Kevin de León, author of California's landmark clean energy legislation, wants cleantech entrepreneurs to take a closer look at the underserved communities their industry often ignores.
The former President pro Tempore of the California Senate, who lost to Senator Dianne Feinstein in the November election, is delving into the cleantech startup world as a strategic adviser to the Honolulu- and East Palo Alto-based Elemental Excelerator. The accelerator selects annual cohorts of startups and funds them to build a demonstration of their technology.
The latest cohort included seven companies focused on equity and access for California communities in the energy, water, circular economy and mobility sectors, tailoring products and business models to under-resourced and over-polluted neighborhoods. De León will pick up that mission and work to close what he calls "the gap between the technology space and those who need most urgently the benefits of innovative and creative thinking."
Exposure to risk from climate change and environmental pollution tends to concentrate in low-income areas which lack the access to capital necessary to adopt new clean technologies, he said.
"It won’t be enough if only certain economic [strata] have access to storage, to transportation electrification, to distributed generation or microgrids," de León told Greentech Media. "We run the risk of making our technological advancements a very boutique-ish industry."
With the right strategies to tailor products and reach out to these populations, not to mention hiring locally, companies could expand their reach and make a profit while doing good, he added.
Moving past posh houses with verdant lawns
"If you’re putting together your business model in a way that considers this really large population of the U.S. and frankly the world, I think that’s better for your business," said Melissa Uhl, chief of staff and managing director for community and policy at Elemental Excelerator's California branch.
New energy products, like Tesla sports cars or rooftop solar systems, typically start out at prices that make them a luxury item for early adopters. Over time, prices fall with scale and financing instruments develop to reduce the upfront expense. Lease or loan options still rely on a certain level of cash flow and credit score that rule out potential customers.
Momentum has been building in the solar industry around the energy access market, but the term usually refers to global populations that lack any access to grid power. Off-grid energy access companies obtained nearly $1.7 billion in financing by the end of 2018, according to new research by Wood Mackenzie Power & Renewables.
Low- and moderate-income markets get scant airtime in the cleantech industry discourse; marketing materials reliably depict spacious, affluent homes topped with potent arrays of panels over lush, verdant lawns.
The key will be proving out whether the strategy works for fledgling startups that also have to simply survive and raise money in a tough marketplace. The current California cohort will provide several test cases.
BlocPower, for instance, received funding to apply structured finance to install energy efficiency measures in roughly 600 small to medium-size buildings in West Oakland. Solstice will offer shared solar in Stockton to low- and moderate-income customers including renters and people with low or no available credit score.
Intervention by notable figures such as de León could brighten the industry spotlight on these opportunities, which relate to his legislative record on clean energy and environmental justice from his time in the California Senate. He wrote SB 100, which calls for carbon-free electricity by 2045, and SB 535, which dedicated a quarter of cap-and-trade revenue to low-income communities especially harmed by pollution, among other laws.
"Even though I’m currently out of office at this moment...I’ll always be involved in the laws that I wrote to make sure that they are, in fact, implemented," de León said. "In order...to meet those ambitious target goals, they’re going to need the entrepreneurial community to help them bridge that gap between what’s feasible today and what has to be invented."
De León additionally is working with former Governor Arnold Schwarzenegger on transportation decarbonization, a thorny issue for car-dependent California. He also entered the race for a Los Angeles city council seat that will be decided in March 2020.