- The Rocky Mountain Institute, a Colorado-based nonprofit, and the Swiss investment firm Emerald Technology Ventures will collaborate on two initiatives designed to accelerate the adoption of new technology in the energy sector.
- One initiative, headed by RMI, will focus on identifying and securing seed funding for dozens of startups every year with the potential to create sustainable energy technologies with global impact. The other, headed by Emerald, will identify and address barriers to energy innovation.
- The partners aim to build a replicable business model that can tackle funding and other obstacles standing in the way of the adoption of sustainable technologies with the goal of combating global climate change.
Innovative energy startups attract a much lower rate of venture capital than other sectors, which has slowed the pace of energy innovation, according to Jon Creyts, managing director of the Rocky Mountain Institute. The organization believes that greater innovation and investment is key to finding an economically sustainable solution to climate change, he said.
"We need to see a dramatic acceleration overall and need to be thinking about technologies that could produce gigaton-plus production by 2030 to be on track" to cap global warming at 1.5 degrees Celsius by 2050, Creyts said. "We know that entrepreneurs hold the key to solving some of these challenges and we need to support fully the energy transition. Otherwise, we won't be able to make it."
To combat this problem, RMI was working on a program it calls the "Third Derivative," a sort of nonprofit startup accelerator geared toward energy companies. RMI aims to secure seed funding for 30-50 energy startups per year and then provide them with 15 months of mentoring and guidance in hope that at the end of the incubation period, at least three companies in each cohort will not only raise Series A funds, but will produce technologies with the potential for global impact.
At the same time, Emerald had begun to explore assembling energy companies into a Global Energy Transformation Alliance that would work together to identify and eliminate barriers to innovation in the energy sector such as developing universal standards that could help accelerate change if they have industry buy-in.
Tremendous risk in the energy sector tied to issues like carbon-based assets and cyber security has created an "appetite for innovation as there has not been before," said Christoph Frei, a partner at Emerald Technology Ventures. But the fragmented nature of the industry has hindered the adoption of new technology. Collaboration can help businesses share data and identify potential solutions in a more efficient manner, Frei said.
During routine conversations about other business matters, Creyts said, the two partners realized they both had something to offer the other party: Emerald had the investment dollars necessary to jump start Third Derivative and RMI had experience with the kind of open-source research and discussion that Emerald hopes to foster with the GET Alliance.
While the partnership could help Emerald provide further value to its portfolio companies, Frei said the firm's participation was driven by a desire to address the bigger picture of climate change.
"This is in support of the big agenda that we need to get right: the climate agenda," he said. "Sustainable development, and accelerating the sustainable development and energy transformation that we need."
The GET Alliance has secured agreements with its first member companies and plans to begin peer-to-peer collaboration soon, Frei said. Third Derivative plans to announce partnerships with other investors in the near future, Creyts said.
RMI hopes the partnership with Emerald will establish a new model for doing business in the energy sector, Creyts said.
"What we're trying to create here is broader" than a single partnership, Creyts said, adding that in the face of global challenges like climate change, cooperation may produce better results for business and for society than competition. "But it will take new ways of working."