Dan Adler, California Clean Energy Fund: Seed-stage energy investments
Filed under: Energy, Technology
As a senior analyst in the Division of Strategic Planning at the California Public Utilities Commission, Dan Adler designed California's ambitious clean energy policy, which put a 20 percent target on renewable energy use by the Golden State's utilities by the year 2010.
Four years ago, Adler moved over to the California Clean Energy Fund (CalCEF), a non-profit venture capital entity created to enhance innovation in clean energy by funding early-stage startups. CalCEF is an "evergreen" fund that reinvests any profits in additional startups or research programs in renewables and energy efficiency.
In 2006, CalCEF raised a $30 million fund that Adler now helps oversee as president of the organization. Last year Adler oversaw the creation of a follow-on fund specifically targeting angel-type investments of $500,000 or less. Adler is an expert in renewable energy policy at both the national and state level and has the rare perspective of both a regulator and an investor. I got a chance to speak with Adler at the Renewable Energy Finance Forum West last week. Here are edited excerpts:
Dan Adler: I can understand that point of view. But the utilities have an obligation to serve at the end of the day. They have to run the local infrastructure. They need to pay attention to the state of the wires and transformers and the local distribution grid. If you have unexpected surges coming out of a local grid, than can be a huge problem their systems might not be prepared for. And those surges can happen with solar energy, for example. The ideal is to get to zero net energy communities and back that with a range of local renewable systems. Then bulk up the interface with the grid so that the grid can handle the changes. But it's not all there yet.
I wanted to ask you about biofuels a bit, as well. It's a hot topic in some not so great ways. How much has the ethanol meltdown damaged the credibility of the renewable energy industry with politicians?
A lot. It's definitely been tarnished with some inaccurate assessments of what corn ethanol can actually do. The horrible thing is that everyone saw this coming back in 2006 and 2007. When you have a blunt instrument like a federal mandate saying they want ethanol, that's like opening the floodgates. You had predictable results. If you already saw the narrow margin of environmental benefits in the best case and saw the worst practices out there, it was clearly a green-rush for corn ethanol. But that's how we all learn.
Is there any possible upside to the huge boom and bust in corn ethanol?
Yes. Transmission of alternative fuels was a missing piece. The consumer-facing infrastructure for liquid fuels was missing in our infrastructure. Very little attention was paid to how do you get alternative fuels into the pipeline. Corn ethanol taught us valuable lessons on how we might make that work.
So you started as a fund-of-funds targeting seed-stage energy investments in 2006. Could you tell me about that?
Our initial fund was formed in 2005 with the stated objective of driving venture capital investment in the seed stage of alternative energy plays. This has been difficult because alternative energy is viewed as a sector requiring high amounts of capital, so no one wants to be an early-stage investor in a technology that could require $200 million to get to market. We chose Nth Power, VantagePoint, and Element Partners as the funds we wanted to put our venture investments in. All are great partners. But the market reality changed and no one was willing to invest in risky early-stage technology. So most of the money we put in ended going into later-stage investments. But we hope to help with more early-stage ventures -- so-called "science projects" -- going forward.
What's next for your organization?
We are incubating a seed fund that we hope is going to be north of $20 million. We are partnering with PG&E and CalPERS and trying to create a venture capital discipline level around seed-level investing. Until now it's been friends, family and fools. We think that the same level of diligence at a seed level can lock in a lot of value very early. You help the entrepreneurs understand business as they start to build out this sort of technology and help make it easier for them to go from lab to the pilot stage where larger venture capitalists can step in.
What types of technologies are you looking at with this fund?
We are emphasizing demand-side technologies. Those tend to be very capital efficient. We are looking at startups in flow batteries and flow-battery chemistry, two areas with a lot of potential to become the next generation of battery storage. We are actually looking at flywheel technologies and even fuel cells. So anything that can store energy is on our radar. What's so compelling about that is improved storage adds value to so many other things that we're trying to do over time. We are also looking at more efficient lighting systems and home energy management systems. We have an interesting commitment through an angel fund to back a technology that helps biofuel companies optimize their feedstock in order to squeeze out maximum ethanol, bio-oils or chemicals.
D-Day for Harry Reid: Can he wrangle 60 votes for Senate health reform bill?
Fed stalls on Chinese bank deal, costs taxpayers $1.7 billion
Dell in a handbasket: Should founder Michael Dell resign?
Reader Comments (Page 1 of 1)
10-07-2009 @ 3:53PM
MyKisa said...
....Cali does so well that people are moving there by the zillions.....not
Reply
10-07-2009 @ 5:05PM
JoJo said...
Is the purpose of this article to try and make us more like California? The state that is soooo broke that they shut off the water to the Joquin Valley (the major food growing area in the US) in order to put over 30,000 people out of work (hmmm, I guess they don't NEED that tax revenue to cover their HUGE SPENDING PROBLEM?) and now people are in food lines and we're now starting to import food from CHINA (we all know how good THEY are at keeping things safe) but at least the 3" smelt, a BAIT FISH is safe.
WHAT IS WRONG WITH THIS GOVERNMENT???
Reply
10-07-2009 @ 7:17PM
Tony said...
What a state!
There economy is in shambles do in part to green environmentalist initiatives and the stupid democratic state government agreeing with them. Save every living thing except the human population.
Reply
10-07-2009 @ 10:49PM
John Paul said...
From California: You can do something or you can do nothing. From something can come something. But nothing always produces nothing.
California is trying to do something.
What? you think something like this is perfected overnight.
What are you know-it-alls doing, besides running your mouth?
Reply
10-12-2009 @ 9:49AM
Philip Philleson said...
I am involved with a group of people that started a company specificly to solve a portion of the energy problem. Independent Energy LLC is a South Carolina Company that has the Patent on a newly developed super generator. Although this generator is an all new way to produce electricity, we can not get anyone in government to support our efforts. People are not using their heads. Just because something becomes news does not mean its the truth. Big business and the government work hand in hand. The Government and Big Business does not want your electric bill to be $ 30.00 were it is now $ 300.00. Just think of the impact on Big Business and the Government in terms of lost revenue. We have the answer to this energy problem. We will be forced to take it to a another country to complete development and mass produce our device because of the greed that is taught to our young educated idiots running the U.S. looking for change both in government and business. There is no one left in this country with backbone and nerve willing to put their money where their mouth is. They just put their mouth. I look forward to comments.
Phil Philleson
Reply
10-14-2009 @ 2:40PM
Mike said...
Were can i produce my own energy at home to power for my car and house.
10-12-2009 @ 9:30PM
rja said...
yeah right.... lets all join CA and go bankrupt with them fools
Reply
10-12-2009 @ 11:24PM
RRR said...
My best quote...from the Midwest is....I am ashamed by the wasteful ignorant people in this area. Reduce....is that why the average person here is obese.....Recycle......plastic drive-thru are a way of life here......Reuse....never not here. At least California has confronted and admitted there is a problem...I can't say that for the rest of the country.
Reply
10-14-2009 @ 11:41AM
Tommy said...
California is a great example, but an example of the wrong thing. They have shown us how to make a god of the enviroment, and shown us how to run off business, run off jobs, run off tax revenues, and just generally shown us how to ruin a good thing. Great state with great resources, just idiots trying to carry out an enviromental agenda, that should truly be a non-agenda. The enviroment is a much smaller issue than it is blown up to be, especially the myth of global warming. I live in the deep south, and we have had a very very mild summer, and looks like we starting off to a very cool fall. Why can't California & the EPA see the future consequences of thier idiotic current actions. Shutting off the water and eliminating 30,000 jobs, reduces incoming tax revenues, and increases social program costs. Also it puts less food into the market place in the upcoming harvest cycle, which drives the price of food up for everyone. We have no leadership in this country that is pro-American. We only have leaders that follow the one world gov't insiders proponents. Why is it that the VAST majority of decisions coming from our gov't NEGATIVELY impact lawabiding US citizens ???
Can anyone spell C-O-N-S-P-I-R-A-C-Y ??
Reply
10-14-2009 @ 2:49PM
Yon said...
In view of the fact that nuclear energy has killed far less people than the oil industry, the coal industry or so-called renewables, it would be a far better choice. The nuke energy also does not pollute with greenhouse gases... Far less than our breathing policos create every day. As a matter of fact, not at all. Our Arab friends do not like us using nuke power generation and if you are against it, are you pro Arab?
Reply
10-14-2009 @ 9:10PM
Rick Peterson said...
WHEW! It looks like my family got out of K'alifornia just in time.
You almost don't relize how bad it is until you escape.
Reply
10-14-2009 @ 10:59PM
Noelmark said...
We need jobs and there overseas, we need oil and thats overseas, we need Ameriacn oil and that ,, here, if we use our own oil , the big oil companies can't play with the price, what makes oil go up and down , is not the oil it's the crooks that sell it,, the government can control it here and the price would be 30.00 to 40.00 half of what you are paying for it now, low cost oil makes jobs, see how much money the oil man gave your sentor and congressman,and OUT him this november, write OUT on Everthing, answer the phone with OUT, put OUT on you car bumper,write OUT on the shade house walls, they all are taking the money, this is are last chance, if they get back in it's all,over, and you will be speking spanish,,
Reply
10-15-2009 @ 1:59AM
joseph said...
I'll be bock baby
Reply