You don’t have to spend much time working in clean energy before you catch wind of a “new gold rush.”
This week’s expert argues that the metaphor reveals an unavoidable truth about the clean energy transition.
Getting to the money
With a flood of investment, major buzz across government, media, and major corporations, and thousands of startups appearing every year, it certainly feels that clean energy is the new American gold rush.
Weekly announcements are eye-watering. See billions of dollars in historic federal funding for green banks and residential retrofits, hundreds of millions for clean energy infrastructure, and $3 billion to build the nation’s largest battery factory.
As you might remember from high school social studies, the gold rush of old promised economic prosperity to the hundreds of thousands that descended upon California to strike it big. Most miners were from America but many were from Europe, China, Australia, and Latin America, too. Towns sprung up, infrastructure helped populations boom, and people got rich.
We often forget, however, who the biggest winners of the gold rush were. California’s first millionaire, Samuel Brannan, wasn’t a miner, but a purveyor of supplies. With little competition, men like Brannan cleaned up by selling all the goods that miners needed most, like pickaxes, pans, dynamite, and food. Filling this niche created by the miners' (sometimes reckless) pursuit of value helped shopkeepers like Brannan thrive.
This is why “Don’t chase gold; sell picks and shovels” has become somewhat of a mantra in startup culture. This is also why startups across the clean industry are rushing to hawk 100 branded variations on the same pick-and-shovel.
But if the clean energy industry is a gold rush town flush with grants and VC cash, where the hell are the miners? And what exactly is the gold?
Meet the miners
We need a hundred companies committed to mining for clean energy gold a lot more than we need a hundred innovative shopkeepers hoping to get rich off the frenzy, fool’s gold be damned. Put differently:
Delivering clean energy and cost savings to tens of millions of Americans — and building the infrastructure to make this a dream and not a nightmare — will require new kinds of companies that see the value in each home. We need entrepreneurial doers who aren’t afraid to roll up their sleeves to transform the landscape bit by bit, home by home.
Take, for example, the team at Electric Air (previously Helios Climate). Initially intending to launch a marketplace to connect consumers with contractors, founders Jeremy Osbourne and Shreyas Sudhakar realized that the best way for them to get heat pump prices down was to do it themselves. The company, now a tech-enabled HVAC contractor, is installing heat pumps across the San Francisco Bay Area.
Jack Policar recently assessed that in Colorado alone there will be six marketplace registries or qualified contractor lists. At least five of them will be managed by marketplaces for the sole purpose of finding a contractor to install a heat pump. This saturation helps explain why Policar created the electrification marketplace Carbon Free Homes — to streamline the process of connecting clean energy contractors with homeowners.
“As a Colorado resident,” he shared, “it is going to be incredibly difficult for homeowners to figure out which solution to use… We’re going to need a 12th solution to compare all the others with the traditional solutions.” Policar is already turning down requests from other organizations to help build marketplaces of their own.
Going for gold
Many startups’ obsession with disruption has led them to build tools and provide services based on what they assume home service professionals need. But why not start with the insights of analysts, contractors, installers, and salespeople who’ve been here, long before the recent waves of government funding, VC backing, and media attention?
I want to see more investors connecting with existing deployers who already understand the consumer market that newcomers want to serve.
I want to see more founders leveraging existing data before reinventing the wheel.
And I want all of us to build on the decades of problems solved and insights gleaned by home service providers who committed to bringing clean energy into American homes before the promise of riches.
If we can shift from a competition-first mindset to a collaboration-first mindset, and effectively meet the real needs of clean energy “miners” beginning to deliver game-changing experiences for consumers, I think the real gold rush can finally begin.