It started with a crowdfunding startup, an investment from Prince, and the idea to help new solar companies tackle business challenges that can be hard to overcome on their own.
Now, four years later, the idea has morphed into a group called Powerhouse, and notably, in a world flush with tech startups, it’s one of the only incubators out there focused on launching and growing solar companies.
Powerhouse runs an accelerator and an incubator program. An accelerator typically provides a small amount of funding, free or low-cost office space, and networking opportunities with investors and customers for young companies that are still developing their first technology and business plans. Since its launch in 2013, Powerhouse has invested hundreds of thousands of dollars collectively into 15 startups, and this summer plans to welcome another few solar entrepreneurs into the program.
The group’s incubator division rents office space to more established solar and energy startups across 15,000 sq ft and three floors in downtown Oakland, California. Sometimes the accelerator entrepreneurs graduate into rent-paying companies in the co-working space. Powerhouse now hosts about 15 companies and about 100 people across both groups.
Its goal is simple. The organization wants to play a unique role in fostering a new wave of tech innovation in the solar market. Many of the Powerhouse companies are using software, data and the web to make selling or designing solar systems cheaper and easier. They rely on the advice and networking opportunities through Powerhouse to raise money, find customers or exit – through an initial public offering or acquisition.
“Powerhouse gave us so much validation and credibility at the beginning, when we didn’t have much to show. It was just enough to get people to believe in us,” says Elena Lucas, the co-founder and CEO of UtilityAPI, an energy data startup.
An earlier wave of solar startups was dominated by companies experimenting with different materials and designs for solar cells and panels. Many of those materials-focused solar startups failed in getting the desired technical performance despite large investments from the Bay Area’s venture capitalists.
As the price of solar panels dropped dramatically in recent years, the new generation of entrepreneurs and startups are chipping away at other stubborn problems, such as shortening the time it takes to get permits or honing the sales pitch to homeowners. It’s like when fast internet connections finally got cheap and ubiquitous enough to attract the entrepreneurial-minded to build new websites and services on top of it.
Tough challenges remain for solar startups. Big utilities and power companies, who are potential investors or customers, don’t generally have experience working with young, renewable energy companies. Meanwhile, US government funding for energy innovation is minimal, particularly with potential federal budget cuts looming and a lack of clean energy support in the White House.
But as solar energy becomes cheaper, it’s attracting public and private investments worldwide, evidenced by the $116bn that flowed into solar projects, companies and technologies in 2016, according to Bloomberg New EnergyFinance.
“The ultimate mission of Powerhouse is to make solar energy the most accessible form of energy in the world,” says Emily Kirsch, co-founder of Powerhouse.
Sitting on a bean bag in a nook of the seventh floor of Powerhouse’s headquarters, Kirsch says that despite the rise and success of Silicon Valley-style tech accelerators such as Y Combinator and Techstars, no one else has tried to do the same targeting only the solar industry: “We’re it so far.” The group’s model is showing some success, at least on a small scale, though it’s still early days.
Powerhouse takes a small equity stake in its accelerator companies and makes money if they get acquired or go public. Currently Powerhouse gets the bulk of its investment money from a combination of grants, corporate sponsors, like SolarCity and SunPower, and office space rental fees. It’s considering raising money from angel investors so that it could make larger investments and in more companies.
None of the companies in its portfolio has gone public or been bought yet, but some of them have attracted funding since going through the accelerator program and increased the value of the companies in the process. Kirsch says the top startups in the accelerator program have seen their values increase by as many as 40 times.
Four of the startups in its incubator program have been acquired so far, says Kirsch, though the company doesn’t take a stake in those. But their exits help to build Powerhouse’s reputation among entrepreneurs and investors.
View all SMART GRID Bulletins click here
Enter your email-id to subscribe to theSMARTGRID Bulletins