Today is a big day at LevelTen Energy. We closed a $35 million Series C funding round led by NGP ETP, with participation from Google, My Climate Journey (MCJ) Collective and the majority of investors from our previous rounds, including Constellation Technology Ventures, TotalEnergies Ventures, Equinor Ventures, Avista Development, Prelude Ventures, Techstars, Founders' Co-op, and Wireframe Ventures.
Raising money is an intense, high-stakes endeavor. It’s perilous not because capital is so hard to come by (though sometimes it is), but because a successful company-investor relationship is about so much more than dollars. Companies seek (or should seek) investors that can provide capital, yes, but also investors whose experience and relationships can significantly improve the odds of fulfilling the organization’s vision. Better still are investors whose temperament can abide the inevitable bumps in the road, and whose integrity can serve as a lighthouse when complicated issues arise. Above all, finding investors that wholeheartedly believe in your vision for the future, now that’s an entrepreneur's dream.
This investment syndicate, comprising global technology, energy, and venture capital leaders, is the complete package. On behalf of the entire LevelTen staff, I’d like to express our sincere gratitude to each and every fund for supporting LevelTen’s increasingly urgent mission: to accelerate the energy transition by facilitating frictionless transactions. For decades, the obstacles to widespread renewable deployment were both financial and technical; the underlying technologies simply weren’t mature enough to match fossil fuels, economically (ignoring, for the moment, the generous historical and ongoing fossil subsidies, direct and indirect). Today, though, renewables are cheaper than coal, and often cost-competitive with natural gas. The lingering barrier to our sector’s growth is no longer technological, but rather, transactional.
Generally speaking, buying and selling renewable energy, and buying and selling the underlying renewable projects, themselves, is tremendously inefficient. Nearly every deal is bespoke. Nearly every deal is negotiated bilaterally. This approach is simply not scalable. What the industry needs is the transaction efficiency that the fossil industry has built over a century: the centralization, standardization, transparency, and automation that’s essential to a more liquid market.
This is a trillion dollar problem. To reach net-zero emissions by 2050, BloombergNEF estimates that 1,400 gigawatts of renewables will need to be deployed every year for the next three decades, and investment in energy supply and infrastructure needs to double, to over $3 trillion per year.
To Scale, Renewable Energy Must Cross the Chasm
Geoffrey Moore describes the challenge renewable energy faces today in his seminal work, Crossing the Chasm. Moore explains that while good ideas abound, the most significant hurdle to mass adoption that a new technology faces is crossing the chasm from an audience of “Innovators'' and “Early Adopters” —who are willing to try new things, take risks, and forge new processes— to the “Early Majority”— who want to use a good product because it makes their lives easier, but shy away from risk and uncharted waters. Moore’s “chasm” is the opaque canyon the renewable industry currently peers across.
On one side of the chasm sits the renewable energy buyers of today —the innovators and early adopters— and on the other side sits the clean power buyers of tomorrow — the thousands of organizations that need easier, more efficient, and more transparent processes in order to participate in the market.
The good news is that there are thousands of renewable energy buyers out there —corporations, municipalities, retail electricity providers, CCAs, and more— willing to enter into long-term renewable power purchase agreements. The bad news is that many can’t, today. Perhaps they don’t meet the credit requirements, can’t properly assess the risk, or simply aren’t large enough to buy all the power from a utility-scale project. We have to make it dramatically easier for them.
Two other major parties to a renewable transaction, the project developer and the project financier, are similarly hamstrung. Hundreds of project developers around the globe are eager to serve the growing demand for renewables, but they're often bogged down by manual processes and lack access to market and customer data. And, while major financiers clamor to invest in new renewable projects, the market is currently too opaque to put all this capital to work, effectively.
Burdened with legacy processes, the industry simply can neither move at the speed, nor function at the scale required to match the blistering pace of clean energy growth this historic moment demands. To achieve the energy transition, renewable energy must rapidly reach the “Early Majority,” the “Late Majority,” and become so ubiquitous even the “Laggards” must embrace it.
The Bridge Will Be Built on Renewable Transaction Infrastructure
LevelTen is building the renewable transaction infrastructure required for our industry to cross this trillion dollar chasm. We’re working tirelessly to deliver the cloud-based software, the automated analytics, and the deal standardization required to bring clean energy buyers, sellers and financiers together more quickly.
First, we launched the LevelTen Energy Marketplace in 2018, dramatically accelerating the power purchase agreement process and unlocking billions in corporate renewable energy procurement. It is now the world’s largest online hub for utility-scale renewable energy procurement, connecting over 500 global project developers to the universe of large power buyers. Nearly 30 leading energy advisors and retail electricity providers use the LevelTen Platform to procure renewable energy on behalf of their clients, which include the Fortune 1000, municipalities, hospital networks, educational institutions and beyond. To-date, the LevelTen Energy Marketplace has facilitated more than $5 billion in renewable energy transactions. That’s the equivalent of taking 2.5 million cars off the road each year.
This year, we leveraged the Energy Marketplace to launch the LevelTen Asset Marketplace, an online marketplace for buying, selling, and investing in renewable energy projects themselves. In its first year of operation, the software has already dramatically streamlined the asset M&A process. We’ve expanded our Performance Monitoring software, too, which helps companies track and monitor how their contracts perform after a project reaches operation, bringing yet additional transparency to another formerly opaque market.
But we can’t stop here. It’s imperative that we reach the point when renewable transactions become as customary and as efficient as fossil fuel transactions. What’s really exciting is that, in market after market, when the majority of buyers and sellers coalesce around a technology platform, all kinds of efficiencies emerge. We’ve reached that tipping point now, and that will bear fruit.
LevelTen’s Series C round of funding will allow us to develop new solutions on our path to the energy transition. We’ll create environmental and social justice scoring systems, enhance our services for project developers, and create more advanced power purchase agreement products to meet the needs of more classes of buyers. We’ll grow our team, grow our network, and grow our capabilities.
I’ve never been more hopeful about the growth of the company and our ability to accelerate the energy transition, and I’ve never been more sure that the energy transition is a fait accompli. There’s no going back.
Together, we can accomplish our one goal: a world powered by clean energy. If you’re interested in joining us, as a partner, seller, buyer, or employee, please contact us.