A San Francisco Arc
It will be 11 years to the day that my wife, our beagle and I stepped off a plane from Barcelona, Spain at San Francisco International Airport. We had no idea what the future held for us, but we were ready for the adventure.
Goodbye To The Last Decade:
My Bay Area vocational journey began with Keiretsu Forum, the largest Angel investing network in the world. I ended up enjoying nearly 3 years actively working with the organization, making investments, partnering with international energy interests and growing companies. One of my greatest professional honors during this period was being asked to be the Chairperson of the Cleantech Investment Committee for the global network. Many friends, such as Mike Hennessey, Ian Rogoff, Doug Brien, Colin Wiel, Matthew Le Merle, Ryan Scott, Jim Tietz, Lecia Kaslofsky, Judith Iglehart, Randy Williams, Sonja Markova, Randy Haykin, and others made this a special time. It was a personal crash course in private equity finance, partnering with entrepreneurs and other investors to build sustainability focused businesses. As a survivor of September 11, since 2001 I have been dedicated to living as sustainable a lifestyle as a family of four can, while building sustainably focused, and as Andrew Beebe calls them — “World Positive”, businesses.
Companies born in these days (2006–2010): Principle Power, Cool Earth Solar, HelioPower, Earth Class Mail, Heartland Resources and Azure Power. (See Sustainable Assets Portfolio details below). Wow, what a rush…and if you can imagine it, my wife and I welcomed our first child to the world during this period.
The Latest Diamond (just out of the rough): 2011–2017
In 2011, Mika Nuotio, myself and Milan Ilic (all alumni of a company called Array Power/Array Converter) founded Empower Micro Systems in Silicon Valley, California. Based on our many years in solar, we held a firm view that solar inverters were the Achilles Heel (pain)and also the critical “Network Control Center” (opportunity) for all solar PV arrays, big or small. At that time, the workhorse of the rooftop solar market had been dominated by stand-alone string inverters; a low yield, unreliable, high-voltage DC (direct current) device. Since inception, Empower’s mission has been to make the highest yield, most reliable, lowest cost, AC (alternating current) solar system to replace the string inverter and other alternatives, including microinverters and DC optimizers. With the support of AMAZING investors and focused work by the team, Empower achieved that mission. Please see my LinkedIn post on the subject. We have also completed some rough comparisons to DC Optimizer offerings and the data looks very promising.
Building Owner Economics With Solar:
Due to the high initial capital cost (modules, inverters, racking, permitting, etc.) and small daily cash flow of the electricity (revenue and/or savings) of solar PV installations, the solar PV system owner needs a system to run as expected for >15 years to be financially valuable and fall within a meaningful financial term (“MFT”). Unfortunately, string inverters had/have a known wear out of ~10 years, but in many cases much less (~5 years), which adds to operating expenses and extends payback period. If the system owner is making their decision to install the PV system based on other motivations outside of financial, such as the environment or energy independence and not driven by financial return, these string inverter failures could be acceptable. At the time of Empower’s founder date in late 2011, financial modeling the economics of a solar PV system included at least 1, if not 2 string inverter swap outs during the MFT, which was anywhere between 15–20 years. The MFT is dependant on several factors including initial capital cost, operating cost (which includes those inverter swaps), irradiance, avoided rate of electricity, feed-in-tariff, contracted rate of power, etc.. So, if one was to invent and commercialize a solar technology that increases the reliability of hardware — so it didn’t underperform, increases the electricity from the capital equipment, and lowers the total capital cost to install solar, this would meaningfully improve the economic choice for solar.
Today, the Empower team + community can take great pride in the results of the latest release, Genesys 8K. See results against the DC Optimizer and against the microinverter. Highest yield, widest power range for peak Power Factor, lowest THD, safety compliant and lowest cost rooftop solar solution in the world, bar none. Sadly, our investors have gotten fatigued and Empower is now being wound down. The assets are for sale and we are working with the Trustee and interested parties on the auction coming in September. It has been nearly 6 years in making this great technology and the proof is in the data. It breaks my heart to see Empower fall. It has been an honor to serve all stakeholders on this journey, now at a close.
Sustainable Assets Portfolio:
- Empower Micro Systems (co-founder, Chief Commercial Officer)
- Principle Power (co-founder, Chairman, President, investor): originally, a company focused on scaling promising sustainability technology, pivoted to become the world’s leader in semi-submersible floating foundation technology for utility-scale offshore wind. Founded in 2007, at which time there was massive amounts of capital chasing very early-stage up-stream technologies (“swinging for the fences”) and much further downstream, enormous capital waiting for these opportunities to build their first 4–5 full scale demonstrations so that this money could safely monetize assets with modest, but predictable, returns. Principle Power’s original plan was to bridge this gap (“Valley of Death”, “Crossing the Chasm”). We selected two technologies: a technology from two brilliant UC Berkeley naval architects and a second technology from a Livermore company doing inflated solar concentrators (Cool Earth Solar). Today, the company is currently run by Joao Matelo, a wonderful person and skilled/experienced senior energy executive. His Deputy is one of the original dreamers, Dominique Roddier, a true inspiration. Key investors are EDP, ASM and Repsol. Worth a watch: https://www.youtube.com/watch?v=FkNfyWSc0ig
- Cool Earth Solar (co-founder, investor, Senior Advisor): attempted to develop a <50X inflatable solar concentrator to capture solar electricity, with a substantially lower cost basis, when compared to the use of traditional flat-plate PV modules (circa 2008). Founded with a CalTech PhD, now run by a very skilled CEO, Rob Lamkin, whose former senior executive experience at Calpine and Mirant serves to guide the ship through the solar coaster’s rough waters. Due to the dramatic plummeting of the cost of standard flat-plate solar PV modules, Cool Earth was required to pivot and become one of the leading commercial and industrial solar installation companies in Northern California. Good watch of the original idea: https://www.youtube.com/watch?v=rx7vpYsAz7Q
- HelioPower (investor): I joined a group of like-minded investors in a takeover of a small regional solar engineering company, who had engineered, procured equipment and constructed over >500 solar installations. Since the takeover, HelioPower has grow to ~$15M/revenue, installed >3,000 solar PV systems and became the go-to EpC (Engineering, procurement, Construction) company for many of the major third-party owners (TPOs: SunRun, SolarCity, Sungevity). Recently forced into Restructuring due to difficult financial arrangements which left them holding the bag and out of cash to run their business, HelioPower is expected to come out of protection and soon be stronger than ever. I am cheering for and with them.
- Earth Class Mail (investor and user): a Postal Mail-as-a Service platform. The thesis was that Ron Weiner, an extremely charismatic and ambitious leader, had a plan to replace Pitney Bowes ($6B, at the time) and the US Postal Service (~1M employees, at the time) by scanning the mail, “virtualizing” it and expanding user’s understanding of the “Inbox”. With the success of this platform, consumption of millions of gallons of liquid fuel to move the heavy and bulky mail around (trucks, cars, planes) and square footage of warehouse/office space to support the logistics would be eliminated, both a massive sustainability benefit and economic opportunity. The natural buyer of this company, if the scale demonstrated the thesis, was Google, Microsoft or Pitney Bowes. It’s a very good service and worth a try: www.earthclassmail.com. Unfortunately, the original investors got creamed by the 2009–2010 cash crunch and round-after-round of restructuring. Today, the service is running well and they have added check cashing for customers, which is handy if you travel a ton.
- Heartland Resources (investor): attempted to develop a soy-based urea formaldehyde (known carcinogen) replacement. There was pending California Air Resource Board policy that was going to outlaw the carcinogen (urea formaldehyde), but the lobbying efforts of Georgia Pacific and West Fraser, the leading plywood manufacturers, iced those efforts and perished the budding opportunity. Unfortunately and in parallel, the CEO turned out to be less than reputable and nearly went to jail for his misdeeds. Sadly, the company went into bankruptcy due to his mismanagement and the policy risk which came to roost.
- Azure Power (Advisor): early solar IPP mover in the India market.
