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Five Questions with Nancy Pfund on Clean Energy Investing

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This article is part of a series of insights from leading smart-grid, clean-energy, and utility experts speaking at gridCONNEXT. Questions asked by Clean Edge managing director and gridCONNEXT co-chair Ron Pernick.

Ron Pernick: You’ve invested in some of the leading names in clean energy, with early investments in both Tesla and SolarCity. How would you say the sector has most changed over the past decade?

Nancy Pfund:  Well, we’ve certainly gone from marginalized to mainstream! The rapid adoption of clean energy technologies has been the single greatest source of change in the industry. At first, incumbents would ignore us or even make fun of us, but now they are joining us as they see this is the future of the energy industry. Whole industries, from transportation to food and agriculture to tech, are taking ownership of their environmental impact and actively switching away from carbon. As a result, clean technology has risen in prominence and the field now attracts more entrepreneurs with more experience, more mainstream financing from banks and project finance firms, and far greater participation from corporations around the world, both big and small. While the roles of new entrants and new business models are still evolving, the trajectory is clear for more sustainable and lower carbon business practices across a much broader set of industries than when we started. Finally, we also see much greater innovation and transparency in policymaking than in the early days. As adoption and attention has increased, clean energy issues now often end up at the ballot box or at state capitols, no longer behind closed doors at public utility commissions.

Pernick: One of my biggest concerns regarding the climate denialism going on in our country (particularly at the federal level) is that we risk ceding clean-energy leadership to the Chinese (who already lead, on a range of metrics, in EV, solar, and wind). That said, I’m heartened to see the increasing activities at the corporate, city, and state level (which you partly mention above). What’s your assessment of the U.S.’s current role in clean-energy innovation, and what do we need to do to ensure we don’t lose out moving forward?

Pfund: You’re right to be concerned about climate denialism, but we also can’t let what’s going on at the federal level obscure the very real transformation of energy policy occurring in the states, in cities, and across the globe. While it would be helpful to have federal policy that helps us move toward a clean energy future, this field has always been dominated by state and regional policy and we can still make huge progress even in this political climate. Twenty-nine states now have renewable portfolio standards and many are leading the way by creating innovative policies to hit their targets. For example, early initiatives from California, Hawaii, Massachusetts, and New York have helped build the energy storage industry, providing support through early technical challenges and shifts down the cost curve, readying it for wider adoption. Clean energy is incredibly popular across the political spectrum, for consumers and for corporations, and new offerings like community solar, solar & storage, community choice aggregation, and electric vehicles continue to proliferate across the country and the world. Furthermore, energy access in the developing world is in its early days, with many policies set to help make this important market and impact opportunity happen at scale. We need to continue to support clean energy initiatives at home and abroad, regardless of federal policy.

Pernick: DBL has invested in both clean tech and information tech. (Last month we talked with Rocky Mountain Institute’s Jon Creyts about the future of blockchain platforms and energy as an example of the increasing overlap in clean tech and info tech). How and where do you see these two areas converging as you make your investment decisions?

Pfund: There’s no doubt that these worlds are converging in very dynamic ways. We are already seeing information technology play a huge role improving the efficiency and performance of our energy systems. For example, in our portfolio, we’ve seen how Advanced Microgrid Solutions ’ AI-enabled software supports load shaping at the building level and how Farmers Business Network ’s aggregation of farmer data has made agriculture more efficient and less resource-intensive. We believe we’re just at the start of this revolution and that new information technology companies, including those based on blockchain technology, will lead the way in how we process and manage real-time energy flows, generation assets, tariffs, demand response, and much more. 

Pernick: Which clean energy, transportation, and grid-related technologies do you believe offer the best investment opportunities over the next 3-5 years?

Pfund: Some of the areas we’re excited about in the near term are (1) energy storage and related services, (2) software and hardware for load shaping and grid management, and (3) energy access companies targeting the developing world with both solar and storage products and next generation energy-efficient appliances.

Pernick: I’ve always stressed that environmental protection and economic growth are not mutually exclusive. What inspired you to launch a venture firm focused not just on financial returns, but on enabling positive social, environmental, and economic benefits?

Pfund: For too long we have relied on the government, NGOs and other nonprofits, and incumbent industries to drive our approaches to energy and carbon. While these groups play very meaningful roles, I believe that we must engage the entrepreneurial sector to drive change at scale. High-growth innovative companies can have enormous impact and, in turn, that positive impact can help fuel their growth. Successful impact-focused entrepreneurs end up creating companies that become iconic and attract the best and brightest young people to work there. So, having invested for years in tech and life science startups, I thought it was time to turn the benefits of the entrepreneurial culture and economy toward the climate, arguably the most important challenge — and opportunity — of our age.

Nancy Pfund was a panelist at gridCONNEXT 2017 in Washington, D.C. Click here more information.

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