Stephen Lacey: Valentine's Day was last week. So it was fitting that I saw so many people on Twitter fall hopelessly in love with the latest Republican plan for a carbon tax. The plan is beautiful. It's elegant, but are supporters getting seduced into a flawed relationship, only to get dumped once again by Republicans in Congress? Or are we actually witnessing the birth of a real romance? We'll discuss the newest gossip and chatter around a carbon tax plan in Washington. Then, there's a movement afoot to get scientists running for office. Should clean energy professionals follow? Finally, remembering Art Rosenfeld, the godfather of energy efficiency.
Katherine Hamilton and Jigar Shah as always are by my side. Virtually, at least. Katherine's in Washington, D.C. I think since we recorded last, I've seen you tweet from three or four different events. I can't keep track of you.
Katherine Hamilton: Let's just say, I spent a romantic Valentine's Day at the National Association of Regulatory Utility Commissioners.
Stephen Lacey: Jigar Shah is in New York City. Have you been bouncing around or just keeping tight in the city?
Jigar Shah: Just New York City and San Francisco. My two usual hangouts.
Stephen Lacey: Good. Well, we're not going to be in either of those cities. We're going to be in Washington this week, because we are discussing this new carbon tax and dividend idea. Last week, a group of highly respected Republicans published a plan for a $40-per-ton carbon tax on point-of-source emissions from coal, oil, and gas. With a Republican White House and Congress, they argued, now is the perfect time to show America that conservatives have better ideas than the command-and-control Democrats who are only interested in more regulation as a solution to climate change. And, if you didn't know anything about the last eight years of congressional politics, you might think, 'Hey, that's a great idea.' Because, in theory, it is. A steadily rising carbon tax is the most economically efficient way of dealing with carbon pollution.
But, it certainly doesn't play well in American politics. And, now that Republicans have control of Congress and the White House, they really have no incentive to trade a carbon tax for an end to regulations. They're just going to end regulations. So, Katherine, we'll talk about the political trade-offs, or what people hope will be the political trade-offs. What did you think of this report? One of a few that have come out from prominent conservatives, but I will note, a much higher carbon tax. This $40-per-ton carbon tax is much higher than what others have laid out.
Katherine Hamilton: Yes, and I would just say, I think to get anything like this done you need two things. One is a policy that works. And the other is a political pathway to get it done. So, on the policy front, which is the $40 a ton, that's great. It's still really tricky, because it's totally across the economy and you need other policies to make sure that other things are dealt with. Other greenhouse gas emissions are dealt with, like methane. From that standpoint, that is really tough. Because you need both the tax and dividend, which is in theory a good structure, but you also need to make sure you have other policies in place.
If you look globally at who's been able to get carbon taxes put in to place, $40 a ton is just not reasonable. The highest right now is Sweden, which is $130, and that's just for transportation and heating sectors. Then, Switzerland and Finland are $62, Norway at $53, Tokyo at $38, but those are not anything like the U.S. The U.K. and a few other countries -- Denmark, Ireland, some of the progressive countries, Slovenia -- are at $27. France is at $15, then everything falls below that.
So, I don't even think from a policy standpoint, you could get more than $15 a ton. So, I think theirs is extremely aspirational. On the political side, there's no way. There's not a single Republican, much less a Republican leader in Congress, that is on board with this at all. The House passed a resolution last year that said this would be detrimental to the economy. These guys did get in to see Trump, who says that climate change is a hoax. But, Grover Norquist, who is anti-tax increase of any sort, is also going to go to Trump and say no way. So, I don't see politically how this is viable either.
Stephen Lacey: I want to discuss the politics, but let's rewind, and I want to try to understand what you said there in the beginning. So, they're saying in exchange for getting rid of certain regulations, most notably the Clean Power Plan, we should put in place this $40-per-ton carbon tax for coal, oil, and gas that will steadily rise over time. Pay the dividends back to taxpayers that could be $2,000 per household yearly.
What you're saying is that yeah, that's all well and good, but just focusing on coal, oil and gas doesn't get us looking at things like methane emissions or the transportation sector or all these other important components of the economy that may need other types of regulations to tackle emissions? Is that basically what you said?
Katherine Hamilton: Yes, that's right. What they're offering is this tradeoff, and that's a little tricky, because they want to trade off the Clean Air Act's ability to regulate greenhouse gases. In other words, carbon. But there are a lot of other greenhouse gases in there too. But if you give up your ability to do carbon, then you're releasing your jurisdiction. If you do that, then it's really hard to get anything else done. That leads to the politics of -- there's not an environmental group that's going to be OK with giving up EPA authority with that kind of uncertainty with what else is out there that we need to regulate.
Stephen Lacey: Is it really such a big problem, though? I mean, couldn't you have a hybrid approach or couldn't you say, if this is successful, let's create some sort of cap-and-trade or cap-and-dividend approach to methane emissions and other forms of pollutants? Like we did with NOx and SOx emissions?
Katherine Hamilton: Yes, I think one of the issues is that you have to really make a decision as a country that you want to lower carbon and figure out, is this going to do it all, and where are the gaps? In the short term and then longer term, and in the very long term, how do we fill those gaps? And some of this is having to wait for it to spin out. There's going to be a period of time of adjustment if you put something like this in place where you're not exactly sure how economically it's going to affect every sector and where those gaps are going to be. But, you have to have taken a decision as a country that you're going to do it. I don't know. It's very complicated, and we would have to really come together on how we're going to do it. How's it really going to happen? And I think just having the tax piece, that's one piece of it, and certainly globally, everybody agrees, that's the way to do it. The devil's in the details.
Stephen Lacey: That coming together part, that's the tricky one. Jigar, your thoughts?
Jigar Shah: I think there's a Beatles song like that, right? I understand where Katherine's coming from and completely agree with her. First of all, I think the vast majority of this work occurred around the time that I was talking about the carbon tax on The Energy Gang with Jerry Taylor around the deal to remove EPA's power to manage carbon dioxide in exchange for a carbon tax. That is what they proposed. So, I think this was recycled because they had already done all the work to create the backup documentation for this trade when Hillary was elected president. When she wasn't elected president, it died a horrible death. That's basically what Grover Norquist said in his tweets. So, it is what it is.
I don't know that I'm as pessimistic about the merits of the case as Katherine is, but I do think that the $50-a-ton tax is moving forward in Canada. I think Justin Trudeau has really been a big proponent of it, and I think the work that was done by these Republicans, which I'm not quite sure you can even call them Republicans anymore since the Republican Party has sort of morphed into something really weird and different now. I do think the intellectual work done here can be leveraged by the Canadians, so all in all, I think it was a good effort.
Katherine Hamilton: Yes, and I'm not saying they shouldn't still keep pushing it. I think it's really important to have those voices out there, and these guys have been at it for a long time. Jim Baker and George Shultz have been working on this for a long time and really believe in it. At some point, we're going to really need it. At some point, somebody's going to say, all right, what's out there that's workable and that we can use. They're going to have to have something. Right now, this is a proposal that has been vetted and has been worked on, and at some point it could become politically viable.
Stephen Lacey: Well, God bless them for working on this issue. It's certainly not easy. I do know that Jim Baker, who was the former Secretary of State under Reagan, and Ted Halstead, who is the founder of the Climate Leadership Council, who has been working on variations of a carbon tax plan for, I think 20 years, and who finally brought all these prominent Republican figures together, they had a meeting at the White House with top staffers there. I have not seen how the meeting went. The fact that they actually got a meeting is pretty good. Although Leonardo DiCaprio and Al Gore got meetings too, and we saw how the president reacted after those.
Anyway, the politics here are kind of interesting, because I've talked to a few people in the carbon tax camp. I had a conversation a while ago, after Trump was elected, with Alex Bozmoski, who is a guy who helped co-found the group republicEn with Bob Inglis. He said, gosh, I'm really bullish now. I think that we can start having different conversations about how to put a price on carbon and I choose to look at this from a positive lens.
But Grover Norquist's reaction last week I think sums up the tricky politics of this. Yeah, maybe some Republicans would have considered a tradeoff for getting rid of the Clean Power Plan and other top-down regulations for a steadily rising price on carbon. But now they control the White House and Congress. So, they don't need to do that. There's no tradeoff. The political calculation is that they don't want to touch this stuff because they're afraid of their constituents' backlash. They really have no incentive to make some sort of tradeoff, because there is no tradeoff anymore.
Jigar Shah: I do think that the efforts of Justin Trudeau in Canada will bode well for what we're doing here in the U.S. I do think the data coming from that effort will inform efforts that might come into the U.S. later.
Stephen Lacey: I'm a little bit ignorant on the politics of how this is working in Canada. What could the U.S. possibly learn from what's happening there, Jigar? I don't know how to apply them.
Jigar Shah: So, several years ago, a province in Canada that includes Vancouver put in a carbon tax. Justin Trudeau, when he came in as prime minister of Canada, announced that every single province in Canada has to have a $50 carbon tax by X date.
Stephen Lacey: Alberta has a $30-per-ton carbon tax going into effect in 2018.
Jigar Shah: Right, and that came from Justin Trudeau. So, British Columbia was first, and then Alberta's was in response to his mandate. Saskatchewan and others are arguing with him and saying that we're not going to do it and so there's a lot of back and forth and the politics are real here. But, I think those politics will inform a lot of the different constituents in the U.S. as well. I do think it's going to work, and I do think some of these tradeoffs between sectors is where we want more data.
So, how does this affect the greenhouses and agricultural sector in Alberta? How does it affect oil sands? How does it affect transportation? The way in which these tradeoffs work and whether there's actually a real reduction in carbon emissions is what people are testing. Because, if you do all this work and you don't get a carbon reduction, then it's sort of all for naught, right?
Katherine Hamilton: Yes, and we'll also be able to test different economic data points so we can see how it's affecting their economy as well. I like the point about looking at Canada and looking globally because other countries are taking a stand. The EU is. Like I said, the majors are really thinking about this, so I actually looked to see what Rex Tillerson at State is going to do. Because he operates in that same world, or he did operate in that same world, as members of OPEC, who were all talking about carbon tax as well. I'm just wondering how that will impact what we do as a nation on climate negotiations and then what he can bring back to the president and Congress.
Stephen Lacey: I called Bruce Hagen, who is director of Clean Energy Business Engagement at Citizens' Climate Lobby. I wanted to get the bullish take for a carbon tax. Because, I'm super skeptical that this will work given the state of politics. And he said, 'Look, after Trump's election, a lot of people are coming to [us] and saying, what can we do? How can we help? How can we put pressure on our lawmakers? How can we submit op-eds? Go to more town halls?
In a very short period of time, over the last year or so, their membership has tripled. They're setting up more national calls. They're seeing a lot more passion from people who are looking around and saying, 'I kind of feel helpless.' I need to know what to do. So, they feel like they can put enough pressure on certain lawmakers to actually make this an issue and get a bill introduced that looks similar to this new Republican plan within this session.
So, that's kind of the bullish take. That the grassroots effort is stronger than ever. There's renewed pressure for people to go and speak their mind at town halls. The Citizens' Climate Lobby has always kind of used the town hall approach, but now a lot of people are feeling galvanized, so they believe that they are going to leverage even more support for this.
Katherine Hamilton: Yes, they may feel galvanized for a number of other reasons outside of climate, but you're right that this at least gets people engaged and out there talking to their members of Congress and holding them accountable.
Stephen Lacey: Moving on. It's a pretty dark time for science, particularly climate science in this country. President Trump has surrounded himself with a team of professional climate skeptics. Government climate scientists are busy backing up data, fearful that much of it will be lost or censored under the new administration. The House science committee continues to tweet out garbage written by people like James Delingpol, a climate denier who was been debunked more times than the fake moon landing.
So, now there's a movement afoot to get scientists to run for office, and it appears to be working. A number of prominent scientists are eyeing seats in Congress or local seats in their state legislatures. This got me thinking. Should there be a similar movement afoot in the cleantech business world? There's a lot more fossil fuel money sloshing around the halls of power than renewables money. That's likely not going to reverse anytime soon.
So, if you believe that we need to transition to a cleaner energy system as quickly as possible, should you run for office, rather than take that sales job at a national solar developer? It's worth pondering. Jigar, do you think more people in this field, particularly young people who come to us and say, how can I get involved, how can I make a difference, what area should I be looking at -- should they be considering public office?
Jigar Shah: Well, I think everyone who has the stomach for running for public office should run. For folks who don't know, I'm on the board of Climate Hawks, which is a group that is trying to make this happen, so I certainly have a vested interest in trying to get more people to run for office.
I do think that we should first note that we have some wins, right? Jerry McNerney and Raja Krishnamoorthi are both clean energy professionals who did run for office, and won. So, I think that's great. Raja had a solar company and Jerry was at PG&E.
So I think that's really good. I also think Tulsi Gabbard, for instance, from Hawaii. Her father Mike Gabbard and I worked...to get a lot of the policies in place in the state legislature in Hawaii. So, she has a lot of firsthand knowledge around what it takes to be a real effective advocate for our issues.
One of the reasons the solar industry was so successful early on in the House, was because we had champions like Gabby Giffords. Unfortunately she got shot and then left the House, but I remember Gabby used to call me randomly on my cell phone and say, what more can I do for the solar industry? What more can I do?
So, I do think it's critical for us to have more representatives in the House. I think that we are finding a lot of energy there. I also think that the author of that piece, Shauna Shames, "Millennials Don't Want to Run for Office" -- I do think that that's taken out of context.
Stephen Lacey: Let me just stop you there, because Jigar is referring to an article in the Washington Post from last year that I sent around in preparation for this conversation from a researcher at Rutgers who had surveyed hundreds of millennials about their appetite for running for office. She basically said that millennials across the board absolutely do not have any appetite for public office.
Jigar Shah: Yes, and we know her personally at Climate Hawks. And I think, her work was taken out of context. She was studying law and public policy folks at the graduate level in the Boston area. Her finding was that the people she studied were skeptical around whether elected office was the most effective way of changing things. She was also focused on a lot of women and minorities who were more afraid of the personal costs of doing that.
But she really wasn't really making the argument that millennials as a generation are more skeptical for running for office. I think that's important, because we're finding exactly the opposite. I would say at Climate Hawks the number of people who have registered through our website to say that they are interested in running for local office, not U.S. Congress, but like local school boards and city councils and other offices, is up 10 times from before the election. The amount of money that we've been able to raise from people who want to support these folks is up 10x from before the election. So, I think that we are two orders of magnitude toward making a positive difference in this space.
Katherine Hamilton: Yes, I would say I completely agree. We need more people who understand science and technology and who are fact-based on the Hill. There are very few. There are only two that have Ph.Ds -- Bill Foster from Illinois and as Jigar said, Jerry McNerney. Senator Martin Heinrich from New Mexico is an engineer, as is Congressman Paul Tonko from upstate New York.
There are a few others that have degrees in science like Joe Barton from Texas, Louise Slaughter, a microbiologist. Very few women. Angus King, the independent senator from Maine, worked for a wind company and did a lot of work in energy efficiency. So, there are some people. I would just say, women need to start running also.
But, part of the issue is it is so expensive to run. In 2012, it cost an average of $1.689 million for a House seat and over $10.5 million for a Senate seat. It just costs so much money to run for office. So, part of this is how do we organize people so that we can support them and get them what they need so that they can run. Whether it's through volunteer work, pro bono work, or actually start raising money for them. Because that's part of the issue, is that young people don't necessarily have the funds to be able to run.
Jigar Shah: Well, that's true. But, if you look at Jamie Raskin, who replaced Chris Van Hollen's district, Jamie really was an environmentalist at heart out of Tacoma Park, Maryland. He raised more money than...a few other folks. He was able to raise a lot of money and win, right?
I actually think what we need people to do right now is just run for office. There are a lot of people out there who, and I'm not talking about Congress, which I agree with you is very expensive, but, I think it's really more around just getting people to run for any office, like local office. We need a pipeline of people, and I'm not talking about Democrats. I mean, Republicans, Democrats, whatever. We just need a pipeline of people who care about facts and care about clean energy and care about our issues.
The other point I wanted to make was that I do think that Earth Day Network has played a big role here with the March for Science that's happening on Earth Day this year. And I do think getting scientists and engineers and others to get out of their work and their textbooks and into organizing and activism really does matter. I'm eager to see how many people show up for this March for Science.
Katherine Hamilton: Yes, and I agree -- building the bench is going to be really important and getting younger people involved. The average age of a member of the House of Representatives is 57 and in the Senate 61. Of course, they're 80 percent dudes, so I mean it is like old white guys for the most part. Getting younger people, women, people of all different backgrounds, and different colors is going to be really important.
Stephen Lacey: You sort of answered it in your last answer, Jigar, but I want to be more explicit about it. If someone comes to you and says, hey, I want to get in to this industry. Do you think they could make an equal, if not more of an impact, by running for public office?
Jigar Shah: Absolutely.
Stephen Lacey: Is it a good option?
Jigar Shah: It is a good option, but I do think people have to go into this with eyes wide open, right? Running for public office means that you actually enjoy talking to people that you don't know, right? Earning their vote and earning their trust and doing all the things that you have to do. You can't just say, I've got a great resume and I'm going to run for office.
So, I think, like any position that people go after, whether it's a position in writing, or in finance, or in communications, this is a position that you have to understand the qualifications for and you have to want to sign up for it, right?
I do think a lot of the people that are in the climate lobby and some of these other organizations that are doing grassroots organizing anyway, are very qualified for running for office. They are reaching out to new constituents and convincing them that putting a price on carbon is really valuable, right? Those are exactly the people that we want running for office.
Stephen Lacey: Well, if there's ever been a time to call for people who want to take a sensible approach to environmental protection, climate policy, and the transition to a clean energy economy, now is the time. There has never been a more important time for people across the political spectrum who just have sensible, grounded-in-fact solutions to help with the pretty severe problems that we face. This is really an extraordinary time for that.
One last note: You mentioned Shauna Shames from Rutgers, who had that survey of millennials. She pointed out in that Washington Post piece that the issues that millennials cared most about, were strong economy, racial issues, gender equality, social justice, and environmental conservation. All of which take an extraordinary push in public policy to grapple with. So, the issues that millennials are supposedly most passionate about, require significant amount of public policy.
If you have both a law and a unit of measurement named after you, you know you've had a really productive life. Art Rosenfeld, often called the godfather of energy efficiency, had both. There's the Rosenfeld effect, which is the decoupling of California's energy consumption from population and economic growth, starting in the 1970s. And then there's the Rosenfeld. An unofficial unit of energy savings. The equivalent of 3 billion kilowatt-hours of saved electricity, or about one coal plant.
Art Rosenfeld pioneered the modern energy-efficiency movement. After his passing late last month, at age 90, we are going to take some time to remember his career and impact, which is quite significant. Katherine, can you provide us a bit more background on who Art was and what he accomplished?
Katherine Hamilton: Yes, so he really was as close to royalty as you could be on energy efficiency. I remember working early on -- my husband was the policy director for the Alliance to Save Energy for a number of years. And whenever Art would come in, I would always just feel insufficient. Like I just hadn't done enough. He was one of those folks who started at Berkeley as a physics professor. He decided during the Arab oil embargo, I'm going to apply this to energy efficiency and I'm going to solve problems that have immediate results, and I'm going to turn particle physics in to a career in energy efficiency.
So he got busy on it. He trained people. He started the ACEEE, which is the American Council for an Energy-Efficient Economy. That was started out of what he called a cold fury at President Carter whose only contribution to energy efficiency was to say, "Wear a sweater." They were so angry, they thought, we need to put together an organization that really advocates for energy efficiency.
So they built ACEEE. Howard Geller was the first employee and the first executive director, and it's still going strong and doing some of the best energy efficiency analysis out there. He's changed the lives of thousands of people, but he also was able to keep California's energy use constant since 1973 with all the policies they put in to place in California that were a result of what he did. As the U.S. energy use rose 50 percent, California's stayed steady.
Jigar Shah: The other fun fact about Art was he actually studied particle physics under Enrico Fermi of all people, right?
Katherine Hamilton: Yes. He was his last graduate student.
Jigar Shah: I mean, it's extraordinary, right? I only met Art once, and it was from afar at a lecture and so I didn't know him. But, his influence is widespread and I do think that it's really with a heavy heart that he passed away.
Katherine Hamilton: Yes, he said, what is dirt-cheap? In other words, oil and gas get treated like dirt and we just use it. So, energy is dirt-cheap and we treated it that way. He sort of changed the way we think about energy. When I was in San Francisco last week I had dinner with Dian Grueneich who was on the California Public Utilities Commission and knew him for years as he was with the California Energy Commission.
She's dedicated one of her classes to him at Stanford. She said he really made her think that she could change the world with energy efficiency.
Stephen Lacey: What's extraordinary about his career is that he did so much on the technology side and so much on the policy side. So, he convinced Jerry Brown to set up the first efficiency requirements for appliances and that kind of put in motion all these other standards that flattened California's energy consumption, as you pointed out, Katherine.
And then also, at the same time at this Center for Building Science at Berkeley, they were working on early compact fluorescent lamps, on other efficient light bulbs, on coatings for window glass to prevent thermal leakage, early analytics programs, computer programs for monitoring building usage. He basically set in motion the modern policy movement for energy efficiency. And, PG&E at that time in the 70s, hated him for it.
Jigar Shah: I think they still kind of hate him for it.
Stephen Lacey: Very likely. I guess a lot of utilities probably do who are facing major efficiency requirements. But, he really did so much on the technology development side, and also put into place all the policies that have been in place for the last couple of decades. Just really miraculous what he was able to do.
Katherine Hamilton: Yeah, and he also helped us decouple that energy use from economic growth.
Jigar Shah: Yeah, I think he did. The one thing I would say, and this is not anti-Art in any way, I do think that Art was really the godfather of energy efficiency 1.0. I do think that one of the things that we're doing now, and it's really obvious at this point, is moving to...energy efficiency sort of 2.0 or 3.0, right?
That the notion of electricity saved at any time of the day is what we're moving on to. I know from NYSERDA's perspective the $8 billion a year that all of us are spending on energy efficiency programs are really going away, and we're really moving toward energy efficiency procurement, right? Where we're actually looking to pay for DERs. We're paying for energy efficiency like you pay for a power purchase agreement in solar, or wind by time that it is produced.
So, I do think that it's an extraordinary thing to me, to see what foundation he built and what we're doing with that foundation now.
Katherine Hamilton: Yes, and that he sent all these missionaries out to start doing other types of energy efficiency too. Because so much of that energy efficiency 2.0 and 3.0 can be traced back to people that he educated all along.
I would just say that one thing to look at is ArtRosenfeld.lbl.gov, it's a really nice site that has a lot of videos about him. It has lectures by him. It shows him getting the National Medal of Technology and Innovation from President Obama in 2013, which is incredibly touching and well deserved. So, I would just recommend going and spending some time at that site.
Stephen Lacey: All right. It is that time of the show when we tell you something you may not know. Jigar, what's your story this week?
Jigar Shah: Well, as many people know, last week was Valentine's Day. I was just really enamored with all of the great outpouring of emails that I got on Valentine's Day from the solar industry. I think we're getting to the point where we're actually tailoring our marketing materials to what's happening in the consumer economy, which I thought was really extraordinary.
It was not but like two or three years ago that I thought our industry was completely, utterly cheesy. And I think we're getting to the point where we're far more sophisticated about this. There's a photo that I tweeted out that a lot of other folks have used where there's a solar panel installation that sort of looks like a heart. And, I don't know. I'm just really thankful that we're getting to that level of professionalism in our industry.
Stephen Lacey: Oh sure, you give the solar industry a shout-out, but you never got back to me on my love letter.
Jigar Shah: Hey, the best things come to those who wait, right?
Stephen Lacey: That's right. I can't wait any longer, what is yours, Katherine? Tell me something I don't know.
Katherine Hamilton: Another little Valentine. And this is thanks to my business partner Issac Brown, who went to a hearing this week of the House Energy and Commerce subcommittee on energy where they talked about modernizing energy and the electricity delivery systems. They talked about grid modernization and they even talked about renewable energy and not in a bad way.
Jigar Shah: What?
Katherine Hamilton: I know. He said the sub-committee chairman Fred Upton from Michigan talked about renewables and storage, as well as the need to upgrade and modernize the grid. Chairman Walden, who chairs the full committee, is from Oregon, and he talked about needing infrastructure legislation this year. That they're going to work on it. Bobby Rush is the ranking member from Illinois, the Democrat. And he talked about economic opportunity in low-income areas.
And, I think this was a great opportunity for us. There's a lot of noise right now in Congress. There are a lot of things that aren't getting done, but I think the conversation continues. Maybe not in terms of carbon or clean energy, but really on grid transformation, and I think that all leads to a cleaner grid.
Stephen Lacey: Ok, mine is a bit of bad news. Yesterday I found out, in a flurry of communications, that NRG Home Solar is shutting down its installation business. I don't think there's any need to go into the background of NRG's troubles on the distributed energy side, but it's kind of interesting to see this company that bought up the stranded assets or Verengo Solar after it went bankrupt, it bought up the solar assets from Next Step Living, which was struggling and eventually went bankrupt, and now it's completely spinning off of its residential business.
So, NRG kind of grew way too fast. Their customer acquisition costs were too high. There was a lot of investor pressure to get rid of the business, and last May, they announced on an investor call that they were cutting 500 jobs and limiting their focus only to Massachusetts, New York and New Jersey. Their installations fell way down. They got rid of a ton of people, and Kelcy Pegler, who was the CEO of Roof Diagnostics Solar, the eighth largest solar installer, who they acquired in 2014, he left. It was kind of a bloodbath. But they said, "OK, we're going to home in, we're going to make this a tight ship," and they decided that it just wasn't tight enough and they had to get rid of the entire installation business.
So, just another sign of how difficult it is to have a national model in solar installation. I should say as a side note that NRG has one of the biggest portfolios of renewables, and they bought up a bunch of assets from SunEdison. They have a couple gigawatts' worth of projects in the works. So, they're doing a lot in renewables. But, this home solar piece -- man, it's tough. They're just going to do sales origination to their retail customers and then pass those on to other installers who can hopefully figure this business out.
Jigar Shah: Yes, I feel bad about NRG Home shutting down. But, I do think that the laws of physics still apply. You can't spend $3,000-$4,000 to acquire each customer and expect to be profitable. I think that, for whatever reason, NRG was not focused on leveraging just its retail marketplace where they serve a lot of retail customers in Texas and in other places as their sales channel. They weren't willing to just limit themselves to the low-hanging fruit that you can get.
I think that is something that has played out across the residential supply chain, whether it's SolarCity or Sungevity or Sunrun or others. Basically, people have to realize that there's a limit to how much you can spend on growth, and everyone who overspent on growth is now pulling back, and I do think that's going to mean a much more resilient and sustainable residential solar industry.
Stephen Lacey: Yes. Certainly many more of the companies that we know today will no longer exist in the future. I don't want to get ahead of myself here, but I know that there are significant troubles still ongoing at Sungevity and so I would keep my eyes on that company as they try to figure out their next move.
Well, that's going to do it for us folks. Katherine, enjoy the rest of your week and weekend and we'll catch you next week.
Katherine Hamilton: Terrific. Thanks, you too.
Stephen Lacey: Jigar, talk to you later.
Jigar Shah: Always a pleasure.
Stephen Lacey: With Katherine Hamilton and Jigar Shah, I'm Stephen Lacey and we're The Energy Gang, a production of greentechmedia.com. We'll catch you next time.
