Clean Energy: Winning Faster

 

By: Andrew Rodriguez, Donna Morton, and Hunter Lovins

The golden era of renewable energy has been a long time coming, and it is finally dawning. Prices of renewables are now on par with, or lower than, conventional sources of energy, and will be everywhere soon. Innovation — including social and political innovation, technological innovation, and business-model innovation — will enable this beneficial revolution to replace fossil fuels once and for all.

What’s not to love about renewable energy? It can mitigate the global threat of climate change. It gets cheaper every year, and in comparison with fossil fuels (per dollar invested), provides far more jobs. Renewable energy fuel sources are free and we cannot run out of them. Well, technically we can — about five billion years from now.

With wind and solar power, every country on earth can become energy-independent and more secure simultaneously. Would this mean an end to all wars? No, but it would sure mean fewer of them. Renewable energy makes sense scientifically, politically, and economically. It is better for our health and the health of our planet.

And so, unsurprisingly, the age of renewable energy is here. In June 2014, Citigroup released a report, “Energy Darwinism: The Evolution of the Energy Industry,” that warned  of the “alarming fall in the price of solar.” Alarming to whom? Citi stated that this was now the “Era of Renewables,” predicting that within 10 years, solar, even without subsidies, would be the cheapest way to generate electricity.

It happened even faster than that. In April 2015, Michael Liebreich of Bloomberg New Energy announced that “fossil fuel just lost the race with renewables ... The world is now adding more capacity for renewable power each year than coal, natural gas, and oil combined. And there is no going back.”

In March 2015, Bloomberg Business reported that from 2013 to 2014, California went from utility- scale solar installations supplying 1.9 percent of its electricity mix to 5 percent. This is commendable. If increasing renewable energy’s share of the energy mix is good, using 100 percent renewable energy is better still. Many cities in Germany have done just that, companies from Unilever to Apple are on that path, and whole countries now have it as a goal. Scotland has pledged to use 100 percent renewable energy by 2020.

It seems as if the momentum is unstoppable, and innovation will drive this revolution faster and further.

In the US, policy has a key role to play. Renewables need to be unleashed from the harmful subsidies now enjoyed by fossil fuels and nuclear power. Hundreds of companies have signed the call by the coalition We Mean Business to put a price on carbon. And socially, we need to get beyond the perception that renewables are intermittent and unreliable. With the right smart grid, adequate storage, and integrated renewables, a mix of solar, wind, and water can work anywhere in the world.

Finance is the mother of all human systems. Where capital flows, momentum follows. Humanity and our planet need smart and impassioned investors to help speed along the renewable energy future we need and want.

The rise of the divest/invest movement is a great example of social innovation in finance designed to disrupt business as usual. Every investment has impact, though not always the impact we might want. As Ellen Dorsey said, “If you own fossil fuel companies, you own climate change.” Utilities that choose to burn fossil fuels to make energy are equally part of the problem. But does it matter if we divest?

The University of Oxford’s Stranded Assets Programme reports that it does: “Divestment outflows, even when relatively meager in the first wave of divestment, can significantly and permanently depress stock price of a target firm if they trigger a change in market norms.”

The divestment movement can make business as usual untenable, and in doing so, can provide momentum for alternatives and the companies leading that innovation. Businesses are positioning themselves through research and development of technologies to enable renewable energy generation to reach 100 percent. They understand that competitive businesses in the coming “Clean Economy” will supply the pieces we need to meet our energy demand renewably. When renewable energy takes over, investors in the innovative companies will reap the rewards.

If you think Tesla Motors is a car company, you are not alone. The truth is far more interesting: Tesla is valued at half the market capitalization of General Motors, yet sells 300 times fewer cars. Why? Because Tesla is a battery company.

Announced this year, Tesla’s battery business, Tesla Energy, will make batteries for utilities, commercial and industrial companies, and homeowners. With more than 100,000 orders placed even before the factory to make them was up and running, Tesla is sold out through all of 2016. Innovation in batteries will enable the solar panels on our roofs to become “firm” power, freeing people from “dirty” energy use even when the sun is not shining.

If you think that is wild, imagine this: Tesla Motors already has more than 100,000 batteries deployed around the country in the cars they have sold. Overnight these cars sit idly in our driveways, yet with a few adjustments, the technology could be a source of on-demand energy for homes. We could charge our Teslas by day with solar and wind power at our offices, bringing us that much closer to 100 percent renewable energy.

Companies like ABB Group are driving innovation around demand response. Where battery technology can ensure energy supply when we need it, smart-grid technologies can smooth spikes in demand that would otherwise be met by conventional energy sources. As our appliances and buildings become more networked, a smart grid can intervene when energy demand peaks by turning off power to an idle dishwasher or lowering the heat in an empty conference room.

The opportunities for companies to innovate in the smart-grid space are tremendous. Technologies like intelligent metering, connectivity hardware and software, and economic incentives from utilities can all drive “green” consumer decision-making. It’s called a smart grid for a reason: anything that can lower energy consumption without us noticing is pretty smart.

Companies like SolarCity are innovating through business-model design. While the cost of solar-panel systems has been decreasing, it still represents a large up-front cost for many families. With SolarCity’s financing options, families are able to install solar panels for $0 down. The reduction in their electricity bill then offsets their loan payment. When the loan is paid, families own their solar power generation and all of the clean energy it produces, which is now free for the life of the panels. Some families are even able to generate income by supplying excess energy generated to the grid, allowing others to benefit from their investment. This was the sharing economy before it was cool.

If you believe that 100 percent renewable energy is the future the world needs, wants, and will have, join us. Divest from fossil fuels. Make wise investments in companies that are innovating in this space. Choose renewable energy options from your utility company or install solar panels. Together we can halt climate change and save the earth. Humans don’t have to trash the place, and with innovations like these, we won’t.

Disclaimer: This article is not an offer or recommendation to buy or sell any security. Donna, Andrew, Hunter, or clients of Principium Investments, LLC may own securities of the companies discussed, so don’t make investment decisions solely on what you read here. Investing is your responsibility, so do your own research and/or consult with a qualified investment adviser whom you trust.



Andrew RodriguezAndrew Rodriguez is a
financial advisor and research analyst at Principium Investments. He is a graduate of Pinchot University’s MBA program and is a writer, with previous job titles ranging from impact investor and executive coach to pastor. He brings strong technical and emotional skills to advocating for capital markets to accelerate the Clean Economy.


Donna Morton
Donna Morton is the director of business strategies at Principium Investments. She brings decades of experience in sustainability, economics, social innovation, clean energy, and ethical wealth management. Donna is a lifelong social entrepreneur as well as a frequent speaker and thought leader. She is also an Ashoka, Ogunte, and Unreasonable Fellow.


Hunter LovinsHunter Lovins, president of Natural Capital Solutions, works with companies, countries, and communities
to implement profitable strategies for sustainability. Hunter is the co-author of “Natural Capitalism,” and she has been recognized with the Mitchell Prize, the Right Livelihood Award, and the Lindbergh Award for environment and technology. In 2000, she was named a “Hero for the Planet” by TIME magazine.

This article appeared in Issue 5 | Jan/Feb 2016

To read more inspiring articles from Issue 5, including our cover story featuring Daniel Lubetzky, Founder and CEO of KINDSnacks, purchase a copy of Issue 5 online!

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