Investor on Texas as a climatetech hub, disruption opportunities with the grid, and more

Q&A

Tyler Lancaster, a Chicago-based investor with Energize Capital, shares his investment thesis and why Houston-based Amperon caught his eye. Photo courtesy of Energize Capital

One of the biggest challenges to the energy transition is finding the funds to fuel it. Tyler Lancaster, partner at Energize Capital, is playing a role in that.

Energize Capital, based in Chicago, is focused on disruptive software technology key to decarbonization. One of the firm's portfolio companies is Amperon, which raised $20 million last fall.

In an interview with EnergyCapital, Lancaster shares what he's focused on and why Amperon caught Energize Capital's attention.

EnergyCapital: Energize Capital has been investing in climate tech for the better part of a decade now. What types of companies are you looking for and how are these companies’ technologies affecting the greater energy transition?

Tyler Lancaster: We partner with best-in-class innovators to accelerate the sustainability transition. This means identifying climate technology companies at various stages of maturity — from early commercialization to approaching the public markets — that we can help scale and realize their full potential. We invest in software-first climate technology businesses, with a focus on asset-light digital solutions that can help scale sustainable innovation and enable the new energy economy. Our portfolio currently drives software applications across renewable energy, industrial operations, electrification & mobility, infrastructure resilience, and decarbonization. We primarily focus on proven, commercially available and economically viable energy transition solutions (solar, wind, batteries, heat pumps, etc.). These solutions suffer from challenges related to efficient deployment or operations, where enabling digital platforms can play a key role in optimizing costs.

EC: Amperon is one of Energize Capital's portfolio companies. What made the company a great investment opportunity for Energize Capital?

TL: Accelerating the energy transition will require critical forecasting tools like what Amperon provides. This is underscored by the escalating impact of extreme weather events, increasing penetration of variable energy resources, like wind and solar, on the supply side, and surging demand growth driven by flexible loads and rapid electrification. We believe the need for Amperon’s platform will only continue to grow, and their increased raise from Series A to Series B showed they are scaling smartly. We’ve also known Sean Kelly, Abe Stanway, and the entire Amperon team for a long time, and building strong relationships with founders is how we like to do business. Amperon has built a blue-chip customer base in the energy sector in a very capital efficient manner, which is more important than ever for startups operating in the current equity market environment.

EC: One of the energy transition’s biggest problems is sourcing and storing reliable and affordable energy. What have you observed are the biggest problems with Texas’ electricity grid and what types of new tech can help improve these issues?

TL: Today’s electricity grid and the demands we’re putting on it look very different than they ever have. Major changes in climate and extreme weather show how perilous and unreliable the power grids in this country are, particularly in regions like Texas that don’t have the right infrastructure to shield grids from unusual temperatures — just look at the damage done by 2021’s historic Winter Storm Uri. And consumer demand for electricity is increasing as electrification accelerates globally. The makeup of the grid itself is shifting from centralized power plants to distributed clean energy assets like solar arrays and wind turbines, which brings issues of intermittent electricity production and no traditional way to forecast that.

Tech solutions like Amperon are the only way to navigate the nuances of the energy transition. With global net-zero goals and impending Scope II accounting, Amperon’s expertise in granular data management further enables companies to build accurate, dynamic forecasting models with smart meter data and get more visibility into anticipated market shifts so they can optimize their energy use — all of which helps to create a more resilient and reliable power grid.

EC: You are also on the board of the company, which recently announced a collaboration with Microsoft’s tech. What doors does this open for Amperon?

TL: Partnering with Microsoft and offering its energy demand forecasting solution on the Azure platform enables Amperon to better serve more companies that are navigating the energy transition and a rapidly evolving grid. Many power sector companies are also undergoing cloud migrations with Microsoft Azure having high market share. This partnership will specifically accelerate Amperon’s reach with utility customers, who typically have slower sales cycles but can greatly benefit from improved accuracy in energy demand forecasting and adoption of AI technologies.

EC: As a non-Texas investor, how do you see Houston and Texas-based companies’ investability? Has it changed over the years?

TL: While most tech startups are concentrated on the coasts and in Europe, we see Texas emerging as a hub for energy and climate focused startups due to its vicinity to energy giants, which represent potential customers. Texas leads the country in renewable energy production and sits at the forefront of the transition. Energy companies based in this region are relying on technology innovation and software tools to modernize operations and meet the evolving demands of their customers.

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This conversation has been edited for brevity and clarity.

A Houston investor is looking to target high-potential hardtech startups within the energy transition with his new venture studio. Photo via Getty Images

Houston investor launches energy transition venture studio to help elevate early-stage hardtech startups

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The way Doug Lee looks at it, there are two areas within the energy transition attracting capital. With his new venture studio, he hopes to target an often overlooked area that's critical for driving forward net-zero goals.

Lee describes investment activity taking place in the digital and software world — early stage technology that's looking to make the industry smarter. But, on the other end of the spectrum, investment activity can be found on massive infrastructure projects.

While both areas need funding, Lee has started his new venture studio, Flathead Forge, to target early-stage hardtech technologies.

“We are really getting at the early stage companies that are trying to develop technologies at the intersection of legacy industries that we believe can become more sustainable and the energy transition — where we are going. It’s not an ‘if’ or ‘or’ — we believe these things intersect,” he tells EnergyCapital.

Specifically, Lee's expertise is within the water and industrial gas space. For around 15 years, he's made investments in this area, which he describes as crucial to the energy transition.

“Almost every energy transition technology that you can point to has some critical dependency on water or gas,” he says. “We believe that if we don’t solve for those things, the other projects won’t survive.”

Lee, and his brother, Dave, are evolving their family office to adopt a venture studio model. They also sold off Azoto Energy, a Canadian oilfield nitrogen cryogenic services business, in December.

“We ourselves are going through a transition like our energy is going through a transition,” he says. “We are transitioning into a single family office into a venture studio. By doing so, we want to focus all of our access and resources into this focus.”

At this point, Flathead Forge has seven portfolio companies and around 15 corporations they are working with to identify their needs and potential opportunities. Lee says he's gearing up to secure a $100 million fund.

Flathead also has 40 advisers and mentors, which Lee calls sherpas — a nod to the Flathead Valley region in Montana, which inspired the firm's name.

“We’re going to help you carry up, we’re going to tie ourselves to the same rope as you, and if you fall off the mountain, we’re falling off with you,” Lee says of his hands-on approach, which he says sets Flathead apart from other studios.

Another thing that's differentiating Flathead Forge from its competition — it's dedication to giving back.

“We’ve set aside a quarter of our carried interest for scholarships and grants,” Lee says.

The funds will go to scholarships for future engineers interested in the energy transition, as well as grants for researchers studying high-potential technologies.

“We’re putting our own money where our mouth is,” Lee says of his thesis for Flathead Forge.

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Capitalism and climate: How financial shifts will shape our behavior

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I never imagined I would see Los Angeles engulfed in flames in this way in my lifetime. As someone who has devoted years to studying climate science and advocating for climate technology solutions, I'm still caught off guard by the immediacy of these disasters. A part of me wants to believe the intensifying hurricanes, floods, and wildfires are merely an unfortunate string of bad luck. Whether through misplaced optimism or a subconscious shield of denial, I hadn't fully processed that these weren't just harbingers of a distant future, but our present reality. The recent fires have shattered that denial, bringing to mind the haunting prescience of the movie Don't Look Up. Perhaps we aren't as wise as we fancy ourselves to be.

The LA fires aren't an isolated incident. They're part of a terrifying pattern: the Canadian wildfires that darkened our skies, the devastating floods in Spain and Pakistan, and the increasingly powerful hurricanes in the Gulf. A stark new reality is emerging for climate-vulnerable cities, and whether we acknowledge the underlying crisis or not, climate change is making its presence felt – not just in death and destruction, but in our wallets.

The insurance industry, with its cold actuarial logic, is already responding. Even before the recent LA fires, major insurers like State Farm and Allstate had stopped writing new home policies in California, citing unmanageable wildfire risks. In the devastated Palisades area, 70% of homes had lost their insurance coverage before disaster struck. While some homeowners may have enrolled in California's limited FAIR plan, others likely went without coverage. Now, the FAIR plan faces $5.9 billion in potential claims, far exceeding its reinsurance backup – a shortfall that promises delayed payments and costlier coverage.

The insurance crisis is reverberating across the nation, and Houston sits squarely in its path. As a city all too familiar with the destructive power of extreme weather, we're experiencing our own reckoning. The Houston Chronicle recently reported that local homeowners are paying a $3,740 annually for insurance – nearly triple the national average and 60% higher than the Texas state average. Our region isn't just listed among the most expensive areas for home insurance; it's identified as one of the most vulnerable to climate hazards.

For Houston homeowners, Hurricane Harvey taught us a harsh lesson: flood zones are merely suggestions, not guarantees. The next major hurricane won't respect the city's floodplain designations. This reality poses a sobering question: Would you risk having your largest asset – your home – uninsured when flooding becomes increasingly likely in the next decade or two?

For most Americans, home equity represents one of the largest components of household wealth, a crucial stepping stone to financial security and generational advancement. Insurance isn't just about protecting physical property; it's about preserving the foundation of middle-class economic stability. When insurance becomes unavailable or unaffordable, it threatens the very basis of financial security for millions of families.

The insurance industry's retreat from vulnerable markets – as evidenced by Progressive and Foremost Insurance's withdrawal from writing new policies in Texas – is more than a business decision. It's a market signal. These companies are essentially pricing in the reality of climate change, whether we choose to call it that or not.

What we're witnessing is the market beginning to price us out of areas where we've either built unsustainably or perhaps should never have built at all. This isn't just about insurance rates; it's about the future viability of entire communities and regional economies. The invisible hand of the market is doing what political will has failed to do: forcing us to confront the true costs of our choices in a warming world.

Insurance companies aren't the only ones sounding the alarm. Lenders and investors are quietly rewriting the rules of capital access based on climate risk. Banks are adjusting mortgage terms and raising borrowing costs in vulnerable areas, while major investment firms are factoring carbon intensity into their lending decisions. Companies with higher environmental risks have faced higher loan spreads and borrowing costs – a trend that's accelerating as climate impacts intensify. This financial reckoning is creating a new economic geography, where access to capital increasingly depends on climate resilience.

The insurance crisis is the canary in the coal mine, warning us of the systemic risks ahead. As actuaries and risk managers factor climate risks into their models, we're seeing the beginning of a profound economic shift that will ripple far beyond housing, affecting businesses, agriculture, and entire regional economies. The question isn't whether we'll adapt to this new reality, but how much it will cost us – in both financial and human terms – before we finally act.

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Nada Ahmed is the founding partner at Houston-based Energy Tech Nexus.

Houston renewables developer powers two new California solar parks

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EDP Renewables North America LLC, a Houston-based developer, owner, and operator of renewable energy projects, has unveiled a solar energy park in California whose customers are Houston-based Shell Energy North America and the Eureka, California-based Redwood Coast Energy Authority.

Sandrini I & II Solar Energy Park, located near Bakersfield, is capable of supplying 300 megawatts of power. The park was completed in two phases.

“Sandrini I & II represent EDP Renewables’ continued commitment to investing in California and are a direct contribution to California's admirable target of achieving 100 percent clean electricity by 2045,” says Sandhya Ganapathy, CEO of EDP. “The Golden State is known for its leadership in solar energy, and EDP Renewables is elated to meet the growing demand for reliable clean energy sources.”

Shell signed a 15-year deal to buy power from the 200-megawatt Sandrini I, and the Redwood Coast Energy Authority signed a 15-year deal to buy power from the 100-megawatt Sandrini II.

In July, EDP announced the opening of the 210-megawatt Pearl River Solar Park in Mississippi. Earlier in 2024, the company debuted the 175-megawatt Crooked Lake Solar Park in Arkansas and the 74-megawatt Misenheimer Solar Park in North Carolina. Click here to read more.

Houston climatech incubator names new CFO

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Greentown Labs, a climatech incubator with locations in Houston and Somerville, Massachusetts, has hired Naheed Malik as its chief financial officer. In her new role, she oversees finance, accounting and human resources.

Malik previously worked at American Tower Corp., an owner of wireless communication towers. During her 12-year tenure there, she was vice president of financial planning and analysis, and vice president of corporate finance.

Before American Tower, Malik led financial planning and analysis at Wolters Kluwer Health, and was a management consultant at Kearney and an audit CPA at EY.

Kevin Dutt, Greentown’s interim CEO, says in a news release that Malik’s “deep expertise will be a boon for Greentown as we seek to serve even more climatech startups in our home states of Massachusetts and Texas, and beyond.”

“I am delighted to join Greentown at such an exciting time in its organizational growth,” Malik says. “As a nonprofit that’s deeply dedicated to its mission of supporting climatech innovation, Greentown is poised to build on its impressive track record and expand its impact in the years to come.”

Greentown bills itself as North America’s largest incubator for climatech startups. Today, it’s home to more than 200 startups. Since its founding in 2011, Greentown has nurtured more than 575 startups that have raised over $8.2 billion in funding.

Last year, Greentown’s CEO and president Kevin Knobloch announced that he would be stepping down in July 2024, after less than a year in the role. The incubator. About a month before the announcement, Knobloch reported that Greentown would reduce its staff by 30 percent, eliminating roles in Boston and Houston. He noted changes in leadership, growth of the team and adjustments following the pandemic.

Greentown plans to announce its new permanent CEO by the end of the month.

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