News Article | April 30, 2017
It started with a crowdfunding startup, an investment from Prince, and the idea to help new solar companies tackle business challenges that can be hard to overcome on their own. Now, four years later, the idea has morphed into a group called Powerhouse, and notably, in a world flush with tech startups, it’s one of the only incubators out there focused on launching and growing solar companies. Powerhouse runs an accelerator and an incubator program. An accelerator typically provides a small amount of funding, free or low-cost office space, and networking opportunities with investors and customers for young companies that are still developing their first technology and business plans. Since its launch in 2013, Powerhouse has invested hundreds of thousands of dollars collectively into 15 startups, and this summer plans to welcome another few solar entrepreneurs into the program. The group’s incubator division rents office space to more established solar and energy startups across 15,000 sq ft and three floors in downtown Oakland, California. Sometimes the accelerator entrepreneurs graduate into rent-paying companies in the co-working space. Powerhouse now hosts about 15 companies and about 100 people across both groups. Its goal is simple. The organization wants to play a unique role in fostering a new wave of tech innovation in the solar market. Many of the Powerhouse companies are using software, data and the web to make selling or designing solar systems cheaper and easier. They rely on the advice and networking opportunities through Powerhouse to raise money, find customers or exit – through an initial public offering or acquisition. “Powerhouse gave us so much validation and credibility at the beginning, when we didn’t have much to show. It was just enough to get people to believe in us,” says Elena Lucas, the co-founder and CEO of UtilityAPI, an energy data startup. An earlier wave of solar startups was dominated by companies experimenting with different materials and designs for solar cells and panels. Many of those materials-focused solar startups failed in getting the desired technical performance despite large investments from the Bay Area’s venture capitalists. As the price of solar panels dropped dramatically in recent years, the new generation of entrepreneurs and startups are chipping away at other stubborn problems, such as shortening the time it takes to get permits or honing the sales pitch to homeowners. It’s like when fast internet connections finally got cheap and ubiquitous enough to attract the entrepreneurial-minded to build new websites and services on top of it. Tough challenges remain for solar startups. Big utilities and power companies, who are potential investors or customers, don’t generally have experience working with young, renewable energy companies. Meanwhile, US government funding for energy innovation is minimal, particularly with potential federal budget cuts looming and a lack of clean energy support in the White House. But as solar energy becomes cheaper, it’s attracting public and private investments worldwide, evidenced by the $116bn that flowed into solar projects, companies and technologies in 2016, according to Bloomberg New Energy Finance. “The ultimate mission of Powerhouse is to make solar energy the most accessible form of energy in the world,” says Emily Kirsch, co-founder of Powerhouse. Sitting on a bean bag in a nook of the seventh floor of Powerhouse’s headquarters, Kirsch says that despite the rise and success of Silicon Valley-style tech accelerators such as Y Combinator and Techstars, no one else has tried to do the same targeting only the solar industry: “We’re it so far.” The group’s model is showing some success, at least on a small scale, though it’s still early days. Powerhouse takes a small equity stake in its accelerator companies and makes money if they get acquired or go public. Currently Powerhouse gets the bulk of its investment money from a combination of grants, corporate sponsors, like SolarCity and SunPower, and office space rental fees. It’s considering raising money from angel investors so that it could make larger investments and in more companies. None of the companies in its portfolio has gone public or been bought yet, but some of them have attracted funding since going through the accelerator program and increased the value of the companies in the process. Kirsch says the top startups in the accelerator program have seen their values increase by as many as 40 times. Four of the startups in its incubator program have been acquired so far, says Kirsch, though the company doesn’t take a stake in those. But their exits help to build Powerhouse’s reputation among entrepreneurs and investors. Kirsch has been involved since day one. Years ago, when Kirsch was working for Van Jones, an environmental and human rights activist who briefly served as a green jobs adviser to former President Obama, he asked her if she would be interested in helping the then new startup called Solar Mosaic, which provides financing to install solar panels on rooftops, pilot a solar program in Oakland. Meanwhile Jones’s friend Prince was looking to invest a quarter of a million dollars into solar projects in Oakland, and ended up funding Solar Mosaic’s first four solar buildings. Based on that experience – connecting a young solar startup with partners and capital – Kirsch and Danny Kennedy, a former Greenpeace campaign manager who co-founded solar installer Sungevity, launched a company to try to see if the model could work for many more young solar companies. They changed the name of the company, SFunCube, to Powerhouse two years ago. On a visit earlier this year to Powerhouse’s headquarters, dozens of entrepreneurs were heads down working on their products and mingling with potential partners during a weekly open house event. The Powerhouse team connected UtilityAPI with its first investor, Better Ventures, as well as an adviser, Jon Wellinghoff, who is a former chairman of the Federal Energy Regulatory Commission. After going through the accelerator program, UtilityAPI, which creates software to collect data about a building’s energy use and deliver it to customers such as solar or energy storage installers, has grown to nine people from the two co-founders. It now has an office space on the sixth floor of Powerhouse after previously using shared desks. Lucas says the co-working space served as a “brain trust” because all the entrepreneurs brought with them different types of expertise. That allowed her to get quick answers about energy policy or technical standards. Another accelerator program graduate, BrightCurrent, which works with big box retailers and solar companies on marketing solar panels and installation services, now employs 120 people and became profitable last year, says John Bourne, the co-founder and CEO of the five-year-old company. Bourne says Powerhouse helped his company connect with investors (like Better Ventures) and customers and hone his sales pitch. During the accelerator program, Bourne met with Kirsch or Kennedy once a week to walk through BrightCurrent’s plans and brainstorm for ways to overcome obstacles. “It can be really isolating, lonely and tough being an entrepreneur. You’re working alone and trying to build something,” Bourne says. When he joined, Powerhouse was operating out of Sungevity’s offices and, he says: “It was a warm great environment, and I found people who cared about what I cared about. That was a huge win for me.” Solar Mosaic’s co-founder and CEO, Billy Parish, says that his company – which is now six years old and employs more than 150 people – has partnered with at least three of the Powerhouse startups on projects, including UtilityAPI, Sunible and BrightCurrent. “Powerhouse is one of the hubs of the solar ecosystem and they are helping bring breakthrough ideas for the industry into existence. Being close to them keeps us in touch with those new ideas and entrepreneurs,” says Parish. In total numbers, Powerhouse is still pretty small. Its companies have contributed to the installation of 242 megawatts of solar, employ 386 people, and have generated $52m in revenue. That’s probably the group’s biggest drawback – it’s limited, it’s very narrowly focused and it’s still operating on a tiny scale. But they’re part of a larger movement to invest and nurture new companies in low-carbon energy. Other companies running energy-related accelerator programs include Cyclotron Road, which has partnered with Lawrence Berkeley National Laboratory, and Otherlab in the Mission District of San Francisco. Last year, Bill Gates and a group of investors launched Breakthrough Energy Ventures to spend $1bn on early stage breakthroughs in energy. Powerhouse co-founder Danny Kennedy, who now heads up the California Clean Energy Fund, describes the importance of ventures like Powerhouse and the California Clean Energy Fund like this: “We need early-stage energy investing programs now more than ever to enable the energy transition. It’s critical.”
News Article | April 20, 2017
Longtime venture capitalists Abe Yokell and Josh Posamentier have decided to do something that nearly all of their Silicon Valley peers have been avoiding: invest in early-stage cleantech startups. The two are actually calling it investing in “sustainability technology,” and together they’ve launched a new fund called Congruent Ventures, which they discussed with GTM for the first time this week. According to a filing with the Securities and Exchange Commission, the fund is raising $50 million for seed and Series A rounds. There’s also another $50 million that will be used for follow-on investments. The duo says they’ve already made their first investment, though they declined to name the startup, and they plan to do approximately 10 investments of around $1 million each per year. While small, the new fund is notable. It's one of a very small number that are still willing to make bets on early-stage entrepreneurs and startups that are building companies around energy technologies, new kinds of materials, advanced manufacturing and agriculture. Most investors backing these types of companies are investing at a much later stage, hoping it will make those investments less risky, or are opting for these investments only when they’re based on software and computing innovations. For the few investors that are still committed to these types of early-stage companies, there are still big opportunities. The megatrends that provided the basis for the original cleantech wave are stronger than ever: World populations are increasing and more people are moving to cities, the climate is changing, and countries and cities are shifting to lower-carbon technologies. With fewer investors hunting for deals, there’s also less competition. Most of these rare investors are developing new funds, instead of trying to do more investments under firms that have mostly moved away from cleantech. The idea is to tell a new and more positive story to limited partners looking to put their money to work. Other new funds include 1955 Capital, created by former Khosla Ventures partner Andrew Chung, and Breakthrough Energy Ventures, a fund with a billion dollars from investors Bill Gates, Vinod Khosla and John Doerr. Green Bay Ventures, a $130 million fund from NEA co-founder Dick Kramlich, has indicated it will also do early-stage energy, manufacturing and transportation investments. Yokell and Posamentier said they’re looking for sustainability technologies that are hardware- and software-based, and plan to make investments across a full spectrum of sectors. “We think the babies are being thrown out with the bathwater when it comes to hardware. There are some good hardware investments out there,” said Yokell, who spent 13 years with RockPort Capital Partners investing in cleantech companies. In a conference room at RockPort Capital’s offices in San Francisco, Yokell and Posamentier laid out some of their philosophies and plans for how Congruent Ventures will make money investing in this difficult sector. Part of their strategy lies in how they’re structuring the fund; the other part is their collective experience of seeing the inflating and deflating of the cleantech bubble over the years. The investors see Congruent Ventures as a new type of fund that collaborates closely with follow-on investors. The two partners will make the early-stage investments through their $50 million fund. Then a group of partners, who are investing in the $50 million follow-on fund, can opt for additional investments in the selected companies. “The challenge with this sector right now is that if you’re trying to do early-stage investing, you have to have some of the follow-on capital prebaked, or at least predisposed. There is a big financing gap between early and late [stage] right now,” said Yokell. While the pair declined to identify their limited partners, Yokell described some of them as investors in the space who don’t currently have an investing team, along with others who are looking to bring more capital into the earlier stages of the sector. In that way, Congruent Ventures could act as a feeder fund and screening mechanism, and also a confidence booster for bigger firms. The structure is highly unusual and could be difficult to implement. Yokell confirmed that for the follow-on fund, “There’s no legal commitment for them to do anything.” Beyond the fund structure, the partners shared similar philosophies about ways to invest. Posamentier, who was formerly a partner with Prelude Ventures, acknowledged the capital intensity of cleantech. However, he argued that it hasn’t been that much worse than other sectors -- only that mistakes were made on when to deploy large amounts of capital. “I think for a lot of the challenging investments in cleantech, the trigger was pulled too early on the capital investment. By the time you knew it worked or didn't work, it was entirely too late to throttle that investment,” said Posamentier. Another way to de-risk investments is to leverage the ecosystem that has built up around cleantech over the years, said Posamentier. “Today you can build an advanced materials company that really doesn't have to put in a dime of capex, because there’s already manufacturing infrastructure they can use out there.” There are also newer incubator and accelerator programs like Cyclotron Road and Greentown Labs that were created specifically to support hardware-oriented energy, materials and manufacturing entrepreneurs. Posamentier said the new ecosystem and infrastructure for early-stage cleantech startups is similar to how consumer web startups can rely on Amazon Web Services and database providers to lower their costs. It’s also similar to how the semiconductor industry moved to fab-less chip companies. “Cleantech is moving to that more mature business model,” he said. Few think cleantech investing will hit the heights of the bubble of years ago. But Congruent Ventures is part of a trend of investors trying out new models. “I think there will be some amount of resurgence. It’s not going to be huge,” said Yokell. Other investors are backing the themes of sustainability with their own unique methods. Andrew Chung of 1955 Capital is focused on bringing technologies born in the U.S. and Europe to be commercialized in China and other developing countries. Chung was able to help a handful of startups work on commercializing technologies in China through Khosla Ventures. It’s unclear how successful these ventures will be. But the world needs new energy, materials, manufacturing and agriculture innovations more than ever. And Yokell and Posamentier want to stay ahead of the trend. “If you don't have the early-stage stuff starting, you’re not going to have the late-stage stuff. It’s got to start somewhere," said Yokell.
Lafrance-Vanasse J.,Cyclotron Road |
Williams G.J.,Cyclotron Road |
Tainer J.A.,Cyclotron Road |
Tainer J.A.,Scripps Research Institute
Progress in Biophysics and Molecular Biology | Year: 2015
The Mre11-Rad50-Nbs1 (MRN) complex is a dynamic macromolecular machine that acts in the first steps of DNA double strand break repair, and each of its components has intrinsic dynamics and flexibility properties that are directly linked with their functions. As a result, deciphering the functional structural biology of the MRN complex is driving novel and integrated technologies to define the dynamic structural biology of protein machinery interacting with DNA. Rad50 promotes dramatic long-range allostery through its coiled-coil and zinc-hook domains. Its ATPase activity drives dynamic transitions between monomeric and dimeric forms that can be modulated with mutants modifying the ATPase rate to control end joining versus resection activities. The biological functions of Mre11's dual endo- and exonuclease activities in repair pathway choice were enigmatic until recently, when they were unveiled by the development of specific nuclease inhibitors. Mre11 dimer flexibility, which may be regulated in cells to control MRN function, suggests new inhibitor design strategies for cancer intervention. Nbs1 has FHA and BRCT domains to bind multiple interaction partners that further regulate MRN. One of them, CtIP, modulates the Mre11 excision activity for homologous recombination repair. Overall, these combined properties suggest novel therapeutic strategies. Furthermore, they collectively help to explain how MRN regulates DNA repair pathway choice with implications for improving the design and analysis of cancer clinical trials that employ DNA damaging agents or target the DNA damage response. © 2015.
Tsutakawa S.E.,Cyclotron Road |
Lafrance-Vanasse J.,Cyclotron Road |
Tainer J.A.,Cyclotron Road |
Tainer J.A.,Scripps Research Institute
DNA Repair | Year: 2014
To avoid genome instability, DNA repair nucleases must precisely target the correct damaged substrate before they are licensed to incise. Damage identification is a challenge for all DNA damage response proteins, but especially for nucleases that cut the DNA and necessarily create a cleaved DNA repair intermediate, likely more toxic than the initial damage. How do these enzymes achieve exquisite specificity without specific sequence recognition or, in some cases, without a non-canonical DNA nucleotide? Combined structural, biochemical, and biological analyses of repair nucleases are revealing their molecular tools for damage verification and safeguarding against inadvertent incision. Surprisingly, these enzymes also often act on RNA, which deserves more attention. Here, we review protein-DNA structures for nucleases involved in replication, base excision repair, mismatch repair, double strand break repair (DSBR), and telomere maintenance: apurinic/apyrimidinic endonuclease 1 (APE1), Endonuclease IV (Nfo), tyrosyl DNA phosphodiesterase (TDP2), UV Damage endonuclease (UVDE), very short patch repair endonuclease (Vsr), Endonuclease V (Nfi), Flap endonuclease 1 (FEN1), exonuclease 1 (Exo1), RNase T and Meiotic recombination 11 (Mre11). DNA and RNA structure-sensing nucleases are essential to life with roles in DNA replication, repair, and transcription. Increasingly these enzymes are employed as advanced tools for synthetic biology and as targets for cancer prognosis and interventions. Currently their structural biology is most fully illuminated for DNA repair, which is also essential to life. How DNA repair enzymes maintain genome fidelity is one of the DNA double helix secrets missed by James Watson and Francis Crick, that is only now being illuminated though structural biology and mutational analyses. Structures reveal motifs for repair nucleases and mechanisms whereby these enzymes follow the old carpenter adage: measure twice, cut once. Furthermore, to measure twice these nucleases act as molecular level transformers that typically reshape the DNA and sometimes themselves to achieve extraordinary specificity and efficiency. © 2014 Elsevier B.V.
Gilbert B.,Cyclotron Road |
Katz J.E.,Denison University |
Rude B.,Lawrence Berkeley National Laboratory |
Glover T.E.,Lawrence Berkeley National Laboratory |
And 3 more authors.
Langmuir | Year: 2012
Reactions taking place at hydrated metal oxide surfaces are of considerable environmental and technological importance. Surface-sensitive X-ray methods can provide structural and chemical information on stable interfacial species, but it is challenging to perform in situ studies of reaction kinetics in the presence of water. We have implemented a new approach to creating a micrometer-scale water film on a metal oxide surface by combining liquid and gas jets on a spinning crystal. The water films are stable indefinitely and sufficiently thin to allow grazing incidence X-ray reflectivity and spectroscopy measurements. The approach will enable studies of a wide range of surface reactions and is compatible with interfacial optical-pump/X-ray-probe studies. © 2012 American Chemical Society.
PubMed | University of California at Merced, Cyclotron Road and Lawrence Livermore National Laboratory
Type: Journal Article | Journal: The New phytologist | Year: 2016
Coniferous forest nitrogen (N) budgets indicate unknown sources of N. A consistent association between limber pine (Pinus flexilis) and potential N2 -fixing acetic acid bacteria (AAB) indicates that native foliar endophytes may supply subalpine forests with N. To assess whether the P.flexilis-AAB association is consistent across years, we re-sampled P.flexilis twigs at Niwot Ridge, CO and characterized needle endophyte communities via 16S rRNA Illumina sequencing. To investigate whether endophytes have access to foliar N2 , we incubated twigs with (13) N2 -enriched air and imaged radioisotope distribution in needles, the first experiment of its kind using (13) N. We used the acetylene reduction assay to test for nitrogenase activity within P.flexilis twigs four times from June to September. We found evidence for N2 fixation in P.flexilis foliage. N2 diffused readily into needles and nitrogenase activity was positive across sampling dates. We estimate that this association could provide 6.8-13.6gNm(-2) d(-1) to P.flexilis stands. AAB dominated the P.flexilis needle endophyte community. We propose that foliar endophytes represent a low-cost, evolutionarily stableN2 -fixing strategy for long-lived conifers. This novel source of biological N2 fixation has fundamental implications for understanding forest N budgets.
PubMed | Cyclotron Road and Scripps Research Institute
Type: | Journal: DNA repair | Year: 2014
To avoid genome instability, DNA repair nucleases must precisely target the correct damaged substrate before they are licensed to incise. Damage identification is a challenge for all DNA damage response proteins, but especially for nucleases that cut the DNA and necessarily create a cleaved DNA repair intermediate, likely more toxic than the initial damage. How do these enzymes achieve exquisite specificity without specific sequence recognition or, in some cases, without a non-canonical DNA nucleotide? Combined structural, biochemical, and biological analyses of repair nucleases are revealing their molecular tools for damage verification and safeguarding against inadvertent incision. Surprisingly, these enzymes also often act on RNA, which deserves more attention. Here, we review protein-DNA structures for nucleases involved in replication, base excision repair, mismatch repair, double strand break repair (DSBR), and telomere maintenance: apurinic/apyrimidinic endonuclease 1 (APE1), Endonuclease IV (Nfo), tyrosyl DNA phosphodiesterase (TDP2), UV Damage endonuclease (UVDE), very short patch repair endonuclease (Vsr), Endonuclease V (Nfi), Flap endonuclease 1 (FEN1), exonuclease 1 (Exo1), RNase T and Meiotic recombination 11 (Mre11). DNA and RNA structure-sensing nucleases are essential to life with roles in DNA replication, repair, and transcription. Increasingly these enzymes are employed as advanced tools for synthetic biology and as targets for cancer prognosis and interventions. Currently their structural biology is most fully illuminated for DNA repair, which is also essential to life. How DNA repair enzymes maintain genome fidelity is one of the DNA double helix secrets missed by James Watson and Francis Crick, that is only now being illuminated though structural biology and mutational analyses. Structures reveal motifs for repair nucleases and mechanisms whereby these enzymes follow the old carpenter adage: measure twice, cut once. Furthermore, to measure twice these nucleases act as molecular level transformers that typically reshape the DNA and sometimes themselves to achieve extraordinary specificity and efficiency.
News Article | December 12, 2016
Bill Gates just revealed more information about his plan, first unveiled about a year ago, to bring together a group of billionaires to fund breakthroughs in energy technology that can fight climate change. The group, which has a collective net worth of $170 billion, is one of the most star-studded and diverse ever assembled to fund any kind of technology innovation. But will the big new fund be more successful than the mostly lackluster attempt at cleantech investing of the past decade? On Monday, Gates and his group announced a new $1 billion fund -- called Breakthrough Energy Ventures -- which will invest in science-based energy research, entrepreneurs and companies in areas like generating cheap clean energy, capturing and storing carbon dioxide emissions, and making buildings more energy-efficient. The fund plans to make investments in both early-stage tech projects and later-stage companies. Unlike a traditional VC fund, Breakthrough Energy Ventures plans to make investments over a 20-year period, intends to offer larger amounts of capital to companies that can be commercialized, and also plans to partner closely with university labs. The fund includes investments from well-known Silicon Valley venture capitalists John Doerr and Vinod Khosla, who both led cleantech investments at their firms over the past several years. Among the list of 21 investors, big names include Alibaba founder Jack Ma, Amazon founder Jeff Bezos, SoftBank founder Masayoshi Son, LinkedIn co-founder Reid Hoffman, Virgin founder Richard Branson and former New York mayor Michael Bloomberg. Board members include energy hedge fund manager John Arnold, the Chairman of Reliance Mukesh Ambani, SAP co-founder Hasso Plattner, as well as Ma, Khosla and Doerr. Gates is listed as the chairman of the board. The fund will be a rare source of new financing for energy tech innovation, an area which has been fairly neglected in recent years in many regions. About a decade ago, many investors in Silicon Valley jumped into funding cleantech startups, but years later many dropped those efforts after losing money. High-profile cleantech failures like solar startup Solyndra, electric car company Fisker Automotive, and biofuel company KiOR scared off many. However, the devil will be in the details for how the fund plans to make its investments, and if it will be more successful than past attempts. Gates, Khosla and Doerr have already funded dozens of companies around energy storage, biofuels and solar manufacturing with few big wins to show so far. Will the trio use Breakthrough Energy Ventures to double down on their prior model of investing, just with a bigger fund and with capital outside of the confines of their firms? According to the investors on a media call on Monday afternoon, their cleantech investing will be different this time around. Gates, Doerr and Khosla gave every indication on the call that the fund would take full advantage of everything they’ve learned from the industry’s past mistakes. Doerr described the fund as “bespoke,” and designed “for the unique nature of the opportunity.” “We’ll take a lot of learnings over the last decade of energy investing and apply them here,” he said. Doerr described the lessons learned as: Energy tech breakthroughs need to be revolutionary instead of evolutionary, technologies need to have a clear market and the innovations need to be backed by an outstanding team. Investors also need to take “a really long point of view,” and also be willing to put two, three or maybe even five times more capital into companies than in an average VC investment, said Doerr. He also noted that winning with energy tech breakthroughs is “harder than usual.” “I can’t guarantee that it will happen,” said Doerr on commercializing successful energy tech companies, but he said the group is focused on enabling better, faster and cheaper energy and a zero-carbon planet by 2050. “I would never underestimate the power of energy entrepreneurs to change the game here,” said Doerr. Khosla said that the fund would give investors the “ability to be patient and take larger risks.” That type of investing can also create a much better opportunity for returns, said Khosla. However, the board members didn’t provide more details on what expected returns might look like or how deals would be structured. Arnold said the fund would only make an investment if the technology could have a large impact on reducing greenhouse gas emissions. In that way, the group is very mission-focused. Gates said that investors would take more of a hands-on approach with entrepreneurs and companies, helping them find strategic partners and follow-on financing. Within the next three months, Breakthrough Energy Ventures plans to hire managers to make its investments and do due diligence on entrepreneurs and research ideas. It’s unclear just how much involvement and influence the board members like Gates, Doerr and Khosla would have over investment choices. The selection of the management team will be very important to determine just how different this cleantech investing project will be, compared to past efforts. Will these folks come from the traditional Silicon Valley venture capital world? After it became clear that the traditional Silicon Valley model of VC investing hasn’t worked so far for cleantech, a variety of new models have been introduced. Those include Cyclotron Road, which is collaborating closely with university labs; the energy research shop of Otherlab; regionally focused groups like the Energy Excelerator; and industry-focused projects like Powerhouse. Former Khosla Ventures partner Andrew Chung recently launched a $200 million fund with 1955 Capital to invest in technologies to manage resources in emerging markets like China. Whatever team ends up managing Breakthrough Energy Ventures, they should be well versed in what’s worked and what hasn’t. Breakthrough Energy Ventures says it plans to invest on a 20-year horizon, instead of the typical VC model which expects returns in a much shorter time period, like five years. Breakthrough investors will also be willing to put in larger funding rounds -- seven-, eight- and nine-figure investments -- into established companies that can be commercialized, said Arnold. The fund, which has a pool structure, has already had a first close with a commitment of a billion dollars, and plans to have a second close in the spring of 2017. The fund will also invest internationally, said the board members. The investors, like Khosla, still plan to make their own investments through their own firms. Arnold said on the call that the group is developing a “conflict of interest” policy to examine investments by Breakthrough Energy Ventures compared to investments backed by funds from board member’s own firms. While the board members said all the right things on the media call, the fund appears to be an evolved venture capital fund with some important different parameters. But will that be different enough to get different results? The question remains if any form of venture capital is really appropriate to fund difficult-to-achieve energy tech innovations.
News Article | December 2, 2015
This week’s announcement from President Obama and Bill Gates of a multibillion-dollar public-private partnership for clean energy innovation was a major development for the Paris climate negotiations and the international energy community. The world’s leading energy and climate analysts have long identified the need for substantial increases in research and development, and 20 countries have now committed to deliver, backed by billions from titans of high-tech industry and finance. Never before has a group of private investors come together at this scale for the purpose of commercializing energy technologies resulting from government-funded research. If successful, the partnership could prove to be a landmark development in the history of public-private partnerships and venture philanthropy broadly, mobilizing tens of billions of dollars and potentially leading to the creation of a patient capital asset class for commercializing high-risk, high-impact technologies -- building on precedents like the Green Revolution and the 1 billion lives it saved from starvation in the 20th century. For the United States, the partnership presents an unprecedented opportunity to increase the commercial impact of its energy innovation system, particularly the Department of Energy’s multibillion-dollar annual investment in energy research and technology development. Fortunately, the U.S. is better positioned than any nation in the world to partner with the Breakthrough Energy Coalition (BEC) and other investors. The biggest winner of all is likely to be the American taxpayer, who could see a significantly greater return on every tax dollar spent on energy research, development and demonstration (RD&D) -- not to mention long-term energy cost reductions, new high-growth businesses, and global climate leadership. More broadly, Congress and the Obama administration should take this unique opportunity to further optimize the DOE to focus on its energy innovation mission, address long-standing inefficiencies in its RD&D management, and further enhance its ability to collaborate with investors and industry. By combining increased energy RD&D spending with real management and performance reform to ensure high return on taxpayer investment -- all leveraged by billions in private investment commitments -- Democrats and Republicans alike can come together to seize this moment to double federal energy RD&D. Many ideas on how to proceed will be debated in Washington and across the country over the months ahead, as well as into the next administration and Congress. To help jump-start this important public dialogue, what follows below are some early ideas on how DOE, BEC, and other mission investors can make the most of this partnership as its designs are fully established. But first, let’s quickly recap on how we got here. The fundamental purpose of Mission Innovation and Breakthrough Energy Coalition is to correct a major market shortcoming -- namely, the ongoing failure of the private marketplace to invent, develop and scale more affordable, secure and clean energy technologies for public benefit. This is a goal the U.S. and other nations have pursued for decades for different reasons -- think of France’s dash to nuclear energy in the 1970s -- but it has become ever more urgent in the face of climate change and competition for new energy industries. As the International Energy Agency recently concluded, “Recent trends reaffirm the need to accelerate energy technology innovation.” More than two decades of economic analysis and real-world market observation have informed us that the energy sector faces basic structural obstacles to technological innovation and diffusion, above and beyond most industries. To name a few: knowledge spillover, high capital intensity, non-differentiated product markets, regulatory disincentives, market-distorting subsidies and barriers to entry, long-term product and infrastructure lifecycles, and unpriced market externalities. The nature of these barriers also makes them very difficult to resolve with simple technology “pull” mechanisms, such as pollution taxes or regulations. The result is chronic under-investment from the private sector in energy RD&D. Analysts used to refer to this as a single “valley of death,” but over time we’ve developed a more nuanced model for the energy sector. During my time at the DOE, we consistently identified three key gaps in the energy technology commercialization cycle, including laboratory technology maturation, seed-stage commercialization, and first-of-a-kind (FOAK) demonstration projects. At the height of the first cleantech investment wave in 2008, it appeared that venture capital might be capable of filling most of these gaps, and some assumed that private investors would be increasingly willing to take on higher levels of risk as clean energy demand grew and capital markets matured. Unfortunately, cleantech VC collapsed thereafter, once the fund managers and their limited partners came to fully realize the structural barriers to energy innovation. For early-stage cleantech ventures, VC investment fell 85 percent from 2007 to 2014, according to Bloomberg New Energy Finance. We now know this is largely structural and not simply a cyclical decline. Following the cleantech VC collapse, there have been very few remaining investors in clean energy companies or projects willing to take practically any form of technology risk. This led the White House and DOE to launch the Clean Energy Investment Initiative earlier this year to catalyze a new wave of mission-oriented investors, resulting in $4 billion of private investment commitments and other executive actions, including the creation of DOE’s new Clean Energy Investment Center. Mission Innovation and the BEC take this effort to the next level. To increase the likelihood of success, what follows are three areas of suggestions. First, cultivate technologies through a diverse portfolio of innovation models. Second, improve the management of public and private funds and coordinate for impact. Third, support the full technology innovation pipeline and create pathways to scale-up and deployment. In terms of early-stage technologies, participating investors should cultivate technologies from a diverse portfolio of DOE programs and performers. ARPA-E is probably the most well-known program since its launch in 2009, representing $280 million of DOE’s current $5 billion energy RD&D budget. It has a strong track record advancing novel technologies toward commercialization. Beyond ARPA-E, promising early-stage investment opportunities arise from a wide variety of sources, from multidisciplinary research centers at national laboratories and universities, to industry-laboratory consortiums, to small-business grants, to regional business incubators, to other forms of financial assistance, technical support, and cooperative research DOE offers to startups and large companies alike. The national laboratories alone have nearly 6,000 active intellectual property licenses based on lab-developed technologies, and every year they disclose up to 2,000 inventions and receive 800 new patents. To more effectively leverage its RD&D system, the DOE has pursued several new innovation models in recent years, including the Energy Innovation Hubs, Energy Frontier Research Centers, Bioenergy Research Centers, SunShot Incubator, Lab-Corps, Small Business Vouchers, Cyclotron Road, Clean Energy Incubator Network, Manufacturing Demonstration and System Integration Facilities, other regional consortia, and more. The DOE is also currently establishing a new Technology Commercialization Fund, and the long-standing Small Business Innovation Research grants program supports promising performers. Mission Innovation governments and BEC investors will want to leverage and potentially scale up these models. 2. Improve the management of public and private funds -- and coordinate for impact Both the government agencies and private investors involved with this effort can adopt more effective ways of managing and coordinating their funds for maximum impact, learning from successes and failures of the past. On the private investor side, details on the funding vehicle for the BEC have not been released. To enable truly patient investments, one would hope for a fund structure that avoids the limitations of traditional 10-year closed-end VC funds. A potential model could be a permanently capitalized holding company similar to i(x) investments, recently founded by Howard Warren Buffett, grandson of Warren Buffett. Another could be a 20-year closed-end fund, which Matthew Nordan at PRIME has designed. Yet another could be the Clean Energy Trust’s evergreen investment fund for early-stage cleantech companies, the Clean Energy Prize Fund. For institutional investors that join the BEC, Ashby Monk and Jagdeep Bachher have examined how institutionals can rethink their VC-type investments. On the government agency side, the DOE has played a vital role in U.S. energy technology development, but it was not originally designed primarily for energy innovation, as reflected in its budget: energy-related RD&D represents only $5 billion of DOE’s $27.5 billion annual budget, with the remainder for nuclear security, environmental cleanup, and basic discovery science. As such, there is significant opportunity to optimize its RD&D management. Over the years, a number of task forces and think tanks have examined ways to improve the DOE and its national lab system from across the political spectrum (here, here, here, here, etc.). These are beyond the scope of this piece, but at least three basic areas stand out for the purposes of Mission Innovation. First, DOE should strengthen its capacity to effectively collaborate with and assist the Breakthrough Energy Coalition and other mission-oriented investor networks, such as Aligned Intermediary, Ceres, Confluence Philanthropy, CREO Syndicate, PRIME Coalition, and the Stanford Steyer-Taylor Center. The DOE’s new Clean Energy Investment Center was designed precisely for this purpose and should be fully institutionalized at the agency. Second, DOE should continue improving its institutional capacity to manage technology transitions across its program offices and national laboratories and into the marketplace. At the least, this means fully institutionalizing the new Office of Technology Transitions, establishing analogous functions within each program office (building upon the EERE Tech-to-Market and ARPA-E Tech-to-Market teams), and properly resourcing all the National Laboratory Technology Transfer Offices. These offices would all benefit from the flexible hiring authority of ARPA-E to enable more streamlined hiring from the private sector. Third, Congress and DOE should continue breaking down stovepipes across narrow technology sectors with atomized budgets across the Department, in order to pursue off-roadmap and cross-cutting opportunities such as grid modernization, subsurface science and engineering, materials, energy-water nexus, and other areas identified in the recent Quadrennial Technology Review. Recent progress has been made, particularly through the creation of the Office of the Under Secretary for Science and Energy, and the Office of Technology Transitions housed within it, to coordinate across the DOE’s basic and applied energy programs. 3. Support the full technology innovation pipeline -- and create pathways to scale-up and deployment Finally, to maximize commercial impact, the participating governments and investors should pursue investments across the innovation pipeline -- from early-stage research through commercial-scale demonstration and innovative project finance -- with the goal of de-risking technologies for later-stage investors and corporate strategics with lower risk tolerance. Most experts now agree that the linear model of innovation -- where government simply funds basic research, invents breakthrough technology, and then transfers it to the private sector for commercialization -- is highly reductionist. So is the tired dichotomy between “R&D-only” versus “deployment-only” approaches. Rather, the emerging approach for strategic, non-military sectors like energy is a “technology transitions” model that addresses the multiple, interlinked connections among multiple stages of research, development, demonstration, and early deployment. This approach recognizes that technology commercialization is a full-contact sport involving high levels of risk and uncertainty at numerous stages. This often requires multiple rounds of public and private support to achieve escape velocity into the marketplace, as well as different types of support at different stages -- from research grants, to technology maturation resources, to technical assistance and shared facilities, to innovative financing mechanisms, including loan guarantee programs. Furthermore, cost-reductions occur not only with RD&D, but also with scale-up and early deployment in the form of learning curves and economies of scale, as the world experienced dramatically with solar photovoltaics over the past few years. Importantly, a technology transitions approach also recognizes that to achieve real-world impact on the energy sector, every technology roadmap must be clearly informed by and connected with industry (and in this case, later-stage investors) beginning at the research stage. The pathway to scale-up and deployment should be identified early and often to ensure technology development is optimized at each phase, and when necessary, to more quickly identify no-go projects. Over 50 years ago, Vice President Henry Wallace visited Mexico, which was suffering from rampant hunger and substandard food production. Upon his return, he met with the president of the Rockefeller Foundation and recommended a new project focused on improving Mexican agriculture. The foundation took Wallace’s advice and sent a small group of agricultural experts on a 5,000-mile journey across Mexico in a station wagon to review the situation. Upon their return, the Rockefeller Foundation created the Mexican Agricultural Program to transfer U.S. agriculture technologies to Mexico, developing high-yield grains, expanding irrigation infrastructure, distributing hybridized seeds, and creating synthetic fertilizers and pesticides. This story is now considered the founding of the Green Revolution, credited with saving over a billion people from starvation globally and considered one of the most impactful philanthropic and technology transfer projects of the 20th century. The leading scientist, Norman Borlaug, went on to win the 1970 Nobel Peace Prize. Today, the United States faces an even greater opportunity for public-private partnership on clean energy innovation and technology transitions. For nearly 40 years, since the consolidation of the Department of Energy itself, we have neglected to make the basic investments our nation and the world needs to secure its energy and environmental future. The challenge has grown so urgent that dozens of major investors and philanthropists from around the world have now stepped up to spend billions of their own dollars on high-risk ventures to help solve it, alongside 19 other countries committed to doubling their energy R&D budgets. Teryn Norris served as Special Advisor at the U.S. Department of Energy until November 2015, where he managed finance and commercialization programs and served on the founding team of the Office of Technology Transitions. Follow him at http://twitter.com/terynnorris.
News Article | November 28, 2016
"I don't know if you've noticed," she would reply, "but the nuclear industry is a little behind in terms of innovation." The nuclear energy sector is often perceived as a last-century industry. But that is changing. A growing market of venture-backed startups signals that we are on the verge of a nuclear do-over. Despite a turbulent history, the allure of nuclear energy—electricity production on a massive scale with minimal emissions—remains attractive. Its low emission rate is why the United Nations International Panel on Climate Change recommends doubling the world's nuclear capacity by 2050. Nuclear energy as an effective strategy to combat climate change, along with the fascinating physics of nuclear fission, is what drew Slaybaugh to the field in the first place. "I keep going back to the numbers for safety and impacts," she says. "Even without considering climate change, just look at the public health impact of air pollution. I just can't come to any answer that isn't nuclear." Yet the bulk of the 100 nuclear reactors currently operating in the U.S., which continue to produce about 20 percent of the nation's energy, are reaching retirement age, and energy market forces don't always favor nuclear. In June, California's Pacific Gas and Electric utility announced plans to shutter its long-controversial Diablo Canyon reactor within a decade. The reason cited was not environmental issues or safety concerns, but economic: the aging reactor can't compete price-wise with other energy sources. "It's ironic that as environmental groups switch to pro-nuclear or at least neutral on nuclear, existing nuclear plants are closing—not because of increased public backlash, but because of distortions in the electricity market," Slaybaugh says. "I'm very pro-renewables, but production tax credits are paid to some resources that don't emit air pollution and not others," she continues. "That doesn't make a lot of sense." Many realize that for nuclear energy production to have a future, the entire industry needs an overhaul—including how regulatory structures and energy markets are constructed, as well as how nuclear reactors are designed, financed and built. The need for industry-wide modernization is clear even in highly partisan Washington, D.C., where lawmakers from both sides of the aisle are largely in agreement that the nuclear sector—one of the most heavily regulated industries in the world—needs to be more accommodating to new ventures. Likewise, training a new nuclear workforce will also need an overhaul. That's why, with a sense of urgency and favorable political tailwinds, Slaybaugh launched a nuclear innovation bootcamp. Held in August, the two-week bootcamp hosted 25 university students from around the world and encouraged them to envision what "new nuclear" would look like. Slaybaugh collaborated with Third Way, a D.C.-based centrist think tank working on nuclear energy-related issues, along with the Nuclear Innovation Alliance industrial consortium, to develop the curriculum for the two-week course. "One of the reasons it makes sense to have this bootcamp at Berkeley," says Todd Allen, a nuclear energy expert and senior visiting fellow at Third Way, "is because there is a culture of innovation. One of the Department of Energy's first incubators, Cyclotron Road, is located at the Berkeley Lab. The Bay Area has all of the pieces that could support something like this." The golden age of nuclear began immediately following World War II, when the federal government started pouring research and development money into commercial nuclear reactor designs. In 1951, in a concrete building nestled in the sagebrush scrub plains of eastern Idaho, scientists working at the National Reactor Testing Station (now part of the Idaho National Laboratory) flipped the switch on the first reactor designed to convert heat derived from splitting uranium atoms into electricity. During its first flickers of life, the reactor lit up four 200-watt lightbulbs, kicking off a decade of pioneering research and engineering—followed by four decades of controversy and catastrophic technological failures. By the late 1950s, the first large-scale commercial nuclear reactors came online across the country. In 1960, the Atomic Energy Commission estimated that the nation would be powered by thousands of nuclear reactors by the year 2000. "Back in the day, the philosophy was that commercial deployment had to be done as quickly as possible," says Per Peterson, nuclear engineering professor and the college's executive associate dean. "We became competent in building and operating water-cooled reactors for submarines. And then we got locked into that one kind of technology." Despite early developments using other reactor designs and fuel configurations, the industry settled on that single design—water-cooled reactors, also known as light-water reactors—as a universal standard. The time and money involved in the nuclear regulatory permitting process made deviating from the accepted design prohibitively expensive. Light-water reactors produce electricity by creating steam to spin a turbine. The solid fuel, usually uranium arranged in rods that need replacing roughly every four years, is cooled by pressurized water. An accident at a light-water reactor can release radioactive materials as fine particles. With high pressure steam, these particles can leak from a reactor building, as in the high-profile accidents at Chernobyl and Fukushima. "The consequence space for severe accidents is pretty substantial with this type of reactor," Peterson says. "Therefore, it took a lot of effort to develop extremely reliable active systems to provide cooling, low leakage and high-pressure containment structures, which make these reactors more expensive. So they were built bigger and bigger to achieve economies of scale." "In the end, that didn't seem to work too well," he says. In 1979, a reactor at Three Mile Island in Pennsylvania had a partial meltdown because of valve failure and human operator error, resulting in the evacuation of 140,000 people. Following the accident, anti-nuclear sentiments became a foundation of the country's budding environmental movement, raising questions about the safety of nuclear facilities and what to do with the growing pile of spent nuclear fuel rods. Over the next 30 years, the vision from nuclear's early days—of thousands of reactors pumping out emissions-free energy—was tempered by economics and politics. Despite the grim outlook for growth, Slaybaugh became curious about a career in nuclear engineering as an undergraduate at Penn State in the early 2000s. She was initially interested in physics when she happened to get a work-study assignment at the university's research reactor. In graduate school at the University of Wisconsin, she began studying the Boltzmann Transport Equation—"a single equation that describes where all of the neutrons are in a nuclear system," Slaybaugh explains. "Anything in a nuclear system starts with where all of the neutrons are, so it lets you figure out everything else." Working with the equation can be challenging, so Slaybaugh developed expertise in creating algorithms and software to solve the equation faster and more efficiently, which ultimately can be applied to designing and modeling new nuclear technologies. "Truly predictive modeling will end up making it a lot more feasible, affordable and practical to ask questions about what's going to happen in new reactor design scenarios," Slaybaugh says. "I also have this serious concern about best practices and quality: You want to make sure that the codes you are using in nuclear systems work." "Fundamentally," Slaybaugh says, "I make the tools that other people use to do analysis. So I get really excited about making better hammers so that other people can make better houses." Slaybaugh, recently appointed by the Secretary of Energy to the Nuclear Energy Advisory Committee, also works with the Gateway for Accelerated Innovation in Nuclear (GAIN), a group organized by the Department of Energy to provide guidance on technical, regulatory and financial issues facing this emerging "advanced nuclear" industry. Advanced nuclear is the umbrella term used to describe novel research on smaller reactor designs that incorporate alternative nuclear fuels and cooling systems. Some advanced designs reuse existing nuclear waste as fuel; or use fuel that does not require enrichment, which reduces security concerns associated with nuclear energy. "The big thing is that the government is making national lab resources available to private companies in a way that it wasn't before," Slaybaugh says. "If you are a nuclear startup, you can only go so far before you need to do testing, and you are not going to build a nuclear test facility, because that is hard and expensive. But now you could partner with a national lab to use their experimental resources. I've been talking about how to set up a pathway from universities for this kind of research." Over the past year, Third Way, a supporter of Slaybaugh's nuclear innovation bootcamp, published a number of reports and white papers defining the advanced nuclear industry. They found 48 projects and startup companies working on advanced nuclear energy technologies, worth over $1.3 billion, all over the U.S. and Canada. One of those projects is led by Per Peterson's research group at Berkeley. Following his Ph.D. research in mechanical engineering at Berkeley, Peterson began designing passive safety systems for light-water reactors, with an eye toward replacing and greatly simplifying the active safety systems the industry had originally adopted. "Back in 2002," he says, "the U.S. launched an international effort on advanced nuclear technologies called Generation IV. This got us thinking about what we wanted to see in advanced nuclear technologies, beyond just passive safety." Those experiences led Peterson to conceptualize entirely new designs. "Now the majority of my research relates to advanced reactors cooled by molten fluoride salts, which have undergone major advances since molten salts were first studied for reactor applications starting in the late 1950s," he says. Molten-salt reactors are cooled by fluoride salts that liquefy and remain stable at high temperatures. They do not need to be pressurized like light-water reactors do, reducing the probability of large-scale accidents. "Molten salts are fantastic heat-transfer fluids; they have enormous volumetric heat capacity, which means they are remarkably compact. This puts you in a position to design reactor vessels to have limited service life, to be replaced multiple times during a life of a plant," Peterson says. "As soon as you focus on limited service life, you are in a very different space in terms of innovation and upgrading old components." Named to the Department of Energy's Blue-Ribbon Commission on America's Nuclear Future in 2010, Peterson also contributes to the national discussion about new nuclear regulatory standards. "Here we are just 10 years after NASA launched its Commercial Orbital Transport Services program to fund startup companies like SpaceX, and massive change has occurred with the idea that private-sector startup companies can be significantly more nimble and still work in areas requiring high levels of technical sophistication." Drawing inspiration from successes from other heavily regulated industries, Peterson says, is what keeps him optimistic. "There is the potential for rapid innovation to occur, and we can make major changes in nuclear technology. This is what we need to be working on this coming decade." 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