CalNEXT: A New Resource for Innovation

CalNEXT: A New Resource for Innovation

Looking for help to crystallize your cleantech idea into a commercial product that finds a ready market? In July, the utilities in the state launched a new initiative called CalNEXT to speed the pursuit of promising emerging technologies. “CalNEXT is a statewide initiative to identify, test, grow electric technologies and delivery methods to support California’s decarbonized future.” They will fund projects in the range of $20-400K to assess innovations and help shape them to fit product needs that have already been identified.

CalNEXT

CalNEXT

CalNEXT is run by Energy Solutions in Oakland, a 25-year old analytics firm that provides insights on markets, designs for programs to incentivize adoption of innovations, and assessments of the potential of clean technologies. Program Manager Casidee Kido and her colleague Erin Fitzgerald explained how CalNEXT works in our Perspectives session on December 15.

Cassidee Kido

Cassidee Kido

CalNEXT is funded by the ratepayers of the investor-owned utilities in the state (PG&E, SoCal Edison, SoCal Gas and San Diego G&E) and is intended to focus the efforts of energy-efficiency innovators to work on things that can have the most impact on reaching a decarbonized future and the most effective ways to market them. It is an outgrowth of the work of the Emerging Technologies Coordinating Council created by the CEC with participation of all the investor-owned utilities plus SMUD and LADWP a dozen years ago. The idea of the ETCC was to encourage collaboration on RD&D among the utilities and to assure alignment of priorities with the CEC programs as well. As the innovation process evolved into one that involved a much broader set of entities, the ETCC added roles in increasing the visibility of ET resources and opportunities for engagement with ETCC members, along with strengthening the knowledge and capabilities of the ET community by sharing project results, methodologies, and collaboration opportunities. CalNEXT is the new way to achieve these goals and it comes at a great time with more money than ever being committed to clean tech deployment.

Erin Fitzgerald

Erin Fitzgerald

CalNEXT works through “Technology Priority Maps.” These are wish lists of innovations and market information the ETCC would like to see developed. They cover 6 technology groups and 46 families of innovations. The six are HVAC, lighting, plug loads/appliances, water heating, process loads, and whole -buildings. You can look at these here, and then dive into the details of the half-dozen or so technology families in each. Click on those and you get to specific innovations or market support projects the ETCC would like to see. You can then propose projects to address these needs each year. The current round will be open until February 23. The TPMs will be updated and probably adopted late in 2023, with applications then open in Q1 of 2024. Even if you are rejected, you can apply as many times as you like, and on multiple wish list items. To date CalNEXT has funded 35 projects totaling $14 million. At the end of each project, CalNEXT will provide help to connect companies to those in the utilities and elsewhere that can help on moving to demos and commercialization opportunities.

“CalNEXT will track and vet the efficacy and claims of these technologies, products, and solutions to assess and confirm their potential energy savings and operational performance, help estimate long-term cost-effectiveness, prioritize technologies with significant energy savings opportunities, and identify potential barriers to market adoption. CalNEXT is a great opportunity for programs to see their full potential, to get the evaluation and implementation support they need, and for good ideas to come to life and make major impacts to support California’s decarbonized future.”

This looks like a very helpful gateway to the kinds of connections and follow-on funding that innovators need. It is worth exploring even if you have been rebuffed on other programs. The vetting and evaluation process will be helpful in generating investor interest. The whole session is recorded and available.

Thomas Hall

ABOUT THE AUTHOR

Gary Simon is the Chair of CleanStart's Board. A seasoned energy executive and entrepreneur with 45 years of experience in business, government, and non-profits.

CleanStart Sponsors

Weintraub | TobinBlueTech Valley, Revrnt, River City Bank

Moss AdamsPowerSoft.biz, Greenberg Traurig, California Mobility Center

ToloPhoto’s Bumpy Startup Journey

ToloPhoto’s Bumpy Startup Journey

Photo from CalSEED website, awardees Cohort 4

In our December 13 Perspectives webcast, Thomas Karagianes, CEO of ToloPhoto, shared the story of his road to building a business.  He reinforced the importance of spending time early-on discovering customers and networking to find the resources he needed.  

In 2015 Thomas had a good idea.  Seeing all the problems in deterioration of utility distribution and transmission systems in remote areas causing wildfires, he came up with the notion of doing inspections with a drone rather than sending crews in the field to assess the condition of the systems manually.  Not just any drone would do, it had to be one that took exceptional high-resolution pictures.  Then those pictures needed to be analyzed better than having someone look at 100K+ photos one at a time.  The savings in time and in the costs of avoiding catastrophic failures on the system that could lead to sparking incredibly destructive wildfires could be enormous.  How did he go about finding what he needed to build his business?

He tried going to the people in the utilities he thought would have the most to gain from his innovation, but discovered the well-known aversion in utilities to taking risks with new technology.  He tried going directly to VCs to get the funds to build prototypes, but they told him that without a utility customer lined-up, they could not afford to have their money tied up for the time it would take to get to profitability.  

In the world of startups, Thomas was discovering the “Valley of Death” for himself—up close and personal.  By 2020, he found the value of spending more time seeking advice and building a network of connections.  The decision that made all the difference for him was to apply to CalSEED.  It originated in 2017 as a way to support early stage innovators that need money to develop and test their ideas.  It exists to bridge that “Valley of Death.”  ToloPhoto was awarded a $150,000 Phase 1 concept award and then did so well, it advanced to Phase 2 with an additional $450,000 to develop and test a prototype.  Now Thomas has much of what he needs to get a foot in the door with customers and investors.  Now he is getting exposure to the Electric Power Research Institute, to mentors, and to more sympathetic investors.  

What he still needs is at least one customer that says, “I gotta have it.”  But he is enthusiastic to keep searching.  In our discussion, we talked about other industries which might need his technology, particularly those that are desperate to inspect thousands of bridges for corrosion so serious it might cause a collapse.  The current method of manual inspection from bucket trucks under the bridge is far too costly and time-consuming.  

In summary, Thomas said the big lesson from his journey is not to spend too much time heads down developing the technology.  Asking lots of questions about what customers want and who the real customers are pays a lot of dividends.  

Thomas Hall

ABOUT THE AUTHOR

Gary Simon is the Chair of CleanStart's Board. A seasoned energy executive and entrepreneur with 45 years of experience in business, government, and non-profits.

CleanStart Sponsors

Weintraub | TobinBlueTech Valley, Revrnt, River City Bank

Moss AdamsPowerSoft.biz, Greenberg Traurig, California Mobility Center

Our Fearless Predictions for 2022: Were We Right?

Our Fearless Predictions for 2022: Were We Right?

 1. Oil prices will fall below $60 per barrel.

RESULT: Wrong number, right direction. We did not factor in the Russian invasion of Ukraine and the Western sanctions. On the other hand, even with all the disruptions, the price of oil as we write this ($75.30/bbl) is BELOW what it was a year ago, prior to the invasion. It will likely fluctuate around that level to the end of the year. The peak in the oil price was on March 8 when it was $123.70/bbl. The oil market has a remarkable capacity to over-compensate for a price run-up, and it happened again. Unfortunately, not all of the reduction in wholesale oil prices has shown up at the pump…yet.

2. The installed price of rooftop solar will decline more steeply in 2022 than in 2021.

RESULT: Wrong. The price for installations under 10 kW crept up to $4.71 per kW from $4.65 in 2021. There’s probably some of that attributable to general inflation. The CPUC has not quite made its final decision on net energy metering prices to be offered for surplus generation from rooftop solar, but the proposed compromise essentially postpones most of the expected drop. That may actually stimulate a rush to beat the deadline on this grandfathering period and cause a bump in installed costs.(See our blog specifically on this proposed decision). We will revisit this next year.

3. A new microgrid will be developed in our region with at least 500 customers.

RESULT: Didn’t happen. With all the projects popping up around the country, we thought one would take off in our area. Still nothing. We got a similar prediction wrong in 2021, will we make a similar prediction for 2023? A broken clock is right twice a day.

4. The Air Resources Board will publish new, lower Carbon Intensity figures for renewable fuels made from captured CO2

RESULT: Correct. Faced with a lot of controversy over the precise carbon intensity scores calculated for various alternate fuels, CARB created a mechanism to allow anyone to propose a specific “pathway” from raw inputs to miles driven (what used to be called “well-to-wheel”) to calculate this figure. The result has been a profusion of hundreds of calculated carbon intensities depending on the exact circumstances. Over 200 new calculated scores were added in 2022 (making a total of 1390 “pathways”). The result of all these variations is that methane derived from biomass conversion can have a carbon intensity score from -600 (really great) to +90 (no better than regular gasoline). If you intend to sell alternate fuels, be sure to understand how to get the right score for your product. Any negative score can earn money from selling the excess credits that score creates.

5. California will receive a new application for an offshore wind farm.

RESULT: So far there has been no such additional application. However, there has been new momentum. In August, the CEC set goals to have 5 GW of offshore wind generation in 2030 and 25 GW by 2045. If these goals are to be met, someone is going to have to apply for some pretty big installations very soon. On December 6, the Biden Administration announced the first auctions for leases 20 miles offshore California, near Morro Bay and Humboldt. The goal is to have 4.5 GW of wind turbines installed, part of the federal plan to have 30 GW of offshore wind in the US by 2030. The auctions will trigger a review of all the environmental, fishing, and shipping complications of the possible installations.

6. Nationally, renewables (solar, wind, hydro, geothermal) will generate more GWh than coal and nuclear.

RESULT: On the mark. The slide in coal used for power generation resumed through the end of September. In addition, renewables continue to outrank nuclear as a source of generation. “Renewables” in the definition used by EIA includes conventional large hydro as well as small hydro. Many others include only the small hydro. Total generation grew 2.85% from 4,098 to 4215 TWh with the rebound ion the economy from COVID shutdowns.

Source of Generation

Source of Generation

Source: Energy Information Administration

7. EV adoption will double in the US with twice as many delivered in 2022 as in 2021. The supply shortages slowed Volkswagen ID.4 and Ford’s Mustang sales in 2021. The Chevy Bolt EV and EUV faced recalls, but should return to strong sales in 2022. Most companies are releasing new EV models. New companies with significant preorders will start delivering. We expect EVs to make up 10% of new purchases (more than double 2021).

Phev + EVs Sold

Phev + EVs Sold

RESULT: Optimistic but it may prove true. But right now it is not. Argonne National Laboratory which tracks EV sales shows that the first 10 months of 2022 saw 587,640 EVs sold. It is unlikely the last two months of the year. While winter auto 2022 sales are typically the biggest There would have to be more than 330000 EVs sold. EV sales will not have doubled. However, total car sales were down in 2022 compared to 2021, possibly due to the shortage of chips. If so, then EV sales might have been constrained. Still, a forecast of a doubling of sales was aggressive. Estimates by Argonne NL have EVs now at over 10% of new cars, though.

Electric Vehicle Sales

Electric Vehicle Sales

8. There will be another SPAC deal with a regional company, as the boom slows.

RESULT: No other regional cleantech SPAC (Special Purpose Acquisition Company) happened or is on the horizon. The SPAC boom rose quickly and fell even more quickly. Our prediction was in part based on the amount of money that had been raised in these “blank check” companies that were searching for a real company in which to invest. Of the hundreds of SPACs in the hunt, 56 closed deals in clean tech, but the results were disappointing. There are still SPACs actively searching for deals, but nothing new in clean tech in our region has been announced. There still are SPACs out there looking for clean energy investments, but they are broadening what they will consider. For example, Decarbonization Plus Acquisition Corp., lead by a team that already made 3 clean tech SPAC investments, just announced they are buying an oil and gas producer.

Origin Materials was the local company acquired by a SPAC (now listed as ORGN on NASDAQ) and it has done better than most. Its stock started at $10, rose to $13 and is down to $5.50 now. However it has made major investments in two new plants to manufacture its plastic resins made from biomass. It still has $108 million in cash after investing over $330 million in the new plants, and most importantly, has signed up customer product purchases and capacity reservation agreements worth $9 billion. .It may turn out to be one of the better SPACs.

Other SPACs are not doing so well, Volta (EV Charging) may delist and is just the most recent example of SPAC companies running out of money.

SPACs

SPACs

Source: CleanTechnica.com

9. CleanEdge’s Smart Grid Index QGRD will cross $120.

RESULT: Wrong. It was a rough year for the market all around. QGRD is hovering around $90. While that is performing better than S&P indexes it hasn’t gotten close to $120. We missed this one. We hoped that Government investment in infrastructure and modernizing the grid would help keep QGRD’s winning streak.

10. Elon Musk will step down from the Tesla CEO position.…He still will argue with people about Tesla on Twitter but his SEC liability for doing so will be reduced.

RESULT: Wrong, even though he said he wanted to, he didn’t. Elon contradicted many things he has historically said. There was not much that was “normal” about Elon Musk this past year. We thought he would spend less time on twitter. He said in November that he didn’t want to be the CEO of any of his companies, despite having added Twitter to his list of CEO-ships. It may still happen, but for Musk and Tesla it probably would have been better if he had stepped aside. The Tesla share price ($183) is now about half of its peak in 2022 ($361) after Musk acquired Twitter, breaking a long run of ever-increasing Tesla share prices.

Net Energy Metering War Taking Another Big Step in December

Net Energy Metering War Taking Another Big Step in December

On November 10, the California Public Utilities Commission issued a much-revised version of its 2021 proposal to slash dramatically the price that homeowners would get for exporting excess solar to the grid. The CPUC has moderated what many considered a very harsh decision and extended some olive branches to the solar industry to mitigate the pain.
It was clear that, given the extraordinary back blast the 2021 proposed decision created, the CPUC was going to find some way to backpedal and find grounds for compromise. However, this battle is far from over. The new proposed decision (PD) has been out for comment, and the CPUC won’t issue a final decision until December 15 (or possibly defer that action into 2023). But more importantly, the new PD comes across as a temporary truce in the war, not a final solution. The harsher impacts have been postponed, but they will still happen. The price paid for surplus power will still eventually drop by about 75%, not just to those that install systems after April 2023.

In the meantime, the compromises in the PD will give people more incentives to install solar now rather than wait, and to add storage to new or existing systems. If there is a silver lining to the decision, this temporary boost to those who install solar and storage is it. If you are in this category, move quickly. These parts of the PD are not likely to be changed before final adoption.

Detailed explanations of the decision are available from a number of sources. Try these to get a more complete idea as to what is going on: An article from Solar.com, an article in PV Magazine, an article from Renewable Energy World, a brief analysis by consultants at Scott Madden, a summary from Canary Media, and a thoughtful explanation from my former colleague Ahmad Faruqui on why he has moderated his opposition to NEM.

NEM bore the seeds of its own destruction right from the start. Economists were very clear that it overpaid homeowners for surplus production (the amount paid was far more than the costs the utility avoided by taking the surplus generation) and the payment would be subsidized by all ratepayers that didn’t install solar. But when it started, it seemed like the subsidy was small and pushing solar made the utilities look good. It was introduced in Massachusetts in 1979 to support two demonstrations and then became law in Minnesota in 1983. San Diego Gas and Electric became the pioneer in California and in 1996 by law all regulated utilities were required to offer it. Originally, capped at some tiny percentage of all of a utility’s load, the caps were increased. Now 43 states have some form of NEM, and most of them are facing the same warfare as is happening here as the aggregate subsidy to those installing rooftop solar became significant.

This is not a political problem. Fundamentally, if EVERYONE installed solar and got paid at current prices for their surpluses, it would bankrupt the utilities. Regulators will not let that happen, nor will state legislatures. The economics of the current version of NEM are upside down and that cannot stand. The question is how to design an acceptable transition that minimizes the impact to those concerned. Be alert to the subtleties of this off ramp (probably different in each state that has NEM) and redesign your offerings accordingly.

Thomas Hall

ABOUT THE AUTHOR

Gary Simon is the Chair of CleanStart's Board. A seasoned energy executive and entrepreneur with 45 years of experience in business, government, and non-profits.

CleanStart Sponsors

Weintraub | TobinBlueTech Valley, Revrnt, River City Bank

Moss AdamsPowerSoft.biz, Greenberg Traurig, California Mobility Center


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