With your extensive experience in energy consulting and as the Chief Impact Officer at Energy Impact Partners, how do you assess the potential of these new renewable energy technologies in terms of scalability and impact?

The process of evaluating the potential value of an investment based on its impact begins with selecting the appropriate metric. In social investing, numerous metrics are relevant, but at EIP Ventures, we prioritize carbon savings due to our mission at Energy Impact Partners to accelerate the clean energy transition. For this discussion, I will focus solely on carbon savings. To measure carbon savings, the first step is to establish a baseline scenario—what the world would look like without your investment. This involves considering additionality, or the degree of causality between your investment and changes in the energy system. You need to outline a baseline emissions trajectory and then model the same energy system incorporating your technology.

Building this model involves isolating the portion of the energy system impacted by your investment. It’s crucial to establish a measurable chain of causality, as many investments may not have one. For foundational investments, we avoid quantifying carbon savings to prevent false precision, which we believe can border on greenwashing. However, for investments with a clear causality chain, we analyze which part of the energy system the technology will alter, the extent of the change, and the expected emissions without the investment. This requires a thorough examination from the investment to the company’s business plan, realistic sales forecasts, competitive analysis, and alternative technology pathways. Modeling all these factors allows us to make credible calculations for investors to base their decisions on. At EIP, this framework is integral to our investment process. We primarily invest in startups, many of which lack such a framework. These companies, aligned with our mission, often welcome the framework, as it integrates them into our community and simplifies the learning process. We collaborate with them annually on these calculations, ensuring they grasp the framework. By the third or fourth year, they typically understand it well enough to continue independently post-exit.

Regarding investor interest in clean energy technologies, I believe there is significant attention across most verticals. However, energy efficiency has been chronically underfunded due to high transaction costs and institutional barriers. This broad area, spanning from heating electrification to simple solutions like attic insulation and smart energy-saving technologies, has substantial untapped potential.

AI is an invaluable tool for enhancing technology and processes. It accelerates the discovery of new battery compounds and rare earth metal substitutes, optimizes processes, and improves the efficiency and reliability of the power grid. AI’s potential to drive process improvements is vast and already evident. For instance, Energy Impact Partners has invested in Urbint, a company leveraging AI in the clean energy sector. Urbint uses AI to tackle a significant issue: accidental ruptures of gas lines during construction, which release methane, a greenhouse gas 28 times more potent than CO2. With thousands of construction projects near gas lines daily, Urbint’s AI analyzes utility applications to predict and identify high-risk sites. This allows utilities to allocate resources more effectively, reducing leak rates and enhancing safety. This innovative use of AI has been validated over several years, showcasing AI’s potential to solve complex challenges in the energy sector.