From time to time, I'm asked to speak to students and other would-be-entrepreneurs. Inevitably, someone asks, "What are the most important lessons you've learned in building businesses from scratch?" Many things come to mind, but if I had only one salient and enduring learning to convey, it would be the following:
If people aren't telling you that your idea is crazy, you're not being ambitious enough!
The world doesn't need a marginally better product-the climate certainly doesn't-and customers won't respond to an incremental improvement. The only way to incentivize people to shift from the old way to your way is to build a dramatically better mousetrap. Relish the resulting (and, hopefully, temporary) discomfort of being called crazy and wait until the market catches up to you.
In this spirit, we named our company LevelTen. To accelerate the clean energy transition, we needed to improve the renewable procurement process by 10x. That ambition brought the naysayers out of the woodwork. Indeed, we heard it all:
Corporate PPAs can't be standardized; they're too bespoke.
Software isn't needed; analytics by hand is both sufficient and necessary.
The data is too complicated to organize.
The deal cycle will always be 12+ months.
PPA procurement is an inherently difficult, painful process.
We're happy to confirm that none of these statements are actually true. Looking at 2019 in the rearview mirror, I'm relieved that we're not the crazy ones and that we've validated some important concepts.
You can, in fact, build a renewable energy marketplace that gives buyers dramatically better results
The launch of the LevelTen Marketplace was a critical breakthrough in bringing utility-scale clean energy procurement into the modern era...the first step in making the process 10x better. Thanks to standard formatting and robust submission requirements, buyers can compare renewable projects under development across multiple geographies and technologies. The addition of extensive third-party data layers (like weather data and forward curves) and automated, best-in-class risk and value analytics elevated transparency for buyers, allowing them to truly understand the economic and environmental implications of their procurement.
Today, the Marketplace features data from nearly every renewable energy project developer in North America, and a growing number in Europe. Though naysayers were initially skeptical that this marketplace approach was feasible-indeed, managing this process requires 26 million calculations per day, a task that necessitated the deployment of sophisticated, custom-built software-now buyers wouldn't have it any other way.
You can monitor PPA performance data in more meaningful ways
Similarly, industry experts told us that monitoring holistic PPA performance data (economic, energy, and carbon) in real-time was impossibly complicated. Nonetheless, unearthing no insurmountable technical obstacles, we successfully launched Performance Monitoring in 2019, offering buyers immediate access to vital performance data, on both individual PPA and portfolio levels. Key metrics we track include cash flow, energy generation, REC generation and retirement, avoided emissions, and more, all available on both historical and mark-to-market forward bases.
Suddenly buyers had complete performance transparency, allowing them to take informed action and to communicate renewable energy progress to internal and external stakeholders, effortlessly. Thus, Performance Monitoring perfectly complemented the PPA procurement transparency offered by LevelTen's PPA Marketplace.
There is a huge market for PPAs beyond tech giants
Corporate titans like Microsoft, Google, Amazon, Walmart, Facebook and Apple have forged a trail for the industry and continue to innovate to the benefit of us all. With massive energy needs (and similarly outsized balance sheets), as well as trailblazing executives and stakeholders, these companies wield both immense purchasing power and teams of experienced energy procurement specialists. More risk-averse or less resourceful companies looked on with a blend of envy, skepticism, and trepidation. They struggled to find projects willing to enter into smaller PPAs, and without key standards and buyer protections, the barrier to entry was too high.
Fortunately, that's no longer the case, as advancements by LevelTen have successfully expanded the market. In 2019, LevelTen announced two groundbreaking PPA transactions that illustrate this. The first, a PPA transaction involving Bloomberg, Salesforce, Cox Enterprises, Gap Inc., and Workday, established the viability of software-enabled buyer aggregation. The second, an innovative portfolio of PPA slices for Starbucks, demonstrated the feasibility of more sophisticated, less risky procurement models. Both deals, and many more subsequent transactions, were catalyzed by our Dynamic Matching Engine, a tool embedded in the LevelTen Marketplace. The Engine's algorithms process massive data sets to find optimal buyer-seller matches, a task impossible without technological assistance.
Similarly, LevelTen's RFP Automation tool, also embedded in the PPA Marketplace and launched in 2019, has made the renewable energy procurement process dramatically simpler, shorter, and more successful for all buyers, large and small. The modern, software-enabled process incorporates rigorous data standards and automated analytics, relegating imprecise and lengthy Excel-based RFPs to the dustbin of history.
Corporate PPAs are viable in Europe
Wholesale energy markets are, of course, complex. Regional anomalies and market-specific rules can confound even the most diligent buyer. In Europe, these challenges are amplified. For this reason, many doubted that LevelTen could facilitate a smoother Europe PPA transaction. Undaunted, as always, and at the behest of a growing contingent of buyers with global procurement goals, LevelTen expanded our Marketplace to Europe in the fall of 2019. Bringing unprecedented transparency and efficiency to this market, LevelTen looks forward to accelerating corporate renewable procurement in these important and rapidly-developing markets.
We're not crazy, anymore
Ok, so not everyone thought we were delusional. In fact, last year a group of investors supported our vision with a $20.5 million investment, which we deployed to expand our suite of products and services that reduce the barriers to widespread renewable energy procurement. We were also pleased to be recognized by Seattle Business Magazine with their Tech Impact Award for companies making a difference. Most gratifying, though, customers procured billions of dollars in electricity through the LevelTen Marketplace, cementing our transition from startup to the preferred industry procurement platform.
Rest assured we've got more creative ideas about how to make renewable procurement better and easier. We look forward to revealing solutions to a few other "impossible" problems in 2020!