This week, nearly 600 industry and government experts gathered at the Ronald Reagan Building & International Trade Center building—steps from the White House and fittingly nestled between the EPA and Department of Commerce—to discuss the planetary and economic impacts of the clean energy transition and decarbonization of American business.
The point of the conference, as described by Director of the Loan Programs Office (LPO) Jigar Shah, was to bring together public servants and the private sector leaders who want to “traverse the next summits” of the clean energy transition and join forces to tackle the hard problems ahead.
The programming, which began as an idea seeded during CERAweek in March, touched more on specific challenges than the big-picture, opportunity-driven narrative at NY Climate Week, getting into the details of complex industrial transitions. CTVC was among the crowd to take it all in and bring back the key insights.
“Deploy, deploy, deploy” IRL
The two-day event felt like one big celebration of all the hard work this DOE, and Shah in particular, has been promoting. The DOE folks took center-stage to share their thinking on key topics and interface with industry in a showcase of public-private partnership IRL. We heard remarks from DOE bigwigs like US Energy Secretary Jennifer Granholm, Under Secretary for Infrastructure David Crane, and Chief Commercialization Officer and Director of the Office of Technology Transitions (OTT) Vanessa Chan. Shah himself hosted multiple chats and roundtables (and showed up everywhere from presentations to t-shirts as well). Despite the serious topics, there was an optimistic energy and some fun built in, like the CO2 molecule easter egg in the conference logo design.
Creative formats:Programming ranged from big-picture plenaries with celebrity guests dropping in, to smaller, more intimate circuits and Chatham-house-style curated dialogues on heavy industry-specific topics. The design focused on building trust, which perhaps even more than money, clarity, and regulations is critical for effective public-private partnerships, Ross Brindle, CEO of Nexight Group, which organized the off-the-record dialogue sessions, said.
Move fast (and fail fast): “What we achieved in solar in 15 years, we’re now trying to achieve across industries in the next 7 years,” Crane said, calling this potentially “our last opportunity” to act on climate change and deliver affordable, clean energy to the American people. Speakers pushed for moving fast and getting in the mindset of not being afraid to fail.
A bigger tent: Remarks and fireside chats also pointed to the impacts of this climate transition beyond just dollars and cents. There was a big focus on community benefits, creating high-quality jobs and a diverse, skilled workforce to fill them, and enabling an equitable transition into a cleaner grid and decarbonized economy.
Public-private alignment: Two-thirds of the tech needed to reach 2050 net zero goals is already proven and ready to go, but we still need ~$300B per year in climate tech investments through mid-century, according to LPO Chief Strategist Jonah Wagner. Most of this investment is going to come from the private sector. Even as financial institutions pledge billions or trillions of dollars to clean energy, they are struggling to find quality projects, Wagner said. Government involvement in markets is complex, and DOE is working on tools to get stakeholders on the same page to move quickly. There are hundreds of projects entering into active development over the next year through DOE programs, but the public sector still needs the private-side human capital—like lawyers, financiers, and tax experts—to get them done.
🚀 Laser-focus on Liftoff
A significant emphasis during the gathering was DOE’s work to create an understanding between public and private sectors on how to most efficiently use the unprecedented resources available for clean energy and decarbonization to move forward fast and together. The department has had hundreds of conversations with industry players across key technologies to develop the Liftoff reports.
“These are neither DOE policy nor DOE strategy, they are a dialogue,” Wagner said. DOE officials emphasized that the reports are living documents meant to be updated regularly and that DOE wants to hear from you on these topics (reach out at firstname.lastname@example.org).
Doers and DOErs: The Deploy23 audience aimed to bring all the key players together. Attendees were relatively diverse, including startups and growth companies looking to access LPO funding, developers trying to understand how to access tax credits, investors and bankers looking to provide private sector capital, and representatives across the supporting ecosystem, including lawyers and media. And of course DOE showed up 300-employees strong and ready to engage. (If you wanted to meet DOE officials, this was the place to be.)
Celebrity appearances: Celebs like Bill Mckibben and Mark Ruffalo also Zoomed in to hammer home the mission.
“Aunty IRA" and "Uncle BIL”: Unsurprisingly, US legislation and money for climate tech felt like it had its own seat at the table. Government leaders emphasized the need to sustain and increase the momentum created by IRA incentives and activate $30T in private investments in the US with the $1T in federal funding.
“Public-private partnerships” was the name of the Deploy23 game. Since bringing industry and government decision makers together was the aim of the event, the most-repeated expressions from speakers and presenters were a little different than the buzzwords of NY Climate Week.
“Government-enabled, private-sector led”
“We need to create a fast-following wave of investment in these technology areas that don’t rely on federal money,” Crane said.
“It’s different this time”
“In Cleantech 1.0 it was almost assumed we would fail.” Cleantech 1.0 was aspirational, and innovators were trying to solve the market, adoption, and tech problems all at once. We’re in a totally different world now, and it’s a whole new category of problems: environmental, supply chains, geopolitics. It takes a different set of business skills, Redwood Materials CEO JB Straubel said.
“Skate to where the puck is going”
“You cannot sit back and wait for the DOE to fix this problem. And DOE cannot sit back and wait for industry to fix this problem,” Brindle said, summarizing the messages from intimate industry discussions.
“This is hard”
“We need to get to net zero by 2050 to stabilize our atmosphere which will require a transformation of the global economy on a size and scale that has never happened in human history. That’s your charge… and it’s a pretty audacious goal, quite frankly,” John Podesta, Senior Advisor to the President for Clean Energy Innovation and Implementation, said.
“We have to move fast”
“The time for incremental progress is done. We have to move faster…. What can we do tomorrow? What can we do in the next 12 months? What can we do in the next 18 months?” Brindle said of industry dialogue takeaways.
"Chicken and egg"
“There’s a chicken-and-egg demand issue for commercialization with supply chain and offtake agreements,” Chan said.
"It shouldn’t be political"
“One of the challenges we have as an industry is that this issue should not be political. We should all be trying to use US tech to lead the world on clean energy and energy abundance,” Shah said.
Challenges and solutions in the decarbonization dilemma
Individual sessions focused on specific pieces of the decarbonization puzzle, but shared themes emerged.
Funding to scale
Challenge: It’s tough to secure financing for early projects. We’ve said a lot about this throughout 2023 in posts on project finance and gaps in the Climate Capital Stack. Even with DOE support, young companies can struggle to navigate the many programs and eligibility requirements of government funding opportunities. Meanwhile investors can struggle to price in public sources of capital.
Solutions: The DOE has a lot of money to deploy—[more than $60B in funding for the Office of Manufacturing and Energy Supply Chains (MESC), transmission updates, and Office of Clean Energy Demonstrations (OCED), to name a few. The LPO alone has ~$400B to lend. Conditional commitments from LPO are essentially a “term sheet” that can be priced ex-post when evaluating a subsequent round. On the equity side, DOE has ~$50B to use for federal cost sharing by the early part of 2024, which translates to>$200B in private sector investments in these projects.
Insights: More transparency and support for young companies to navigate public resources would help startups access federal funding, and clearly defined stage milestones within programs would help investors determine the probability of securing funding at different project readiness levels, Saloni Multani, Founding Partner and Co-head of Innovation & Expansion at Galvanize, said at Deploy23. (If you have no idea where to start, check out our Founder’s Guide to the DOE and roadmap for winning government grants.)
Public dollars catalyzing private investment
Challenge: Government can’t do this alone, but matching projects with the risk and return profile investors are seeking is still difficult for much of climate tech. Public funding helped bring down the cost of wind and solar, but issues now go beyond renewable energy and require a massive wave of capital.
Solutions: Many private sector players know these investments are both the right thing to do and an opportunity to increase profitability and sustainability. Corporate balance sheets are an important tool to leverage. New types of project financing structures that spread first of a kind (FOAK) or “early of a kind” risk across multiple entities could bring more private sector players less resistant to jumping in before tech reaches maturity. But investors with large pools of capital need a clear sightline into how these markets and businesses are going to develop, Alan Schwartz, Executive Chairman of Guggenheim Partners, said.
Insights: The LPO is doing a great job of instilling confidence in climate tech businesses, as founders like Redwood’s Straubel shared, but 90% of the office’s investments have gone to mature technologies, where more private investors are already comfortable playing, Schwartz said. If DOE can take more risks earlier on—even if it's side by side with existing investors—that could be the real catalyst, he said.
Challenge: DOE officials noted that many employers are worried about finding enough workers to fill the ~1.5M new jobs that clean energy policies and the decarbonization push are expected to create. Without a trained workforce, there’s one to build projects, operate facilities, or produce key technologies.
Solutions: Along with encouraging high-paying jobs, this is one issue the prevailing wage and apprenticeship tax credit adder is designed to address. This incentive creates a 5x increase in the value of tax credits if pay requirements and apprentice thresholds (12.5% of people this year, going up to 15% of all workers next year) are met. Engaging labor unions early can build community support for projects, help secure the necessary workforce, and actually bring down overall costs.
Insights: “The only way to pay wages lower than Davis Bacon is to pay registered apprentices,” Amy Peterson, LPO advisor in industry relations, said. Unions are looking at market signals to decide which jobs need expanded apprenticeship programs, and those conversations need to happen ~2 years before projects begin. “There’s not a shortage of workers in the construction industry. There’s a shortage of predictability,” Austin Keyser, IBEW Assistant to the International President for Government Affairs, said. Many labor unions already have long-standing training programs and local leaders who can help companies begin planning their workforce strategies. IBEW has >300 training facilities in the US with programs including transmission and construction.
Challenge: Some projects are finding resources for funding and staffing only to run into roadblocks caused by community sentiment. Competition in the energy sector over the last century has been about technological and engineering prowess, but the skills needed to engage with communities will be the differentiator between companies moving forward. Failures on this front will mean projects won’t get off the ground and others will have the competitive advantage.
Solutions: Start talking to local residents really early. Engage often and face-to-face when possible. “Email outreach is great, but personal contact is better,” Kate Ringness, Chief Strategist at DOE’s Office of Policy, said. “The one stakeholder you leave out of your outreach is going to be the one that’s a thorn in your side.” Go through your networks and find one person to talk to, then build from there. Have people write down their values in initial meetings in order to identify shared priorities and follow through on requests or questions to build trust.
Insights: “Think about [community engagement] as part of a fundamental go to market strategy,” Avra van der Zee, COO of Elemental Excelerator, said. The responsibility is on companies to simplify complex topics for local residents and to understand the histories of the communities they plan to build in before the work begins. Engagement strategies need to be bespoke—it’s not the same conversation in the Gulf Coast as on the West Coast, Vikrum Aiyer, Head Of Global Public Policy & External Affairs at Heirloom, shared. Get comfortable with having uncomfortable conversations, Jacquelyn Omosunbo Omotalade, National Director of Climate Investments at Dream.Org, recommended.
Permitting and regulatory hurdles
Challenge: Reaching the Biden administration’s goal of 100% clean electricity by 2035 means the US needs to deploy transmission lines at twice the current pace and steer projects through regulatory processes more rapidly to start getting steel in the ground. There’s an ongoing federal permitting discussion, but a lot of these bottlenecks exist at the state and local levels.
Solutions: New rules for the interconnection process were finalized in July and in In August DOE announced $300M in grants to strengthen clean energy siting and permitting. The federal government is investing $1B in key permitting agencies to increase staff capacity and improve coordination.
Insights: “We need you to keep voicing your support for federal permitting reform,” Podesta told business leaders. Private sector speakers emphasized the need to be realistic about timelines for regulatory and permitting processes and for the federal government to help break down barriers to deployment by modernizing systems (like interconnection).
Supply chain onshoring and national security
Challenge: When it comes to manufacturing, America has been ceding ground to China for nearly two decades. Now with Asia dominating many critical supply chains, the US is playing catch-up and needs to move fast.
Solutions: “Instead of bringing a knife to a gun fight, we’re wielding an economic bazooka,” Secretary Granholm said of US incentives to drive domestic manufacturing growth. Building battery plants takes years, but some companies are already shifting investment strategies from Asia to the US due to legislation like the IRA, Ric Fulop, CEO of Desktop Metal, said.
Insights: Still, progress is slow for onshoring or “friendshoring” the battery supply chain. It’s not just about mining permits, but also creating capacity for the steps beyond extraction and refining in that critical minerals value chain, which don’t currently exist in the US, Redwood’s Straubel said. “There’s a lot of work to do and I think that’s still sinking in across DOE and the broader group of companies focused on electrification, batteries, and sustainability.”
Willingness to take risks
Challenge: Right now, industries and climate tech innovators are taking as many shots on goal as they can. Some things are going to fail, but need to be willing to take those risks.
Solutions: The important thing is getting in the mindset of not being afraid to fail. With LPO returns, there’s no way to have success in every single deal. Don’t be afraid to have a batting average, Fulop said.
Insights: “You need to have the courage and the vision to move beyond quarterly earnings,” Chan told private sector attendees. If we don’t invest quickly, we’re going to miss the boat. Make investments beyond your horizons as a CEO. You’re getting older, and so are your kids. Please deploy your capital, she said.
Long-term visibility and certainty
Challenge: For industry to start building in earnest, the private sector needs the government to provide some stability for the long-term rather than wavering with political ping-pong. Businesses need to know that the money is here to stay, but the upcoming federal elections and ongoing political polarization in the US create a lot of uncertainty.
Solutions: The structure of the IRA keeps a 10-year timeline in place without relying on Congress to renew funding or incentives like tax credits. Additional guidance is coming on tax credits, which present their own set of challenges and opportunities. Attendees and presenters agreed that more transparency and communication between public and private stakeholders is key.
Insights: “We really need demand-side levers to accelerate these early deployments,” Kelly Cummins, Acting Director of OCED, said. The office has put out a demand-side request for proposals to support clean hydrogen hubs through guaranteed demand and revenue certainty. This helps address the fundamental mismatch of producers needing demand to secure the financing to build projects.
Some of the most pressing questions from entrepreneurs and investors about the details of government policy were met with some version of, “I can’t speak to that right now, but stay tuned,” from federal officials. Here are a couple of the most common questions left unanswered:
Timing: Many eligible companies weren’t ready for the first wave of IRA-created funding opportunity announcements (FOAs). Private sector attendees sought clarity on the timelines for future FOAs so businesses can properly prepare.
Sharing learnings: Government-backed projects such as clean hydrogen and DAC hubs were proposed in the spirit of knowledge-sharing and pushing entire industries forward. OCED officials also discussed making certain emerging climate tech project reports publicly so that the private sector can get more comfortable with the risks associated with FOAK endeavors.
Specifics: Companies looking to take advantage of IRA tax credits are still awaiting detailed guidance on certain "adders" and major decisions on clean hydrogen requirements for 45V. One US Treasury official assured attendees that the IRS is working at a “historic rate,” but the private sector anticipation of these announcements was palpable.
With conference season in full swing, we hope everyone is getting some rest and taking their vitamins! What's been the most valuable event you attended or tuned in for this fall? Send your thoughts on takeaways and coverage of September's programming to email@example.com.