Episode 188: Alex Laskey, Rewiring America
Today's guest is Alex Laskey, Co-Founder and Executive Chair of Rewiring America.
Rewiring America's mission is two-fold: 1) demonstrating that rapid electrification of all aspects of the American economy is the key to combating climate change, and 2) designing and promoting practical policies to accomplish it.
Before Rewiring America, Alex was the President and Founder of Opower, the global leader in cloud-based software for the utility industry. Under his leadership, Opower grew from a two-person startup to a publicly-traded company whose software is used by more than half of the largest electric and gas utilities in the world. Today, Opower is a division of Oracle and delivers more than 6 TWh of energy savings per year to help homeowners save more than $1B per year on their energy bills. Alex is a Board member of Arcadia and a longtime Director of the Conservation Lands Foundation. In addition, he was a founding Commissioner on the Energy Transitions Commission and a board member of Advanced Energy Economy.
I was excited to sit down with Alex and learn more about his climate journey. We discuss Rewiring America, the goals of the non-profit, and why energy grids and renewable power are vital to the clean energy future. Alex also walks me through his time at Opower, the unique idea that utilities can be customers, and Alex's career as a climate entrepreneur. Alex is an excellent guest.
Enjoy the show!
You can find me on twitter @jjacobs22 or @mcjpod and email at info@myclimatejourney.co, where I encourage you to share your feedback on episodes and suggestions for future topics or guests.
Episode recorded December 10th, 2021
In Today's episode we cover:
Overview of Rewiring America and why the organization was founded
Alex's climate journey, his passion for energy, and how he first began working in climate
Opower, what motivated Alex to found the company, and how he found himself as an entrepreneur
How Alex decided to make utility customers and flip the script on the existing energy system
Why Alex cared about energy savings and balancing impact and returns
Opower's theory of change and how it related to personal behavior change
The challenges holding Rewiring America's mission back and the problem the non-profit is working to solve
Key levers for change that would accelerate energy distribution and efficiency in America
Where the technology is at currently and where it needs to be for a successful clean energy transition
How to translate Rewiring America's model to other countries and, potentially, globally
Links to topics discussed in this episode:
Rewiring America: https://www.rewiringamerica.org/
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Jason Jacobs: Hey everyone, Jason here. I am the My Climate Journey Show host. Before we get going, I wanted to take a minute and tell you about the My Climate Journey or MCJ as we call it membership option. Membership came to be because there were a bunch of people that were listening to the show that weren't just looking for education but they were longing for a peer group as well. So we set up a Slack community for those people, that's now mushroomed into more than 1300 members.
There is an application to become a member. It's not an exclusive thing. There's four criteria we screen for: determination to tackle the problem of climate change, ambition to work on the most impactful solution areas, optimism that we can make a dent and we're not wasting our time for trying, and a collaborative spirit. Beyond that, the more diversity, the better.
There's a bunch of great things that have come out of that community, a number of founding teams that have met in there, a number of nonprofits that have been established, a bunch of hiring that's been done, a bunch of companies that have raised capital in there, a bunch of funds that have gotten limited partners or investors for their funds in there, as well as a bunch of events and programming by members and for members, and some open source projects that are getting actively worked on that hatched in there as well. At any rate, if you wanna learn more, you can go to myclimatejourney.co, the website and click the become a member tab at the top. Enjoy the show.
Hello everyone. This is Jason Jacobs, and welcome to My Climate Journey. This show follows my journey to interview a wide range of guests to better understand and make sense of the formidable problem of climate change and try to figure out how people like you and I can help. Today's guest is Alex Laskey, co-founder and executive chair of Rewiring America. Rewiring America is a growing nonprofit working to launch a movement that electrifies everything starting with our 121 million households.
Prior to Rewiring America, Alex was president and co-founder of Opower, the global leader in cloud based software for the utility industry. During his tenure, Opower grew from a two person startup to a publicly traded company whose software is used by more than half of the largest electricity and gas utilities around the world. I was excited for this one because Alex has such an interesting perspective.
He grew up in the political realm and then spent a bunch of time as co-founder of one of the largest software companies selling to utilities and now in his next chapter, co-founded a nonprofit that is extremely impactful in electrifying everything but doing so from a totally different direction. We cover a lot in this episode, including Alex's journey, what led him down the climate path to begin with, what led him down the entrepreneurship path especially given his roots in other areas, and now what led him to found Rewiring America, the charter of the organization, some of the tactics that they're using to get stuff done, and of course, where they need help. Alex, welcome to the show.
Alex Laskey: Thanks Jason, it's good to be with you.
Jason Jacobs: It's good to be with you as well. And it's funny, I mean, I feel like over the last few years that I've been focused on climate, we've gotten to be friends and frequent collaborators. Although I know about some history with us from overnight camp when we were little kids that you apparently had no recollection of but I remember vividly.
Alex Laskey: Well, it's... You know, I didn't wanna embarrass you before we actually became friends again with all the vivid memories I do have of you as an 11 year old so... And I wouldn't- I wouldn't wanna reveal those to your guests on this show. But it is- it has been nice getting to know you again. You know, it's interesting I feel a little bit as I did... My wife and I dated for eight years before we got engaged or seven and a half years. And I like had this feeling that I wanted to be an adult before I got married, I wanted to have some confidence that I knew what I was doing with my life.
And so it took me that long to have that confidence. And similarly, when you and I re connected and you had done maybe two or three of these shows, you said, "You should come on the podcast." And I said, "Well, I don't really know what I'm doing right now. I- I feel like I need to get a little bit settled before I come on the podcast." And here we are a hundred and, or almost 200 episodes later and I'm- I'm finally ready to walk down the aisle with you as it were.
Jason Jacobs: Well, maybe that's a good segue. What are you doing, Alex? What are you up to these days?
Alex Laskey: I am primarily working... Well, I have three little kids with said wife. I'm optimistic that you and I, our relationship won't produce children, but... and we have a little puppy who arrived on Sunday. But from a climate perspective, my focus is on primarily on Rewiring America, which is an organization I founded with Saul Griffith to whom I introduced you ages ago and was one of your early guests focused on the electrification of the economy. I also do a couple of other climate related things. I sit on the Arcadia board, you had Kiran on early in your journey, the CEO there, and this exciting company focused on bringing sort of democratizing access to clean energy. And I do a couple of other things and I'm a very proud and happy investor in the MCJ fund.
Jason Jacobs: And we're glad to have you as well. And we're of course, an investor in Arcadia as well so it all comes full circle. Maybe take it from the top in terms of Rewiring America. So what is the organization and how and why did it come about?
Alex Laskey: From my perspective, I spent 10 years at Opower which were like almost exclusively fantastically fun and exciting, but I also spent 160, 170 nights a year away from home for those 10 consecutive years. They were the first 10 years of my marriage. And at the end of those 10 years, we had two young daughters and I decided to take a break and focus on being a human being and a dad and a husband and stop checking email for a year. And I came back from that experience rejuvenated and rested and with good sense of like what I wanted, at least at the time.
And I really wanted to focus on climate and on economic inequality and dove into a bunch of projects, including joining the Arcadia board. And I came close to taking a job in New York State and working on the decarbonization of the economy of New York. And in that process, worked on trying to get past a comprehensive and ambitious climate legislation which passed in 2019, I guess. And I started thinking through how would one and implement either as a policymaker, as an entrepreneur, or if you were king or emperor, what would you do to decarbonize the state of New York and what would be hardest?
And I came... You know, pretty quickly I like went through, I had 10 years of working with utilities and I know that working with utilities isn't always easy and without its friction, but utilities are motivated and effective at doing what the public interest demands, and that's been the case for over a hundred years at this point. And the public is demanding a move to decarbonize electricity. And so utilities are moving in that direction fairly aggressively, perhaps not as quickly as any of us would like, but still with reasonable speed. On vehicles, it's very clear to me or was clear to me four years ago, remains even clearer now that electric vehicles are just better than internal combustion engine vehicles.
Jason Jacobs: I have one now and it's very clear to me that that's true. In fact, because of range anxiety, when we go to see my in-laws over the holidays, we may end up taking our second car, which is still a fossil car, it'll be the last fossil car that we have. I don't wanna take it. I don't wanna take it because it's bad for the environment, but more importantly, or not more importantly, but like I also don't wanna take it because it's just not nearly as fun to drive.
Alex Laskey: Yeah. I- I don't yet own an EV, but you're not alone. Everybody who has one is basically saying the same thing, "I'm gonna- I'm not gonna go..." The fossil fuel vehicle I still own is the last one I'm ever gonna own. And it's a better product. And by 2024, 2025 according to Bloomberg New Energy Finance, they're gonna be cheaper off the showroom floor. And so, you know, one idea I had about this range anxiety thing that people have, including me, and maybe if any of your listeners work for Rivian or Tesla or, uh, you know, GM, Ford, I think that the EV companies been well served by saying, "You buy a new Rivian, we will give you one week a year, a rental car on us, an internal combustion engine rental car on us. You know, we'll deliver it to your door." Jason, you can take it to visit your in-laws or take it to your summer vacation.
Because the reality is people think, well, what am I gonna do that one week when we go up... when, you know, in your case, living in outside of Boston, you drive up to Maine or when visit the in-laws. So if you knew you were gonna have access to a rental car like, you know, maybe that would help you get over your range anxiety. And I think probably most people would never use it 'cause they'd be like, "Oh, well actually this is fine and I'll just stop to get charge." So anyway, the bottom line is that people are gonna switch to EVs 'cause they're better vehicles, they're cheaper to own and maintain and before long they're gonna be cheaper to buy.
Jason Jacobs: And the range, the range is like the battery life on the first iPhone. Everyone's like, "The battery life is terrible." Like it's not gonna power any powerful apps and it's like... Or you can just wait a few generations and the battery life problem will be solved or certainly one heck of a lot better than it was once upon a time.
Alex Laskey: Yeah. And you know, most of the time you imagine and that you're gonna drive all th... you know, do these long trips, but like most of the time you're just driving your kid back and forth to hockey practice, like you're not... you know, which you can do with 90 mile range and certainly with, you know, 250 mile range. So anyway vehicles. And then so the... When I was thinking about New York, the thing that struck me that was gonna be hardest to do, and I had no clear idea about how it would be achieved is decarbonizing our homes.
Even commercial and industrial buildings felt easier because they're sort of rational decision makers theoretically. But having spent 10 years working at Opower trying to influence the demand side and recognizing that we are not rational decision makers when it comes to how we use energy or to very much else in our lives, there are 120 million homes in the US and they typically replace their heating system or their hot water system only under duress.
You know, it's December, the house isn't getting warm, you go downstairs and pretend that you're a mechanical engineer and try and fix your furnace and before long you're calling the phone number on the furnace and a guy comes out and you know, the sticker that's there, guy comes out and tells you he can't fix it but he is got one on the truck or he can bring one tomorrow and replace it. And then all of a sudden, you're stuck for 20 years with a efficient, but still fossil burning device. And I couldn't quite figure out how New York or any other state was going to decarbonize that without really transforming the market.
So I noodled on that for a while, I read a bunch of stuff and then I ended up calling Saul Griffith with whom I had become friendly speaking at climate conferences and energy conferences over the years. And so I called him thinking maybe Saul's invented some technology that the world doesn't yet know about that's gonna make decarbonizing heating that much easier. And we caught up and he does in fact have two very cool companies, one of which is out in the public now called Gradient that's doing in-window heating and cooling Kigali compliant and the other one is more heat pump and storage earlier stage company.
We probably spent 90 minutes on the phone together and we spent 82 of those minutes talking about, you know, policy and politics and how we thought that the Democratic candidates and certainly Trump, but that the Democratic candidates at the time were- were missing the opportunity to tell an optimistic and aspirational story about addressing climate change. One that started with a story like the one you just told us, which is that, gosh, these EVs, we're not gonna force you to ride a bicycle or to drive a Prius.
Like you could have an electric F-150 that's better than the F150 you have today and it'll be cheaper to own and maintain. And you know, the same story can be told across the economy, that electrifying the economy will require far less energy, will make bills for people in their homes much more predictable and lower. And if we do it right, we can set America up for another generation of economic prosperity.
Because not only, you know, not only do these machines need to be manufactured and installed and then exported and financed to the rest of the world, we announced last week or a few weeks ago, I guess an electrification caucusing Congress where... Well, we can get into that later. But the thing that struck me about this announcement, Sean Casten who's a Congressman from Illinois-
Jason Jacobs: Came on the show.
Alex Laskey: Yeah, he's a former solar entrepreneur. He described it I thought very eloquently and very powerfully, that- that's clean energy transformation and electrification transformation is going to represent the biggest wealth transfer in human history, from energy producers to energy consumers. In America's case, you know, from our analysis, if we do this correctly, we're gonna save people 2,500 to $3,000 a year on their energy bills. And you know, that- that's in a country in which pre pandemic 40% of Americans had less than a thousand dollars in savings, you know, post pandemic gets worse. Pre pandemic, less than a thousand dollars in savings for significant minority, you know, 40% of American households saving $2,500 a year on energy bills is a tremendous opportunity for wealth creation and for peace of mind for Americans across- across the country.
Jason Jacobs: I have a bunch of questions about that. Maybe talk a bit about what Rewiring America does. And before we get too far down the path into tactics, then we can go on the way back machine and talk about some of the history leading up to that.
Alex Laskey: Sure. So we're a nonprofit. We are focused on making the case for the electrification of the economy, we're ultimately in the business of transforming these markets. By our calculation, there are a billion electric machines that need to be installed in people's homes. And you know, 90% of emissions come from energy of that, 42% are tied to the home, the car you drive, what heats your home, what electricity you use. And our goal is that when your fossil burning machine clunks out, whether it's the vehicle in your driveway or the furnace in your basement, that the cheapest and easiest thing to replace those machines with are electric.
And so how do we get there? Well, we're getting there through federal advocacy. So we proposed a notion that there should be rebates for household electrification because the upfront cost of buying the- the heat pump and the heat pump hot water heater and the induction stove is higher than the upfront cost of buying a new efficient fossil machine. And Senator Heinrich New Mexico took that idea and ran with it and proposed legislation called ZEHA, Zero Emissions Home Act which has now been folded into the Build Back Better plan.
So there's roughly $7 billion that pass the house in rebates available. If the Senate passes it, there'll be $7 billion in rebates available for people to install heat pumps, heat pump hot water heaters, induction stoves, electric dryers and breaker boxes which are necessary to be upgraded. There's also money in that bill for low cost financing for these devices and also tax credits. So we're trying to reduce the upfront cost and increase the affordability of these electric machines.
And then the next piece of our focus will be on moving local regulation and local permitting and rules to make it easier and cheaper for these things to be installed. And ultimately these are not consumer devices. You're not waiting around at this time of year reading the Christmas catalog from train to figure out what kind of heat pump you want to get. These are installed by contractors and we wanna move the contractor market also.
So we have a big and ambitious agenda. We're producing a lot of great papers, go to rewiringamerica.org. There's great data, there's great analysis and importantly, there's a bunch of job openings. So, you know, we started as sort of a bootstrap thing that I funded with a couple of, you know, outta my pockets and with a couple of small foundations in 2020. We got enough traction, enough attention from the incoming administration that we decided to hire Ari Matusiak to be our CEO who's been outta this world fantastic. And he's built a bit of a team and is- the team is growing. And we've raised more money and we have a lot of ambition. There's 120 million homes, there's a billion machines and we're eager to be a big force to rapidly electrify those machines and those homes.
Jason Jacobs: Well, I have so many questions about that. But before we get too far down that path, I mean, taking a step back and I know you- you want to talk about Opower which of course we should. But I mean even before that, I mean, where did this climate and energy passion come from? When did it start? How did it start? Why did it start for you?
Alex Laskey: Yeah, well I think probably some of it started where you and I met, which was go... you know, I grew up on Long Island in a really terrific home with great parents who were both public servants. My dad was a prosecutor, a very liberal, progressive prosecutor in Brooklyn for most of my childhood and then did organized crime prosecution elsewhere in New York State as I got older. My mom taught middle school English for 39 years. And I grew up in a home where making a difference in the world was what was prioritized in terms of career.
And it wasn't like force fed to me, but I saw it into role models and that's the sort of the values we have as a family. So it was never a question for me that I was gonna try and do something that made a positive impact in the world, whether the world was the globe or my community. And I was fortunate to go to sleep boy camp with Jason Jacobs and with other people. And for me, it was a... we went to camp in Maine. And my favorite part of camp was going on camping trips, hiking, and canoeing. And I had, you know, I'd never had access to that as a kid.
I mean, we were kids, but I didn't have access to that in my home life. And I found being in the woods to be, you know, revelatory. And we took two big vacations as kids. We had grandparents and aunts and uncles in Florida and we would go down there routinely, but we took two other big vacations and both of them were out west to the national parks. And all that experience led to a love of nature and a love of the outdoors and a love of the planet. And in college, I took a semester off from college and went and worked on a... I had this sort of romantic idea of what the west was like and went and worked on a cattle and sheep ranch in Wyoming.
And pre-Opower, that was the best job I ever had. And part of it was just being in this gorgeous place and getting to work outdoors every day and getting to do stuff I wasn't good at, which all were really great. The other part of it that made it fantastic is that I worked... you know, it really challenged my notion and expanded my thinking about what it means to be an environmentalist. Because here I was working for a family of ranchers, multi-generation who, you know, some of the traditional environmental movement demonized then and demonized still, not this particular family, but ranchers generally.
And what I experienced was a- a family of people who cared deeply about the ecosystem in which they operated and not only cared about it, but their livelihood and the legacy was dependent on it. And the restoration work they were doing for trout streams and for grasses and trees were all like super inspiring. So I think that's complicated and made my understanding of like what it means to protect the world, it made it more sophisticated. And so that has been a very helpful lens through which to see things because, you know, I spent 10 years working with utilities who other...
You know, again, in some cases the traditional environmental movement and environmentalists have demonized utilities, but I saw and see very clearly and I think the rest of the country is beginning to see that when regulated appropriately and when the right people are in leadership positions, utilities are, they are essential parts of the fight to decarbonize. We cannot decarbonize our economy unless the utilities are on board in helping play a leading role. So I don't know, that's like a rambling. But I think those are my... that's where these interests came from, very much from like childhood and our shared experiences together in the woods of Maine, but then deepened over time.
Jason Jacobs: And prior to Opower, you didn't start out down the entrepreneurial path. So tell me a little bit about the Opower forming story, but also what led you to seek out innovation as a lever for change, if that's the way that it came about? Like how did you find yourself as an entrepreneur?
Alex Laskey: Yeah, yeah, yeah. So the other thing I did when I was in Wyoming was I worked for the one daily newspaper in Wyoming, the Casper Star-Tribune. I worked as a reporter there because I thought... You know, when I went to college, I thought I either wanted to work in politics or work in journalism. The idea of being a business person was sort of alien to me at best and in some ways, like I had kind of an antagon- not antagonistic, but I wasn't interested in- in business and I wasn't interested in making money, I- and I felt maybe in sort of- sort of a overly simplistic and juvenile kind of way, critical of those pursuits.
But I was interested in trying to have some impact in the world and being sort of like a rabble rousing journalist or a involved in public policy felt like the appropriate pursuits. It took working at a daily newspaper for a few months to realize like I wasn't really cut out for journalism. Like I fou- that I found the- the pressure of a daily deadline too much. So I, after college, primarily worked in politics. And I wouldn't characterize that as... I think I would've told you I was an entrepreneur then, but I was a different kind of entrepreneur.
I worked in politics and campaigns almost exclusively in losing campaigns, which I'm told builds character. [Laughs]. I don't have anything to compare it to so I don't know. But in working in politics, I got particularly interested. Actually in some ways, you know, we started by talking about my relationship with my wife. I wrote with the help of a friend, Matt Elliott who does oceans work. Together, he and I wrote this very bold policy paper for a candidate whose campaign I was managing with her involvement, she was running for the state assembly.
And finishing that policy paper, I felt like I have a sense of what I'm gonna be when I grew up, I'm gonna be a political consultant, I'm gonna work on environmental policy, I'm ready to get married. And I like sort of on a... I mean, it's hard to say this was on a whim, but this was eight and a half years into a relationship. But I called my future in-laws, I told them that I intended to marry their daughter. I think their response was, "What took you so long?" And then I got engaged. And so it was that paper, you know, and that sort of sense of like, this is what I wanna work on.
I was wrong of course, about what angle I would work on it from, but was the thing that got me the confidence to feel like I could stand up as a married person and feel like good that I was an adult. Anyway, I worked on these campaigns, mostly losing campaigns and then I worked as a public opinion researcher, a pollster, primarily on climate and environmental issues, both state ballot initiatives, some legislative races. And in spite of my involvement, most of those things passed and succeeded.
And anyway, I was doing all of that and Dan Yates who you've had on the show, who's the, now the executive chairman of Dandelion Geothermal and is on the NRDC board and was a very good... was and is one of my best friends, approached me and said, "Hey, I think it'd be fun if we worked together on something." And he had just taken this epic drive with his then girlfriend from Alaska to Tierra del Fuego, Patagonia. So he said, "You know you care about the environment, you know a lot about these issues. What if we did something together on the environment?" And I said, "Great."
I said, "I don't know if I really wanna start a business, but maybe we can start a non profit." And he said, "Okay." Well, he had made a bunch of money selling his previous software company. So he said, "When you finish up this sort of polling that you're working on, why don't we sit down and figure out if there's something to do together?" So Rachel and I got married Labor Day weekend of 2006. I worked on a campaigns through election day and a little bit afterwards. And Rachel and I were supposed to take a one month honeymoon in India in January, February of 2007 and instead, Dan and I started working together in January of 2007. And I said to Rachel, "This is gonna last a few months and then we'll take a honeymoon together."
Jason Jacobs: Have you taken your honeymoon?
Alex Laskey: No.
Jason Jacobs: [Laughs].
Alex Laskey: I've been to India without her for Opower, but we've taken a lot of wonderful trips with our kids.
Jason Jacobs: Nice.
Alex Laskey: And, you know, not exactly a sort of stereotypical honeymoon, but I don't think our marriage has suffered, but would be nice to go on a honeymoon. Anyway, Dan had a very interesting... Dan was an experienced entrepreneur and I think always wanted to be an entrepreneur so and Dan has a very clear and rigorous engineering mind. And so he had this sort of... We had like 5, 6, 7 ideas and his thought and rubric was, "Let's work on these ideas together, let's figure out one, if we like working together, we like being friends, but let's see if we like working together and whether our... we actually are sort of complimentary.
And over these next indeterminate period of time, let's figure out whether any of these ideas really have salt and like, uh, uh, and really have like, are worth pursuing and then we'll decide to hit the go button or we won't. And the hitting the go button will mean we're gonna jettison all the other ideas, we're gonna be laser focused on the one idea we want to pursue." So we had a bunch of ideas and including this notion that we should... This came actually you and I, we were already talking about Evs.
At the time, I had a beat up old Civic and Dan had this very cool Toyota 4Runner that he had ridden, you know, stick shift that he had made this epic road trip on. And we found ourselves, we were driving all over the Bay Area, we were both living in San Francisco. We found ourselves always driving my Civic when we drove together because we were both environmentally conscious and didn't wanna waste gasoline. And one day we were at a traffic light, I think, in the East Bay and we had this kind of recognition of we feel like glib and- and proud that this like Civic we're driving is using far less gasoline than all the other people at the traffic light and we have a clear sense of how much gasoline we use compared to others.
But neither of us have any idea whether the apartments that we rent are efficient or inefficient, and nobody has any idea. And wouldn't it be useful to give people that same perspective to compare- so that they can compare themselves to norms vis-à-vis their homes. And so that was part of the inspiration for this idea. I don't know how much more you want me to tell you at the beginning of Opower or challenge Dan's memories about the beginning of Opower?
Jason Jacobs: Well, one thing that would be good to know is just, I mean, a lot of people are skeptical to this day, investors, for example, about selling software to utilities or- or selling to utilities in general, and yet Opower built your business on doing that. So maybe talk a bit about that decision process to have utilities as customers and how that went. And- and then it'd be interesting to understand from where you sit today, you know, whether you do that or invest in other companies doing that again, given all the experience that you now have u- under your belts.
Alex Laskey: Yeah, sure. I mean, I- I'm sympathetic to investor and entrepreneur skepticism about this. I mean, just to give you like a flesh out a little bit more of the founding story because I think it speaks to this. Dan and I went to... we were going to Palo Alto to meet with an entrepreneur who had a solo concentrator- solar concentrator idea, we were meeting him at Stanford. And we were in Palo Alto an hour and a half early, which to this day is boggling to me because neither Dan nor I are early for anything.
And so the fact that we were both early, and this was in the days before the iPhone and I- but I said to Dan, "I, you know, there's this utility in Palo Alto." We had heard a guy on the radio in Palo Alto talking about their green energy program. I said, "I bet the utility's based in the big municipal building in Palo Alto, this tall white like 15 story building. Why don't we, while we're here early, why don't we go and see if we can talk to him?" So Dan said... Dan's not an extrovert, but Dan's always willing for like... he's always game. So he's like, "Sure, you know, you- you figure this out, we'll go."
So we parked in the municipal parking lot. We- we found the utility, we went up to the 14th floor, whatever floor they're on. We said to the guys at the front desk, "There was a guy on the radio talk on the NP- NPR talking about clean energy. Can we talk to him?" And they said, "Oh, Brian Ward, you certainly can talk to him." So they went back and got Brian, Brian came out and talked to us. And we told them, "Hey, we've got this idea to improve your utility bill and show people how they compare to their neighbors."
And he said, "This is a fantastic idea, I will be your first customer. You start this company, I'm gonna be your customer." And we walk out of the meeting and I high five Dan. And I said, "Dan, it's time to hit the go button. We're gonna start this business." And Dan looked at me and said, "Are you nuts? This is Palo Alto. Like the people's Republic of Palo Alto. I'm not starting a company based on what one potential buyer in Palo Alto says. Like we need to prove that this could work at scale."
And so we then went... I had a friend who was Texan and connected us to political people in Texas, we contacted the appropriate people in Texas, both a guy named Dub Taylor who had been appointed by George Bush to run the energy office, Governor Bush, and a guy named Tom Smith, who went by Smitty, who looked like Willie Nelson whose job was to shut down all the coal plants in Texas. They actually worked well together, but politically very different. And we said, "Hey, we've got this idea. Do you think it would work with the utilities in Texas?"
And they both said, "Well, that sounds interesting." And we're meet- the legislature is meeting right now to discuss energy efficiency and we meet only once every two years. You guys should come to Austin and meet a bunch of the utilities and meet the legislators and see what you think for yourself. We'll help set up some meetings. So we flew to Austin on a Southwest light. We rented a- Pricelined a very cheap motel room and met with people, ended up writing a clause into legislation. And the fellow who was the author of the legislation said, "This is fine. I'll include it in my legislation on energy efficiency. But if anybody opposes it at all, I'm stripping it out because, you know, I don't want to..."
So together we spent two days, I spent another three or four days like shoe-weathering around Texas, trying to convince people to either support it or be neutral on it, including the utilities. We got some enthusiasm and mostly people looking at us thinking this is harmless. And it ended up, we testified at 3:00 in the morning and then Rick Perry signed it into law. And at that point we said, "Okay, there's a market for our stuff." Certainly there's the guys in Palo Alto, but there're also all the utilities in Texas now. And so Dan agreed we should hit the go button. We started the business.
We never did business in Texas, Palo Alto became a customer, but I think they were our 15th or 17th utility that we worked with. So all to say that like selling to utilities is not straightforward or easy or at least it's not predictable in the way that you would want to self enterprise clients. But I remain a really big believer certainly in utilities. And I- I think- I think there is something that we accidentally did very right and then something that later we did that I would, I sort of regret doing that made selling easier and harder.
The thing that we did right is that when we started the company, we were selling outcomes. We told the utility, you know, we thought this was gonna save energy, we're gonna run randomized control trials, these communications that show people how they're using compared to their neighbors and give them anal- analytically driven tips about how to save. And we didn't promise a specific amount because we had no idea what that amount was gonna be. But for the first five or six years of the company, seven years of the company, we were laser focused on delivering, we remained throughout, but we were laser focused on delivering energy savings for these utilities. And I think when utilities thought about buying our product, they didn't think about buying software, they thought about buying energy savings.
Jason Jacobs: Why did they care about energy savings? I mean, isn't more energy usage more money in their pocket?
Alex Laskey: You know, most utilities in the US don't own generations so they don't make money by selling electricity. They earn a rate of return that's regulated and different states do it in different ways. But states including ones that you would think of as very unlikely like Kentucky and Mississippi have all created incentives for utilities to help their customers save energy. And they're very good at procuring energy and energy savings. That's like what utilities do. So when they looked at our program, they didn't look at software, they looked at here's a program that's gonna deliver a certain amount of energy savings.
We're willing to pay X cents a kilowatt hour for those. This is how that stack ranks in our portfolio of energy savings we can procure, we subsidized the CFL light bulbs, now LED light bulbs, we subsidize efficient HVAC systems, we- we finance home retrofits, those things we all have sort of measured savings for what we're gonna achieve and how much money we're putting into it and we can measure the cost per kilowatt hour. And this program, we can measure the cost per kilowatt hour 'cause they're running a randomized control trial and we can measure with high accuracy and precision how much energy we're saving and how much money went in. And so...
And the other thing is that when you buy energy or when you buy energy savings, the marginal kilowatt hour of energy or the marginal kilowatt hour of energy savings cost more than the average, which is very much unlike software. So that last energy savings is the most expensive energy savings to procure. And so as we grew our programs and our contracts with utilities, we never had a performance guarantee per se, but they were buying energy savings and they were paying sort of like what was the market value for those energy savings.
So if we went from a program that was excised and- and they were paying a certain cents per kilowatt hour and we 10X the size of that program, they were comfortable paying 10X worth or maybe even paying 11X for it because they were buying energy savings. And I think utilities- utilities are very efficient and excellent procurement organizations. They do procurement better than anything else that they do, whether it's procuring the equipment that they have on their distribution network, whether it's procuring the- the poles and wires that they are installing and maintaining, or whether it's procuring software.
In our case, we weren't selling them software. I mean, we weren't selling them software, but we were selling it under the guise of energy savings so they were procuring energy savings. At some point we s- pivoted. We had pressure from, I don't know pressures one of the wrong word, but guidance from investors that as we've thought about going public especially, that we were gonna be looking to attract software investors into the business. And they wanted us to clearly demonstrate that we had a software business 'cause it was kind of a weird like... you know, this was not a time when like...
There wasn't a lot of money in climate tech in 2009, 2010, 2011. We started in 2007 yet we went public in 2014. During those years we raised very, very little money, roughly 50 million in primary before going public and we raised it from software investors. But they took a lot of time getting to know our business. We raised it from MHS Capital, NEA, Xcel, Clymer, these were all sophisticated investors who spent time. As we thought about going to public markets and attracting software investors who are gonna have far less time to spend with us, we wanted to represent what we were doing much more clearly as enterprise software.
And in doing that, I think we sort of revealed for our customers and we changed the way we like presented to our customers to be much less about outcomes that we were delivering and much more about software that we were delivering. And as we did that, and maybe this was inevitable anyway, but as we did that, our clients kind of got hip to the fact that, oh, when these guys run a program that's 10 times larger than the program they were just running for us, even though we're getting 10 times as much energy savings, we didn't pay 10 times as much because we're buying software.
And when we buy software, which we're very good an- and proficient at doing, each marginal seat should cost less. And so you had this some debate over Twitter at some point that I observed and didn't chime in on, but about out whether you could sell software to utilities. And I thought a little bit about at the time, I think so long as you're selling outcomes to utilities and you have some way of pricing your software so that you're rewarded for delivering business results, you can have a really great business selling to utilities.
I mean, they are not competitive with one another, they follow one another. So if you establish a better product with better results and better customer service, you can win the entire market in a way that's very difficult to win in other markets. And they're also... like they're not always without frustration to deal with, but they're very predictable. The people who work there are honest and they do what they say they're gonna do and they're loyal customers.
So as far as like people to work with, I enjoyed it very much and their business interests are very clear. So if you can deliver a result, a business result that they are demanding or interested in and you can somehow tie your pricing to the efficacy of your solution, I think it's a great place to build a big business. If you are just interested in selling software seats, there are easier industries to go into.
Jason Jacobs: Now prior to Opower or heading into the Opower experience, what was your theory of change as it relates to personal behavior change and- and where that fits in? And- and then what's your view on personal behavior change today with the Opower experience under your belt?
Alex Laskey: Yeah. Yeah. Well, one, you asked the question why did you guys work with utilities? It's not like we had any love for utilities particularly in 2007. It was that I had read the data from the political polling perspective and Dan was just a- had a good sense of this. People didn't care about their energy consumption, you know, and- and don't today care about it, even people who are environmentally focused. I bet that neither you nor I could with any real confidence, tell you how much energy was used in our homes yesterday or last week or last month. And I know you know how many miles you ran in the last week.
So in any case, I also know how many miles I ran last week, which is far fewer than you, at a slower pace too. But, you know, so we decided if we were gonna have this impact at scale... And you know we were in 2006, 2007, there was a little bit of clean tech interest in the valley but it was all focused on the supply side. And Dan and I thought the demand side is just as important and nobody's focused on it, it's totally unsexy, but it's a big market and we think we can have an impact. So we decided to focus there. I mean, that was part of the, what- what drove us to focus on it.
But the only way to do anything at scale was not attracting consumer interest, but was at getting the utilities to act as our partners and agents so that's why we started with them. As for behavior change, I mean, look, human behavior is an essential part of solving any problem. And it is critically like getting you to buy the EV, getting you to buy the induction stove, you're overcoming years and generations of behavior so, you know, behavior change is critical and it works at scale.
I mean, Opower today as a division of Oracle is producing roughly 10 terawatt hours of energy savings a year. There aren't that many clean energy companies in the country that have that kind of impact at scale even today. Imagine Tesla does, but I'm not sure that there are... You know, I don't know how much- how much clean energy is Sunrun producing every year, I don't know what the number is, but it's not all that different than Opower. And so I think behavior change is a- is a meaningful ingredient but I think there is a risk that we think that the answer is individual behavior and knowing full well that the only reason we had access to run these programs is because of good government.
You know, good regulators of both parties and legislators of both parties at the state level had created these incentives and mandates for utilities to run these kinds of programs. And similarly, yeah, I want you Jason next time tha- when your wife's car dies for you to buy a second EV. But we need the government to step up as it has to drive down the cost of EVs through rebates initially, and those rebates will eventually go away 'cause they'll be time unnecessary, but through infrastructure investments that allow you to drive to your in-laws without range anxiety 'cause you know there's gonna be charges between your home and theirs.
Similarly, we need to change the incentives and the regulation in the building sector. So yes, I want you to buy a heat pump, but I also want to make sure that your town in Massachusetts makes it easier and cheaper for you to install that heat pump and that the federal government steps in and provides manufacturing assistance and rebates to bring down the cost of those. So, you know, I think like behavior change is critical. We all need to be a part of the solution, but we need to make it possible, and that's the role that government has, make it possible and not only possible, but easy and desirable to decarbonize.
Jason Jacobs: So Rewiring America aside, as you look at the problem or the challenge or whatever word you wanna call it o- of Rewiring America, what are the biggest levers for change or set another way, what are the biggest bottlenecks that are holding us back?
Alex Laskey: Yeah, a lot of it is local. I mean, tha- to use an example that maybe Saul used on your program, has- he's definitely used it elsewhere, but it's one that's very like accessible is rooftop solar. Rooftop solar in Australia today is installed at less than 90 cents a watt, which financed works out to less than 5 cents a kilowatt hour, which is cheaper than the electricity that any one of your listeners in the US is paying for electricity. In the US... So it's less than 90 cents a watt installed. In the US, it's over $3.25 a watt installed, so it's more expensive than grid electricity.
What's the difference? Well, the difference is not equipment cost, 'cause it's not like the Australians have more buying power than we do. It's not labor costs 'cause the Australians are paying $35 an hour prevailing wage to rooftop installers. It's a bunch of permitting and regulation, both federally and primarily locally. So we treat, the sort of like useful construct to think about, is we treat solar installation in this country like a custom home renovation or addition.
So when you put a 200 square foot addition onto your home, you have to get inspectors out from the town and plans in and they gotta weigh in and have their opinions and then the architect has to redraw the plans and go back. In Australia, they treat solar installation basically on par with installing a normal appliance. So how do we turn solar installation on your roof outside of Boston and on my roof in the DC area into essentially the same thing as plugging in a new refrigerator? Like that is a big set of problems that need to be resolved.
Because if we can drive the cost of electricity down to 5, 6 cents or even 10 cents a kilowatt hour, it'll make it far easier to justify and finance the rest of the transition. Because if you're powering your vehicle with 6, 7, 8 cents a kilowatt hour electricity, that means you're saving a few hundred dollars every year on fuel cost for your vehicle.
Jason Jacobs: So that one is local permitting friction, correct?
Alex Laskey: Yes. It's local permitting friction. So that's one. Another is market incentives, you know, federally. So it's these rebates that we're pushing for heat pumps, that's a big barrier. We need to make this equipment not only more affordable to install them-
Jason Jacobs: It's a barrier that it's a premium today and so a rebate can make up the difference if the rebate exists, and either it doesn't exist or it doesn't exist at a level that's high enough to make it not a premium.
Alex Laskey: Yup, absolutely. And these things can be temporary. As is- as is the case, lithium batteries have come down in cost by 80% in the last seven years I think, and the rebate on the EV will be unnecessary in two or three years. So unnecessary in fact that GM is gonna stop producing internal combustion engine cars by 2030, because there's not gonna be a market for them because they're gonna be too expensive. And so the same thing can exist with EVs. We can drive down the cost of EVs and we are driving down the cost and we need to... or that has happened with EVs. The same thing can happen in homes.
We can, by scaling up the manufacturing installation capacity of America for heat pumps and hot water heaters, these rebates are not permanent. They can be temporary because we'll drive down the installed costs such that they are as low as or lower than the fossil alternatives. So it's a temporary lever. In doing so, the other thing we need to do that's a major barrier is workforce training. We are shy between one and 2 million electricians and HVAC technicians in this country.
These are jobs that are good, middle class, upper middle class jobs. And they are necessarily whole jobs because if you live in New Hampshire, you're not gonna get some guy from Boston or New York and certainly not somebody from China to install the heat pump in your house, it has to be installed by somebody who lives in your community and is gonna show up in their truck and install it, their electric truck and install it. And so, I mean, there is a... that's a big deal. You know, the workforce training, you know, in this labor market is gonna be challenging, but these are good jobs and they're good jobs that don't require college degrees and you know, we need to do our best to recruit and train people to do this work.
Jason Jacobs: So local permitting friction, subsidies not existing or not being high enough, workforce training around the actual installation. Any other key leverage points?
Alex Laskey: Yeah. I mean, there's, you know, there's cultural resistance. I don't think people care. I would- I would imagine even your astute listeners don't know, you know, or significant minority of them don't know what kind of fuel heats their home, but they all know what kind of fuel they cook on and there is like cultural attachment to cooking on gas. But I think that can be overcome too. And you know, there's all these health studies that are coming out about indoor air quality that when you're making soup for your kids, you're creating air quality around the stove that wouldn't pass OSHA standards for industrial facilities.
So, you know, we're giving our kids asthma and other kinds of sicknesses by the air quality by burning fossil fuels in our home. And you know, people have bad experiences from cooking on those old coil electric stove tops but these induction stoves are very precise. But you know, people obviously, and for good reason, are attached to cooking and the way they have cooked and it will take some work to overcome those obstacles.
Jason Jacobs: I'm not hearing or maybe I am tangentially there, but I'm not hearing directly that performance or reliability is a- a bottleneck. Is the tech where it needs to be today?
Alex Laskey: You know, I- I think if we were up in Northern Maine where you and I went camping as kids, there's- there's still some work to do for air source, ground source heat pumps would work fine. And again, it's- it's a little bit like that range anxiety when you visit your in-laws, which if you're lucky, that's the only anxiety you have when you visit your in-laws. But again and there's programs like this. In Northern Minnesota, they're doing some programs which are hybrid programs where it's mostly electric except for the few days a year where it's -20 and there's a gas backup. And so the technologies continue to improve and get better. Most of Scandinavia, which is quite cold, is run on heat pumps. And so we need to continue to investing in these technologies.
Secretary Granholm announced a big investment in R&D for cold weather heat pumps. They're already good, they're getting better, part of it is that like bringing the technologies that exist in Northern Europe into the US. And there's a bit of a chicken and egg, like we need to show demand in the market and we show demand in the market than both more R&D will be done and also the technologies that exist in Europe will be imported to the US. And so, you know, we think about decarbonizing the economy, getting to zero in time to save these beautiful places and to save species and you know, civilization, as we know it, there are obviously things that can't be electrified and are gonna be hard to decarbonize.
But to me, like it's a crying shame if we don't execute on and deliver the things that we know work now. Because the faster we decarbonize things that we do have the technology to decarbonize including our cooking and especially our hot water and heat, the faster we do that, the more time we have to solve some of the thornier problems that are truly technical problems.
Jason Jacobs: And both from the key leverage points, but also tactically, if your organization was called Rewiring Europe or Rewiring Africa or Rewiring Asia or re- Rewiring the Globe, how much of what you're doing around Rewiring America in terms of priorities and tactics would be the same and how much of it would be completely different as you look region to region?
Alex Laskey: Yeah, largely would be the same. The- there are different issues in the developed world and in the- the developing world, but it's largely the same. In fact, we are running a program right now, Rewiring Australia because Saul's Australian and we're about, we have an exciting announcement on the horizon where we're going to do a large demonstration project in the city. And you know, the issues are similar. They are different bottlenecks. They've figured out this regulating and permitting process so that solar is cheap and accessible, but they have a luxury tax on electric vehicles, which make electric vehicles far more expensive than they need to be.
So the prioritization might be different in different places, but the set of issues remain pretty constant. US... In some ways it's like looking at like drug prices, the drug prices in the US are like unconscionably high, much higher than the drug prices in much smaller economies elsewhere in the world. You know, rooftop solar in Australia is 90 cents, in Mexico, it's even less, that's mostly driven by reduced labor costs, but in France, which is not a place where you think of having like lax labor standards, it's 1.50 franc. And in the US, we're 3.50.
Like there's just no excuse, we gotta lower those... we have to lower those costs. And so there are different prioritizations in different places. There's different kinds of climate, there's different housing stock, but the issues remain pretty... You know, we're all human beings, we all live our lives relatively the same way and so... and the only path to decarbonization is electrification.
Jason Jacobs: And I have two distinct questions. I'll just... I tend to ask questions in pairs for whatever reason. But one is just in your mission to rewire America, if you could change one thing outside of the scope of your control, what would it be and how would you change it to most accelerate that mission? And then I'll ask you the same question in terms of where you need help to help fulfill the things that are within your control as an organization.
Alex Laskey: The place where we need the most help up is talented people to join us, join us as donors, join us as volunteers, join us as collaborators in writing with us and blogging with us and- and go to rewiringamerica.org, sign up for our updates. But of course at the end of the day, the place where we need the most help is join us, come and work with us, work on our team. Like we're building out an exceptional team, we want people from diverse backgrounds and diverse experiences.
You know, we are- we started from nothing a year and a half ago, we have tens of billions of dollars in the Build Back Better plan that were of our creation. And we're just getting started. We're, you know, I think we'll be a hundred people in three years and we want your listeners to come join our team. So that's the most important way that we can be helpful. And if we have that happen, you guys can be helpful. And including, you know, the other place just because of who your network is, we started this coalition, this bicameral caucus for electrification in Congress where we have members of the Senate and the house now meeting weekly to talk about what they can do in the federal government to accelerate the electrification of the economy, which is super exciting.
When we announced that, we simultaneously announced a Mayors for Electrification, where we had mayors from across the country announced that they want to electrify their cities, which is terrific. Because as we discussed, a lot of the rules and regulations that make it challenging and could make it easier are controlled locally. But the other thing very relevant to your audience is that we announced the CEOs for Electrification. And so we'd love your CEOs listening or those of you who know CEOs to come on and sign up to be a- a part of this coalition and to help us advocate for the rapid electrification of the economy. So that's the most important thing.
As to the things that are outside my control or our control, frankly, I think if we have enough talented people and enough resources and we'll have enough resources if we have enough talented people, I don't think there is anything outside our control. Like I think we can solve this problem. And it's Herculean task but I think the good news is it's the right thing to do. We can put money back into people's pockets, we can put millions of people to work and we can create prosperity and happiness as we're helping decarbonize.
I think that's like a very attractive message and there will be very few things beyond our control. If somebody listening has access to a time machine, we could use that 'cause it would've been nice to start doing this a decade ago or three decades ago. But you know, I don't think of anything being beyond outside of scope. And I think- I think we have a message that will resonate. We're having conversations with Republicans too.
I mean, this is a message about making it easier and cheaper to build. I mean, that's something that it resonates with lots of people. This is about providing low cost financing to help business thrive. Like I don't think this is a particularly partisan message, this is about rewiring the American economy to do right by the planet and also do right by the American homeowner and worker.
Jason Jacobs: And Alex, anything I didn't ask that I should have or any parting words?
Alex Laskey: There's tons, there's more to talk about that we didn't have a chance to talk about, but you know, maybe we'll have other opportunities. But the other area, there is one more thing, which is just to say like we met each other 35 years ago and I've been working on this work now for 15 years and maybe even a little bit before then. And I'm very excited that there are a lot of people who are turning their attention. You know, not least from you, like what you have done in the last couple years in building your own knowledge and building a movement, getting people to work on this is super inspiring and I'm really very, very pleased that you're doing this. I think it's great.
I think it's easy when people get involved in this issue to think about, to get overly torqued on good news and bad news. And there is a sense of urgency appropriate that we need to solve this problem in the next decade. But there are gonna be ups and downs between now and then. And I think it's just like... it's important to maintain a sense of urgency, but it's also important to maintain some sense of like humanity. And I don't know, I just like giving you a hug Jason and everybody, everybody listening a hug because it's not always great, but like that's okay, nothing hard is.
Jason Jacobs: Well, I think that's a great point to end on Alex. And I mean, especially in the seat that you're sitting on, I think that perspective and that reminder to look out for yourself and- and to take breaks and make sure that you have the stamina and the sanity to be in it for the long haul. I think that's a good reminder for all of us. So thanks again for making the time to come on the show. Thanks for the important work that you do. Thanks for your support of- of me and- and of MCJ. And wishing you, Rewiring America and you know, Arcadia, all the things you're involved with in this important mission every success.
Alex Laskey: Thank you so much, Jason. Congratulations on everything.
Jason Jacobs: Hey everyone, Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey, you can visit us at myclimatejourney.co. Note that is .co, not .com. Someday we'll get the .com, but right now, .co. You can also find me on Twitter at Jjacobs22 where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear. And before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes. The lawyers may say that. Thank you.
