As part of our mission to bring you the most compelling news and analysis in the solar industry, pv magazine USA is happy to bring you a new interview series by kWh Analytics, #Solar100 Thought Leaders, which we are syndicating. Today’s interview with Danny Kennedy is the first in what will be monthly installments.
It seems fitting for our inaugural monthly #Solar100 interview to be with activist turned entrepreneur turned fund director, but ever the solar advocate, Danny Kennedy.
Kennedy believes the different roles are not at odds, noting, “Entrepreneurs are the classic ‘won’t take no for an answer’ activists, really. They just use business tools rather than community organizing.”
Though the tools may change across roles, Kennedy’s means and ends—his theory of change and his ultimate vision—are decidedly centered on people. He believes people will drive the necessary changes towards clean energy, and that changes towards clean energy are necessary to protect Earth and its people.
It is striking how easily Kennedy uses a broad “we” and “us” in the place of “solar”; or how quickly he can name examples of off-the-radar startups and activist campaigns that are contributing to the revolution for clean energy; or outside of this interview, how often we hear Kennedy’s name cited among solar groups just getting their start.
Kennedy speaks like an activist, builds community buy-in like a grassroots organizer, can leverage financial tools like a capitalist, and at kWh Analytics, we think he’s the most interesting man in solar.
Solar’s Biggest Challenges
Richard Matsui: In Rooftop Revolution, you identified the challenge of building a movement for solar amidst the many marketing campaigns started by solar’s opponents—that it is expensive, inefficient, subsidy-driven, that it can’t be scaled, that it takes away jobs, etc. As you look at the landscape five years later, what are the top 3 challenges you see in solar now?
Danny Kennedy: There’s an irony in how things have progressed since 2012 when I wrote that book—then, we were “too small to be significant” for everyone—from Bill Gates to Donald Trump. And now, we’re becoming “too dominant.” It’s a complete turnaround that we’re now being depicted as a problem in the grid because we produce too much free electricity. I find it stunning that regardless of how many anti-solar marketing myths are refuted or how much progress is made, certain people will create excuses in attempts to stop solar.
I would say the three biggest obstacles are:
1) Fossil fuel interests trying to protect themselves. The only way coal survives is a political choice for it to survive. There is no economic or social rationale otherwise. But we’ve seen that political choice being made by governments from America to Australia: subsidies being crafted, policies being set up to literally overturn the outcome. Fossil fuel interests will obfuscate, make up crap, and create crazy stories to defend coal and gas. That’s the number one obstacle: political power of the vested interests.
2) Sustaining popular commitment to the cause against fatigue. We cannot relent. We have been driving fast to get from one to three to maybe ten percent of the electricity supply in some states, and we’ve done really well. But we’re still a fraction of the supply and have to continue doubling. That demands consumers and citizens and activists all carry on building the market—movements make markets as much as businesses do, and we cannot forget that.
3) Technical. I think getting to 50% renewables is relatively easy; getting from 50% to 100% will present some new technological challenges. And so as solar grows towards dominance in the grid, there will be some new technical challenges, which are not insurmountable, but which will still need to be addressed.
RM: When we have this conversation in five years’ time, what do you think will be solar’s top three challenges then?
DK: A lot does depend on what happens in the next four years. Politics can get uglier still. People ask me what can slow down the inevitable rise of renewables, and I think war could do that. The world could fall apart like a pig in a blender, go back to its corners, do what it knows and not be advanced, adventurous, or push the boundaries of technology and good things. And I think war is very possible. That’s the big one that risks all the progress we’ve made. Other than that, in 2022 the main obstacle and question will be: How fast can we make the change to solar?
RM: Can you talk about an off-the-radar startup that’s tackling one of these big issues?
DK: When it comes to building the buy-in and commitment of a community to solar, my favorite right now is called Solar Ear. They are working to make hearing aids available to the hundreds of millions of humans who can’t get them because batteries are expensive and hard to get into remote and emerging markets. Solar Ear’s solution: a solar-powered hearing aid, which effectively recharges the battery rather than disposes of it, making it more advanced than the current crop of hearing aid technologies, as well as much more affordable and available. And their business model is really cool—it’s driven by deaf people doing this work in these countries for deaf people.
And I love it because it doesn’t sound like a direct response to any of the obstacles I just listed, but the political will and cultural commitment to the transition we were talking about has to happen most in emerging markets. The billion plus people under 30 in Asia and Africa that are looking at the world and wondering what their future is need to be engaged by this to carry it forward. That’s where electrification is going to happen. America’s an interesting, small portion of the movement in terms of the Gigawatt capacity that will be built in America, so building movements worldwide and empowering people literally and figuratively with solar products is really important. In terms of demonstrating how solar can have a really meaningful impact in peoples’ lives, that’s one company that touches me.
Activism, Entrepreneurialism, & Building the Movement for Solar
RM: As a leader in solar, you have a particularly unique background as an activist in Greenpeace. In your 2013 TEDxSydney talk, you mentioned the profit motive as a driver for change, and this line made me chuckle: “Capitalists are coming for your rooftops. It means the solution will come.” I think it’s fair to say that you are now a capitalist, although perhaps a conscious capitalist. What sparked that change for you?
DK: First, a lot of Greenpeace’s successes over the years and strategies are capitalist. I don’t think the two are mutually exclusive. To give an example, I ran a lot of forestry campaigns trying to save forests in places like Papua New Guinea. It’s often the case that you can use market forces to make change as an activist, such as forcing good wood procurement practices as a way of protecting ancient forests. That’s been the strategy for the climate and clean energy case for a long time, as in adding cost to carbon. Small businesses can be agents of change, and entrepreneurs are the classic ‘won’t take no for an answer’ activists, really. They just use business tools rather than community organizing.
Second, that doesn’t mean that I’m not also a socialist. My personal thinking is that capitalism has its uses, but it’s pretty simplistic to just stick with one or other of the -isms. We have to find the blend that makes sense for the 21st century. Capitalism has had its use in unleashing the energy innovation that we’ve seen in the last decade, but there was also chronic market failure before it—capitalism had failed for most of the 20th century in creating any innovation. That’s the hundred years prior to the California Solar Initiative, which was kind of a socialist model, and certainly up to Germany’s Energiewiende, wherein the market was somewhat constrained by strong industrial policy. Prior to those the energy industry had been failed by monopoly capitalism. For me, market force is a means to an ends—market force works, but that doesn’t mean it excuses us from the bigger conversation of what capital is for and what market force should lead to. I believe in a guided market, at the very least.
RM: I like that point you’re making—this idea that market forces are very capable of doing certain tasks, but maybe not great at all tasks. The forestry example is new to me, but I think you were working with Jeremy Leggett on the divestment movement to put financial pressure on institutions to do more. Is there another big campaign that you’re working on?
DK: I think the focus on stranded assets is really important. There is a phenomenal amount of money that is being wasted by the fossil fuel and nuclear industry as they enter their dying days, with examples like Adani’s Carmichael coal mine in Australia or the gas pipelines from Texas to Mexico. In Australia, $1 billion tax dollars are being used to subsidize a coal mine that should not be opened in in a region that represents 2% of allowable carbon pollution left for the atmosphere. It’s just wrong. In Mexico, they’re spending billions this year on natural gas pipelines from Texas, which is going to lock them into debt payments on those pipes whether or not the gas price stays low, whether or not they decide to make the transition to wind and solar, which is much cheaper than gas already in Mexico’s reverse auctions, to electrify vehicles, etc.
The stranded assets campaign is really about avoiding “locking in” communities to uncompetitive infrastructure. Remember when Shell went up to the Arctic from Portland? The drilling rig was blockaded by canoeists and people like those I used to work with for a while, but the rig got out. And then they failed to find anything worth developing, which was predictable. It forced Shell to report a write-down of $7b dollars within about six months. The Arctic exploration effort of the oil majors generally has led to tens of billions of dollars of write-downs by those companies. There’s no accountability and instead there’s still support from government. There’s a huge contrast between the waste of money on the dirty side of the ledger versus the amounts we’re profitably deploying on the clean side of the ledger. There’s a capital market campaign I would love to run against the stranding of further assets in light of climate change. And maybe I will.
RM: Given that you’ve gone from activist to solar entrepreneur to clean energy investor, how are you liking this new role, and how is it different?
DK: It’s different in that I get to play with a lot of entrepreneurs instead of just a couple companies, like Sungevity, Mosaic, and others that I helped get going. The job is working more on the system than in the system, in the entrepreneurial ecosystem itself. It’s a different layer of responsibility. I really like our work, both because managing other peoples’ money effectively is important and challenging, but also because it’s about open-sourcing a lot of the lessons we’ve picked up over the last decade in California. The solar coaster, as we call it, has been tumultuous—plenty of lessons for future entrepreneurs that we hope to make transparent and share with the world. California’s like the lab for the world—we actually should get to 100% renewable energy by 2030 if we can. The main focus now for me is not California, as important as it is—it’s on continuing this work in Africa and Asia, otherwise we don’t turn the carbon dial.
RM: Fascinating. Given that you’re looking at this ecosystem more holistically now, are there gaps you perceive in the ecosystem that others can help supplement?
DK: Oh, god yeah. There’s this wrong belief that now that clean energy’s got some poster children that have been successful and have made it public and disrupted some categories like private vehicles that it’s inevitable that we will succeed in time. But that’s not true at all. We’re talking about a trillion dollar value creation story annually for the next 20 years. We need hundreds and thousands of highly successful companies, from entrepreneurs working in niche segments to entrepreneurs working on broad electrification. 100% renewable energy is not going to be done by a couple businesses out of California that expand their models to Africa. It’s going to be carried forward by African entrepreneurs. The future of the energy demand in the massive new urban realities in Asia—these mega-cities in India, China, Indonesia, and elsewhere—how will their needs be met in a uniquely local and specific way? Leveraging learnings and technologies from afar no doubt, but the distributed nature of renewable energy suggests that it’s going to be accomplished through a combination of ideas, and those are going to come not just from people in Palo Alto. We need to find and fund many more entrepreneurs.
There are big human capital gaps, as well as massive financial capital gaps. Emerging markets get no joy, even though that’s where the work is. Early stage gets very little investment these days, as you know, because investors prefer to do project finance now that they’ve kind of got their heads around wind and solar farms. We still need to do a lot more in different segments, whether that be community solar in America or off-grid in developing countries. Or diesel displacement, which can be very lucrative and great investments, but for other reasons people don’t want to make them, like presumptions or prejudices they have about those markets. There are also major policy gaps, which is why I’ve joined the board of Power For All, a campaign to bring distributed renewables to the 25 countries in the world with the least electricity by 2025.
Lessons Learned & Advice for Entrepreneurs
RM: What advice would you give to an entrepreneur? Given that you witnessed and helped drive the founding of the first generation of solar startups, at least in the states, what is the one thing that you take from that experience that you think is broadly applicable to other founders?
DK: The one thing? Oh, I’ve got lots of lessons. If just one, I would say pick your investors carefully so you can control your own destiny. That’s one of many, if I had to choose just one for other founders. Another is plan for the long haul. Beware this is going to go all kinds of crazy…
RM: Has your time in CalCEF working more broadly on the clean energy ecosystem, instead of just residential solar, lent additional perspective on the solar industry? For instance, at kWh we look at CoreLogic and say, “Ah, that’s how mortgages are financed, therefore solar must eventually look more like this, and this is how we should think about the data infrastructure for our industry.”
DK: Yes, because so much of solar is about the financing of solar—which now involves a lot of your data and statistical insights—I think the microfinance experience is very relevant to the solar industry as it goes forward, again, in the emerging markets. It sounds obvious, but it has not happened yet.
RM: That’s surprising. What’s the gap there? I would assume if you’re doing microfinance, I would assume you could make the argument very easily for why solar-powered light allows someone in the BOP (“Bottom Of Pyramid”) to be more productive in the evening, which would enable loan repayment.
DK: I just don’t think we’ve gotten there yet. We’re talking about hundreds of millions of people who lack basic services like electric lighting. So, those entrepreneurs that are there are still using the most expensive type of money there is—equity, like we did for early establishment of US residential solar—to do solar as a service. Mainstream microfinance reaches hundreds of millions of people today, which required a system of controls to be built at the village-level. I think solar will follow this path, to create a de-centralized market of electricity of the future.
Call to Action
RM: Everything I’ve ever read or heard you say points to an underlying theme of people as entrepreneurs, as agents of change. You identified entrepreneurs as activists and talk of social movements that are leading the solar revolution. This hopeful picture stands in stark contrast to the brutal “solar coaster” we live on. I think the people in our industry are actually feeling quite depressed right now, even though our numbers on deployment and costs have never been better. What would you want to say to the people working in solar?
DK: I think you’re right on. Solar has been so wildly successful on important measures like $/kWh—but this is not the same as profitability. I would say my recommendation is people should take care of one another. And particularly, to bring up leaders to step into our shoes, follow in our footsteps. This is a long haul. And I think you’re right—at Sungevity, we were one of the vanguards to modernize solar, rode the wave as it crested. Kind of like Netscape for the internet. [Laughter] It was a necessary precedent to Google Chrome, Mozilla’s Firefox, and all sorts of newer and better ways of doing it. And those people doing that work needed to be supported by the people before them. Leadership development, mentoring, investing in young upstarts. And diversifying that leadership. Because if our movement is not inclusive of women and minorities locally and internationally, and if we just become tech bros, we don’t go global and we don’t achieve the climate justice that we’re meant to be about.
Interview conducted by Richard Matsui, kWh Analytics