trader provides a balance sheet for working capital to purchase energy on behalf of David’s customers.
“Renewables are causing fundamental shifts in energy markets, and new models and tools need to emerge,” said Dinkar Bhatia, co-head of North American Power at Hartree Partners. “James and the team have identified a significant opportunity in the market and have the right strategy to execute. Hartree is excited to be a commodity partner with David Energy on the launch of the new smart retail platform and is looking forward to helping make DE Supply the premier retailer in the market,” said McGinniss.
David now has retail electricity licenses in New York, New Jersey and Massachusetts and is looking to expand around the country.
“David Energy stands to reinvent the way that hundreds of billions of dollars a year in energy are consumed,” said Equal Ventures investor Rick Zullo. “Business model creativity and finding ways to change user behavior with new models is just as important if not more important than the technology innovation itself.”
Zullo said his firm pitched David Energy on leading the round after years of looking for a commercial renewable energy startup. The core insight was finding a service that could appeal not to the new construction that already is working with top-of-the-line energy management systems, but with the millions of square feet that aren’t adopting the latest and greatest energy management systems.
“Finding something that will go and bring this to the mass market was something we had been on the hunt for really since the inception of Equal Ventures,” said Zullo.
The innovation that made David attractive was the business model. “There is a landscape of hundreds of dead companies,” Zullo said. “What they did was find a way to subsidize the service. They give away at low or no cost and move that in with line items. The partnership with Partree gives them the opportunity to be the cheapest and also the best for you and the highest margin regional energy provider in the market.”
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Andreessen Horowitz could make the carbon offset API Patch its latest climate bet
The early-stage carbon offset API developer Patch could be another one of Andreessen Horowitz’s early bets on climate tech.
According to several people with knowledge of the investment round, former OpenTable chief executive and current Andreessen Horowitz partner Jeff Jordan is looking at leading the young company’s latest financing.
Such an investment would be a win for Patch, which could benefit from Andreessen Horowitz’s marketing muscle in a space that’s becoming increasingly crowded. And, if the deal goes through, it could be an indicator of more to come from one of the venture industry’s most (socially) active investors.
Companies like Pachama, Cloverly, Carbon Interface and Cooler.dev all have similar API offerings, but the market for these types of services will likely expand as more companies try to do the least amount of work possible to become carbon neutral through offsetting. A growing market could generate space for more than one venture-backed winner.
Neither Patch’s co-founders nor Andreessen Horowitz responded to a request for comment about the funding.
One concern with services like Patch is that its customers will look at offsetting as their final destination instead of a step on the road to removing carbon emissions from business operations. To fix our climate crisis will take more work.
Founded by Brennan Spellacy and Aaron Grunfeld, two former employees at the apartment rental service Sonder, Patch raised its initial financing from VersionOne Ventures back in September.
Around 15 to 20 companies are using the service now, according to people familiar with the company’s operations.
The company has an API that can calculate a company’s emissions footprint based on an integration with their ERP system, and then invests money into offset projects that are designed to remove an equivalent amount of carbon dioxide.
While services like Pachama privilege lower-cost sequestration solutions like reforestation and forest management, Patch offers an array of potential investment opportunities for offsets. And the company tries to nudge its customers to some of the more expensive, high-technology options in an effort to bring down costs for emerging technologies, said one person familiar with the company’s plans.
Like other services automating offsetting, Patch evaluates projects based on their additionality (how much additional carbon they’re removing over an already established baseline), permanence (how long the carbon emissions will be sequestered) and verifiability.
And, as the company’s founders note in their own statement about the company’s service, it’s not intended to be the only solution that customers deploy.
“The majority of climate models indicate that we need to reduce our emissions globally, while also removing carbon dioxide from the atmosphere,” the founders wrote in a Medium post. “We take care of a company’s carbon removal goals, while they focus their efforts on reducing emissions, a more proprietary task that requires intimate operational knowledge. Patch complements this behavioral shift and gives us a real chance to mitigate climate change.”
VersionOne’s Angela Tran addressed any concerns about the defensibility of Patch’s technology in her own September announcement.
“We also believe that defensibility comes with the aggregation and ‘digitization’ of quality supply. When we view Patch as a marketplace, we believe that businesses (demand) care about the type of projects (supply) they purchase to neutralize their emissions,” Tran wrote. “For example, a company might choose their sustainability legacy to be linked with forestry or mineralization projects. Patch is partnering with the best carbon removal developers and the latest negative emission technologies to build a network of low-cost, impactful projects.”
While Patch is explicitly focused on climate change, Andreessen has made a few early investments in a broad sustainability thesis. The firm led a $9 million investment into Silo last year and backed KoBold Metals back in 2019.
Silo has developed an enterprise resource planning tool for perishable food supply chains. Currently focused on wholesale produce, Silo said in a statement last year that it would be extending its services to meat, dairy and pantry items over the next year.
“The market potential for an innovator like Silo to reduce waste and improve margins is enormous and we’re excited to support its efforts as the system of record for food distribution in the United States,” said Anish Acharya, general partner at Andreessen Horowitz, in a statement at the time. “Silo is well-positioned to scale beyond the west coast to help more customers modernize and transition their operations from pen and paper to software.”
Meanwhile, KoBold is a software developer that uses machine learning and big data processing technologies to find new prospects for the precious metals that companies need to make new batteries and renewable energy generation technologies.
“By building a digital prospecting engine — full stack, from scratch — using computer vision, machine learning, and sophisticated data analysis not currently available to the industry, KoBold’s software combines previously unavailable, dark data with conventional geochemical, geophysical, and geological data to identify prospects in models that can only get better over time, as with other data network effects,” wrote Connie Chan in a blog post at the time.
Taken together, these investments coalesce into a picture of how Andreessen Horowitz and its pool of $16.5 billion in assets under management may approach the renewables industry.
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AI-driven energy startup Octopus hits $2B mark after $200M investment from Tokyo Gas
You’ve heard of challenger banks? Now meet the challenger energy suppliers. The U.K.’s Octopus Energy has attained a $2.06 billion valuation (£1.5 billion) after attracting a $200 million (£150 million) investment from Tokyo Gas, for a 9.7% stake, in order to launch a joint venture. Octopus will own 30% of the venture, with Tokyo Gas owning the majority. After five years of operation, Octopus is now close to the valuation of British Gas owner Centrica.
Octopus will now launch as a brand in Japan with its trademark 100% renewable electricity operation, which uses an innovative AI and data-based platform to balance loads around the grid. Its Kraken software is also licensed to Origin Energy, nPower and E.On, Good Energy and Hanwha Corporation, among others, reaching 17 million energy accounts worldwide.
“This joint venture will bring our exciting approach to renewable energy and technology to the world’s largest competitive energy market, and the investment will turbocharge our mission to revolutionize energy globally,” said chief executive Greg Jackson (pictured above) in a statement.
Australia’s Origin Energy is also set to take a stake in Octopus for $50 million (£37 million) following a larger investment in April when Origin bought a 20% stake.
Octopus says it is aiming for 100 million customers around the world by 2027, and recently launched in the U.S., Australia, Germany and New Zealand.
In the U.K., Octopus has a 5% share of the energy supply market and counts 1.8 million households in its retail portfolio, according to the company.
Tokyo Gas president Takashi Uchida said: “Through this partnership, we will contribute to the achievement of a better lifestyle for customers by realizing value creation and delivery tailored to every one of them.”
Japanese renewables lag the U.K. by 50% (renewables in Japan in 2019 accounted for 18.9% of electricity versus 37.9% in the U.K.), so the potential for growth is significant. Japanese Prime Minister Yoshihide Suga has set a target of reaching net-zero by 2050.
In the U.K., Octopus has also launched Electric Juice, an electric vehicle roaming network, and partnered with Tesla to launch Tesla Power.
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