CEO Roundtable: Boulder area a fertile ground for clean tech, but regulatory, funding challenges remain

BOULDER — Boulder has emerged as a budding clean-technology powerhouse, but challenges with the regulatory environment, innovation pinch points, access to capital and workforce recruitment remain persistent hurdles for local firms looking to step onto the national stage. 

Energy-firm executives gathered Tuesday to discuss the state of the industry at BizWest’s CEO Roundtable on Clean Tech at Plante Moran’s Boulder offices.

The clean-tech industry in Colorado, and specifically in the Boulder area, is unique in that it embraces a variety of types of companies that many might not immediately associate with the energy sector, Colorado Cleantech Industries Association executive director Shelly Curtiss said. That include plant-based natural-foods brands, cannabis and hemp producers and other agricultural-technology firms.

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The local innovation ecosystem, which is driven collaboratively by private industry, educational institutions and research hubs such as the National Renewable Energy Laboratory in Golden, is robust and diverse in no small part because of “all of the brain power that’s here in Colorado and all of the brain power that moves here to Colorado,” she said. “… I feel like [the industry] is stronger now than it has been in the last 10 years.”

Boulder’s position as a popular destination for clean-tech workers can be both a blessing and a curse, industry leaders said. 

“People love Boulder, but there’s no doubt it is an expensive place” to recruit and retain employees, Homer Energy LLC CEO Peter Lilienthal said. 

In fact, Siemens Power Generation director Jacques Nader said his firm’s Boulder office is one of its most expensive to staff and operate. Siemens is headquartered in Germany and has offices in some of the most expensive cities in Europe and Asia.

Raising capital

While local firms are accustomed to shelling out cash for top-dollar talent, local investors are more hesitant to open their wallets for clean-tech companies. 

“It’s not all been a bed of roses,” e-Chromic Technologies Inc. founder Loren Burnett said of raising capital. 

Companies can find themselves stuck in no man’s land of sorts, he said. “You need more money to operate on a larger scale but [no investors] want to give you any money because you’re not large enough in scale.” 

While Boulder’s clean-tech industry is strong, local investors often hesitate to lead funding rounds, Curtiss said. “Everybody is still going to the coasts and overseas to get funding.” 

Nader noted the scarcity of “patient money,” or investors who are willing to wait multiple years to see a return. Clean-tech startups can take longer to pay off than successful firms in other industries. 

High-profile failures such as Solyndra, which became a political hot potato during the Obama administration, scared some investors away from clean tech in the past, but “I don’t think that’s part of the conversation much anymore,” Burnett said. “Those days are over.”

Namaste Solar CEO Jason Sharpe observed that large technology firms such as Amazon or Apple would appear to be fertile sources of investment for up-and-coming clean-tech startups.

However, “big companies want to write big checks,” he said. Tech giants would often prefer to make a splashy $100 million investment than a $5 million investment, and Boulder clean-tech firms are much more likely to need that smaller scale funding assistance.

Red tape

The regulatory environment, from the local level to the federal level, plays an outsized role in the fates of companies in the clean-tech sphere. Government rules can serve as both drivers of innovation and costly headaches for executives. 

On one hand, regulations can prod clean-tech innovation forward by making it more expensive for more-traditional (and often more carbon-emitting) energy companies — electric utilities, coal-powered plants, etc. — to do business. This makes it more profitable to develop new and cleaner energy technologies.

State and city mandates related to vehicle emissions reductions can help “push the [electric vehicle] industry forward.” Microgrid Labs principal Namit Singh said.  

On the other hand, it’s often most important for governments to simply stay out of the way, Hygge Power CEO Caleb Scalf said. 

The complexity and ever-evolving nature of the industry makes it a particularly difficult one to legislate, he said.

“I’m having a difficult enough time explaining things to investors,” Scalf said. “How is a politician supposed to understand these issues?”

The best practice for regulators to adhere to, he said, is a simple one: “Tax waste and incentivize people who are doing things to reduce carbon emissions.”

Jack’s Solar Garden CEO Byron Kominek said he has had positive experiences working with county-level officials to tweak land-use and zoning regulations. Testimony and support from scientists and researchers at places such as NREL helped move the ball forward and convince regulators that changes to code would be beneficial not only to the company, but to a wider swath of constituents. 

EnergySense LLC CEO Carl Lawrence said firms can benefit from joining forces to advocate on behalf of the industry. In fact, he said he’s working to develop a local business association for companies in the EV and autonomous-vehicle spaces.

Coronavirus supply chain disruption?

Like all leaders in all industries, clean-tech executives are keeping a close eye on the coronavirus.  

“It hasn’t hit us badly yet, but we’re nervous,” Sharpe said of Covid-19’s potential to wreak havoc on the firm’s supply chain. 

The cancellation or postponement of conferences and trade shows has already had an impact on firms that rely on industry events for marketing, sales and networking, Lilienthal said.