Wednesday, April 4, 2012

Renewable Energy Financing

by Ben Margolis

The Panel on Renewable Energy Financing provided a fantastic discussion on the current trends in the renewable energy development industry. Featuring Tony Clifford, CEO of Standard Solar, Matt Fedors, VP at Leaf Clean Energy, and James Mackey, Executive Director at NextEra, the conversation focused on the interplay between investor-owned-utilities (IOUs), developers and the Federal, State and Local governments. Each panelist came from a different perspective, James Mackey represented a large developer as part of an IOU, Tony Clifford, a commercial scale solar installer, and Matt Fedors a project and company investor.

The panel covered various topics, ranging from utility roles to international development. Panelists discussed the need for collaboration between utilities and developers, citing that the development of these renewable energy projects is dependent on the attitude of the utility. On the finance side, the panel touched on the concept of bankable power purchase agreements (PPAs), with proper suppliers, and the role of EPC companies coming into play for a lot of new technologies. As for the role of the government, the panel was divided between delivering a national renewable energy standard or simply eliminating market barriers. The panel ended on a high note with Tony Clifford predicting that solar will be cost competitive with one third of states’ retail energy by 2016. Ultimately though, the panel agreed, it all comes down to natural gas prices, the future of renewable energy financing will depend on the price volatility of the natural gas market.

Technology: New Tools to Enact Education Reform

by AJ Gorman

Voltaire once said, “The Holy Roman Empire was neither holy, nor Roman, nor an empire.” Although the Technology: New Tools to Enact Education Reform panel was neither focused on technology nor education, it was a great dialogue that successfully touched on a variety of high-level social impact issues.

The two of the three panelists worked for new organizations (Americans Elect & Ruckus) that want to enable political change by expanding ballot access and providing opportunities for building stronger political organizations. The third panelist comes from Students First, Michelle Rhee’s educational advocacy group (note: Michelle Rhee was my former boss when she was the Chancellor or DC Public Schools).

The panelists all shared an enthusiasm for socially impactful entrepreneurship. I expected more discussion specifically focused on ways to use technology to affect change in education but I was really impressed by the panelists’ perspectives on how the internet is revolutionizing individuals’ ability to organize. I also really enjoyed hearing about their experience with startups that are leveraging technology to produce social impact.

Energy Efficiency

by Michelle de Arruda


Cyntia Adams – Local Energy Alliance Program (LEAP)

Ben Bixby – My Energy

Matt Short – Johnson Controls

Dale Stanton-Hoyle – CleaResult

Moderator: Casey Lichtendahl

In this blog, my plan is to present a brief summary of the discussion that took place at the Energy Efficiency Panel through the main questions addressed at the panel.

In this panel we learned that the biggest challenges we face today for a scenario of more efficient use of energy are to create a regulatory environment that fosters such change and to grow public education in this matter.

What’s the role of government policy?

Government policy can impact in three ways: technology, building code and incentivizing.

Policies should help the consolidation of energy efficiency, but regulatory environment differs from state to state. So, in the US policies should aim to leverage successes starting at state level.

What government should be doing?

According to our panelists, the government should increase energy efficiency standards, “bark together” and portray an all-in commitment to the issue as a public policy need because it costs much less (around 1/3) to develop energy efficiency solutions than to build power plants.

Where’s the industry heading?

We already see some examples of smart grid application; nevertheless the available options today still don’t have a satisfactory high resolution. In addition, many companies are already engaging in cutting unnecessary energy use mainly for cost cutting purposes.

However, our panelists believe that for a greater leap, we need to have software components or intelligent software to help people adapt and be more efficient without having to think about it and greater ubiquity of highly resolution data.

What’s the role of human behavior?

Budgets are being squeezed and if each person saves only a bit (2% to 3%) on his/her energy consumption, we can have a tremendous impact. Additionally, US households pay very little for their energy use; in other words, energy bills still represent a very little part of their monthly budget. Finally, one of the panelists also pointed out the issue of the American households attitude towards consumption – “I have the right to keep things on.”

In order to change consumer behavior, advocates of energy efficiency should focus on efficiency rather than focus on sacrifice, emphasizing the positive aspects. The question must be reframed to “how we do it?”

Finally, according to our panelists, MBAs have to challenge convention wisdom and drive change in the energy industry.

Financial Citizenship

by Isaac Salem

We spend a lot of time at Darden discussing the optimal financing mix for a business to utilize. This consideration of tax shields and risk tolerance takes for granted though the complex and interconnected mechanisms developed economies have established in order to allocate capital. In developing economies, the ways savings are channeled to productive uses is still evolving and there are big differences between economies. These efforts to improve access to financing in emerging markets were a frequent focus of International Development panel at the Sustainability and Innovation conference.

Shital Shah of ShoreBank International and Rosita Najmi of the World Bank discussed why it is so important for individuals and businesses to have access to credit as well as some of the new methods being used to help improve financial access for underserved populations. Though several for profit development institutions have come under criticism recently for the high interest rates these institutions, microfinance lenders in particular, charge their customers, Najmi made a convincing argument for why financial inclusion is so important. For consumers around the world, savings is very important for planning. However, in economies with underdeveloped financial markets, too often this savings is forced to take the form of cash, which is insecure and inefficient. By providing savings alternatives for middle and low income workers, a virtuous cycle can begin whereby the purchasing power of consumers is increased and business can tap local savings to fund investment, bringing the cost of capital down. Further, such savings vehicles encourage more transactions to occur in the formal economy, which provides protection, dependability and lowers the cost of operating businesses.

Toward this end, Shah described one project ShoreBank has been involved with promoting mobile banking in Bangladesh. By partnering with the world’s largest NGO, BRAC, ShoreBank has provided mobile banking services to millions of people in Bangladesh. They leveraged BRAC’s large customer base in order to speed adoption. Now customers are able to receive and repay their BRAC microfinance loans through their phones as well as conduct an increasing variety of other transactions. Such low cost alternatives to traditional banks are gaining traction in much of the developing world as a way to integrate previously underserved populations into the financial system.

The role of technology in this process helps highlight the panel’s parting message. The challenges and opportunities in international development remain great. However, what is needed now are not international development experts. What are needed are experts in a particular field, such as telecommunications or remote banking. Students interested in pursuing careers in development were encouraged to develop a concrete skill set, rather than studying development itself. Increasingly, development financial institutions are relying on locals for strategic, political, and cultural expertise. Outside human capital can still be tremendously powerful, but it needs to be specialized.

Tuesday, February 21, 2012

Innovation and Transformation in Government

by Laura Durity

As a licensed lawyer, self-proclaimed political junkie and a first year Darden student who is interested in the intersection between government, business and law, I was particularly pleased to see a panel of senior government officials addressing the “business” of government, a topic too infrequently addressed at Darden. The panel offered a different perspective on how the management skills Darden teaches can be applied (and where they are desperately needed).

Although I agree with panelist Robert Motyka, a Darden alum and Senior Manager at the Federal Reserve Board, that the United States government is not a business, as the panelists made clear modernizing how our government’s operations with ideas and innovations from the private sector is essential. Darden alum and panelist Pat Nicklin, Executive VP & COO of Partnership for Public Service emphasized the need to improve federal government operations and , perhaps more importantly, inspire agencies to hire mission critical talent who can improve agencies’ ability to do more with shrinking dollars. Panelist Eric Schweikert, Director of Compliance Analytics at the Internal Revenue Service, agreed that the biggest hurdle facing government agencies is a lack of resources, both money and staff. As a result, he said, the IRS can “do something of everything but not all of anything.” The panelists also emphasized other challenges of government leadership: how to function when strategic goals are lacking or amorphous and how to motivate employees to improve performance when poor performance rarely leads to job loss.

However, I found the panelists concluding remarks to be the most salient. Eric summarized that whether Americans desire a small or large government, all Americans should want a government that operates efficiently and with greater professionalism. I agree. Why not demand higher standards of performance from our government instead of concluding it cannot improve? Why can’t this politically-neutral goal be a unifying point for Americans? Moderator Roberta Mourao of Accenture’s Federal Government Practice and the panelists illustrated several recent innovations in government leadership but in general, these seem few and far between. Ultimately, I agreed with Robert’s conclusion: Darden should offer more coursework concerning what it means to be a government manager in contrast to a for profit manager. Maybe then more accomplished MBAs will be interested in fostering innovation in both the private and government sectors.