October 15, 2015

100% Clean Energy – the New Zero Waste

Last week I had the chance to toast Dan Shugar, CEO of NEXTracker, a global leader in tracking systems for solar power plants, such as the 70MW Javiera Solar project in Chile pictured above.    Since SJF Ventures led a Series B financing with the company in December 2014, Dan and his team grew the company faster than any we have invested in over 15 years at SJF and then consummated a $330MM exit to Flex last month.    He will be leading NEXTracker within Flex to continue to drive down the cost of solar globally.    Dan and NEXTracker investors are donating to a 100% clean energy initiative at the Sierra Club to continue to support the rapid transition away from fossil fuels… just as he had earlier help to kickstart the Beyond Coal initiative after selling Powerlight to Sunpower.

 It has occurred to me that just as ‘zero waste’ was an aspirational goal mobilized many companies over the last two decades… so too will this new goal of ‘100% clean energy’ in the next two decades.   And the world will be a much better place due to the great jobs, community revitalization, energy independence, and carbon reduction driven by this next wave of cleantech companies, like NEXTracker, that pursue yet another vision that many naysay as unattainable.

In the mid-1990s, several recycling advocates including myself began promoting the goal of ‘zero waste.'(1)  We were frustrated by the incremental efforts at 10% or 20% recycling and wanted to focus individuals, cities, and companies on a more aspirational and ultimately attainable goal.   We drew attention to broader source reduction, reuse, composting and advanced recycling.   The concept was initially derided by many in the waste management industry as unrealistic.   And yet, over time it gained acceptance and now many cities and corporations have set zero waste as their goal.   Cities that now have zero waste goals include Seattle (aided by SJF portfolio company CleanScapes, since acquired by Recology), San Francisco (served by Recology), Los Angeles, San Diego, Dallas, Minneapolis and New York City (2).

Many corporations have also set their sights on zero waste as a paradigm shift for their business culture which drives innovation, reduces expenses, builds more efficient operations and inspires their employees and customers.   Several operations or factories that have effectively achieved ‘landfill free’ zero waste, including Proctor & Gamble, Subaru, Ford, Sunpower, Cargill, Unilever, Miller Coors, and Eaton. (3)

 SJF Ventures has helped to finance and scale companies that are driving this change towards a ‘circular economy’ including Optoro, Hyla Mobile, Novinium, Living Earth, BioSurplus, Salvage Direct, CleanScapes, Intechra, R24 Lumber, Evco, and Selectech. (4)   These eleven companies are helping their customers profitably reuse and recycle returned or damaged retail goods, mobile phones, utility equipment, organic material, biotech equipment, vehicles, municipal discards, e-waste, scrap lumber, and plastics.     We continue to look for the next wave of great entrepreneurs that can find wasteful sectors of our economy where they can capture value & transform material and product flows.

Just as the target of ‘zero waste’ has driven recycling, reuse and asset recovery … so too is ‘100% clean energy’ becoming a motivating target for a whole set of energy entrepreneurs.   SJF has invested in NEXTracker, groSolar and Community Energy, which are all driving rapid adoption of low cost solar energy.   And our portfolio companies EnTouch Controls, Ayla Networks, FieldView Solutions, RealWinWin, and B.B. Hobbs which are enabling greater energy and water efficiency at restaurant and retail chains, appliance manufacturers, data centers, large commercial buildings, and farms.

The costs of solar & wind power, as well as energy efficiency, have declined rapidly – such that new additions the grid are often from 100% renewable sources, often displacing retiring coal plants.   Energy storage costs are also declining rapidly – with the headlines driven by Tesla’s new Gigafactory to be producing the Powerwall – but with many other companies also driving down costs. (6)   As business and utility models innovate to capture more of the diverse values of energy storage on the grid – for customers as well as utilities – the sector is likely to scale along the same low-cost, wide-adoption path as wind and solar. (7)

The advent of low-cost storage, along with electric vehicles, has created the potential for individuals, companies and eventually communities and countries to move to 100% clean energy.   Indeed, the RE100 is a global coalition of companies committed to going to 100% renewable energy including IKEA, Swiss Re, Goldman Sachs, SAP, Starbucks, Johnson & Johnson, UBS and Walmart. (8)

Advocacy groups such as the Solutions Project have developed research on how states can cost effectively achieve 100% renewable energy. (9)  And the Sierra Club is proceeding from its successful Beyond Coal initiative to a 100% Clean Energy Project. (10)   Most 100% plans include not only solar and wind, but efficiency, storage and intelligent grids, along with hydro, geothermal and tidal power.

Just as with zero waste, it is achievable today for families or companies to effectively go to 100% clean energy through onsite solar, green power purchases, efficiency and energy storage.    Cities beginning to adopt the goal as well, including the Cities of Vancouver, Ithaca, NY, Aspen, CO and Greensburg, KS.   Costa Rica has a target to be 100% carbon neutral by 2020. (11)   Interestingly, 83% of Americans say they support an ambitious 100% clean energy goal in a national online poll recently conducted by Global Strategy Group on behalf of the Sierra Club and HereNow.

Similar to the waste management industry – with its sunk investments in landfills  – opposing the concept of zero waste… so too today is the fossil fuel industry fighting renewables and a 100% clean energy vision.    However, more and more investors and institutions are seeking to distance themselves from fossil fuels and their risks of stranded assets through a divest – invest program.   That is, divesting from all fossil fuels and investing in renewables and efficiency. (11)

We will continue to hear from skeptics that say we need an ‘all of the above’ solution for energy… just like we still ‘need’ landfills for waste.    I would liken this to each of us saying it is OK for us to have some toxins in our diet and not be 100% healthy… because it is just too hard or costly or troublesome to have a clean diet.   However, with the costs of renewables, storage and efficiency dropping so fast… we no longer have to be distracted by that false dichotomy.

As I rolled out my recycling and trash carts this week, the recycling one was filled to the brim, my compost pile is full, and my garbage cart had one small bag in it.    With the 6 KW solar PV array on my roof, we are generating all the power we need in our house on a net basis.   I bike to work most days and SJF Ventures buys carbon offsets for all of our air travel.    It is a lot more fun for us all to work on getting to 100% clean and 0% waste in our lives, companies and communities.  

 SJF Ventures is proud to be a part of this 100% clean energy & zero waste movement... along with our fund investors and portfolio companies.   We are eager to find the next great entrepreneurs, like Dan Shugar of NEXTracker, to move us further and faster towards 100%.

(1) The GrassRoots Recycling Network originally advocated the concept of zero waste in the early 1990s.

(2) List of ten cities with zero waste goals: http://waste360.com/waste-reduction/10-major-us-cities-zero-waste-goals#slide-0-field_images-203371

(3) List of twenty companies with zero waste facilities:  http://waste360.com/features/20-companies-zero-waste-landfill-operations#slide-0-field_images-209791

(4) Links to all of SJF’s sustainability portfolio companies, including those listed is this article: http://www.sjfventures.com/industry-focus/sustainability

(5) For net coal plant retirements and wind, solar and natural gas additions to the US grid over the next eight years, see the graphic midway down in this Atlantic article:http://www.politico.com/agenda/story/2015/05/inside-war-on-coal-000002

(6) For more in-depth resources on energy storage and related companies, see the Energy Storage Association: http://energystorage.org/

(7) See the Rocky Mountain Institute’s latest research on the thirteen services that energy storage can provide to customers (including backup power, demand charge reduction), utilities (transmission and distribution deferral) and ISO/RTOs (energy arbitrage, frequency regulation): http://www.rmi.org/electricity_battery_value

(8) See the full list of RE100 companies here: http://there100.org/companies

(9) See http://thesolutionsproject.org/

(10) See http://www.sierraclub.org/one-hundred-percent

(11) See a list here http://www.go100percent.org/cms/

(12) See http://divestinvest.org/philanthropy/ and  http://gofossilfree.org/