Thought leadership and opinions

Solar and tigers and bears oh my!

It’s not everyday you get to help install a solar system…it’s also not every day you get to do it in the jungle with elephants and rhinos passing by…

Earlier this month I took an incredible trip to Nepal with GRID Alternatives where I helped install a 1.2 kW off-grid solar system in the Chitwan National Park.

Often in the clean energy space, unless you are a developer or installer yourself, us computer and desk laborers can feel fairly far removed from the technology and often our knowledge of the technical side of the business can be intangible and learned only from drawings and maintenance reports. I wanted to get my hands dirty and help build a system from start to finish.

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Four takeaways from Fintech Rising — How innovative technology is transforming finance

I had the opportunity this week to participate in roundtable discussion with finance leaders on “Innovations in Finance” at the Fintech Rising Summit. While 2017 was a big year for the fintech space, there were four major takeaways from our roundtable discussion on Wednesday:

Machine learning and algorithms are driving efficiencies and validating investment opportunities.

Machine learning or an algorithmic approach to finance is actually not a revolutionary method to finance; banks and funds have been using algorithmic underwriting processes for decades. The exciting innovation is the application of data to these algorithms. With more robust data sets and refined algorithms, machine learning can now provide us with more accurate analysis to challenge assumptions and assess risk. We’re seeing this trend in all aspects of finance.

It’s going cost $90 Trillion over the next 15 years to meet our clean energy goals but very few institutions have invested in this sector. To meet our global clean energy goals, we need to empower institutional investors with information that helps them understand clean energy investments and the underlying risk. Machine learning can play a big part in achieving this.

Fintech is converging with traditional banks and financial institutions.

Fintech has fully arrived on Wall Street with banking giants like Goldman Sachs and Royal Bank of Canada (RBC) entering the space. Just last month Goldman Sachs announced plans for generating as much revenue from online consumer loans as from buying and selling securities. RBC announced today the automation of personal finance and budgeting capabilities within their mobile app powered by AI.

While startups might have initiated the disruption, incumbent institutions are now embracing fintech to drive efficiencies and gain an edge.

Fintech is about technology and data, and less about crowdfunding and marketplace lending.

While fintech may have started as a space for individuals and companies to raise money online, it has rapidly evolved into a category that is changing all aspects of finance. With advancements in machine learning, payments, and personal banking, tech and data make the entire finance universe more streamlined, transparent and accurate.

This is important to CleanCapital, we deliver capital to capital-inefficient segments of the clean energy market. We leverage data and technology to attract more investors to clean energy, and accelerate clean energy adoption.

Innovations like blockchain and cryptocurrency are still in their infancy but have large potential for disruption in finance (and energy too).

Blockchain and cryptocurrency will continue to grow. Blockchain’s applicability appears more near term as it is being used for smart contracts, and you can see the use of smart contracts being applied to financial transactions. My co-panelist, Oren Bass and the team at Pave are using blockchain to better analyze credit. Just like machine learning is reducing inefficiencies in the underwriting process, blockchain can help connect parties in financial transactions more efficiently and transparently.

Beyond finance, blockchain is playing a role in securing our energy grid from cyber attacks. Last month, the Department of Energy announced its intention to leverage blockchain technology to sure up grid resiliency by providing highly auditable and structured data trails which would allow for easy and early detection of fraudulent activity and potentially thwart cyber attacks by making the grid essentially unhackable.

There are no limits to the potential for technology to eliminate friction in financial transactions, and for data to improve deal evaluation and underwriting. As CleanCapital accelerates clean energy by applying some of these innovations, it was amazing to see the numerous data and technology solutions that are on the horizon.

Understanding the Solar Trade Case: My Conversation with SEIA CEO Abigail Ross Hopper

Solar power has blossomed over the last 10 years from a nascent industry to a $23 billion market that continues to grow. I recently had the opportunity to sit down with Abigail Ross Hopper, President and CEO of the Solar Energy Industries Association (SEIA) for a candid discussion on the current state of the U.S. solar market. This conversation kicks off “Experts Only,” a new podcast by CleanCapital in which we explore the intersection of energy, innovation and finance.

My conversation with Abby was extremely timely given the trade case before the U.S. International Trade Commission (ITC). In this episode, we dive deep into the case and the impacts that it may have on the industry. Abby provides a critical and informative background on where the case stands and the path to getting it resolved. We discuss the context on just how big the American solar industry is today. It’s one of the fastest growing job sectors, with 1 in 50 jobs last year coming from solar. The industry employs more people than Google, Facebook and Apple combined. With tens of thousands of jobs on the line, the Suniva trade case has become an issue for which a broad, bipartisan coalition of companies, trade associations and other organizations are aligned in their opposition to the case.

The solar industry comes together for Solar Power International (SPI) in Las Vegas in a few short weeks. As always, SPI provides us with a great opportunity to connect as an industry, learn from each other and celebrate just how far we’ve come. It’s also an opportunity to look ahead. This year The Solar Foundation, in partnership with SEIA, will release a new study that is the first-of-its-kind, comprehensive baseline analysis of diversity in the solar industry. The study will provide a comprehensive analysis of the representation and experiences of women, racial and ethnic minorities, veterans and members of the LGBTQ community in the solar industry. This study is a crucial step towards becoming a more equitable industry that is both reflective of the diversity of our customers and a great place a work for us and our colleagues.

For those interested in learning more about the ITC case or the solar industry more broadly, give the episode a listen. If you like what you hear, be sure to subscribe, share and leave us a review on iTunes or wherever you get your podcasts.

You can also get involved with SEIA and the ongoing trade case by visiting Seia.org/trade to learn more.

CleanCapital Acquires $30M in New Solar Operating Assets: Is Your Project Next?

It’s an exciting time to be in clean energy finance. The solar industry continues to set records and surpass obstacles. On Monday the solar industry faced the challenge of a once-in-a-hundred-year event: a total solar eclipse that took 9 GW of solar offline. Thanks to advancements in grid resiliency, grid operators throughout the nation were able to manage electricity demand throughout the eclipse and ramp solar production back immediately after it passed.

Leading By Example — What we can learn from the military’s adoption of clean energy

This article was originally published in NAREIM Dialogues — Spring AR2017 issue.

Serving in Iraq as part of Operation Iraqi Freedom, we both had life changing experiences that have led to careers focused on continuing our service to our country. It was those experiences that led us to personally understand the high price that our country pays in blood and resources to secure oil supplies, from protecting desert fuel convoys to keeping international shipping lanes open for oil tankers. It was also these experiences that led former Commander of the 1st Marine Division, and the new Secretary of Defense, General James Mattis to famously comment on the need to “Unleash us from the tether of fuel.” Like many veterans, we both left the service to enter the clean energy sector with a commitment to secure our nation’s energy future and combat the impacts of climate change.

Prior to co-founding CleanCapital, we continued our service in different ways. Jon was appointed by President Obama to join the White House as the Chief Sustainability Officer of the Federal Government. This is a role many in the real estate sector and private sector would recognize immediately. Kevin, a West Point graduate, left the military and lead M&A and business development for several of the world’s leading renewable energy companies. We both realized that we could continue to serve our country by making the case for clean energy innovations here at home. But, it also became apparent that many in the private sector like WalMart, Apple, and Google were recognizing the global trends and beginning to take action in this sector. We will explore the changing landscape of energy and look at how leaders in the real estate sector can take action.

Landscape of changing energy markets

The world is at a transformative moment in terms of how we produce and use electricity. Global powers are experiencing a major shift in how their electricity is being produced. The traditionally fossil fuel dominated electricity marketplace is being replaced by new low carbon sources, and many developing countries are also capitalizing on these innovations. Development of distributed clean energy solutions are allowing nations to leapfrog generations of outdated technologies. Clean, distributed energy now allows solar panels to sit on a residential or commercial rooftop that powers storage batteries in the basements no matter how remote a community may be. The development and policy implications of these types of advancements are truly significant.

Market demands are clearly the driving force accelerating the rapid deployment and adoption of clean energy in both developed and emerging markets across the world. American leadership and engagement has been instrumental in demonstrating the transformative market potential that clean energy technologies offer to create local jobs and mitigate the impacts of climate change.

For instance, the solar market continues to grow and prove that solar is economically successful and a force that has value across markets, from the DoD to commercial real estate. For the first time ever, in 2016, solar ranked as the number one source of new electric generating capacity additions on an annual basis. This growth in solar has been led by falling prices. The cost to install solar has dropped by more than 60% over the last 10 years, leading the industry to expand into new markets and deploy thousands of systems nationwide.

As the solar industry has matured, the decline in costs has been fueled by a number of factors. For example, the supply chain trimming costs helps cut risk premiums on bank loans, and pushed manufacturing capacity to record levels. By 2025, solar may be cheaper than using coal on average globally, according to Bloomberg New Energy Finance.

Better technology, the economies of scale, and better manufacturing have been key in boosting the industry as each generation of more efficient solar panels provide more cost effective systems. Five years ago, a solar panel cost over $5 per watt with 15% efficiency. Today, you can buy the same panel for $0.45 cents per watt with 20% efficiency. The trends are clear, solar is getting cheaper at an accelerating rate.

Lastly, stable and predictable policies have also been driving down costs. President George W. Bush signed the Energy Policy Act of 2005 with tremendous bipartisan support and ushered in solar, along with other renewables. It established the Section 48 Investment Tax Credit (ITC), providing a lucrative 30% tax credit for solar projects. Over the course of the next few years, other policies aligned at the state level, and then a combination of the ITC and appropriate technology advancements mentioned above bolstered the solar industry, while driving down costs.


Depart of Defense (DoD) — Leading By Example

If our Federal Government were a corporation, given the size and scope of its operations, it would be the biggest business in the United States. The DoD alone has over 500 major installations around the world and manages more 500,000 buildings with over 2.2 billion square feet. That is over three times the square footage Wal-Mart currently operates. Energy touches every part of the military’s mission, and domestically it must ensure energy security and reliability to fulfill that mission. For example, drone flights over the middle east piloted out of Air Force hangars in Nevada, vital communications systems supporting Naval fleets in the Pacific, or cyber security operations all need to be able to operate regardless of how the local grid is up and running.

The military facility energy budget alone is $4 billion, just to keep the lights on. As such,to better manage costs and ability to always meet its mission, the DoD has been strategically evaluating strategies to fundamentally reduce its energy footprint.

For the military, having such a large installation footprint can be a challenge, but it can also be an incredible opportunity. These installations display many of the same characteristics as a university campus or small city or town with residential, industrial, and business sections that all require different levels of energy demand. The military asked for a study of the energy production capability on its bases by the Department of Energy’s Pacific Northwest Laboratory which estimated that 90 percent of the critical power needs could actually be met by renewable energy resources.

To tackle these challenges, the military is turning more and more toward renewable energy. For instance, each of the branches (Army, Navy and Air Force) have been pursuing a 1 GW renewable energy goal, and the Navy met theirs years ahead of schedule. They are also looking to drive efficiency and sustainability within their buildings. This is an area where the military is learning from the innovations within industry and using systems such as the US Green Building Council’s Leadership in Energy and Environmental Design (LEED) standards to design and certify more sustainable buildings.

They are relying on a variety of solutions that look similar to what is happening in the commercial and industrial real estate market. This includes distributed generation solutions like rooftop solar arrays, microgrids, onsite storage, but they are also executing long term power purchase agreements. One key development over the last few years is the emphasis in using third party financing to fund these initiatives. Congress provided the DoD with a variety of authorizations to utilize alternative financing by allowing the private sector to invest in military bases to own and operate projects. This allows the DoD to reap the benefits of project ownership without needing to overcome the sometimes impossible hurdle to provide the upfront capital required for construction.

The military’s leadership and progress is commendable, but it is also key to recognizing the many in the private sector who are also leading by example. Hurricane Sandy was a major instigator to these efforts. According to CNN Money, the total cost of property damage from this super storm is estimated to run between $10–20 billion, but the cost of business interruption can go as high as $25 billion. Major operations up and down the East Coast were shut down. Local utilities in places like Delaware, New York, New Jersey and Connecticut could not provide reliable power to customers for weeks. Whether it was big box stores, office buildings, or data centers, finding the fuel to put into their diesel generators was nearly impossible as they competed against hospitals and military operations during the clean up.

As a result, many companies stepped back and re-evaluated their operations. Companies like Wal-Mart, Google, and Prologis set significant goals like utilizing nearly 100% renewable energy for their operations, and also looked at critical measures for reliability. Google is on track to reach this goal in 2017, while receiving serious cost savings along the way. Prologis reported in 2015 that it has over 149 MW of solar generating capacity. Being a mega-corporations should not be a requirement to be a part of this effort as commercial and industrial real estate comes in all shapes and sizes. There are some key lessons though that can be learned from the military and these corporations.

They include some of the following:

Taking Action

These lessons have many applications. For portfolio managers, they can look to take steps in addressing their energy needs. For investors, there are real opportunities as well. The key to continued growth of the clean energy sector will be investment. President George W. Bush’s former Secretary of Treasury, and former Goldman Sachs CEO, Hank Paulson points to the opportunity in “green investing” in his latest op-ed in the New York Times. $90 trillion is a large price tag, but it should not be seen as a bill, rather a worthy investment. The good news is clean energy proves to be a great investment and is already outpacing capital in fossil fuels thanks to large institutional financial backing. Despite this rapid growth, there is still a dramatic funding gap, and in order to bridge that gap, we need to be able to access the collective private capital available and capitalize on the clean energy revolution.

At CleanCapital, we look at solar and other clean energy projects as an asset class similar to a real estate asset, our due diligence and underwriting is similar to what is widely practiced in private equity funds, and our asset management resembles what is done by REITs. Solar is a great investment because the yields are real. This is the unique opportunity that operating, cash-flowing solar projects provide, and they can be a great investment for a broad set of investors. Data models now provide significant clarity on the revenue coming in over the life of solar projects that comprise these deals. Institutional investors, family offices, or even individuals, who may not like the risk exposure of new build projects can now get into solar through operating assets. This is the evolution of solar finance.

CleanCapital is accelerating clean energy by creating an online marketplace that provides opportunities for investors and access to capital for project developers, through a fintech platform that is simple, safe and secure. CleanCapital is reaching the next phase of solar energy by providing everyone access to these lucrative investment opportunities and funding the clean energy economy. Learn about upcoming investment opportunities by contacting us at CleanCapital.

Jon Powers is an Iraq Veteran and Co-Founder of CleanCapital. He also served in the White House as the Chief Sustainability Officer of the Federal Government and also as the US Army’s First Special Advisor on Energy.

Kevin Johnson is an Iraq Veteran and Co-Founder of CleanCapital. Kevin, a West Point graduate, transitioned from the military and lead M&A and business development for several of the world’s largest renewable energy companies.

 

 

Why solar is here to stay (and ripe for investing)!

This is an incredibly exciting time for the solar industry as we continue to surpass major milestones. Last year, was the strongest year ever for the industry and we celebrated one million installations. While we may only be one month into 2017, solar shows no signs of slowing down this year. Costs of installations are on a steady decline, more companies and homeowners are benefiting from the cheap and clean power, and the number of Americans working in the industry are setting records every quarter.

This week, two industry updates demonstrate solar’s continued strength as an economic driver on two fronts. In addition to generating clean, affordable energy, it’s putting money back into consumers’ pockets, generating revenue and putting Americans to work.

First, The Solar Foundation released the Annual National Solar Jobs Census Report finding solar accounted for 1 in 50 new jobs in 2016. Solar now employs over 200,000 people, providing jobs across all sectors in 44 of 50 states. In the US, solar now employs more people than oil and gas combined!

Next, The Business Council for Sustainable Energy released their 2017 Sustainable Energy in America Factbook, illustrating the positive trends across the renewable industry. 2016 set a new record for annual renewable energy capacity additions as the US added 22GW of renewable generating capacity. That is enough to power an estimated 16.5 million homes per year! Solar was responsible for half of the new generation.

This is great news for those currently working in this thriving industry but it’s also another demonstration of the broad, positive impact of renewables, specifically solar. In order to continue this trend and scale renewables to meet our clean energy goals, it’s going cost $90 Trillion over the next 15 years.

In a tumultuous political environment, it is the continued reduction of the cost of electricity for solar combined with continued growth in jobs that will secure its momentum. As Eric Wesoff from Greentech Media recently pointed out, “profit has no political allegiance, and renewables are already winning on sheer economic advantage — today.”

As the solar workforce grows, the cost of technology comes down and with consumer savings on the rise, now is the time to expand the clean energy marketplace and provide everyday Americans with the opportunity to invest in our future. Global corporations are already investing in renewables and making 100% commitments, individuals should be afforded the same opportunity.

Before now, clean energy finance was limited to institutional investors, large banks, private equity firms, and tax equity investors. CleanCapital has expanded the market by allowing more people to have access to these lucrative investments and has over $100 million in operating distributed generation solar projects in the pipeline for future investments. 2017 is going to be the year these investments become available to you. You can be the first to hear about these opportunities by joining CleanCapital’s investor waitlist. Sign up today, and be ready to invest in our future!

Why we launched CleanCapital

A few years ago, I refinanced my law school loans with SoFi. I was ushered through a painless process that resulted in better loan terms and a lower rate. As a lawyer that was involved in billions of dollars of clean energy transactions, I was accustomed to inefficient, painful financings. My SoFi experience offered an alternative approach. If there was an easier way to finance student loans, surely, I thought, there could be a better way to finance clean energy projects.

If there was an easier way to finance student loans, surely, I thought, there could be a better way to finance clean energy projects

The idea was born, and the founding team began work on the business that would become CleanCapital.

Frustrated by the status quo, we set out to change the paradigm that was restraining clean energy growth. This is why we created CleanCapital — a technology-driven platform that is accelerating clean energy with simpler finance.


Getting Started

CleanCapital recently achieved an important milestone towards this goal. We announced a first-of-its-kind clean energy financing that allowed a diverse group of investors to directly invest into a portfolio of operating solar projects. CleanCapital received funding from a prominent insurance company alongside a number of family offices and individuals.

It may sound basic, but until now, very few investors could access direct solar investments. Clean energy investing has been limited to a small handful of banks and investment funds with little participation from pension funds, family offices and individuals despite the appeal of these long-term cash-flowing assets. Yet it is broad investment from these very investors that is critical to achieving ambitious and necessary clean energy goals.


Accelerating a Global Transition to Clean Energy

The global awakening to the impact of a carbon-saturated future is leading investors and policymakers to take material steps to transition to a clean energy economy. An increasing trend towards divesting from carbon has led many large investors to seek clean energy alternatives and they are doing so with broad policy support.

In December 2015, COP21 convened in Paris to negotiate the Paris Agreement in which nearly 200 nations agreed to implement measures to limit global warming. In the United States, the Clean Power Plan and numerous state policies — most recently, California and New York — have similarly demanded robust clean energy reforms.

PV Deployment Forecast (MWdc) per Year
Source: US Solar Market Insight Report for Q1 2015 – GTM Research


A Better Way to Invest

Expanding clean energy investment requires CleanCapital to offer a different business model. Investors repeatedly express frustration with the dominant “fund” investment approach in which investors blindly lock up capital for long periods at high fees. CleanCapital allows investors to review and make investments online at their convenience. With low fees and a transparent investing experience, CleanCapital puts investors first.


A Better Investment

Clean energy is an excellent investment class that provides sound, predictable returns to investors. It can be a dependable piece of a diverse portfolio particularly in today’s environment. With corporate bonds yielding in the low single digits, CleanCapital deals offer investors a similar risk profile with stronger returns. In a “high risk/low return world,” solar investing offers investors an attractive new investment alternative. It is a real asset with real returns.


What’s Next?

The wheels of the clean energy transformation have been riddled with friction. In the United States alone, building and financing clean energy projects is painfully challenging. While CleanCapital’s first step is simplifying and broadening investment in the space, we are developing cutting edge technology that will unhinge barriers to growing it.

The CleanCapital team came together because of these challenges, not in spite of them. With two Iraq war veterans among the co-founders, the CleanCapital mission is an extension of their military service and post-military service. The team has also built cutting edge software, worked in the White House, and led over $1 billion of clean energy financings. We came together to grow CleanCapital into a ground-breaking investment platform that solves problems and transforms the energy sector.