Today’s guest is Bill Nussey, CEO & Founder at the Freeing Energy Project. Bill is a many-time successful technology CEO, now squarely focused on clean energy, and specifically solar. This episode goes into depth about Bill's background and history, what led him to transition to clean energy, his process to make the transition, current area of focus, plans for the future, thoughts on the role of innovation in helping solve the problem of climate change, and advice for all of us! Long one and great one. Enjoy the show!
Today’s guest is Bill Nussey, CEO & Founder at the Freeing Energy Project.
Bill Nussey is the founder of the Freeing Energy Project, whose mission is to accelerate the shift to cleaner, cheaper energy. Prior to Freeing Energy, Bill spent most of his career as a tech CEO. His first company, which he co-founded in high school, provided graphics software for early, text-based personal computers. His second company, Da Vinci Systems, was started out of his college dorm room and grew to serve millions of users across 45 countries. Later, he spent several years as a venture capitalist with Greylock. In 1998, he left the firm to run a portfolio company, iXL, which went public and grew to almost $500 million in revenue. After iXL, he joined Silverpop as CEO. Silverpop grew to nearly $100 million and became a global leader in cloud-based marketing. In 2014, IBM acquired the company and made it the foundation of the IBM Marketing Cloud. Shortly after the acquisition, Bill was promoted to VP Corporate Strategy out of IBM’s world headquarters in New York. Bill’s companies have created thousands of jobs and billions of dollars in value.
For the last few years, Bill has been conducting research for a 2019 book called Freeing Energy. Supported by 200 interviews across the world, the book’s mission is to help non-industry readers understand how we can accelerate the shift to clean energy. The core ideas focus on decentralized (or local) energy, novel business models, and new approaches to ownership and finance. Much of his early research was shared at Bill’s October 2017 TED talk called Accelerating the Shift to Clean Energy.
In 2018, Bill co-founded Solar Inventions. Based at Georgia Tech’s ATDC incubator, the company’s mission is to commercialize a set of scientific breakthroughs for improving silicon photovoltaics.
Bill received a degree in electrical engineering from North Carolina State University and an MBA from Harvard Business School. He holds several patents, has published two books and sits on several commercial and non-profit boards. Bill and his family are involved in a handful of projects providing off-grid, resilient electricity in places like East Africa and Puerto Rico.
In today’s episode, we cover:
Links to topics discussed in this episode:
Freeing Energy: https://www.freeingenergy.com/
Bill Nussey: https://www.linkedin.com/in/billnussey/
Bubba McDonald: http://www.psc.state.ga.us/pscinfo/bios/mcdonald.asp
Amory Lovins: https://en.wikipedia.org/wiki/Amory_Lovins
Loren McDonald: https://www.linkedin.com/in/lorenmcdonald/
Solar Inventions: https://www.solarinventions.com/
Henry McCance: https://skoll.org/contributor/henry-mccance/
Arcadia Power: https://www.arcadiapower.com/
Form Energy: https://www.formenergy.com/
You can find me on twitter @jjacobs22 or @mcjpod and email at firstname.lastname@example.org, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.
Enjoy the show!
Jason Jacobs: Hello, everyone. This is Jason Jacobs, and welcome to My Climate Journey. This show follows my journey to interview a wide range of guests to better understand and make sense of the formidable problem of climate change, and try to figure out how people like you and I can help. Today's guest is Bill Nussey, the founder of the Freeing Energy Project, whose mission is to accelerate the shift to cleaner, cheaper energy. Bill is a really interesting guy because he, for most of his career, was a technology CEO.
Jason Jacobs: His first company, which he co-founded in high school, provided graphic software for early tech space personal computers. His next one, Da Vinci Systems, was started out of his college dorm and grew to serve millions of users across 45 countries. Later, he was a venture capitalist with Greylock. In 1998, he left to run a Greylock portfolio company called iXL, which went public and grew to almost 500 million in revenue. After that, he joined Silverpop as CEO, which he grew to nearly 100 million before selling to IBM. He was VP of corporate strategy out of IBM's world headquarters, and in 2016 he transitioned to the climate fight.
Jason Jacobs: The first thing he did was write a book, and talk to more than 200 experts using the book as an entry point into learning about climate change and getting to know everybody, which sounds a lot, by the way, about what I'm doing with the My Climate Journey podcast. Bill's core interest areas are around decentralized or local energy, novel business models, and new approaches to ownership and finance, but he has a wide variety of interests. Bill is a fascinating person to talk to because he is an operator's operator with deep granular knowledge, but also a really strategic thinker. I also just found him to be thoughtful, and humble, and had a really unique and interesting perspective. Without further ado, let's bring him on. Bill Nussey, welcome to the show.
Bill Nussey: Thank you. I'm excited to be here.
Jason Jacobs: I'm excited to have you. I'm a little scared, I'll admit it, but that's mostly because, well, one, we have a similar transition in terms of coming from technology entrepreneurship into a predominantly climate focus. I know it's not your only focus, but a heavily climate-motivated focus. But you have a lot more experience on the operating side than me, so that's one reason that I'm intimidated. The other is that we've both gone through this journey. We've gotten to wildly different places. That's another interesting point. Then the third is that I'm content-light, other than the podcast, and you have so much content that it gives me an inferiority complex. How do I get more content like you?
Bill Nussey: Well, I've been at it a little longer, and I am a content nut, but thank you for that. Normally, I think of myself as just being intimidating to my children, so it's heartening to know I can intimidate others as well.
Jason Jacobs: So when did all this come about? When did you start the journey? You call it a journey just like I do, so I feel like I'm home.
Bill Nussey: I've been in the tech space for 25, 30 years. I started my first software company when I was in high school, and sold that. Went to business school, worked briefly at McKinsey, the consulting firm. Then I spent some time at Greylock, the venture capital firm. Funded a company.
Jason Jacobs: I saw that. In Boston, right?
Bill Nussey: I lived in Boston for four years. Loved it. Went to graduate school there, and worked at Greylock. Then I funded a company that was in Atlanta, which is one of the places I always wanted to end up. I ultimately left Greylock to run that company. Took it public, and it was a great success.
Jason Jacobs: That was iXL?
Bill Nussey: That was iXL, yeah.
Jason Jacobs: Yeah, and that was one of the big dot com success stories back in the day.
Bill Nussey: Back in the day, yeah. We had about 3,000 people in 25 cities. It was a sizeable company, and it was an honor to be a part of this huge number of companies. General Electric, for example. Their entire webification, we worked with them to put all the websites, all the business systems up, and that was just an amazing time to be in that industry. It's part of the reason I get excited about energy, because it feels similarly new and similarly large in its potential. But I left iXL to join a software company focused on marketing tech. I grew that as CEO with an amazing team, and we sold it to IBM. It became the IBM Marketing Cloud.
Bill Nussey: While I was at IBM, I wrote a letter to the CEO, Ginni, amazing executive, and painted a picture for her about what IBM could be more than I thought it was. The response was, "Would you come help run strategy for IBM?" I thought this was a joke because they have tons of people that have been there for 30 years and knew the company inside and out, but they were serious. I went up to New York every week, and helped IBM think about where they'd be in 5 and 10 years. I had a team of about 30 people. It was just an amazing time. That's where I really decided to take the leap.
Bill Nussey: But rewinding just a little bit, probably my first time I thought about myself as a citizen of the greater planet Earth, the need to take individual action to work towards this important goal of keeping the earth healthy for the hundreds of generations after us was during TED 2006, I believe. I've been going to TED forever. Al Gore did his speech. It was one of his first speeches. I think it was before the Inconvenient Truth was widely available. I remember writing down as clearly as I can think of talking to you today. I wrote down, "Buy a Prius, dammit."
Bill Nussey: That was the first time I decided that there's something I needed to do, but part of my climate journey was that I actually loved the tech. The Prius is a really cool car. I liked the notion of that. It had two of the three things I really was looking for to make a difference. I bought a Prius. Loved the Prius. My kid drove the Prius for many years after that. It was with us for many years. That was really my first entrance, but it wasn't until I got to IBM and had a chance to study a bunch of industries, including the clean energy industry as a business, that my interest became a profession.
Jason Jacobs: When you left IBM, at the time you didn't give specifics, but it seems like you alluded to this energy transition. I mean you knew even then, the day you left, what you were going to do. Is that true?
Bill Nussey: Well, I knew what I wanted to do, which is I wanted to be in the entrepreneurial side of this transition that's occurring. I didn't know anybody in the industry, and I didn't know anything about the dynamics in the industry. All I knew was that I'd heard and read how different it was, how fundamentally different the success patterns, and operating methods, and financing methods for infrastructure businesses like energy, how different they were from software.
Jason Jacobs: I think the biggest difference is that, from what I can see from a distance, is that they require more money, take more time, and deliver worse returns.
Bill Nussey: There's a dimension of that, although I think the gap between software and clean energy is going to get smaller in the next five years. We can talk about what's driving that. But not knowing the industry, and not having a network, I pulled a trick that I had done earlier in my career when I had a similar gap of knowledge about the marketing industry. I decided to write a book. I quit IBM with this primary purpose of writing a book on how to get to clean energy more quickly. That led to a TED talk I did on what I call local energy, community solar rooftop, commercial solar, that kind of thing.
Bill Nussey: That's led to a bunch of other stuff we can talk about. But writing the book, which I think, and you and I have talked about this, is very similar to what you're doing with your podcast, which is a way to meet amazing smart people, and to have great conversations about what's possible, and to find in that opportunities that appeal to your ... in my case, and probably yours, the strengths and weaknesses and passions to do something where I can bring a business mentality and business experience that can amplify the set of ideas that I bring there, so we can get to clean energy more quickly.
Jason Jacobs: You also, I should note, just referred to yourself as amazing and smart.
Bill Nussey: I almost said present company excluded.
Jason Jacobs: I'm just giving you a hard time. You are amazing and smart. I'm glad to have you on the show.
Bill Nussey: Oh, yeah. I'm blushing.
Jason Jacobs: Here's one question I have. I listened to that TED talk that you gave on distributed community solar. That's a pretty specific talk. That's not a talk on decarbonization, the climate problem, the carbon budget. That's a talk on a very specific type of solution in a very specific area. So how long was that after you left IBM, and how long did it take you once you started looking into this area before you got that specific with your approach? Because I'm so broad. I'm 10 months in, and I'm horizontal I'm so broad.
Bill Nussey: That was my initial challenge when I saw this as a businessperson. We looked at many industries at IBM, trying to map out IBM's future. The clean energy was one of many, many. It appealed to me personally for a lot of reasons. But I realized that of all the industries we looked at, clean energy was one of the least digitized industries in existence today. I had been a part of the rise of digitization of telecommunications when I worked at McKinsey, and certainly the rise of digitization of media, and video and things like that through my different efforts. My belief was there's a massive opportunity in the digitization of energy, both in the control and planning of these incredibly vast infrastructure systems.
Bill Nussey: That's the angle I started with it, and it was appealing to me because it checked off three really big boxes that I wanted to do with this chapter of my career, one of which was I wanted to do something that really mattered in a broad context, and that's the climate side of this, the reduction of greenhouse gases. But I also wanted to do something that had a strong social impact. If you look at the three billion people on the planet Earth today that live in energy poverty, the billion that have no energy to speak of other than biomass to burn, solving these technical problems and market problems accelerates the solutions to these people.
Bill Nussey: Then the third reason, which I think speaks to your question a little bit, was this is a two trillion dollar a year industry. Electricity is a two trillion dollar a year industry globally, and one that is wildly inefficient, and one that has barely changed for 100 years. In fact, I don't know of any business model that's lasted as long as the regulated monopoly utility industry since its inception in the 1920s. It's time to have a change, and we'll do it gradually and intelligently.
Bill Nussey: The great news about this is that it's already been underway for decades because people have realized that, irrespective of the business side, we need to fix this. The reason I stayed fairly focused on the topic of clean energy, and particularly local clean energy, is that that is the place that has the most business value. So if we want to reduce greenhouse gases, and we want to accelerate the shift to clean energy, virtually every conversation I see broadly is focused at the policy level. Without policy-driven changes like carbon taxes, which I think would be great, you're basically having a whole lot of people spend 98% of their energy screaming at each other about why this isn't a problem, or why this is the world's biggest problem, and shouting anecdotes and facts at each other, but really not having a conversation.
Bill Nussey: I'd like to think, and if I'm successful with this effort, I will change the conversation from a, "This is a real thing," "No it isn't," or, "This is going to threaten the future of our planet," or, "You're just blowing this up to spend government money," whatever side of that argument people fall on to shift it to the universal thing. How do we make good investments? How do we save money and deliver better product? Most people of any political persuasion agree on that. Not everybody, but most, way more. So in that regard, I'm coming at it from that angle. The climate benefits I think that'll accrue from this are very large. I think this is the fastest path. It's the most universal path, and maybe the fastest path.
Jason Jacobs: I think what I'm hearing from you, and what I heard from you before we started recording in our prior discussion, is that there's a dual motivation here. One motivation is doing good for the world, and climate change is certainly an important societal problem. Then the other is being successful in business, and that it's your belief that intertwining the two is the best way to have impact because, by producing business success in a mission-based area, it creates positive social impact as well.
Jason Jacobs: When you got to climate, rather than getting to climate saying, "I'm going to save the world," you said, "I'm going to marry these two things, and here's an area, the grid. The grid is this huge business, and it's monopolistic, and it's outdated, and it's ripe for destruction. It's got a social purpose to it, so even if I were to go and spend 18 or 24 months on this world tour like Jason over here, evaluating sector, by sector, by sector, by sector, maybe I could find one that was a little higher, a little lower, whatever, but this checks all my boxes so I'm going to get to work."
Bill Nussey: Yes. I have to mention that I'm a serious nerd. I love what you do, and a lot of my friends are customers of the company you started. They speak highly of your startup. But you would not find me running in marathons. I wish I did, but I'm a nerd. My undergraduate in electrical engineering, so the electrical side of this is a natural fit with my personal interest, my personal passions. I have a little bit of background in it, so I can understand the difference between a volt, and an amp, and a watt, and an ohm and all that. That helps a little bit.
Jason Jacobs: One of the prior discussions I had actually much earlier in the podcast ... I mean I've been doing it three months now, so I'm a veteran. But one of the very early discussions was with the Opower co-founder and CEO, Dan Yates. He was saying that Opower, it made a difference helping with efficiency, but if you were only optimizing for difference, that there were bigger things he could do. Now he's holding himself to a higher bar now that he's had this big win, and that he's focused on more tough tech kind of stuff.
Jason Jacobs: Then I asked, "Well, you aside, if there's one thing that would have the highest impact, what would it be?" He said, "Oh, that's policy." It's like, "What are you doing? Why are you working over here if you can work on anything you want, if you're optimizing for impact?" He said, "Because in order to have impact, it needs to be stuff I'm good at and that gives me energy, and policy stuff doesn't." I think that was a really important point that was eyeopening for me. I think back to that discussion often when I'm trying to figure out my own spot, is that you can't just look at impact. You have to look at your weird individual makeup, and how to leverage that not only so you can be good at what you're doing, but so that you can be really psyched to get up every day and go to work.
Bill Nussey: I think you nailed it. I would further that, and Dan's perspective, by saying that the history of policy, a lot of the policy in the United States related to technology is it's actually instigated by a shift in technology. So while a ton of people are spending a ton of effort, and I applaud it, to go to Washington, and to the state capitals, and to the global organizations, the UN and others, and say, "Listen. We need to change the policy around energy, clean energy, electricity." If you look at, for example, the history of AT&T deregulation, I did some work on that professionally many years ago. It's something that I talk about in my book.
Jason Jacobs: The book is called Freeing Energy, and you can find it where?
Bill Nussey: Well, the site's freeingenergy.com. The book is still under work. But I put out an article a week. There's a ton of stuff. Sign up if you're interested in these topics. But AT&T, it wasn't like the US government sued AT&T because they didn't like the fact that they were a monopoly. They sued them because MCI and other companies were embracing technology that AT&T was reluctant to embrace. The government knew that if these technologies could get to market, that customers would have better phone service, and much less expensive phone service. That was the wedge that caused a massive, massive policy shift, much larger policy shift than we need in energy. It was driven by technology.
Bill Nussey: We see the same exact thing happening. One of my favorite interviews was a guy in Georgia, where I live, Georgia Public Utilities Commission. His name is Bubba McDonald. He's an icon in this part of the world. He's actually famous globally because he is often credited with being the driver of solar in Georgia, in the Southeast. I asked him. He's a very conservative politician, and very Republican. I asked him what made him embrace solar and clean energy, where some of the folks in his party do not. He smiled a big smile. He looks at me, and leans forward, lowers his voice and says, "I knew a secret nobody else knew." I said, "Okay, what's that?" He says, "Solar is cheaper."
Bill Nussey: That was really an essential point. Solar is cheaper. Not always, but in many cases solar is cheaper than the alternatives. His position wasn't ideological. It wasn't climate-based. It was the I figured out ahead of a lot of other people that solar is cheap. The reason solar is cheap, Jason, is that it's a technology. That is the reason solar is so inexpensive. That's the reason it costs 300 times less today than it did 40 years ago, and in 10 years it'll cost probably five times less than it does today. It's a technology. That's why I think policy, if we can't figure it out in Washington at the state capitals, at the very worst we can do is the technology will force the changes eventually, just because it's cheaper and better.
Jason Jacobs: Now what was the timing when you decided to write the book?
Bill Nussey: It was I think April of 2016.
Jason Jacobs: Okay, so April of 2016 you decided to write this book. You have this area that's pretty narrow, and fertile, and you want to investigate it. Tell me about that process of gathering information for the book, and in general for your journey.
Bill Nussey: I didn't have the narrow topic, what you would call narrow topic today. It still feels really broad. But the move towards local energy-
Jason Jacobs: I'm just comparing to my journey.
Bill Nussey: Fair enough.
Jason Jacobs: It's all relative.
Bill Nussey: I didn't have that perspective at all. I just knew that it was an undigitized industry, and that there was a huge amount of technology, solar, batteries, wind, others that was, at the time, might become less expensive than coal and nuclear, and has since become meaningfully less expensive in many situations. I spent a couple of months finishing my job at IBM. Before I started working on the book, the energy book, Freeing Energy, I've written a book or two before, but I wanted to really get my book writing muscles ... I say that generously, my book writing muscles back in shape.
Bill Nussey: I decided to finish a project that I'd been working on for 20 years. I wrote a book for my kids, which is now available on Amazon. It's called Your Mountain is Waiting. It's these lessons, life lessons, that my friends and other people I respect have learned about how to be successful as you're graduating from college and high school. That was great because I worked with publishers, and artists, and editors and got that whole thing down. That took the second half of 2016.
Bill Nussey: As 2016 was ending, I did my first interviews. Was it Christmas Eve? It was the 23rd or 24th of December, and I was outside of Aspen, Colorado. I sat down for three hours with Amory Lovins. For people that don't know who he is, he's the grandfather of clean energy. He's one of the most widely-credited people for the clean energy movement. He runs the Rocky Mountain Institute with hundreds of PhDs that think about the future of energy. It's an amazing organization. He's an amazing guy. For those people like you and me, he had great advice.
Bill Nussey: He said, "The problem with you IT people," apparently I'm an IT person, "The problem with you IT people is that you think that energy business is like the software business, and you get into it and you blow up." He said, "So I tip my hat to you for spending some time," Jason, you too, if you were there. He'd say, "I tip my hat for you to learn a lot about it, to learn what's unique about it, and to study it as an outsider respectfully, rather than coming into it immediately and assuming the things you've already learned that have made you successful in other fields will apply here." I just finished the book for my kids, and it was on its way. It took another year to get it out to market, but most of my work was finished. That really gave me the license to do what you're doing and I'm doing, which is to make this into a journey. I don't need an answer. This is a journey.
Jason Jacobs: I need to stop there for a second, because this is a question that I've been thinking about a lot where been my experience so far is that, coming in, the best thing that people like you and I can do, coming from the technology industry, is to hurry up and wait. Get here, and then take the time to really understand the nature of the problem. In order to do that, it takes a lot of time and effort, I'm finding. The only way to do that is to not have a job, and the only way to do that is to already have had a win or otherwise have some financial flexibility. A lot of people want to head in this direction that are not in that situation. I'm finding it really difficult to know what to tell them in terms of how to go about it. It's one of the reasons I started the podcast as this leave behind. Usually we save advice for the end, but just to skip to the punchline, what advice do you have for those people?
Bill Nussey: I've been in the startup world for the tech space for a couple of decades. I can't remember a startup that was done while somebody was comfortably ... economically comfortable, I should say. I think most startups I've seen and all that I can recall were started on weekends with borrowed time over kitchen tables. I think that same pattern would apply to what we're doing. So if you and I have the tremendous fortune of not having to do it on borrowed time, I think that just puts more responsibility and opportunity for us to maybe lean into it a bit more than others are able to.
Jason Jacobs: You call it fortune. Maybe it's a curse in terms of lack of urgency. Maybe I should stop with this podcast and go pick up a shovel. That's what someone said to me the other day.
Bill Nussey: I think it's like looking for a house or an apartment. You don't know what apartments you want until you've seen a bunch of them. Then as you go through the process, you get a really clear idea of what you like and you don't like, but you'll never figure it out academically. You've got to go see these places to know what you like. I think that's what you're doing, and I think it's great.
Bill Nussey: One of my heroes is a guy you should probably interview, although he's on the EV side, a guy named Loren McDonald. I used to work with him. We've remained friends. But he started an incredibly successful media business measured by impressions and reach called EVAdoption. He's doing this while he's working full-time. I think his aspiration, like all startup people, is to turn this into a full-time business and get a full income from it. I'm pretty sure he will. But he has built an amazing following, and he does keynote speeches at major EV conferences now. His employer supports this, and so he's able to make all this work.
Bill Nussey: It is possible. Definitely not easy. I also think there is your point about having less time urgency. I can tell you, having been at this a little longer than you, if you don't feel urgency today, you will absolutely feel urgency if you get into this a little further. You're an entrepreneur at heart. At some point, it'll start to eat at you like crazy that you're not building a business.
Jason Jacobs: Tell me about that process of discovery for the book, and also where are you today with all this, and maybe just a bit about that evolution.
Bill Nussey: I have had the most amazing experience the last couple of years. I have interviewed 250 people. Amory Lovins was among the first, and easily one of the most memorable, but I have interviewed some people whose brilliance, and vision, and charisma and ideas are so amazing that it just changes and expands my worldview. I just talked just a few moments ago to a guy who's investing in African energy systems, and building a venture capital model for solving a problem that people think can only be solved by traditional government aid. It's amazing.
Bill Nussey: That part of this has been one of the most inspirational things in my life. I think you probably know exactly what I'm talking about. I've traveled all over the world. I've met people in Africa living in huts. I've been to the floors of the biggest Chinese solar factories on the planet. I climbed to the top of a wind turbine, and climbed 300 feet up the shaft to see that, get a perspective, and spent the day with people in that industry. That part of the journey I think is unique to my very fortunate position to be able to take a little more time to do this.
Bill Nussey: Along the way, my mission is to create businesses that should exist but don't exist because they lack some critical components. There's lots of money in this space, and there's lots of good ideas, but there's very little of this glue, this nexus that allows those things to be connected together. My business experience and the network I've built, I can play a bigger role in that.
Bill Nussey: A brilliant scientist, a solar PhD who's been in the industry for decades, found me through some mutual friends about a year and a half ago. He had this wild claim that he had a better way to manufacture silicon solar than anything that had been done before. It was almost incredible, right? It's hard to believe. I said, "Well, go make some prototypes and see if this actually works," and within a few weeks it worked. It was amazing. Literally a breakthrough in the science of silicon solar.
Bill Nussey: Last year, we formed a company called Solar Inventions. I spend a little bit of time every week on this. We're now finalizing our conversations with the go-to-market customers, and finishing up the process of getting pilots. We've won a bunch of rounds of money from the US government. This is a great example of the journey that I feel like, as I hoped it would come together. This is a company that wouldn't have existed had I not met the scientist and been able to put some money into it. But more importantly, I knew a bunch of people who were really excited about this stuff. We were able to put a small funding together, and get the scientist the room he needed to go test the stuff. It was really fortunate.
Bill Nussey: I love to be able to see that company, Solar Inventions, turn into a real major enabler of more solar energy for the same investments to improve the efficiency, and effectiveness and safety of solar. Then looking at several others where I will bring together a group of people, investors, executives, advisors, customers, and see if we can continue to create these new companies. That is the midterm of my journey, and if I can do this a couple more times, then I will have really achieved the mission I set out to.
Jason Jacobs: Is there a template in terms of fixed criteria that you feel like the companies that are the right fit for this model that you used and are seeking to replicate? I mean is it the same model each time and fixed criteria, or is it project-specific and all over the place?
Bill Nussey: I had the benefit of working at Greylock, which is a well-known venture capital firm. You may have heard of them.
Jason Jacobs: Yeah. I'm right here in Boston. I know of the firm well. But once upon a time, they had a big presence here.
Bill Nussey: Yeah. They're totally Silicon Valley now. They knocked it out of the park in Silicon Valley, and shifted their gravity over there, as so many have. But one of the great learning experiences of my life was working for a guy that was effectively the founder of Greylock, a guy named Henry McCance. He was my mentor for many years. I will never forget the first day on the job. I had to wear a coat and tie at that company every day in downtown Boston.
Bill Nussey: He walked me through the halls. They were at Federal Street at the time. Hall after hall after hall there were, on the wall, all these S-1s, the documents you file when you go public. Just dozens, dozens. Maybe over a hundred of these. At this point, this would've been in '98. No one had that kind of track record. Maybe Kleiner Perkins. Nobody. He got to the end of all these companies. These were the history of the computer industry. He said, "How many of these companies that went public, went public on the business plan that we funded?" Now that's a trick question, right? I said, "Not many." He said, "Zero." He said, "We don't fund business models. We don't fund markets. We fund people."
Bill Nussey: The very long answer to your question is that I've had the good fortune to work with people who have a great deal of success at spotting entrepreneurs that will make a difference, and vetting whatever it is they're pitching, and in short, making bets on people. That's ultimately what I would do. When I do look for this next set of companies, I'm looking for people. The PhD scientist who's my partner now at Solar Inventions, named Ben, Dr. Ben, he is one such person. He's an extraordinary guy, and someone that I would, if he was opening a restaurant, right, or he was doing B2B software optimization, he's a guy I'd want to be in business with. That's the long answer to your question.
Jason Jacobs: What about from a domain standpoint? How would you describe your domain focus?
Bill Nussey: The narrowest part of my focus, which Solar Inventions is not in, is locally generated energy. Not residential rooftop, only because that's a very tough industry, and it's one that's got very well-funded, very strong existing competitors in, and extremely sensitive to government policies. But commercial and industrial, small-scale community, that kind of stuff. Very, very interesting. That, to me, is my main area of focus. Looking more at the systems level, rather than the component level.
Bill Nussey: I've been in software and computing long enough to know that nobody made any money in hard drives. The computer industry wouldn't exist without hard drives. It wouldn't exist without RAM, but people who made those products, those components, made no money to speak of. A couple people, but by and large it was instead Apple and Microsoft. They made a lot of money because they integrated a lot of pieces, and they put an umbrella over them. That's the same pattern I would look for in clean energy is systems integration.
Bill Nussey: A great example is Tesla, right? Tesla had access to the same technology Ford, BMW, Chrysler, everybody had access. It wasn't anything that Tesla could go out and buy that those companies couldn't buy, right? In fact, most of the Tesla cars, especially the early ones, had very few uniquely built products. They had a quite motor, but the batteries were off the shelf. They just put them together better.
Bill Nussey: You got to get your head around that, right? Think about it. Tesla had access to nothing different than anyone else had. They didn't have patents, that I know of. I'm sure they had a few small ones, but they didn't have any groundbreaking patents. They didn't have any particular industry domain. The executives weren't all from the auto industry, yet they created, in a matter of years, what every objective observer of cars say is the best car ever made. The safest, fastest, best to drive car ever made.
Bill Nussey: There's nothing they had that Ford and BMW didn't have, other than a lot of gumption, and fresh clean slate, and some amazing leadership, including Elon Musk, but also JB Straubel and others. That's why I get back to that notion of it's the people, and probably to some lesser degree it's the integration. People that see how to put things together are more fundable, and more likely to be successful than someone who's inventing the next battery.
Bill Nussey: Now there's probably someone who's going to invent the new battery that's going to make a billion dollars, but there's probably 50 to 500 companies trying to invent the next battery, and most of them will end up going the way of the hard drive companies, which is they end up getting consolidated into a larger hard drive company, and now there's two or three hard drive companies left. But no one along the way made a fortune.
Jason Jacobs: What about stage?
Bill Nussey: Part of the question is, and I think this is probably relevant to both of us, is what am I good at? I'm good at two distinct things. One is I'm a bit of a nerd, so I love and have some depth in science, and engineering, and programming, and hardware and software and all right that. Certainly not a professional level, but enough to keep people from BSing me. I love that stuff. The second is I have grown companies hundreds of millions of dollars in revenue from, in some cases, very little or nothing, and so I also know how to build a business. Probably that means that very early stage, or much later stage. For reasons that are probably obvious, really early stage is really interesting and fun. That's where I'm focused at the moment.
Jason Jacobs: Do you envision at some point you'll be back running a big company?
Bill Nussey: I just had lunch with a CEO friend of mine who's grown one of the hottest software companies. He used to work at one of my companies, and he's now a rock hot CEO. It's a company called FullStory, funded by Google and Kleiner Perkins. Amazing CEO. He was asking me that question, since I have had some experience growing larger companies. Wouldn't it make sense for me to end up there? I think that's a possibility. But anybody's that been involved with early-stage companies, they are just so fun. But they're risky. You could have the best idea in the world, and just get a little bit of bad luck, and no company. Waste of time. I think it's some balance in between there with an edge towards small companies would be ... if it all worked out, that would be my preference.
Jason Jacobs: So this portfolio approach that you've got now, I would assume that is all the earlier-stage bucket. Is that a fair assumption?
Bill Nussey: The stuff I'm looking at getting involved with at the moment is all early stage, yeah.
Jason Jacobs: Is that stuff a good fit for traditional VC, or what kinds of capital sources are you finding make the most sense for follow-on financing for these types of companies?
Bill Nussey: I think it depends on the company. VC is great for asset-like businesses with their software or intellectual property-focused, but a ton of the opportunities in clean energy have some more asset heaviness. As a VC, you have to be specialized in that, and you have to be open to it. As I'm sure you're well aware, in 2011, somewhere between 10 and 25 billion dollars of venture investments were flushed down the toilet because the VCs got ahead of their skis.
Jason Jacobs: I know they're aware.
Bill Nussey: Yes. The ones that haven't really thought it through yet have come and said, "Well, clean energy's a bad area." I've written a bunch of articles on my site about what exactly happened. I've interviewed about 15 of the VCs that were involved in that era, and the ones that are doing it now. What did you learn, and what went wrong? There are still a lot of investors that have an unnecessarily negative view, and have painted the entire industry for all time with the 2011 experience. But there's a couple that are leaning into it.
Bill Nussey: Then you've got the other extreme. You've got Breakthrough Energy Ventures, Bill Gates' billion dollar, two billion dollar consortium of money. They're acting like government should, in a good way, in that they're providing longterm large-volume capital for science-heavy investments. I don't know that you're going to see a lot of those, because that's a lot of money, and you've got to be able to have money that's willing to wait a decade or longer. I'm excited those exist.
Bill Nussey: You've started to see some of the larger oil companies do that too, take that longterm approach. I think some governments, even the US government, is doing some stuff like that. That's encouraging. I think the grid is becoming a software problem, to put it bluntly. So therefore, the things that venture capitalists are good at, and are able to fund at the levels they have control over, I think the number of opportunities will dramatically increase for those kind of investors and entrepreneurs in the coming years. I'm very bullish on that.
Jason Jacobs: If you will, let's do a quick role play. I'm a big institutional investor, and I lost my shirt for the fund on the first clean tech bubble, and here I am. Hey, we just met. Great, or we just saw each other again. Great to be reconnected. Oh, you're doing a bunch of clean tech, and getting involved in early-stage startups that require a bunch of capital. That still makes me nauseous from the bad experience I had way back when. Why is this time different?
Bill Nussey: If you go back and look at the majority of investments that investors, the government put money into in the 2005 to 2011 timeframe, the greatest amount of them were trying to create energy from the sun, or create energy from biological processes like waste from sawgrass into gasoline. It turns out that none of the bioenergy companies, or the algae companies, none of those worked out for reasons I don't really understand. But as a group, none of them really made it to market. That was one of the reasons that a lot of the money didn't work.
Bill Nussey: But the biggest set of money was silicon has unbelievable promise but it's so expensive. At the time, somewhere in that timeframe, silicon reached a peak of $600 a kilogram, which is incredibly expensive. All these companies, including Solyndra, which was the poster child for failures of the time, were building thin film, or concentrated solar, or thermal solar systems. Anything to capture the sun's energy that was less costly than silicon. What happened was that silicon ingots, silicon wafers, pure silicon, 99.9999% pure silicon plummeted in price.
Bill Nussey: Solyndra, as I understand it, actually hit some really aggressive we can make solar power for this price targets. But what they didn't expect, and no one expected, was the price of silicon plummeted down to ... I don't know where it is today. $20, $10. I mean it's a fraction of what it was. All of a sudden, all these investments to find non-silicon ways of creating electricity from the sun became a moot point because silicon solar, which had been well-established and well-studied, the primary material became cheap. Bam, all of a sudden silicon just destroyed all the other attempts. There's really only one main company, First Solar, making thin film left in the industry. All the investors and all those other companies ended up losing all their money because of the price of silicon.
Bill Nussey: That's the big thing that was ... and then there's this other little thing that probably had an effect, which was the largest economic meltdown in my lifetime, which was 2008. As you said to me earlier, a lot of these companies get so heavily funded that they just can't right themselves. That happened. These companies got funded like software companies. 2008 comes around. They're looking for crazy valuations. They've got way too many people, way too many costs. There's no money left to fund them. Even some promising companies went under.
Jason Jacobs: You explained what was wrong with the first bubble, so now here we are in the present. Why is this time different?
Bill Nussey: This is the crux of my book. We are approaching the most profound tipping point, economically, that we've seen since Edison, Tesla figured out how to make the centralized large-scale grid. That is that the price of solar and batteries together are about to become less expensive, and in many places like Hawaii are already less expensive than buying electricity from the grid. Because self-generation is not typically regulated, whether you're a consumer owning a house or a business owning a building, you can put up solar and batteries yourself.
Bill Nussey: Solar, by itself, is an imperfect solution because it keeps you tied to the utilities and the old model. You need electricity at night because the sun goes down. So if you have a solar by itself, you're still part of the existing system that would really prefer you not to be successful. But if you bring batteries into that, and they get cheap enough ... the price of batteries. There's a great article by David Roberts, who writes for Vox, just two or three days ago.
Bill Nussey: Today, the price of batteries are 180, $300 a kilowatt, depending on which one you're measuring in. He was going through technologies where we're seeing it down to $10 a kilowatt. The price is just plummeting. All of a sudden, it makes economic sense for a consumer, for a business, for a campus, for a neighborhood, for a police station to put up their own solar panels, and their own batteries, and generate most of their electricity. When that happens, the tipping point takes you from a world where you have a couple hundred customers called utilities who are regulated, slow-moving, and risk-averse to a world we've got millions, and millions and millions of customers who can choose to buy your better products.
Bill Nussey: You have to compete with the other battery solar providers, and controlling systems, and smart thermostats and that whole ecosystem. All of a sudden, you actually have a real market. That invites venture capitalists, entrepreneurs. I think we're going to see the solar plus battery pricing drive this huge tipping point that will cause an explosion in entrepreneurship, and innovation and venture investment that we haven't seen since Edison created the first grid in 1892.
Jason Jacobs: So if you were going to start a clean tech fund today, what would it look like in terms of size, structure, time horizons, areas of focus? How would you do it?
Bill Nussey: Well, my friends have suggested that I probably should start a clean tech. I've been a venture capitalist. I should start such a fund. But at the moment, that's not what I'm likely to do because I love building companies. I love building products. I've been a venture capitalist. I think I was good at it, but I didn't love going to work every day like I do love going into Solar Inventions and looking at how we're going to change the way silicon photovoltaics work.
Jason Jacobs: Let me ask it differently. Bill, I'm thinking of starting a clean tech fund. What stage should it be? What size should it be? What should it be structurally relative to typical VC funds, and where should I invest within clean tech?
Bill Nussey: I would look for markets that exist outside of the electric utility value chain. I've talked to tons of entrepreneurs whose products at some point need to be purchased by a utility. Some of them have made great businesses, but those are the exceptions. I think utilities are excellent customers. They just move more slowly than the timeframe that venture capital allows. They make decisions over years rather than months. They often can't purchase something until it's approved by the regulators, which is a two to three year process. Together, that means that it's a very tough, very small market. It's the same all over the world. In fact, depending on where in the world you are, the utilities have even more market power than they do in the US because they're literally owned by the government.
Bill Nussey: I would look for markets outside of that. I think it's a little early, but I'm very bullish on microgrids. I'm very bullish on commercial solar battery. I'm very bullish on energy efficiency optimization. There's a lot of talk about prosumer markets where people are buying and selling electricity. I think that's a little early, because today that ... for me to sell you electricity is illegal in almost every place in the United States, as crazy as that is. If you live next door to me, I can't sell you a kilowatt. It's illegal. Massachusetts may be one of the first places that does stuff like this. New York is looking at it. But until you have that regulatory flexibility, I think that those promising ideas of transactive marketplaces are still early. But I do like the stuff that consumers and businesses can buy today, that they can buy for themselves on their own.
Bill Nussey: The other one I like is if you do want to take the tough road but the big road, like Opower did ... actually, they sold the businesses. But if you want to, as several successful companies have taken, you can look at merging the benefits of residential and small commercial, small businesses with the utilities in aggregation plays where you aggregate a bunch of water heaters or home batteries. You either provide demand response where you turn off the house's consumption during peak periods for the utility, and you sell that as a service to the utility. Those kind of businesses I think have some play. But again, it's utilities are tough and longterm sells. There's not a lot of companies on their way to a billion dollars in revenue in that segment yet.
Jason Jacobs: Any standout companies that are examples that you think are running those playbooks well?
Bill Nussey: One of the companies, I interviewed the CEO a couple years ago, but I really like Arcadia. Do you know them?
Jason Jacobs: Yeah. I did an episode with Kiran as well.
Bill Nussey: Yeah, okay. Kiran is a great guy, and a great vision. Just an amazing job of building a real business out of it, and basically allowing people, irrespective of their geography and regulatory environment, to buy community solar. I think that's a really good idea. I think there's a couple of companies that are playing in the slightly deregulated retail markets where they're bringing the opportunity to have choice over the kind of electricity you buy.
Bill Nussey: Another company I really like is Drift, which is ... I've had some time, and interviewed the CEO, Greg Robinson. But this is an example of companies that are leaning into some of the early deregulation, and giving customers a complete alternative to buying from your utility. They are selling to consumers, although they're still somewhat beholden to the regulatory environment. But in states like New York, it works.
Bill Nussey: They basically say, "Listen. We're going to give you a real customer experience, and we're going to give you choices over the kind of energy, electricity you buy. It's as clean as it can be, very clean, somewhat clean. It can be clean when clean is available easily. It can be more expensive but all the time." They've taken this consumer focus, and now they've brought it to businesses. They've had a great run building this business with customers like Budweiser and others that they've made some fame with. That's another one I really like.
Jason Jacobs: If you could wave your magic wand and change one thing that would unlock the acceleration in this category, what would it be? It could be an innovation thing, a policy thing, a government thing. You name it. Something totally different I'm not even thinking about.
Bill Nussey: If I had one wish, it's regulatory. I hate to ever have this answer. But if I could make anything happen, I would have a state and federal regulation that said, "Electricity consumption below a certain level, call it a megawatt, you can stick that behind the meter." I can take my entire neighborhood, or my entire campus, or a couple of townhomes and apartment buildings, and stick all those together behind a meter, and then let someone sell to the individuals within that community and create a marketplace. If you can create a marketplace that doesn't involve the utilities having to do the sales, where customer service, and innovation, and new products, and it's going to be coming from the cleanest energy, blah, blah, blah.
Bill Nussey: I think the ability to have free markets where people can come and make investments to create marketplaces would be my dream come true. That means that it could start small. The utilities and regulators can see that it can be done without the threat that they perceive, that these things can be managed without undermining the quality of service that we take for granted for electricity, and that a slightly higher profit motive isn't met with bad practices. I think a couple dozen jurisdictions have put this kind of thing in place will overnight open people's eyes that we can in fact start the process of creating competitive electricity markets without putting the fundamental system at risk.
Jason Jacobs: Is that type of policy in place anywhere today?
Bill Nussey: I've asked a lot of people that, and I think there's little places where it exists. I think there's exceptions that are carved out in many places where somebody goes to the utility commission in their state and says, "I want to do this one thing." But as a general rule, I am not familiar with a place. So if anyone who listens to this can send me some, or send you some examples of where this is happening at a scaled level, I would love to read about it.
Bill Nussey: From my opinion, I think Hawaii is ... they struggle with it, but Hawaii is leaning into this stuff more than anywhere else because they've had such a high adoption of solar because the price of electricity was so high there, is so high there, that they've had to get really creative. Not to the degree I just described, but they are definitely well past the denial stage that solar is going to be cheaper, and solar and batteries are going to be cheaper. They're putting policies in place. I think if we don't have that, it's just going to take longer. I'm assuming that this thing I've described will not happen. But if I could have it, that would be my one wish.
Jason Jacobs: Are there people working on that on the advocacy side?
Bill Nussey: I don't think there are, because most of the people who are focused on policy and advocacy are I think by and large taking a very top-down approach. It's the listen, climate's a really big problem. We need to reduce greenhouse gases. For those reasons, we need to set policies that are targets, RPSs and things like that. I think they're starting from the other end, rather than a how do we make markets with a belief that markets will ultimately result in better, lower prices with more reliability. I don't know many people who are working on that. Again, if someone's aware of advocacy groups who are working not just at the residential level, but more broadly, I would love to meet them.
Jason Jacobs: You mentioned that you've got a two-pronged approach where it's about impact and it's about business. I'm curious. If you were only focused on impact, how would you do things differently than you're doing them today?
Bill Nussey: The challenge we have today is that the question of climate change has become so terribly politicized. I've done a lot of writing on the history of these politics. I love to tell people, "Go take a look at the Republican platform in 2008." Not only does it recognize climate change is happening, but it talks about market-based approaches to addressing it. Somehow, between 2008 and the last couple years, the Conservative Party has decided that it's not an issue. It's something that isn't happening, or doesn't need government assistance. It's created a very emotional and heated response from folks who typically are Democrat side, liberal side. It's really devolved into this ideological argument.
Bill Nussey: One of the things that I wish were different, as excited as I was about the Green New Deal, and I think the direction of the Green New Deal is a great idea, I did a long article, and I read it sentence for sentence and analyzed the entire document. It's more of a manifesto about a different world than we have today, one where people are guaranteed jobs, where indigenous people have a bunch of rights that they should have and don't have. It's insurance should be available for everybody, and by the way, we need to reduce greenhouse gases and address climate change.
Bill Nussey: I was disappointed that it covered such a wide variety of topics. While they're all important, and more important to some people than others, but they're all important topics and all worth discussing. But by conflating all of it into the question of climate change, it became just as ideological from the other side. You can't find a conservative person who wants to talk about the Green New Deal because it involves way more than climate change. All we're doing is shouting at each other politically louder. That's very frustrating.
Bill Nussey: So if you and I can play a role in this, and others like us who come at this with more of a business mindset, and creating value for everybody, I'd love it if we can help change the conversation away from the political shouting and to something that says, "Let's find some common ground where another topic to discuss besides we're all going to die tomorrow and we need to spend a trillion billion dollars, or this isn't happening at all, and shut up and go away."
Bill Nussey: There's an absolute middle ground where everybody can agree we need to help the world, our leaders, find that middle ground so we can have a discussion on those topics. Like Bubba McDonald said, it's cheaper. Let's talk about that. That's, I think, is my mission, is to make sure those conversations happen, and bring as many people helping have this rational conversation as possible.
Jason Jacobs: So then are you basically saying that, by focusing ... although you have a dual-pronged approach, by focusing on business, that's the way that you can also have the greatest impact on the problem?
Bill Nussey: Yes. It doesn't solve everything, right? Business isn't the answer to many dimensions of this. There's parts where business probably won't help much. But for example, it's an often-cited issue that the rise of rooftop solar can cause disproportionate costs for low-income parts of the communities. This is cited as a showstopper by some who would not like to see rooftop solar happen, but it's an easy policy fix.
Bill Nussey: I do think that there are a lot of problems that can't be solved without policy, but there's a whole bunch where policy isn't necessary for forward movement, and focusing on those ... Bill Nussey, me, focusing on those is the place I can make the most difference. I have tremendous respect for the people who are devoting their lives, energies and talents to the policy side of it. I don't know that I can help them a lot. They understand the language and the issues better than me. My perspective is I understand technology and I understand business.
Jason Jacobs: I've heard you say that you think that the renewables are going to win, just based on cost. The renewables and batteries combined.
Bill Nussey: Absolutely.
Jason Jacobs: Yeah, and you're a market-driven guy, so one question that I have is that if another technology could show that it could win on cost, let's say nuclear ... I'm not saying it can. I'm saying if hypothetically it could, would you support it?
Bill Nussey: Absolutely. I actually spent some time ... I've got a podcast interview coming up in two months with the CEO of a company that does micro hydro, small scale hydro. Not dams, but inline flow hydro. The amount of water flows available for this so far exceeded what I thought was possible. I think that's a good example of something I'm excited about that has nothing to do with solar panels.
Jason Jacobs: So although you happen to be working on solar, and you're a big proponent of solar, if the market showed that there was something better, then what?
Bill Nussey: I'm all for it. I would tell you though that I've got a piece out now about the full cost of solar as it compares to the full cost of ... I just put it up this weekend, compared to the full cost of natural gas, and coal and others. Nuclear is a great example. While today most people agree it is a lot more expensive than anything, and the research I've read suggests that no one expects to have massive price declines, but all of those cost analysis often don't include the full lifecycle of nuclear, and the question of what to do with the waste. There's a lot of money being put towards it, but I think most people agree it's not nearly what it's going to take to cover disposing of all the waste in the United States and the rest of the world.
Bill Nussey: I have no problems with nuclear. I just don't know how practical it is longterm. But the other thing is the cost estimates for the Fukushima longterm costs so far are about 180 billion dollars. That's more money than all the insurance money contributed by all the American solar, all the American nuclear plants since they started putting money into an insurance fund. One accident. Frankly, in the scheme of things, Fukushima wasn't nearly as bad as, say, Chernobyl. I'd like to think none of those will be possible anytime ever again, but I guarantee you that after Chernobyl, no one thought Fukushima was possible. You never know. It's just a tough thing.
Bill Nussey: Nuclear only exists if the government's willing to say, "Listen. If something really, really bad happens, business can't take care of it. We the government will write the giant checks," like Japan's doing now. The giant, giant, giant checks that are way beyond what business could ever do to clean it up and fix it. Nuclear has a lot of secondary costs that are often not included in its analysis. I think that if we find that solar and batteries fail to live up to the continuing improvements, if we find they're stalling in terms of their cost declines, we're not able to make them low environmental impact to the degree that's necessary, and therefore the cost of all energy is going to be a lot higher, nuclear may be a great option.
Jason Jacobs: Do we need a price on carbon?
Bill Nussey: I can't fathom not having a price on carbon. I interviewed some folks early in my process of the book writing on who had worked ... got as precariously close in the United States to getting carbon pricing in place. It got killed at the very 11th hour, as the story was explained to me, because somebody came up with a great term, carbon tax. That, so the story was told to me, just killed the entire idea, which had fairly decent bipartisan support at the time.
Bill Nussey: Not just carbon. I think that we really need to look at carbon equivalents. One of the things that I'm taking a look at right now is methane or natural gas. Most people know that methane is 20 to 25 times more potent per pound or per volume climate impact. Everything I've read suggests that the amount of methane leaking far exceeds what's generally being acknowledged by the people who are part of that value chain. I don't think anyone's hiding anything, per se. I just think it's not regulated terribly closely, and no one's looking at it. I think that we may find that methane is just as concerning as carbon dioxide in terms of global warming. I would not want to focus exclusively on carbon dioxide, but if it's carbon dioxide and equivalents, which a lot of people look at, then I think yeah, a price is absolutely the right thing to do.
Bill Nussey: I think there's 59 jurisdictions across the world today that have some kind of carbon price, from $5 to $30 per ton. I think it's inevitable really, honestly, that we're going to have this. I think this is why the oil companies, and any of these businesses that are not monopolies are leaning into clean now, because they know at some point their cost structure is going to completely change. They want to be ahead of it. I think it's a matter of time. I just wish we'd do it sooner.
Jason Jacobs: With solar, it sounds like the market wins, but you pick solar because you believe that solar is going to win. If proven otherwise, then you'd support whatever's going to win. Do you have a similar lens on a price on carbon? There's all these different competing proposals, cap and trade, and fee and dividend, and revenue neutral and all this stuff. Is it just whichever one we can get across the goal line, or do you think that the devil's in the details, and the details really matter?
Bill Nussey: This is above my pay grade. I have my opinions as a citizen. I would be happy to take any legislation that even remotely reflected, as a starting point, the longterm cost to society for greenhouse gases. By the way, I think there's an equal challenge for longterm costs to society for the pollution from energy, electricity generation and transportation. I think that doesn't get nearly the attention that the greenhouse gas does, because the scope of that problem is so large and so global. But I think there's an incredibly large amount of money that will have to be spent in the future to clean up past and current pollution that's a lot more down-to-earth.
Bill Nussey: I haven't published the article, but I went through and added up I think three states in the South have been pushed by their regulators to clean up the coal ash ponds. I have to get the numbers, but about 59 coal ash ponds across those three states, and I think the total amount of money is somewhere six or seven billion dollars to clean these up. Unlined coal ash ponds where the chemicals, the mercury, and arsenic, and uranium and other components are leaking into the water tables, and having varying degrees of impact on the local communities. Those are 59 ... I think 59 ponds. In the United States, there's 1,400 ponds.
Bill Nussey: This isn't on the scale of the threat of climate change, but this is an amazingly large threat. As long as we continue to burn coal, we're just making this problem worse. That's not to mention surface mining and all the other things. I am all for any legislation that addresses the longterm costs that our kids, and our grandkids and our great-grandkids are going to be faced with. No arguing. They're going to have to deal with this stuff. It's so much easier and so much cheaper to pay for it today.
Bill Nussey: That's business 101, right? If you have an assembly line, and you fix stuff while it's being manufactured, rather than waiting to get to the customer, the fix is a fraction of the cost. If it gets to the customer, then recalling it, fixing it, replacing it, unbelievably expensive. Whether it's methane, carbon dioxide, coal ash toxins, that's the stuff that if we look at it now, fix it today, we'll be saving untold amounts of money in the future. I'm all for all of that.
Jason Jacobs: What about the roles of utilities and big oil and gas directionally? I'll ask it two ways. One is what roles will they play, or are they on a path to playing? Then two, what role should they play in an ideal world?
Bill Nussey: It's interesting to me, because the oil companies are, at least superficially, if not actively leaning into climate change compared to the electric utilities. There's a recent survey of 10 of the 10 largest electric utilities. This was maybe six months ago. To a company, they had really no active plans to do anything that would address carbon dioxide, other than the regulatory requirements to put solar in place like that. They're pretty passive on it because they have no competition, and customers have nobody else to go to if they think that buying clean solar or clean wind energy matters.
Bill Nussey: Alternatively, the oil companies are in a very competitive situation not only between each oil company, but they're facing the massive, even larger existential crisis of electric vehicles, which is obviously the largest usage of oil, or of traditional vehicles. They're leaning into it more. I think it's Shell that said that publicly, they plan to be the largest electric utility in the world. I think some of this is marketing. But as you probably know, the venture funds, the investments, the ownership, the acquisitions, the oil companies, and some of European utility, electric utilities, are among the most active large investors and largest acquirers of clean tech. If nothing else, even if they're doing it for the wrong reasons for political green painting, whatever, the fact is it's causing investors and entrepreneurs to get into the space that might not have otherwise done it because there are exits happening. For that, I am grateful, regardless of their motivations.
Jason Jacobs: Then what about on the utility side? How do we mobilize them more effectively?
Bill Nussey: My thought and the work in my book points to one simple answer, which is that there's got to be competition. There's two problems with competition in the traditional sense. One is that the utilities have enjoyed monopolies for ... monopoly territory control for 100 years. As a group, the utilities are the third largest federal lobbying money of all industries. They're the second smallest of all R&D, but the third largest of all lobbying money. The state by state lobbying, which is where almost all the decisions that affect utilities are made. Almost no state forces the publication of that number, so I've never been able to find the much larger number that utilities put into state lobbying.
Bill Nussey: The first problem is that they're entrenched, and getting the politicians to shake loose the monopoly control from a policy point of view is going to be tough. The second thing, which a lot of people who follow the things I do don't like me saying, but utilities do a really good job. They deliver 99.999% electricity at an affordable price across the United States. Some notable exceptions, but they do a great job. It works really well. It's affordable. The entire society, industry, commercial, industrial, everything we do depends upon them continuing to do a great job.
Bill Nussey: If we start picking apart politically the things they do, there's a really good chance it'll unravel and create larger versions of what California saw when Enron exploited their deregulation. You could see a lot of problems. You don't want to mess with it wantonly, right? I don't think we will. I think there's too much political power to have that happen. The only way to get utilities to change practically is through competition that comes out of the regulatory political regime. That is local energy.
Bill Nussey: When people start telling utilities, "We're putting solar on our roof," the utilities are like, "Well, that's less revenue for us, but you still need us, so we're going to tack on these extra fees, by the way." Many utilities are awesome and are leaning into this, but the vast majority are not. They tack on extra fees like a connection fee, or they way underpay for net metering relative to their cost. But batteries come into it, that's the tipping point.
Bill Nussey: This is the thing that I think a lot of people miss, and my book's really focused on, is as batteries get cheaper, and they're going to way, way, way cheaper, all of a sudden you barely need the utility. You only need the utility for backup. At some point, if the utility charges so much for that because they may feel they need to, or they're just being difficult, there's other ways to do backup, including natural gas or diesel generator you might need a couple days a year when you have a particularly rainy week or something. I think local energy is the answer to getting the utilities to take a much more serious look at clean energy.
Jason Jacobs: So on the battery front, is it just the market will define, and you have no horse in the race, or do you have a clear worldview on how that war is going to play out, and what type of technology or player will dominate, if any will dominate?
Bill Nussey: When you talk about batteries, you've got to realize there's two completely different markets. People forget this, especially the folks who come from the electricity side like me, which is electric vehicles are a completely different business model for batteries than grid or residential scale electric grid replacement stuff. Cars have a very unique set of requirements. The energy density, the weight, that kind of stuff matters a whole lot more. You've seen billions, and billions and billions of money going into, say, solid state batteries, which have twice the energy density, and less flammable.
Bill Nussey: I've talked to the executives of most of the large solid state battery companies. I think we've got a ways to go, but absolutely going to happen. There's too many smart people that believe that this is possible, way too many extremely successful lab experiments, prototypes, pilots. It's just a matter of scaling it up cost effectively at this point. There's no one that doesn't think that's possible.
Bill Nussey: One of the questions people ask is lithium ion going to be the chemistry for cars? My answer is I believe it will, for the same reason that TCPIP is what powers the internet, and that the keyboard here in front of my computer says, "QWERTY," on the top. TCP/IP is a lousy protocol, and QWERTY, as you probably know, was actually designed in the original typewriters to slow people down. The placement of the keys on typewriters were designed to slow people down because they were jamming the old mechanical keys.
Bill Nussey: There's an old CMO of General Electric had a great quote for me, and he said that, "The first one out of the gate wins the race." So in a lot of markets, if you've got something that works, lithium ion in this case, then it's likely to continue working, even if it's not necessarily the best if you started from scratch. I do believe lithium ion ... not to get into the weeds, but I think the use of cobalt, which comes out of the Democratic Republic of Congo, very contentious. Tesla, others, said, "We're not going to use cobalt anymore."
Bill Nussey: The real question is lithium. We manage to find endless amounts of oil and natural gas, endless amounts of every other material we go after. I have no doubt we can find endless amounts of lithium, even with the increased requirements of environmental responsibility. I think there's plenty of it. In the worst case, we default to something else. There's magnesium and others. There's lots of great alternatives. It would just take a while to get as cost-effective.
Jason Jacobs: Then what about for utility in the home?
Bill Nussey: That's the really interesting one, right? You have an entirely ... not only different chemistries, like Form Energy. In your neck of the wood, one of the most exciting. If there was ever a dream team of batteries, Form is that team. They're working on completely different chemistries with an eye towards longterm storage, which is the real problem in the grid. We've more or less cracked the code on how to store enough electricity overnight. It's storing it in a week of rainy days, and that kind of thing. That's where the biggest stuff is, the biggest investments are going.
Bill Nussey: Form is a great example of a company going after that. The article by David Roberts I referenced earlier, they're talking about companies like Form getting down from the $200 a kilowatt hour for electric vehicle batteries. I think a Tesla Powerwall is about $300 per kilowatt hour and change down to $10. All of a sudden, having a week's worth of batteries is less expensive than your solar panels. I think we'll get there in 5, 10, 15 years. Some TBD on that.
Bill Nussey: The other thing about batteries for the grid, even for the home, is that you have entirely different architectures. Like flow batteries, where you actually use electricity to separate a chemical into two separate chemical tanks. Then you store them separately, and when you recombine them they form electricity. This is a maturing technology that has an unlimited capacity. You just need bigger tanks. I think that's another amazing area.
Bill Nussey: Then one of the things that I'm most geeked out about is companies like Energy Vault, which is out of Switzerland and Southern California. They literally use cranes to lift giant rocks. They stack the rocks on top of each other as the energy electricity comes in, and then when they need electricity back, they move the rocks and let the gravity pull the rocks back down to the ground. The crane turns into a generator. They have a 90% turnaround energy efficiency. That's crazy, right? But the cost of that is nothing. It's the cost of rocks and motors.
Bill Nussey: So if you start to think about all of the ways we can creatively store energy for the grid, we lose all the constraints that electric vehicles do, and it's very believable that the lithium supply chain density challenges that people think limit the battery price for cars does not apply at all to residential, and certainly not to grid-scale storage. I'm very bullish that we're going to see grid-scale storage be a tiny fraction of what it is today.
Jason Jacobs: The last topic that I want to cover is I believe we have some type of presidential election coming up.
Bill Nussey: I've heard that. I've heard that.
Jason Jacobs: Without getting into political views or anything like that, I mean the thing that I'd love to chat about briefly is there's different schools of thought, right? Because on the one hand, I hear a bunch of ... especially environmentalists. They say that this is the most critical election in the history of our country, and that there's no way that if Trump gets another term that we're going to make any progress while he's in office. Not only are we not going to make any progress, but we're going to be actively playing defense, trying to prevent him from unwinding all the progress that's been made. Then to go along with that, and we need big, bold bets and movement, and suck more people in, and big initiative, and the new deal or whatever you call it. Don't even call it anything deal, but just think big, right?
Jason Jacobs: There's another school of thought that says, "Who's ever in that office, another day is another day. The hard work is getting done in the states, and this is a longterm problem, and one foot in front of the other quietly behind the scenes in a bipartisan way. That's going to happen at a similar pace, no matter what." Maybe those aren't the right two lines in the sand, but how do you think about it?
Bill Nussey: I wish it was a question of who's the president. I don't think that whoever wins the next election, whatever party they're from, will have nearly as large an impact as who ... if they're lined up with Congress, and what parties they're from. So if you had the Democrats take over half or all of Congress, and a Democrat president, then I think you would see very large scale action. I would probably be frustrated with some of it because they would probably focus less on markets and more on just giant programs, which I think is a less efficient use of money. I'm not sure it's faster either. I've never been convinced that the government can act as quickly as well-motivated business.
Bill Nussey: If the Republicans win partially or all of it, then I think I'm concerned about continuing to drag our feet as one of the largest greenhouse gas emitters in the world, continuing to push that problem larger further into the future. But I think the reality is, because the nation's so divided, that we're likely to see what we see today, which is some combination of split control. The net effect is very little gets done. Whatever does get done, whether it was Obama using executive authority to put the Clean Power Plan in place, which ultimately didn't work, or Trump trying to reduce regulatory stuff on coal, which is now being challenged really heavily, I think the net of all that is it's not going to change much. I don't see one party taking both sides. I don't know the political process is going to help much at all.
Bill Nussey: I think what's probably going to help a lot more, regardless of your political party, is that countries like China, who are better heavily on renewable technology and betting on renewable grids, at some point, if those of us are right, the benefits of that are going to start become apparent. Nationalism, regardless of whether it's red or blue, is going to cause us to try to catch up. Business may be one unifier across political parties, and that's slowly what I'm working on. But I think being trounced by other countries on stuff that matters is another one.
Bill Nussey: You saw what Sputnik did to the US space program, and now it's one of the greatest examples in history of this country, and any country, responding. Maybe not for the best of reasons, but the American space program utterly transformed the world. That was an example of extreme government spending, but that's also an industry where there's no other choice. At the time, there wasn't. I do think that nationalism, the nice kind, the good kind, could also spur the United States to do more than divided political parties will get done.
Bill Nussey: But until then, I'm going to try to do my small part for the business side of it, and explain to people regardless of their political or ideological bent that there's some fantastic smart things we can do that everybody's going to win whether they're low income, high income, red or blue state, whether they like technology or they like social programs. Whatever their backing is, there's some universally really good ideas if we can quit shouting at each other for long enough. Maybe naively for me, but I think people will say, "Holy cow, wait a minute. This really works." There's a lot of stuff we may not agree on. May not agree on all the ways to address climate change, but there's a set of things which we can start on, which we agree on, which I think is local energy.
Jason Jacobs: I ask this question to every guest, but if someone offered you 100 billion dollars, and the condition was that you had to put it towards maximizing its impact on decarbonizing the global economy, and you could allocate it however you wanted to have a maximum impact, where would you put it? How would you allocate it?
Bill Nussey: Well, just to be clear, the very first thing I would do is build an Iron Man suit. That would be the first thing. After that, if you put maybe a lot less, like 10 billion dollars, into loan guarantees for clean energy infrastructure, I think you would have an incredible uptick. One thing that surprised me, and has disappointed me a little bit, but it's the way the world is, is the degree to which the financial markets respond to price signals from government subsidies and tariffs. I think they overly embrace things that have even small subsidies. They overly react to things that have small tariffs. I think, to the extent that you could put that money towards price signaling with policy, that would be another area.
Bill Nussey: There's a lot of folks that think we need a lot of fundamental R&D. Again, I'm a market guy there. I think that there's a whole lot more we could do to make better batteries. The US government is actually putting a lot of money into batteries. Batteries tend to be a little less politically divisive than solar and wind. I don't even know why, but the Trump administration has put several battery-friendly things out there.
Jason Jacobs: Is that through RPE or DOE?
Bill Nussey: Yes and yes. The number of ways the US government puts money and supports this stuff is actually ... they do it through the Department of Agriculture. Who knew? Hundreds and hundreds of millions of dollars. The government has a lot of programs that streamline this stuff, and send price signals out there to get investors to say, "I'm going to put my money into this area," clean energy, or over something else. Maybe handicap sidewalks. That's not a good example, but something that's also good for the world, but maybe from an investor's point of view, the government shines a light on these areas through R&D and subsidies, and gets investors to flock there. I think a couple billion dollars of price signals would really help.
Bill Nussey: Interestingly, I think the US government, according to the Energy Information Administration, I think we put I'm going to call it three or four billion dollars of subsidies into solar, and a little less than that into wind last year. We put about a billion and a half of subsidies into coal. This is right out of the government records from memory. I think we put a couple billion into nuclear. Do you know what the biggest government subsidy program is? You want to talk about price signals? Do you know what it is? This is a huge climate thing.
Jason Jacobs: I don't.
Bill Nussey: Ethanol. It's six billion dollars. It's as much as solar and wind together to subsidize the growing of corn. There's 60,000 square miles of farmland set aside for corn. It's 40% of it, or 50% of it is for ethanol.
Jason Jacobs: Why is it so big?
Bill Nussey: Because once, a long time ago, when Jimmy Carter was facing the energy crisis, the oil embargo in 1974, we can't depend on oil. We've got to make our own oil. He started a whole bunch of programs with the best of intentions, including subsidizing the price of corn so that we could convert it to ethanol. Now we subsidize a massive amount of farmers, which has a lot of social benefit. But I think if we could do it over again, we would be able to spend a lot less money on farmers, and help them even more than growing massive amounts of corn for the sole purpose of turning it into gasoline.
Bill Nussey: I've never read anything. I'm sure there's people that can point it out to me, but I have never read anything compelling that says we need ethanol in gasoline, that we need to spend six billion dollars to grow corn and turn it into gasoline. I think that's an example where just redirecting a fraction of that towards incentives, even farm-based incentives, but things ... As you probably know, growing corn got a massive footprint environmentally. The pollution of pesticides and fertilizers is really bad.
Bill Nussey: The CO2, there was just an article that came out today on biomass. A bunch of scientists looked at it and said, "Wow, this is not carbon neutral. So not carbon neutral. The processing, and transportation, and the creation of fertilizers." Creating fertilizers, I'm sure you know, is one of the largest producers of CO2 in the world. We're creating massive amounts of fertilizer to create massive amounts of corn to subsidize gasoline, which we don't need.
Bill Nussey: I'm getting off my electricity thing, but just to let you know I do have a broader perspective on the climate change, and strong opinions about it too. But my professional work is aimed at this one area of local energy, where I think we can drive ... I can drive, and a few people who are working on it can drive the fastest change that sidesteps all the political stagnation and infighting that's happening. But there's lots to be done, so I think the broad topic is interesting. But if you're looking for something to put your time into as an entrepreneur, my observation is agtech and electricity tech. The two most interesting areas. Agtech has a more open market, but I think it's also a bit harder to be innovative. It's not as tech-centric. I don't think there's a version of solar cells where you've got the price dropping 300 times in 40 years.
Jason Jacobs: We've covered so much in this episode that I feel like this is the kind of episode I'm going to need to listen to several times over because there's just so much substance here that it's going to take me I think a few times to fully digest it, and to go research followup links and things like that. But anything I didn't ask that I should have, or any parting words for listeners?
Bill Nussey: I just want to applaud what you're doing. When I was introduced to you as someone who's taken a similar course in their career, I felt a real kinship. I think that you have demonstrated a very unique set of skills and capabilities to create value in a way that most people don't ever get a chance to try, and few that try succeed. I think you've got a really wonderful set of skills, and putting them towards this incredibly important problem. If it wasn't climate change, if it was feeding the poor people, or solving genetic diseases, I think all those are really worthy.
Bill Nussey: I personally think climate change is one of the biggest ones. I love climate change because there are so many solutions to it. There's obviously policy, but there's technology. There's science. There's activism. There's so many ways you can go after it. I think the journey if exploring to find the way that best fits you is something you'll never, ever regret. I think the world will be a better place for your efforts. I can't wait to see what you end up doing. I look forward to staying in touch.
Jason Jacobs: Well, I absolutely feel the same way. I can't thank you enough for coming on. Bill Nussey, thanks so much for being a great guest.
Bill Nussey: My pleasure.
Jason Jacobs: Hey, everyone, Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey, you can visit us at myclimatejourney.co. Note that is .co, not .com. Someday we'll get the .com, but right now .co. You can also find me on Twitter @jjacobs22, where I would encourage you to share your feedback on the episode, or suggestions for future guests you'd like to hear. Before I let you go, if you enjoyed the show please share an episode with a friend, or consider leaving a review on iTunes. The lawyers made me say that. Thank you.