IronOak Brain Trust Member: Daniel Kauffman

Energy Analysis Lead, IronOak Energy Capital
Founder & CEO, Resispeak, Inc.
President, Terracel Energy, LLC

What do you do within the renewable energy sector and why is it essential?
I have two main activities in the renewable energy sector. My company, Resispeak, develops and licenses utility bill collection and analysis software. Resispeak has analyzed energy usage data on behalf of home energy efficiency programs, electric utilities, building portfolios, and others in order to make their energy management initiatives more effective. My consulting practice, Terracel Energy, provides clients (consulting firms, large corporations, investment funds) with advisory services such as energy technology evaluation and market intelligence. Some of these clients make substantial commitments in the energy sector and I inform their capital allocation processes as objectively and insightfully as I can.
 
Can you describe 2 of your most impactful past projects or engagements?

1. Resispeak is currently participating in a DOE-funded grant whose purpose is to develop a software tool that improves the ability of energy efficiency programs to serve their local communities, with a focus on five counties in eastern North Carolina.
2. Terracel Energy recently led a technical due diligence on a highly innovative and speculative renewable energy generation technology, leading to an investment as part of a significant funding round.

 
What are you most excited about for the renewable energy industry in 2017-2018?
Energy efficiency has always been a neglected stepchild of the energy sector and remains an intractable problem due to its complexity. In the spirit of Eisenhower’s famous quote that “if a problem cannot be solved, enlarge it”, we are beginning to see the emergence of software applications whose purpose it is to connect residential energy efficiency development with other initiatives whose goals differ but whose activities overlap, such as poverty alleviation, weather resilience, and indoor air quality improvement in support of healthcare cost reduction. This comprehensive approach may create meaningful forward momentum towards comprehensive energy efficiency strategies and perhaps even innovations in energy efficiency investment as an asset class.
 
What are you most concerned about for the renewable energy industry in 2017-2018?
My biggest concern is that with cost-effective renewables and low natural gas costs in North America, energy efficiency will remain a significantly neglected option. The business cases for energy efficiency are already often marginal, and with low natural gas and wholesale power prices it can be difficult to make the math work. My other big concern is that we will terminally loose the desire and then the ability to deploy large new nuclear power generation. New reactors in Georgia and South Carolina are experiencing cost overruns on the order of a billion dollars a year per reactor, and unless we can demonstrate that new nuclear is cost effective to develop we will loose any remaining appetite for new nuclear power generation, at least in the U.S.
 
What is one trend in the renewable energy sector that few are paying attention to?
At the end of last year, NuScale became the first company to submit a reactor design certification application to the U.S. Nuclear Regulatory Commission for a small modular reactor (SMR). Unlike large site-built reactors, SMRs would, in theory, be constructed in a factory and shipped to site, thereby taking advantage of manufacturing economies of scale. More than a dozen companies are pursuing SMR commercialization with a wide range of designs. Clearly not all of these companies will succeed, but our best chance for ensuring a role for nuclear power in our energy future may come from SMRs, so look out for advances in this space.
 
Why is good energy analysis important?
If we are trying to reduce a community’s total winter heating costs, we should know how much energy is being consumed for winter heating, and by whom. If we are optimizing a building’s operation, we should observe trends in energy usage from the smart meter data. If we are investing in energy efficiency, we should measure how much energy we are saving. However, very often we do not take these straightforward actions, resulting in wasted money and energy. Proper energy management at any level begins with proper energy analysis, without which energy managers and other decision makers are essentially flying blind.
 
What has surprised you most about your career in the renewable energy sector?
What has surprised me most is how hard it can be to commercialize new energy technology. In an article I wrote about a couple of years ago and published in GreenTech Media, I remarked how innovative energy technology often competes against something that currently exists and already works well. A better mousetrap is rarely enough – doing something innovative in the energy sector generally requires not just technical innovation but also financial innovation, organizational capabilities, and a network of partners that share a common vision and are willing to collaborate on implementation.
 
What are 1-2 pieces of advice you would give someone thinking about entering the renewable energy industry today?
Renewable energy is a very rewarding and intellectually stimulating field to work in, but it can also be quite frustrating due to the extent of regulatory, economic, and technical challenges that need to be overcome to make a real impact. If you are exploring opportunities in the renewable energy industry, my advice is to be sure to budget realistically and ensure others do so as well, since projects often take longer and cost more than optimistic proposers would otherwise hope.