To understand how quickly the world is moving to clean energy, consider three things:
- Corporations are now the biggest buyers of clean energy;
- More than 400 pieces of legislation focused on reducing greenhouse gas emissions were introduced worldwide last year; and
- Investors are expected to spend roughly $40 trillion over the next three decades to move away from fossil fuels, a process we call decarbonization.
This trifecta – clean energy demand, regulation, and investment – is only going to become more impactful as the world focuses on reducing emissions created by burning oil and gas. It’s not a theoretical future; it’s the accepted reality in board rooms, among policymakers, and across capital markets.
No company is clearer on this reality than National Grid.
“Climate change is the defining challenge of this generation. The decisions we take now will influence the future of our planet and life on earth.” That statement is from the first paragraph of National Grid’s Responsible Business Charter 2020. I encourage you to read it, because it lays out our company’s commitment to achieving net-zero carbon emissions by 2050 – not just in the energy we create for our customers, but in our own operations.
National Grid put its financial weight behind this commitment in March when we acquired Western Power Distribution, the largest distributor of electricity in the United Kingdom; sold a chunk of our natural gas business in the northeastern US; and put up for sale a majority stake in our gas transmission and metering business in the UK.
These are seismic shifts in our core businesses – and there will be more to come so we can achieve our 2050 emissions goal. Fortunately, our parent company possesses an unmatched advantage to make it all possible.
National Grid Partners is the only corporate-backed investment and innovation fund in the utility industry. Our charter is simple: get there faster. Get to decarbonization faster. Create more efficient infrastructures faster. Develop innovative ideas faster – and share them across the industry.
We’re doing so, and successfully, in two areas you should know about: investing in strategic startups and serving as a trusted voice to other energy utilities and new clean-energy investors.
Strategic Investments – Generation, Transmission & Consumption
The traditional role of a venture fund is to invest in small companies, help them grow, and sell them for a profit when they get big. We certainly do that. But we also invest in companies that can make National Grid’s own operations even more efficient. Consider three companies in our portfolio that focus on energy generation, transmission, and consumption.
Copper Labs helps utilities understand how much energy they need to generate. It sounds like it should be simple, but the reality is utilities must wait as long as 30 days to get customer energy-consumption data. They have no real way of telling, for example, if a three-day spike in use was due to drop in temperature, an epic cricket match, or a bit of both.
Copper can monitor customer energy demand every 30 seconds and provide that detailed data to a utility, which can then look for correlations to events like weather or holidays. This near-real-time snapshot reduces the chance of generating too much energy and creating unnecessary carbon emissions.
Then there are the transmission lines that bring electricity to our customers. Like pipes carrying water, these lines have a maximum carrying capacity. But that capacity can change depending on weather, wind, and other factors. Sometimes there’s more capacity available, which means utilities could add electricity from clean-energy sources. But until now, most utilities had no easy way to know that extra capacity was available.
LineVision puts sensors on transmission towers and monitors the lines for opportunities to increase their capacity safely. In a project with National Grid in Massachusetts, for example, LineVision found capacity could be increased 13 percent. This gives National Grid, which owns roughly 9,000 miles (14,500 kilometers) of electrical transmission lines in the United States alone, an opportunity to add more energy from clean sources.
Finally, all energy arrives at a destination. One of the biggest is commercial buildings, which account for as much as 40 percent of carbon emissions in the United States. Yet their owners aren’t keen to write large checks for improvements that might take decades to pay off – especially given the fluctuating price of office space.
Carbon Lighthouse finds – and, importantly, guarantees – energy-savings opportunities in commercial buildings without expensive capital investments. It puts a building under a microscope, looking at how things such as weather, occupancy, and equipment use drive energy use.
National Grid was so impressed by Carbon Lighthouse technologies that it chose them for a pilot project at our Greenpoint facility in Brooklyn, New York. This complex spans several hundred thousand square feet and includes a warehouse, repair facilities, and office space. The potential savings over the 11-year project lifespan are staggering: more than $340,000 in direct costs and more than 1,200 tons of carbon kept out of the atmosphere. That’s the equivalent of preventing 1.3 million pounds of coal from being burned.
As National Grid Partners heads into our fourth full year as an investment and innovation fund, you can expect us to make even more strategic investments in startups that share our carbon-reduction mission – in addition to our ongoing investments in companies that make the grid safer and more reliable.
A Trusted Voice For Utilities & New Investors
National Grid Partners is also putting significant resources into industry collaboration. As I mentioned in a previous blog post, there are more than 150 utilities worldwide – and as regulated monopolies, we don’t compete in the same markets. So there’s no downside to working together to exchange ideas, partner on projects, and share best practices to keep up with the impacts of clean-energy demand, legislation, and investment.
That’s why we formed the NextGrid Alliance (NGA), a membership organization made up of some of the world’s most forward-looking energy companies. Our job, in part, is to bring together these voices to help accelerate the world’s decarbonization transition. Since last year, we’ve convened webinars and workshops on topics of shared concern like advancing industry innovation and protecting grids from hackers. This fall, we plan to hold our inaugural NGA Summit in London to coincide with the UN’s COP26 climate conference.
These conversations certainly benefit the NGA’s more than five dozen (and counting) members. But they also put National Grid Partners in the position of being a trusted voice to new investors who will spend enormous sums on clean energy in the future.
In 2020, the worldwide investment in decarbonization hit $500 billion for the first time. It’s an impressive number, but according to the International Energy Agency (IEA), it will need to hit at least $4 trillion annually by 2030 to reach net-zero emissions by 2050. While public financing will be part of the equation, “Ultimately the private sector will need to finance most of the extra investment required,” according to the IEA.
As someone who’s worked in venture capital for more than two decades, I can tell you that financing energy projects at this scale will bring entirely new classes of investors into our world. But they’ll need to understand the dynamics of our highly regulated markets. They’ll need to talk to those who know the industry, the exciting projects underway, the new technologies being developed, the opportunities still available, and the existing challenges.
“Reducing risks for investors will be essential to ensure successful and affordable clean energy transitions,” according to the IEA.
Through the NextGrid Alliance – and our expanding portfolio of startup companies – we have a deep Rolodex of contacts to help new financiers make the biggest impact possible across the entire energy sector. Our deep understanding of the industry also can reduce the risk of those investments.
All of which helps us get to a net-zero world even faster.
I am the Chief Technology and Innovation Officer of National Grid, a multinational electricity and gas utility company, and am the Founder and President of National Grid Partners, the company’s innovation and investment arm. I previously was a Managing Partner at the Westly Group, responsible for investments in energy technology companies, and a Vice President at Intel Capital, where I oversaw the Software and Services sector and established the Intel Capital Diversity Fund. I am also the Founder and Chair of a non-profit called UPWARD, a global network of executive women committed to advancing women in leadership by implementing diversity and inclusion programming.