🌏 A bright acquisition: Sunrun buys Vivint Solar #15
Plus, spotlight on Mark Tercek, former CEO of The Nature Conservancy
Big climate tech deals have been coming through this week. Sunrun and Vivint (#1 and #2 respectively in residential solar) merged in the largest consolidation in the industry’s history. Rivian, of electric truck fame, raised an additional $2.5bn from the likes of Soros, Coatue, Fidelity, and BlackRock with the aim of joyriding their vehicles on the road by 2021. We breakdown more deals, headlines, and jobs (including a Climate Product Designer role at Stripe).
We also feature an interview with (big deal in his own right) former Nature Conservancy CEO and Goldman Sachs partner, Mark Tercek. He shares hard-won lessons over the years and his perspective on nature-based solutions and carbon offsets.
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A bright acquisition: Sunrun buys Vivint Solar
Sunrun acquired major rival, Vivint Solar, for $3.2bn in the biggest residential solar consolidation in the industry’s history. According to Lynn Jurich, Sunrun’s CEO and co-founder, “This transaction will increase our scale and grow our energy services network to help replace centralized, polluting power plants and accelerate the transition to a 100% clean energy future.”
Why does this matter?
As costs continued to fall and solar expanded into more state markets, the residential solar market experienced a record year in 2019. While coronavirus-related impacts are expected to reduce 2020 deployment, Sunrun is now well-positioned to capitalize on residential solar growth when pre-COVID conditions return.
As #1 and #2 in residential solar market cap, the combined Sunrun and Vivint Solar entity commands a 17.5% overall market share. In total, this new solar titan will have a 500,000 strong customer base and three gigawatts of solar assets. Interestingly, Tesla is the #3 residential solar player (with only 4.6% share).
The boards of Sunrun and Vivint have approved the deal, but it still requires regulatory and shareholder sign-off. The acquisition is expected to be completed in Q4.
This deal shines light on the limits of organic growth in the residential solar industry. When stable market leaders opt for consolidation, citing synergies of up to $90m per year, it is a sure sign of a mature market. Additional consolidation can be expected. At this stage in the game, Sunrun is poised to become the name brand player.
Deals of the Week (7/6-7/12)
🚚 Rivian, a Plymouth, MI-based electric truck manufacturer, raised $2.5bn in funding from T. Rowe Price, Soros Fund Management, Fidelity, Baron Capital, Amazon, and BlackRock. The company aims to be the first to bring an EV pickup truck to market and will provide electric delivery vans for Amazon. TechCrunch has more here.
🐮 Perfect Day, an Emeryville, CA-based animal-free dairy producer, raised $160m in Series C funding from the Canada Pension Plan Investment Board, bringing the total Series C round to $300m. Crunchbase has more here.
🚗 Karma Automotive, a Hangzhou, China-based hybrid luxury car manufacturer, raised $100m in funding from unnamed investors. The company, previously known as Fisker Automotive, plans to launch a new all-electric sedan, a supercar, and plug-in delivery vans.
🚗 Fisker, a Los Angeles, CA-based EV maker, raised $50m in Series C funding from Moore Strategic Ventures. The funding will go towards the Fisker Ocean SUV, the company’s all-electric luxury SUV expected to launch in 2022. TechCrunch has more here.
🔋 Natron Energy, a Santa Clara, CA-based sodium-ion battery developer, raised $35m in Series D funding from ABB Technology Venture, Volta Energy Technologies, Chevron Technology Ventures, Khosla Ventures, and Prelude Ventures. More here.
🧪 Solugen, a Houston, TX-based biotech startup focused on decarbonizing the chemicals industry, raised $30m in Series B funding from Refactor Capital, Founders Fund, Knollwood Investment Advisory, Valor Equity, LowerCarbon, Box Group, AeraVC, and YC.
🌱 Upward Farms, a Brooklyn, NY-based aquaponic operation firm, raised $15m in funding from Prime Movers Lab to build its new headquarter farm focused on increasing production of leafy greens and fish. More here.
🔋 E-peas, a Belgium-based energy harvesting startup, raised $9m in funding from Partech, Airbus Ventures, KBC Focus Fund, and other investors. Its technology will reduce reliance on disposable batteries by enabling electronic devices to be powered indefinitely. More here.
♻️ Replenysh, an Orange County, CA-based startup aiming to enhance the profitability of recycling, raised $2m in funding from Kindred Ventures, Floodgate Fund, and 122WEST. The company is building a digital supply chain that enables recycling centers to sell directly to prospective buyers. TechCrunch has more here.
In the Spotlight: Mark Tercek (former CEO of The Nature Conservancy)
This week, we sat down with Mark Tercek, former longterm CEO of The Nature Conservancy and managing director at Goldman Sachs. He currently advises companies, investors, and NGOs on environmental and organizational strategies. Mark champions the idea of natural capital – placing a value on nature for its intrinsic benefit as well as its ecosystem services, such as clean air and water, productive soils, and a stable climate. [The newsletter version has been edited lightly for length, so check out our website for the full feature].
You have an interesting background — starting as a partner and managing director at Goldman Sachs and then becoming CEO of The Nature Conservancy. Can you tell us about your decision to focus on climate?
I grew up in Cleveland and have been an urbanite my entire life. When my wife and I were raising our kids, we wanted them to have greater exposure to nature than we had growing up. From some excursions, I realized there was an inner environmentalist in me. I believe that people innately care about nature so once they’re exposed to it, either in their backyard or across the globe, they’ll catch the nature bug like I did and come to more highly value and respect our planet.
Throughout my time at Goldman Sachs (GS), I believed business could be a force for good. My goal has always been to use business to address environmental challenges. Back then, I spoke to my boss, Hank Paulson (later Secretary of Treasury under President Bush), and Hank suggested that I build an environmental initiative at Goldman. So, I started a small team with the intention of baking an environmental strategy into every division at GS. The strategies had to (1) make money and (2) have positive, quantifiable environmental outcomes. It took off — if we found environmental shortcomings in our due diligence, we would turn down a business unless they improved.
One day, a headhunter at The Nature Conservancy called and asked if I knew any CEO candidates. I said I have one: me. Luckily, my recommendation worked out. While I was at TNC, we had a great run thanks to the organization’s great team. We almost tripled in size, launched a tech accelerator, an impact investing unit (“Naturevest”), started an urban conservation program and some very effective new science initiatives, and completed a $7 billion capital campaign. We did everything we could to grow support for environmental progress (through people, political clout, and money). Now, I’m trying to draw on those two experiences from finance and the nonprofit world to accelerate environmental progress as an advisor to companies, funds, NGOs, and foundations.
What types of projects are you focused on now?
I consider myself a full-time environmentalist. My strategy is to find influential CEOs, investment fund executives, or nonprofit leaders who are ambitious about addressing environmental challenges. Traditional consulting models tend to focus on the past, but it’s clear to me that the big opportunities of the future are going to be driven by entirely new innovations. When I show up, I push CEOs to be bolder. I’m here to push them to distinguish themselves as business leaders over the next 10 years through breakthrough opportunities in climate change or other environmental challenges.
At the end of the day, I’m driven by trying to maximize the positive environmental impact I can achieve. My generation screwed up, but maybe we can make amends and achieve some progress before it's too late. The current generation — like you, the editors of this newsletter — will be the ones carrying the ball forward.
Out of the various climate issues, why focus on conservation and nature-based solutions?
First, I ran The Nature Conservancy, the world’s largest nature conservation organization. There’s so much nature that needs protection and is vitally important, yet there aren’t enough resources (money or people) on our side. I wrote a book about investing in nature to restore forests, take better care of soils, and improve mangroves and grasslands. Out of these ecosystem services, we get biodiversity and environmental benefits like water filtration and carbon sequestration. Human communities all around the world benefit from and depend on all of this too of course. Nature provides a huge amount of undervalued resources. I like to say “Nature is our best investment opportunity.”
Second, it’s increasingly clear that we can’t meet our climate goals without carbon removal. I agree that emissions reduction and mitigation are of the utmost importance, but I think that we can chew gum and walk at the same time — investing in nature-based offsets is a complementary strategy. I’m also in favor of technology-based carbon removal, but it doesn't seem to work just yet. We need to phase out coal, transition to renewables, make buildings more efficient, electrify transportation, and decarbonize industrial fuels. We know what we need to do, and there’s a lot on our plate, so I think there needs to be more open-minded support of all environmental strategies.
For me, I can help bridge the divide between the business and the environmental community and drive greater effectiveness. Companies need to better appreciate the opportunities in nature-based solutions and environmental problem-solving. And NGOs, in my view, can also be partnering more effectively with the private sector. I wrote a recent blog about this.
How can corporations, governments, and individuals be the most effective in addressing climate and environmental issues?
I think we should be careful about overly demonizing companies and people who have historically been climate “bad guys.” To be sure, scrutiny and criticism of bad actors is very important. But I think some former “bad guys” just might be reformed and be able to help the cause in important ways. One such case of how this demonization can slow climate progress shows up in a new and good research report from the Sierra Club and Rocky Mountain Institute. Many coal plants today have long-term power purchase agreements (PPAs). From the utilities’ perspective, these arrangements are reliable and profitable so they’re not incentivized to change them. But we know that they are disastrous on the carbon front. Some emerging private sector players want to buy these coal plants and convert them to wind and solar, but because banks have been persuaded against lending to anything in connection with coal power, it can be difficult to get funding for making this renewables transition. That’s a case where overdoing the demonization of coal is actually slowing climate progress.
This also could happen when we think about the need to develop renewable energy projects around the world. It’s not easy to build big projects in certain geographies due to a long list of challenges ranging from politics to logistics. But who’s effective at doing projects in those areas? The big oil and gas companies. Now that BP and Shell are telling the world they want to be reformed energy companies and better climate citizens, they have the potential to take their extensive international project management expertise and redeploy it into the renewables space. I think we should encourage this.
How can organizations and individuals have the most impact?
Pragmatically, organizations should approach environmental impact from an activities basis and think about where it can reduce emissions, create innovations and breakthroughs, and use its clout and influence to lead by example. They should also push very hard for the regulatory policy we need. On an individual basis, I wrote a recent blog about the 4 main things you can do to have the most climate impact:
1) Get political. Statistics show many young people don’t vote. We need to change that. Beyond voting, we must engage in politics through efforts like Get Out the Vote. There’s nothing more important. Let’s face it, we have — with a few positive exceptions — mostly inadequate (or worse) political leadership on climate.
2) Push your organization to do more. There are opportunities for climate progress within your workplace, school, and community. Look at Amazon as an example. Before the company’s recent climate announcements, employees were rallying internally and succeeded in expediting action. These days, CEOs listen to their employees; university presidents listen to their students; and politicians listen to their constituents. Use your clout, and be thoughtful about speaking up. The goal is to make something happen.
3) Engage with nonprofits. There are many great nonprofits, so pick the one that appeals to you. For every Nature Conservancy there’s a 350.org or Extinction Rebellion. All nonprofits are under-resourced, understaffed, and underfunded. Not to mention that engaging with these groups can bring joy and meaning to your life.
4) Get out into nature. People my age spent three times more time outdoors when they were kids than our busy, tech-enabled, urban young generation. I’m nervous that there will be a generational disconnect to nature. So I always encourage folks to go explore nature to help build a conservation ethic. When you can do so, please take young kids out in nature. I think that a respect and love of nature drives all of the other motivations for impact that we just spoke about.
I’d like to add one more ask of the people reading this. Please try to be kind and find common ground with people who don’t see the world in the same way. This can be hard these days, but I worry that divisiveness, polarization, and harsh partisanship will be a big obstacle to environmental progress. It has taken me a very long time, but in recent years I’ve started to learn that common ground can be found in situations where it seems unlikely. On a personal basis, it feels good to cross divides and make new friends. And if we scale such efforts, we just might build the majority political coalition we need. Let’s face it, we’re all in this together. Let’s try to act that way.
In the News
NYTimes: A federal judge ruled that the controversial Dakota Access Pipeline be shut down after numerous protests from environmental and Native American groups such as the Standing Rock Sioux Tribe. Within the same week, Duke Energy and Dominion Energy cancelled their natural gas Atlantic Coast Pipeline (the assets were later purchased by Warren Buffet) and the Supreme Court rejected an environmental permit for the Keystone XL pipeline to continue construction.
Biden Task Force: Biden’s task force members have finalized a set of ambitious, near-term climate targets they hope to incorporate into his platform. Notable goals include a fully renewable US electricity sector by 2035, a rapid transition to energy-efficient buildings, and developing new vehicle efficiency standards. Biden’s economic plan also includes $300bn for investments in R&D and "breakthrough" tech – with energy as a focus area.
RMI: Wells Fargo, Goldman Sachs, Bank of America, and JPMorgan Chase will be working with the Rocky Mountain Institute's Center for Climate-Aligned Finance to align the banks’ global investment with a net-zero future and the financial sector’s role in accelerating the low-carbon transition.
Greentech Media: Apple semiconductor supplier, TMSC, has signed the “world’s largest corporate renewables deal” for offshore wind with Ørsted. The 20-year power-purchase agreement will supply 920 MW of offshore wind developments off Taiwan to TMSC.
CNBC: Christine Lagarde has expressed interest in using the European Central Bank’s €2.8tn asset purchase scheme to pursue green objectives, marking the first time that an ECB president has committed to examine “greener” changes to all of the central bank’s operations.
A group of Formula One and Formula E drivers is starting an electric scooter racing series, dubbed “eSkootr Championship” with the goal of promoting sustainable transportation in major cities.
The U.S. Department of Energy named 20 researchers to its Lab-Embedded Entrepreneurship Programs which places scientists and engineers within national laboratories to focus on energy and industrial technologies. Activate (a 2-year fellowship at Cyclotron Road) also announced its 28-fellow 2020 cohort.
NYTimes explores what the future could look like in a car-less NYC.
Columbia University announced the creation of a Climate School to address society’s most pressing environmental and public health challenges.
Opportunities & Events:
[Opportunity] Clean Energy Trust: Apply by August 3 for $100K-$300K of investment (targeting Midwest-based cleantech startups).
[Opportunity] Good Food Makers: Apply by August 8 for an 8-week program directed toward food and agtech innovators.
[Event Series] NYTimes: Join the virtual event series called “Netting Zero” where journalists and climate experts discuss carbon neutrality challenges.
[Event] Advanced Nuclear Tech in a Decarbonized Future: Join on July 14 from 2:30-3:30 p.m. PT as nuclear experts explore advanced reactor designs capable of mass decarbonization.
Climate Product Designer @Stripe
Senior Data Scientist @ClimateAi
Various Sustainability Roles @Microsoft
Full-stack Engineer, Data Scientist @Forerunner
Program Director @Los Angeles Cleantech Incubator
Product Specialist @Recurve
Electrochemist @Steelmaking decarbonization startup
Research Analyst @Energy Futures Initiative
Chief of Staff, Software Engineer @Bedrock Ocean Exploration
Utilities Account Executive @Opower
Chief of Staff @Activate
Manager, EPRI Innovation Hub @EPRI
Research Scientist @Symbrosia
Backend Engineer @Numina
Feel free to send us new ideas, recent fundings, or general curiosities. Have a great week ahead!