Major Solar Projects

In May Longroad Energy announced that Facebook would invest in the Boston-based power operator’s $416 million Prospero Solar project in West Texas. The Prospero project, scheduled to be completed next year, will have capacity of 379 MW, and cover about seven square miles, or five times the size of New York City’s Central Park. Highlighting the convergence of renewable energy and the fossil fuel industry, Royal Dutch Shell Plc will be the buyer of the electricity.

Last week, Engie, the French power provider, announced it had entered into a 15-year power purchase agreement (ppa) with Target for 89 MW of capacity from its Sand Fork Solar Project in Texas. Target’s purchase will be roughly equivalent to the energy required power 250,000 U.S. homes for more than a month, slightly less than half of the Sand Fork Solar Project’s total capacity of 200 MW. Engie is looking to build over 2.5 GW of wind and solar capacities over the next 3 years in the U.S. and Canada.

In addition, a handful of Fortune 500 companies, including Applied Materials Inc., Campbell Soup Co. and FedEx Corp., have gone solar in Texas.

Along with demand for new data centers as new projects enter construction, demand for services like maintenance and transmission will likely increase, allowing private capital to finance such services.

Coal

Gradual phasing out of coal is creating additional opportunities for alternative energy investors.

In 2018, three coal plants were shut down, removing more than 4,000 MW (enough to provide power for at least 800,000 Texas homes) of generating power. This power needs to be replaced, likely with renewable energy projects.

Texas generates more electricity than any other state in the US, with 33.5 million MWH, followed by Pennsylvania (18.3 million MWH).  Texas is the 6^th largest coal producer, right behind Illinois and Kentucky, with 36.4 metric tons of coal per year. If coal is going to take time to be phased out, carbon capture and storage (CCS) technologies will need to be applied to reduce the carbon footprint of these plants, allowing VC-backed technology companies to develop products and services to address this specific need.

Since Texas has several mature oil fields that need to be extracted via Enhanced Oil Recovery (EOR) techniques, CCS projects are better positioned to provide CO2 required to operate these fields. In the U.S., this has been the case with the Terrell Natural Gas processing facility in McCamey, Texas, that captures, stores and transports CO2 to oilfields in the Permian Basin.

The closing of the coal-fired power plants has trimmed the projected power reserve margin to 7.4%, an already low figure at just over half of Electric Reliability Council of Texas ERCOT’s reserve margin goal of 13.7%. The margin refers to additional power available to meet unusually high demand or to fill in when generators unexpectedly break down, which could lead to price spikes or blackouts.

New wind generators may also mean that so-called “peaker plants” may never be fired up. These plants stay dormant except during the summer months when demand soars, supplies dwindle and prices spike. The added wind-based supplies have moderated summer price spikes.

The post Texas Goes Green: Renewable Energy Taking Hold in America’s Oil Patch appeared first on Karma Impact.

The CRANE tool is projected as an online, open-source program that cuts the time required to find out if a company’s technology truly helps the environment, the company said in a statement on Wednesday. CRANE stands for Carbon Reduction Assessment of New Enterprises.

The platform is expected to go live early next year after more than a year of development, following a beta version that is slated for late 2019.

The goal is to help reduce costs and time spent on evaluating Emissions Reduction Potential of an early-stage venture.

“Today, assessing the ERP of early-stage companies is time-consuming and labor-intensive, there is no standard report that easily slots ERP calculations into investment decision-making,” says Sarah Kearney, executive director of Prime Coalition.

• Kearney told Karma that CRANE will be “available to anyone who wants to evaluate the emissions reduction potential of a company” before investing.
• Grants from the John D. and Catherine T. MacArthur Foundation, New York State Energy Research and Development Authority, and Massachusetts Clean Energy Center are funding the project
• Karma Take: While the support of state governments and the $6.6 billion MacArthur foundation gives the project an edge over lesser-funded tools, CRANE faces an increasingly crowded field of ESG assessment software.

The post New Software Aims to Help Investors Measure Environmental Impact appeared first on Karma Impact.

While this latest report focuses on the biggest companies, it’s clear that climate change is increasingly becoming a part of business projections for everyone, regardless of the size of the company or sector, as flooding and rising sea levels threaten distribution centers and warehouses.

Along with the costs, there are also opportunities. The big companies see climate change as a $2.1 trillion opportunity in the way of sales of energy-efficient vehicles and other clean products.

• Bruno Sarda, president of CDP North America, believes investors need to be on the lookout for future complications, examine the data, and start demanding accountability from companies, according to Sarda.
• While government policies can play a major role in stabilizing markets by putting prices on carbon, water, or pollution, Sarda says investors and companies can’t “wait for government-sponsored regulations.”
• Karma Column: Real Estate Gets Serious About Climate Risk

The post Pricing In the Costs of Climate Change appeared first on Karma Impact.

Technology companies are ramping up their efforts to shift from fossil fuels, spurring renewable energy demand globally, amid mounting concerns that their powerful data centers are spewing carbon dioxide. The industry is under pressure from socially conscious consumers who are increasingly asking it to deliver on do-good promises and to align operations with international climate goals.

“These are customer-facing companies, and their customers care about the environment,” says Jon Koomey, an expert in energy and environmental effects of information technology and a special advisor to the chief scientist of Rocky Mountain Institute. Data centers are highly profitable, so addressing customers’ concerns is a priority, he says.

Big tech’s push to make clean energy commitments and affect wider change in the industry also dovetails with its penchant to be seen as a positive force in the world, says Matthew Chester, energy analyst for Chester Energy and Policy in Washington, DC

“Going green, in whatever way they do, is seen as a great PR move, a beneficial financial decision, and simply the right thing to do,” he said.

The stakes are high. Global emissions reached record levels last year, rising 2.7% from a year before, according to estimates by Global Carbon Project. The rapid growth in low-carbon technologies has not been sufficient to drive emissions down enough to avoid the worst impacts of climate change, the group said.

Racing against time, scores of corporations have made pledges to switch to renewable energy in the past decade. RE100, a global initiative to use 100% green electricity, counts 179 companies among its members, including Apple, Google and Microsoft. The tech industry has become the top corporate buyer of green energy, signing deals for 10.4 gigawatts as of last year, according to Bloomberg NEF.

The trend, which has fueled investments in solar and wind technologies and driven down green energy prices, is also creating opportunities for smaller players to embrace the renewables.

“Companies like Google, Microsoft, etc. are so huge that they have the sole ability to affect change in the market,” Chester said. “So in that way, any push they make in this regard is a win globally.”

Earlier this week, LevelTen Energy, a Seattle-based startup that allows companies of all sizes to buy clean energy online, raised $20.5 million in a Series B funding for expansion in the U.S. and Europe. Companies have procured over $1 billion worth of renewable energy through the LevelTen marketplace. They include Starbucks, which this month closed on a three-project portfolio, comprising wind and solar farms in North Carolina, Oklahoma and Texas.

In January, LevelTen helped Bloomberg, Salesforce, Gap Inc., Cox Enterprises, and Workday collectively purchase 42.5 megawatts of a 100-megawatt North Carolina solar project.

‘More Impact’ 
The soaring demand for cloud and Internet services has led to an explosion of data centers around the world. They consume up to 3% of global electricity, while emitting as much C02 as the airline industry. Meanwhile, the number of Internet-connected devices is expected to grow from almost 27 billion in 2017 to 125 billion in 2030, according to IHS Markit.

To meet their sustainable energy goals, tech companies sign standard power industry, long-term contracts known as Power Purchase Agreements (PPAs), to source electricity from major wind farms and solar projects. In the latest example, Microsoft this month agreed to buy 90 megawatts from the Eneco-developed offshore wind project in the Dutch North Sea, bringing its total clean energy portfolio to more than 1.5 gigawatts.

This strategy creates “more impact” than other methods, such as bundled renewable energy credits, because it spurs construction of green energy projects, according to Neha Palmer, Google’s director of operations, energy and location strategy.

Last year, the search engine giant met its 100% renewable energy target for the second year running, thanks to several PPA-driven projects, including wind farms in Scandinavia, dozens of wind turbines in Oklahoma, and more than 120,000 solar panels in the Netherlands.

Google also has partnered with several Dutch companies to buy renewables as a consortium, encouraging other small players to band together and save costs on larger deals.

“We want to make it simple for any business — be it a flower shop, retailer, or startup — to buy cheap renewable energy,” Palmer wrote in a blog post. “Though clean energy now makes economic sense across much of the globe, it remains difficult for many companies to access.”

Meanwhile, Facebook is investing in a solar farm in West Texas, expected to have capacity of 379 megawatts, enough to power up to 300,000 homes. The company has committedto cutting its greenhouse emissions by 75% percent and reaching 100% renewable energy in 2020.

Tech giants’ focus on renewables is also boosting the industry of smaller green solution providers, such as EcoDataCenter, a self-described “world’s first climate-positive data center” in Falun, Sweden.

“It is important that the market leaders are in the frontline in terms of sustainability,” which creates more awareness and drives demand, says the CEO of EcoDataCenter, Lars Schedin. “We can never compete with companies like Microsoft or Google. If the large players get 90% of the market volume, we and our competitors are happy to share the remaining 10%.”

Nordic Push 
Big data center owners like Google Cloud Platform and Amazon Web Services are increasingly building heat-emitting hubs in colder climates of Nordic regions, harnessing everything from arctic winds to frigid seawater of Gulf of Finland.

Seeking to offset environmental impact, many companies now redirect excess “IT heat” to local heating systems to warm people’s homes. A data center from Microsoft of 300 megawatts, for example, could heat about 150,000 homes.

“I truly hope this will become one of the development areas for our industry going forward,” said Schedin from EcoDataCenter, which recycles waste heat in a nearby wood pellets factory and in the local heating system during the winters. “If not, the heat ‘thrown out of the window’ from a datacenter is also adding to the greenhouse effect, increasing the temperature.”

Microsoft last month unveiled plans to build “the most sustainably designed” data centers in Sweden, powered by renewable energy sources targeting zero-waste operations. The country is also home to a newly opened AWS cloud computing facility in Stockholm as well as Facebook’s data center campus in Lulea.

“It’s great to see that these tech companies are feeding off of each other and pushing each other to be better,” Chester said. “Are they doing enough? Perhaps not yet, but they are doing more than other industries, and they’ll continue to be leaders.”

Anastasia Ustinova is a freelance business writer based in Seattle with more than 10 years of experience reporting around the world. Her stories were featured in Bloomberg News, Businessweek, the San Francisco Chronicle and the Houston Chronicle.

The post How Big Tech’s Hunger for Data Centers Is Driving Renewable Energy Adoption appeared first on Karma Impact.

The Seattle startup took an investment from Exelon Corp., the biggest U.S. nuclear plant operator and owner of Three Mile Island, site of the worst American nuclear accident. That investment was led by Prelude Ventures, San Francisco venture capitalists who focus their investments on carbon reduction. Another investor was Equinor Energy, which touts itself as an investor in renewable energy growth companies.

A startup offering its marketplace that matches green energy sellers with buyers may not seem a natural fit with a nuclear plant operator. Still, Exelon, with $36 billion in revenue last year, provides a big thumbs up to LevelTen’s ambitions.

“The engagement in this round of several global energy partners should only further establish the LevelTen platform,” said Tim Woodward, Prelude Ventures’ managing director who is joining the LevelTen board, in the statement announcing the investment.

For its part, Prelude sees LevelTen’s technology becoming “an essential tool for corporate and industrial procurement of renewable energy,” Woodward said.

LevelTen was born out of the Seattle Techstars accelerator in 2016, and its technology seeks to create a marketplace for renewable energy, matching producers with commercial and industrial customers. It lists more than 1,600 clean energy projects in the U.S. with detailed project information including location, size and power purchase agreement price, so that buyers can compare and research before making a purchase. LevelTen sees its product opening clean-energy purchases to a wider audience, including smaller businesses.

Investors like Exelon may be drawn to LevelTen for a few purposes: one is the feel-good, image boost that comes with a clean energy investment. Another may be in getting in on the ground floor, because at least one expert says LevelTen has the field to itself right now.

“On competitive landscape, I don’t think that LevelTen has any direct competitors,” Eric Gimon, a senior fellow at Energy Innovation, told Karma in an email. He noted that while most deals are facilitated by individual brokers, LevelTen is the only online marketplace platform.

More than $1 billion of renewable energy has been facilitated by LevelTen, according to the company. The potential generating powers equals to 63% of existing wind and solar energy in the U.S., they say.

CEO Bryce Smith said the company’s platform is permitting it to make solar and wind power available to companies that in the past were too small for access. He said only a small number of Fortune 500 companies were able to sign big purchase agreements.

“This exclusionary problem is one we’re committed to addressing,” he said in the statement announcing the funding round. “With this new investment, we will open the door to an international community of buyers, sellers and service providers.”

The post How This Green Energy Startup Landed Nuclear Giant Funds appeared first on Karma Impact.

At the time of Modi’s announcement — at the 2015 United Nations Climate Change Conference (COP21) in Paris — it meant a quadrupling of the country’s renewable energy capacity in just seven years. Solar represented the lion’s share of this capacity target, at 100 GW, with the remainder drawn from wind (60 GW), bio-power (10 GW) and hydro-power (5GW).

Emerging markets are driving the world’s gradual shift toward renewable energy, with much of the momentum courtesy China and India; the largest and the third-largest renewable energy producers, respectively. Both these Asian giants are set to overtake developed nations in terms of the amount of renewable energy installed, according to the credit rating agency Moody’s.

India has installed 28 GW of solar capacity to date, six times what was installed in 2016, according to the Institute for Energy Economics and Financial Analysis (IEEFA). In 2017, India added almost 10 GW of solar, the second-highest capacity addition in the world (although dwarfed by China’s record-breaking 53 GW that same year). A Mercom India Research study revealed that solar accounted for 50 percent of new power capacity in 2018, with 1 MW of solar capacity installed every hour in India in the first six months that year. This year India is poised for a record solar capacity addition of 14 GW, which could bring its total solar installed capacity to 38 GW by the end of the year.

Investing in India’s Hottest Energy Space
Global energy investment held steady at more than $1.8 trillion in 2018, following three years of decline, whereas investment in the renewable energy sector globally has increased by 55% since 2010, according to the 2019 World Investment Report released by the International Energy Agency. India’s investment in the energy sector grew by 12% over the past three years, with 2018 investments in Indian solar amounting to approximately $9.8 billion.
Renewables, once at the fringe of the country’s energy sector, are now a hotbed of activity with the nation’s power Goliaths, the likes of Tata Power, Adani and Azure Power — jostling side by side with smaller incumbents – startups such as 8Minutes, Orb Energy and Nuevosol. The sector has seen a slew of major acquisitions including the $1.54 billion acquisition of Ostro Energy by ReNew Power — India’s largest renewable energy independent power producer — and the $1.4 billion acquisition of Welspun Energy by Tata Power Renewable Energy.
And global players are also entering the ring. “Slashing government tariffs has made the Indian solar space especially attractive to a host of international players,” said Santi Gon Chaudhuri, founding member and chairman of the International Solar Innovation Council and an award-winning expert in photovoltaic systems.

SB Energy – a joint venture between Japanese investment giant SoftBank, Bharti Enterprises and Foxconn Technology – is working with Essel Infraprojects on a 500 MW plant in the northern Indian state of Rajasthan, as part of a long-term plan to invest a staggering $1 trillion in Indian solar by 2030.

Mytrah Energy – a major private Indian renewable energy developer with a portfolio size of 1.6GW – is reportedly in talks to sell a majority stake to Canada’s Brookfield Asset Management, with a projected deal size of $1.5 billion, potentially making it one of the largest renewable energy deals in India.

“Power” Play
However, scaling renewable energy further toward deep decarbonization of India’s energy system is a much harder task, according to Rahul Tongia, a fellow at Brookings India in New Delhi and member of the World Economic Forum Global Future Council on Advanced Energy, and will require a host of technical, policy, and regulatory improvements. Although Indian RE installations surpassed new coal power plants for the first time in 2017, for solar to become a substantial and reliable player in India’s energy arena, Tongia believes it’s a case of deciding “at what point does your appetizer become your main course.” To that end, Tongia cites a number of systemic issues – from policy to finance to infrastructure – that inhibit solar’s uptake in India.

Multiple studies reveal that RE cannot yet compete against most existing coal-fired generation, which remains the dominant source of power in India and in much of the developing world: 81% of all emerging market coal-fired capacity is located in India and China, according to BloombergNEF. Though new coal-fired capacity fell to 4 GW in 2017, from 17 GW each year between 2012 and 2016, India still depends on the “dirty fuel” for three-fourths of its energy requirements.

Ensuring the reliable provision of electrical energy throughout the day is key, says Tongia. “Grid stabilization needs to be addressed in a systematic way, especially how renewable power will be absorbed, distributed and balanced in the grid as we eventually move towards depending on variable renewable sources,” explains Tongia.

Tongia notes that the difficulties of integrating RE into India’s power grid will worsen as RE’s share of generation increases – RE gross generation stood at 7 percent in 2017 and is estimated to hit 19 percent by 2022, causing disproportionate strain on RE-rich states such as Gujarat, Andhra Pradesh and Karnataka. Substantial investments in long-distance RE-centric transmission are necessary in order to pre-empt this issue.

India’s electricity distribution companies (DisComs) also represent a major challenge. “Almost all DisComs are owned and controlled by state governments and many are struggling financially, leading to payment delays and renegotiating or avoiding signing power-purchase agreements,” says Tongia.

Gon Chaudhuri believes that without government’s will, the powerful coal and fossil fuel lobby also will impede progress.

Solar pricing is also a tenuous issue. India has used bidding to create competition and lower solar and wind prices, down to about 3.5 cents per kilowatt-hour (kWh), the lowest in the world. But he Tongia notes that these prices cannot be compared directly to those for fossil-fuel generation, since renewable energy is not “dispatchable.” “It is available only when the sun shines or the wind blows,” he says.

The Role of Rooftop Solar
Rooftop solar is the fastest growing renewable energy sub-sector in India, according to a recent IEEFA report, which estimates solar rooftop installation will grow at a compound annual growth rate of 50% and achieve a cumulative 13 GW of installed capacity by FY 2021-22. That is still far behind Modi’s proposed target of 40 GW.

While commercial and industrial buildings are increasingly adopting solar panels to secure cheaper electricity, households account for only 9% of the total rooftop solar capacity, according to Bridge to India, a renewable energy consultancy firm.

Lack of residential consumer interest in rooftop solar has slowed progress. “Consumer awareness is an important building block towards rooftop solar uptake,” explains Gautam Das, co-founder of Oorjan Energy – a hybrid cleantech, fintech and IoT startup.

The former banker founded Oorjan in November 2014 and its main strategy has been targeting residential and commercial retail customers and converting them into solar users through a frictionless online experience. The startup uses its own proprietary technology to enable customers to calculate solar energy requirements, select their preferred equipment and, perhaps most importantly, choose a suitable payment plan.

Although investment has created a dynamic and competitive RE market in India – with solar-produced power cheaper than the traditional grid in several Indian states – many households lack access to capital for equipment purchase making it a key roadblock in the transition to a truly solar-powered India. The Indian government subsidizes up to 30% of the equipment cost for households, but a Bridge to India report states that the subsidy mechanism lacks transparency and the application and disbursal process is often complex.

“Large megawatt scale projects still dominate the industry and command a majority of the funding,” notes Radhika Choudary, co-founder of Hyderabad-based Freyr Energy. “Real growth in solar uptake will be unlocked when more banks offer simple, low-interest finance options for residential and commercial solar use cases but as it stands, it is easier to finance your next vehicle purchase, which pollutes the environment, versus a green product.”

With the private sector essential in building most new RE capacity, providers such as Oorjan and Freyr Energy have developed aggressive financing mechanisms in response to the lack of bank confidence and have seen an uptick in residential user interest. “To date, 10,000 customers have generated their own solar energy proposals and we have over 1,200 paying customers across 11 states including Karnataka and Maharashtra,” explains Das, who counts Mumbai’s largest solar-powered housing community among Oorjan’s customers.

Like Oorjan, Freyr also relies on a software platform that “takes into account the location of the customer, applicable policies, tax benefits, payback, available financing options, product design, and vendors servicing in that area in order to provide a reliable system at the most affordable cost,” explains Choudhary. Freyr maintains full ownership of the solar asset while offering qualified customers solar electricity at a discounted rate (by at least 30% to 70%) from the grid. The startup has brought power to more than 20,000 people, including more than 120 tribal habitats in some of India’s deepest forests and difficult terrains.

India’s most interior villages and tribal settlements make up only 10% of Freyr’s portfolio, but Choudhary sees them as a massively untapped opportunity. “A village is classified as electrified if only 10% of the homes or public buildings are connected to the grid. By this definition, 100% of villages in India are electrified when the reality is only 7% or so have electricity. More than 31 million people still live in the dark and that is a tremendous opportunity.”

2022 and Beyond
As investments in and installations of clean energy projects continue to rise – making India the world’s largest renewables auction market – the case for shifting toward a renewables-driven future has never been stronger. “Whether India meets or exceeds its target by 2022, the fact is it is headed in the right direction,” asserts Tongia.

However if Modi’s ambitious vision – that renewable sources must account for up to 40%of India’s power-generation capacity by 2030 – is to become reality; major gaps in knowledge, policy making and implementation need to be remedied when it comes to planning for and adapting to rapid RE expansion in India.

“So far much of the discussion has been focused on the supply side and not on creating demand,” notes Kanika Chawla, director at the Center for Energy Finance at the Council on Energy, Environment and Water in New Delhi. “The government is not engaging enough with consumers on the ground to drive a new narrative and inspire new behaviors that can accelerate India’s transition towards clean energy,” says Chawla. “When so many citizens either just want electricity or simply want to pay less for power, they may not care how it is produced.”

Gon Chaudhuri said that technological enhancements in RE storage are essential toward enabling India’s transition toward clean energy. “Unfortunately RE storage technology that is both affordable and capable of holding power at a megawatt scale doesn’t exist. A transition to renewable energy cannot be truly successful without proper large scale storage… that may take another decade.”

Natasha D’Souza is a Dubai-based business journalist.

The post Despite Teething Troubles, Indian Solar Shines Brightly appeared first on Karma Impact.

What’s the difference? James Joaquin, who founded Obvious with Medium’s Ev Williams and Vishal Vasishth in 2014, tells Karma that it is “a traditional venture capital investor with a unique thesis: that purpose-driven startups solving big problems will disrupt trillion-dollar categories and outperform their peers.”

That has led to a broad range of investments out of the firm’s first two funds — including zero-emission electric buses, cultured diamonds, electric air taxis, Earth imaging satellites, smart baby bassinets and vegan cheese.

What they are not involved in are what Joaquin has billed “concessionary deals,” or companies that expect to be held to different profit or financial standards because they achieve a sustainability or social impact goal.

“We are a returns-focused fund and are only investing in teams that have the potential to build a large profitable business,” he told Karma. “For the right kinds of companies, every dollar of profit also represents some inherent social or environmental benefit. We believe companies that achieve this kind of profitable growth are the definition of truly sustainable impact.”

Silicon Valley Influence
Having a purpose-driven focus has set Obvious apart from other Silicon Valley VCs. It’s a relatively moderate-sized firm with a total of about $200 million invested in 65 portfolio companies, but they have become known for identifying emerging trends in categories such as health and wellness.

The team evangelizes the cause: They regularly tweet and write blog posts about the Obvious vision with grand statements such as, “We’re entering a new phase of the global economy where every industry is becoming a tech industry,” and, “Table stakes for urban structures in near future: every building generates more energy than it consumes, water is captured/filtered/reused like never before; rooftops/curbsides are built for electric transport of all kinds.”

When they decided to codify their purpose-driven approach by asking portfolio companies to sign on to a World Positive Term Sheet, they wrote about it and published a sample.

Joaquin says some seed funds have started using the phrase “world positive,” something he embraces — even though Obvious now faces more competition for deals than it did at the onset.

In a sense, it gives Obvious a multiplying force in its impact: By drawing attention to emerging purpose-based ideas for disruption through investments, the team is able to direct capital beyond its own capacity toward world-changing startups.

“We’ve been fortunate to have storied firms like Benchmark and Venrock lead follow-on investments in our portfolio companies,” he said. “We see a megatrend shift embracing this new approach to investing. Across the spectrum, we’re thrilled to see capitalism reimagined as a force for improving humanity.”

Market Validation
Obvious scored some key validation for its approach earlier this month when Los Angeles-based Beyond Meat, which produces plant-based meat substitutes, went public in what became the strongest market debut of the year. Shares surged 163% on May 2 in the hours after the company’s opening Nasdaq trade as BYND, pushing its market value to $3.77 billion.

The faux-meat company was an early investment for Obvious, which is Beyond’s second-largest shareholder with 10.4% of stock. In 2014, the VC contributed to Beyond’s first fund, which raised $123 million total. Williams had invested in the company even earlier than that, in 2012, out of Obvious Group — an umbrella company he ran with Biz Stone and Jason Goldman.

“For early believers, Beyond Meat is a welcome proof point that purpose-driven businesses can reimagine huge sectors of the economy,” Joaquin told Karma. “For the skeptics, it’s a great case study that a more sustainable approach to business does not require a compromise of profits.”

Key Investments
The company puts its investments in three buckets: sustainable systems, people power and healthy living.Sustainable systems includes Obvious’s investment in Proterra, which is building zero-emission electric buses, and Lilium, which is developing the first electric air taxi to create an Uber-like option for getting around that would eliminate the need for infrastructure like runways. Obvious was part of the group that contributed to the $90 million Series B funding round for the German aviation startup in 2017.

Since then, the team has been busy building a workable jet. On May 16, Obvious tweeted that “the prototype is working, folks.”

The People Power category includes Magic Leap, an augmented reality company, and Gusto, a business-to-business company modernizing payroll software. In a recent interview with The Wall Street Journal, the co-founders said they regretted not investing more in Gusto’s Series A funding. The company’s latest funding round in July gave it a valuation of $2 billion.

The final category, healthy living, may be where Obvious has made the biggest name for itself. Aside from Beyond Meat, portfolio companies include Happiest Baby, makers of a $1,295 bassinet that detects when a baby needs soothing and soothes it automatically with sensations that resemble the womb. It completed a $23 million Series B funding round in December. Other companies include Good Eggs, a premium grocery delivery service, and vegan cheesemaker Miyoko’s.

Looking ahead, Joe Blair, vice president at Obvious, said recently on a podcast that it is particularly interested in co-living and coworking concepts that are redefining “the future of remote work” and that it is on the hunt for a groundbreaking media company: “There’s no industry more ripe for disruption than the cable news industry.”

The firm also has a B2B focus, with interest in tech startups that are revolutionizing established industrial players.

“A stabilized and expanded internet is combining with innovations in mobile and wired infrastructure to bring digital services to traditionally ‘non-digital’ sectors,” Managing Director Nan Li wrote recently on the company blog. “A new breed of tech companies are following a different, more empathy-driven playbook to break into these areas. We believe that this new wave of expansive technology will be a defining feature of the next chapter of Silicon Valley.”

Walk the Talk
Aside from setting value-based expectations for its portfolio companies — its term sheet includes sections on diversity and inclusion, sustainability, and giving — Obvious has also set a high bar for itself. In 2017, it became a certified B Corp, a private certification that verifies the commitment of for-profit companies to social sustainability, environmental performance, accountability and transparency.

Moreover, in the male-driven Valley, where men own an estimated 91% of employee and founder equity, 20% of the founders in Obvious’s portfolio are women. Still, Joaquin says the team can do better: “Ultimately, our CEOs and boards should mirror the diverse set of customers that we serve.”

With its well-networked founders and its focus on world-changing ideas, Obvious seems to be setting a course for Silicon Valley’s brightest minds to rethink how they define value.

“Ultimately that’s good news,” Joaquin said, “[if we] attract more young founders away from disappearing photo apps and vape pens and into huge markets in need of disruptive solutions to big problems.

Ambreen Ali is a freelance writer and editor based in the New York City area who specializes in business and technology. She has 15 years of reporting experience, including covering Capitol Hill and reporting from South Asia.

The post Obvious Ventures Pushes Silicon Valley to Invest With Purpose appeared first on Karma Impact.

What we’re witnessing now is the first such window at the intersection of renewable and fossil fuel industries since the beginning for the shale revolution more than 10 years ago. New projects such as sand mines and gas plants create excessive peak demand on a limited capacity system, threatening the reliability of the West Texas grid, which was never set up to withstand the amount of power going through it. Increasingly challenging reliability and longer lead times to get power to their operations is further fueling demand for alternative energy resources like solar.

As technology advanced in the area of drilling over the last 10-15 years, so did the amount of energy that this equipment utilizes, and this part of the equation was never addressed until now. For example, the iconic four-horsepower pumpjack used to power vertical wells typically consumes 30 KW, a small fraction compared to that of the game-changer horizontal drilling rigs used across most shale basins that perform hydraulic fracturing, which today depend on electric submersible pumps that individually consume about 300 KW.

While drilling rigs, frac pumps, and other large items still run on high-priced diesel engines, once wells are set into long-term production, electricity is the largest operating cost. Most Permian operators focus on how to produce oil faster and efficiently, but historically have spent little time addressing power demand, which is where new technology start-ups such as FlexGen Power Systems, are finding a place to thrive.

Demand for Reliability

Today, only three utilities (Oncor Electric Delivery, AEP Texas and Texas-New Mexico Power) provide most of the electrical power in the Permian Basin, opening a window for industry disruption, primarily led by VC-backed start-ups. Oncor, the biggest electric utility in the Permian, has seen electricity demand grow 79% over the last 12 months, with as much as 400% growth in certain areas of the basin over the last two to three years, providing an opportunity for renewable energy providers to participate in this market.

This demand for reliability is an opportunity not only for solar power generators, but also for VC-backed technology efficiency companies. Large Permian-producing companies like Diamondback Energy and Noble Energy are building their own electrification projects to reduce costs, as the supply of electricity is not 100% reliable in the southern Delaware Basin.

Diamondback, for example, spent 40% of its capex budget on batteries and electricity. In turn, dozens of other energy companies are expected to allocate capital for electricity efficiencies.

Texas Is Big on Green Energy

Texas has been driving a clean-energy boom with the incorporation of wind and solar over the past several years, driven by pure supply and demand and not government-led renewable energy mandates.

Texas is not only the largest oil-producing state, it also dominates America’s wind energy production. According to DOE reports, wind power supplies about 15% of Texas electricity thanks to strong breezes in west Texas and the Panhandle region.

In addition, according to the Electric Reliability Council of Texas, the state is forecast to add more than 6 gigawatts of solar by 2021.

At the end of 2017, Texas had more than 22,000 MW of wind power, three times the capacity of Oklahoma (7,500 MW), the second highest in the nation. As reference, 1 MW can power about 200 homes during periods of peak demand.

Early Entrants

VC-firm Altira Group is one of the early investors in the region, participating in a $25 million Series A financing round by FlexGen Power Systems, a provider of energy storage units in the Permian, in August 2015.

In addition, increasingly, renewable energy and traditional oilfield services companies are collaborating to disrupt the industry. For example, FlexGen eventually signed a deal on March 2017 to work with Schlumberger to help sell the units, significantly boosting its market share.

Lower costs are another factor driving demand for renewables. Building a new solar farm in Texas currently costs approximately $32/MWh, about 15% less than a traditional high-efficiency gas plant. Solar farms can be built in six months, while gas-power plants can take years.

As for major oil companies, in 2018 ExxonMobil signed 12-year agreements with Dutch wind provider Orsted to buy 500 MW of wind and solar in the Permian Basin, which was the largest-ever renewable power contract signed by an oil company. The deal included 250 MW PPA of solar in the Permian from Orsted’s 350-MW Permian solar photovoltaic complex; and 250MW PPA from Orsted’s 300-MW Sage Draw wind farm in Texas.

Innovative companies like Dubai-based Enerwhere have already developed off-grid capabilities in remote regions in the Middle East and West Africa as an alternative to diesel-powered generators and installed infrastructure. Enerwhere says, its solar-diesel hybrid systems dramatically reduce fuel consumption and operating costs of diesel-fuelled mini-grids while providing better or same reliability.

Another major oil company incorporating solar activities into oil and gas operations is Total S.A. Total is built a solar park of more than 11 hectares in size next to its Zeeland Refinery in the port of Vlissingen in the Netherlands. At the plant, a total of 28,440 planned solar panels can deliver 12.5 MW hours of sustainable electricity, enough to supply half of the households in the adjacent municipality of Borsele, or 23% of the refinery’s energy needs. The park is expected to last 25 years.

Finally, BP has made a strong incursion into solar in the U.S. through its Lightsource subsidiary by purchasing 6 solar development assets from Orion Renewable Energy Group LLC. The 135MW DC portfolio consists of projects in the liquid PJM power pool, and specifically in the rapidly growing energy markets of Pennsylvania and Maryland.

Key Risks

Aside from government subsidies and other renewable energy incentives, the greatest risk is low crude oil and natural gas prices that would make renewables less competitive. Abundance of cheap natural gas is the biggest competitor against renewables in the U.S., particularly in areas like West Texas. For example, natural gas in the Permian Basin has become so abundant that producers are willing to pay buyers to take the gas off their wells; and this gas is used in gas-fired power stations that are cheaper than diesel.

The major thesis for investors is that this space is an opportunity for VC and PE-backed startups looking to deploy existing technologies into the oil & gas industry, where the most likely strategic investor being major oil companies.

In other words, VC and PE companies have a potential exit in sight with major oil companies acquiring early-to-mid stage growth companies as part of their expansion in the sector, following in the footsteps of BP Lightsource.

For private investors, the opportunity is primarily in timing. Providing seed capital to experienced management teams looking to capture an identified opportunity, such as FlexGen, or participating in energy-focused VC or PE funds deploying capital in the industry, along the path of Altira Group or RockPort Capital.

Eliecer Palacios is the head of North America Business Development & Principal Investments at LUKOIL Pan Americas, LLC. He is a seasoned investment professional with over 15 years of experience in origination and structuring of public and private transactions across in the natural resources sector.

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It’s a reality that Water Asset Management, a New York-based fund with $500 million under management, anticipated long ago. Since its founding in 2005, WAM has focused solely on water resources, water utilities, technologies and related treatment and sanitation projects. And it has done so with a strong impact investment and ESG overlay.

Since 2005, Diserio’s firm has targeted its clients’ investments into a host of water-related industries globally, including water utilities, treatment and conservation technologies, and companies that seek to ensure people in the developing world have access to clean water.

“Water is the new oil,” says Matthew Diserio, WAM’s  president and co-founder, in an interview with Karma. “The main negative effect of increased carbon emissions, which is warming our planet, is on the hydrological cycle – increasing the incidence and intensifying the severity of drought and flood. Driving private capital to water and sanitation projects is fundamental to fighting climate change.”  

The Perfect Stormwater

The number of funds and social venture capitalists targeting water resources has exploded in recent years.

UBS, the Swiss giant bank, estimates total market volume for water investment is approaching $600 billion. About 35% of that represents investment in managing stormwater and wastewater, including treatment plants, drainage systems. Wastewater is the segment’s biggest single category. Niche markets, too, have proliferated, some of them with very high growth and often spurred by regulatory requirements. For instance, UBS reports that investment in ballast remediation – the decontaminating of water used to stabilize marine vessels of all kinds – is growing at about 20% annually. Investment in desalination technologies are growing about over 10% a year.

Public markets have taken notice, too. Water indexes which track the subsector’s top companies have proliferated, including the Dow Jones US Water Index (focused on the US water sector), the S&P Global Water Index (50 water related companies around the world); the NASDAQ OMX Global Water Index (focusing on companies innovating in water purification, desalination and conservation). ETFs, too, have appeared in the past five years, with the global investment bank Ivesco regularly topping industry ratings for returns.

But for the alternative investor, WAM and other water specialty funds – Summit Water Capital Advisors, for instance — offer something deeper.

“We know the world is looking for yield. We know much of the world is looking for water,” says Diserio. “Put the two together and you have the ultimate impact investment.”

Global impact investment advocates agree. PRI, the United Nations-funded association that monitors investments that advance the world body’s Sustainable Development Goals (SDGs), regards water as “a multi-impact investment because it affects the microclimate, food supply, industrial chain, health, productivity and the environment overall.”

Better Returns

Water management and water-related services are not just about impact investing.

Water utilities, in particular, generate high earnings per share (averaging 5% to 7% in the past two decades) as well as annual cash dividends that average 3%, according to Standard & Poor’s.

“The water utilities have outperformed virtually every asset class for the last 10 years, 20 years and more, and that includes other commodities, oil, and the S&P 500,” Diserio said. “One of the themes is that governments, which really managed and owned a lot of water-related infrastructure for generations, have mismanaged it to a large extent, and there’s a massive privatisation opportunity. So essentially what we’re doing to a large degree is arbitraging government inefficiency and governments’ inability to access capital.”

The WAM pitch looks something like this: The world is searching for yield. But let’s take a quick peek at today’s world. The annual return on the S&P 500 in 2018 was -4.38%. Yes, negative. Commercial real estate cap rates – the ratio between a project’s operating income and the original cost of capital – currently hovers in the low 4s, and in some markets, as low as the 3s. The yield on 10-year US Treasury bill is once again (as of May 23) falling, now at a two-year low of 2.234%.

In such a world, how does a return of 5%-7% sound? Plus the knowledge that your money is making the world a more sustainable place.

That’s a message that resonates with investors, impact and otherwise.

‘Massive Underinvestment’

Water Asset Management’s other co-founder, Disque Deane Jr., the firm’s chief investment officer, counts as a genuine water pioneer. Back in 1995, Deane, then a trader with Lazard, became transfixed with water, and in particular, forecasts from some scientists that the booming economy of the American West was at risk of drying up within the foreseeable future unless someone started thinking strategically about water.

Deane first dipped his foot the water in 1995, purchasing water rights to a mining tunnel in Summit County, Colorado — best known as the home of Vail, Beaver Creek, Breckenridge and other world class ski resorts. The company he co-founded, Vidler Water, intended to sell water to Colorado municipalities. But Vidler found that the market was not ready to properly price water. Deane left Vidler discouraged but not defeated.

He was still hooked on water. With Diserio, a college friend, Deane founded WAM with about $3 million in their own money, betting that ownership of water assets would underpin a good growth strategy. Today, WAM is a $500 million fund and believes the good times have only just begun.

“There’s no life or no economy without water,” says Diserio. “It’s underpriced. It’s completely misunderstood by the capital markets. People just assumed water would come out of the tap, and because of that, there’s been a massive underinvestment in our water infrastructure and water supply. What this has done is created a multi-trillion dollar capital investment catch-up supercycle that is underway, and that massive capital investment supercycle is providing a very steady tailwind to the companies and assets that we invest in that solve water quality and water supply issues.”

The post Matt Diserio: Why “Water is the New Oil” appeared first on Karma Impact.

That is starting to change. Private investments in water management will reach $2 billion in 2019, quadrupled from 2018, Brownlow said. In February, Blackstone invested $500 million in Waterfield Midstream, a full-circle water management company that recently scored a 15-year contract with oil producer Guidon Energy. In May, Singapore sovereign-wealth fund GIC bought a 20% interest in WaterBridge Resources from investment firm Five Point Energy at a purchase price valuing the Houston-based company at $2.8 billion.  

Integrated water management companies including Waterfield Midstream and Five Point Energy  say they can cut costs for the oil and gas industry by providing full-circle services that include identifying sustainable water sources to building and operating integrated infrastructure to working with local landowners on recycling wastewater and preserving fresh water. For example, Five Point CEO David Capobianco told the Wall Street Journal that his company will reduce the cost of water transfer from $2 a barrel by truck to as low as 60 cents by pipe.

ESG investors also have started to pay more attention to water-related risks, said Christina Copeland, who leads the water security program in the U.S. for CDP, a non-profit that runs a global disclosure system that helps potential investors to evaluate the environmental impact of companies, cities, regions and states.

Investors find that companies’ self-disclosures are not enough, she said in an exclusive interview with Karma.

Brownlow said that managing the Permian wastewater efficiently can help the environment. “If you are more thoughtful on development, you can have less impact on the surface of that land and on the ground water supplies below that land,” he said.

His Antelope Water is collaborating with Columbia University on advancing water-treatment technology. The research team reports that its developed a more efficient and scalable desalination approach, which will largely reduce energy consumption and “radically improve the sustainability in the treatment of produced water.”
With proper desalination, wastewater could be reused in oil production, or even for agricultural and municipal purposes. Using recycled wastewater and brackish groundwater put less pressure on freshwater resources. Apache Corp., one of the Permian’s largest oil producers, said that using recycled water enabled it to limited freshwater withdrawals to 2% in 2017.

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