Silicon Valley Energy Summit and the Future of Energy

By Bruce Naegel, July 2017

Stanford University’s Precourt Energy Efficiency Center holds the Silicon Valley Energy Summit yearly. The event covered:

  • Climate change in the Trump Era
  • An Oxford style debate on fracking
  • Financing and policy issues to deliver technology
  • The state of technology solutions
    The new federal administration is a challenge to addressing climate change. However, progress is being made at various levels.

Jim Sweeney was the MC for the conference. Jonathan Pershing presented the kickoff speech. He is currently program director—environment at the Hewlett Foundation. He speaks from experience as the lead US negotiator to the UN Framework Convention on Climate Change. There is a summary of his discussion below.

MC Jim Sweeney at SVES
Jim Sweeney providing opening remarks for SVES 2017

 

Jonathan Pershing -SVES
Jonathan Pershing at SVES

 

SVES-Crowd
The SVES Audience

 

How we got to this place in history

The Paris Accord started in 1998 with the formation of the IPCC (Intergovernmental Panel on Climate Change). This non-profit organization provides a central repository for climate information.

The climate conferences are called COP or Cooperation of Partners. The UN held the first one in Berlin in 1995. The COP is where nations come together to create climate policy.

The Paris Accord

Previous COPs yielded agreements like the Kyoto Accord. However, the Paris Accord is the one that broke through to a wide audience. 195 countries signed the agreement (2). Syria, however, did not sign because of its ongoing civil war. Nicaragua did not sign because actual changes and results are not enforced, but voluntary.

Trump and the Paris Accord

Trump made a campaign promise to withdraw from the Paris Accord, and he announced his intention to do so on May 31, 2017. However, under current rules, he will not be able to exit the agreement until November 2020.

So, Trump fulfills a campaign promise by announcing the withdrawal. He may have thought that if the US withdrew, that action would split the Paris Accord apart. From what we have seen, the opposite has happened. The countries remaining strongly stated that they will keep to the agreement. This was announced at both the G6 meeting and the G20 meeting.

US next steps: Local jurisdictions take over

There are several organizations who are stating they will continue to support the Paris Accord. These agreements are non-binding (which is also true of the Paris Accord). Organizations include:

How can these organizations be successful?

Get goals and start to drive for them

The goals for each of these organizations are different. That allows an organization that cannot commit to one set of goals to find a set that will work for them. We still need common goals, however (e.g. contributing less GHGs or a way to reduce the temperature rise).

Collaborate with others for best practices

There are many organizations that have been mentioned in these discussions. There are 765 companies and investors in We Mean Business and over 1,600 in We Are Still In, for example. There should be a lot of learning occurring within these organizations. To the degree that the information can be shared, it should be.

Act in concert against forces slowing the move to renewables

There are collective actions that can be taken to move the cause forward—putting these organizations together is one such action. From what I have seen, there is a need to act in concert to effect change—for example, to stop the passage of a bill that would be detrimental. Cooperative action provides a louder voice.

Oxford style debate on fracking

SVES-Fracking
SVES Fracking Lunch Discussion

The following individuals took part in a debate about fracking:

Jeffrey Ball (Stanford) moderated
Lena Moffitt (Sierra Club) and Briana Mordick (NRDC) opposed fracking
Dana Boysen (Cyclotron Road) and Mark Zoback (Stanford ) supported fracking

The SVES tradition includes an Oxford style debate. This year the topic was fracking. At the beginning of the debate, people were surveyed as to whether they oppose, support, or have no opinion on the resolution. The side that changes the most minds wins the debate. The exact question was: “Do US benefits from fracking shale oil and gas outweigh the environmental costs?”

The debate ended in a tie. Fifteen percent of those who supported the measure changed to being against it. However, 15 percent of those who opposed the fracking resolution voted for it in the end.

Business, financial, and policy advances

The meeting was balanced between two general subjects: financing/business plans and technology. Renewable energy sources continue to mature and become more cost-effective.

As energy technology matures and becomes more cost-effective, there are business reasons to support it. Zero-down, lease-based solar financing greatly expanded the number of rooftop solar installations.

Community Choice Aggregation

One alternate business plan that was discussed with enthusiasm is the rise of CCA (Community Choice Aggregation) organizations. There are two CCAs operating in the immediate area. One is SVCE or Silicon Valley Clean Energy (9), covering most of Santa Clara County. PCE or Peninsula Clean Energy (10) covers all of San Mateo County. CCE (Community Choice Energy) is another name for CCA.

CCAs started in California with AB 117 (11) in 2002. AB 117 allows cities or groups of cities to form their own virtual power facility. The facility uses the distribution and transmission infrastructure of the large investor-owned utilities. However, they choose the power to be put into the grid on their behalf.

Communities are going to this approach to generate electricity with less carbon than supplied by the large utilities. This is a key step toward communities achieving climate goals. Moving to CCAs also can save money per household, as CCAs are non-profit entities.

 

CCE-Pictograsph
Pictograph of a CCE. Credit: Peninsula Clean Energy

 

CCAs are up and operating in:

  • Santa Clara County
  • San Mateo County
  • Marin County
  • Parts of Contra Costa County
  • Sonoma County
  • Napa County
  • San Francisco County

More CCAs will be coming online in Alameda County, San Jose, and Monterey County.

Alternate Financing for Large Capital Projects

One session was on energy program alternate financing. The issue for energy programs is availability of financing for companies with revenue streams from $3 – 50 million. Banks can provide debt financing for companies beyond $50 million. Venture financing at the early stages can go up to $3M. However, the amount of capital needed for transnational energy or carbon removal projects is substantial.

One of the organizations has a plan for how to bridge the gap between the $3M rate and the $50M rate. The company is Arena (12). They are issuing warrants and loans to provide bridge financing before the organization reaches the revenue run rate of $50M.

 

SVES- Finance Gap
Energy Project Finance Gap at SVES

Financing energy improvements for buildings (like cool roofs) is not an easy thing to do. The roof improvement will lower temperatures. The costs are borne by the building owner, but the reduced cooling bill benefits the tenants. This is another specialty for Arena.

At the other end of the scale are angel investments (very early financing). One firm, Congruent Ventures, is starting to do deals at this level (13).

Grid Security

The five major threats to grid security, as seen by the industry, are:

1. Direct Physical Attack
2. Drones
3. Floods
4. Ice and Snow Storms
5. Squirrels

SVES-Grid-Threat
The squirrel is a threat to grid reliability

One of the topics of discussion at SVES was the security of the grid from electronic security breaches. There have been many intrusions, including power systems in Ukraine and elsewhere around the world. This is a topic that will command more discussion over time. Computer security newsletters are discussing communications links required for the grid of the future.

Climate Change Artistry

SVES-Painting-Killen
Painting by Michael Killen at SVES

 

This is one of the painting series on concern for the environment from Michael Killen. Killen has been painting pictures with environmental and sustainability themes for several years and is usually at the leading energy or environmental conferences, where there is time to interact with him.

Addressing Advances in Automotive Technology

The automotive technology seminar participants were from BMW, Ice Breaker Ventures, Lawrence Berkeley Labs, and Stanford. One interesting question was raised by Rod Sinks, Cupertino City Council member. He is also on the boards of Carbon Free Mountain View and the Bay Area Air Quality Management District. The question was: As a public servant, how should he plan for hydrogen-powered cars? The answer: They will be a minor part of any transportation mix. To change this requires a renewable and easily distributed source of hydrogen. We currently use methane as a feed stock. Converting methane to hydrogen produces CO2.

Another interesting question had to do with when autonomous vehicles would be commonplace. The answer from Lawrence Berkeley Labs was, “Not soon.” The thought was that a fully autonomous vehicle requires a level of interaction with traffic we do not have yet. Perhaps there is a more constrained way to use autonomous vehicle technology that does work in the short term.

Financing Options: Capital Investments

The first stage of financing for energy projects is at the angel phase. This is one at the very beginning of the startup cycle. Congruent Ventures was founded to address this need.

Another financial challenge is the funding of venture-backed energy companies with large capital requirements. Venture financing works well for software companies where ongoing capital requirements are smaller. The capital-intensive companies require financing in the $3 to 50-million-dollar range. This is larger than the venture community is willing to provide, but too small for bank capital-based debt financing.

Both situations can be handled by Arena. They have developed the financial vehicles and methods to handle both situations.

Wrap Up

As the energy field is evolving, we move from just the technical side to the policy and financing side that are needed for deployment. Work is progressing on projects with a sound business footing, regardless of the current federal administration. There is much spirit in the sustainability movement, with opportunities to grow.

We need to foster cooperation between groups in local government, academia, and industry. In the picture below, Rod Sinks is exploring how to build links between agencies like BAAQMD and Stanford.

SVES-Rod-Sinks- Jonathan Pershing
Sustainability leader Rod Sinks talking to Jonathan Pershing

 

References:

All pictures by the author, except for the CCE pictograph.

(1)  https://peec.stanford.edu/sves/2017

(2) https://en.wikipedia.org/wiki/Paris_Agreement

(3) http://wearestillin.com

(4) https://en.wikipedia.org/wiki/United_States_Conference_of_Mayors

(5) https://en.wikipedia.org/wiki/United_States_Climate_Alliance, http://news.nationalgeographic.com/2017/06/states-cities-usa-climate-policy-environment/

(6) http://under2mou.org

(7) https://www.wemeanbusinesscoalition.org/

(8)  https://peec.stanford.edu/news/spirited-debate-fracking-results-tie-score-sves

(9)  svcleanenergy.org

(10) peninsulacleanenergy.com

(11) AB 117: http://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=200120020AB117

(12)   www.arenafunds.com, www.cap-e.com

(13) https://www.bloomberg.com/profiles/companies/1485301D:US-congruent-ventures

(14) https://www.facebook.com/MichaelKillenArtist