Houston’s role as energy capital of the world is growing beyond oil and gas into green and renewable energy with the expansion of the largest US clean energy incubator into the city.
“Houston will soon be the energy transition capital of the world,” said Emily Reichert, chief executive officer of Greentown Labs of Somerville, Massachusetts, in announcing that her company will open a second US location in Houston next spring. “Opening Greentown Labs’ second location in Houston is the best place to broaden our impact and help accelerate the energy transition through cleantech entrepreneurship, in partnership with the nation’s fourth-largest city and the world-leading energy organizations headquartered there,” she said.
The labs, which grew from a small group of startups 9 years ago near the Massachusetts Institute of Technology in Cambridge, will provide space and funding to startups focusing on carbon capture, hydrogen fuel technology, battery storage, and other clean energy sources. Greentown has helped launch 280 companies to date.
The Houston Chronicle reported that Houston has tried in fits and starts to capitalize on its expertise and experience in fossil fuel energy to expand on the growth of renewables. But the effort has been hampered by insufficient venture capital that favors coastal startups, a wary attitude about the legitimacy of climate change from the oil and gas industry, and few government policies that encourage green energy.
Of the top 10 US cities for venture capital spending, only one in Texas—Austin—makes the list at $1.8 billion, compared with San Francisco, California, which is No. 1, with $24.1 billion, according to data firm Crunchbase News, which included investments through 2 January. In Texas, Houston captured 13.3% of venture capital spending in 2019 compared with 61.1% for Austin and 14% for Dallas, according to Crunchbase.
Although oil companies have had teams working on renewable energy projects, most of the work has been carried out in places such as California and Massachusetts. Texas becoming the nation’s top-ranked wind producer and carving out a leading position in large-scale battery storage shed new light on Houston as a potential leader in energy transition.
Houston needed a catalyst, a place where entrepreneurs could come together to talk about ideas, make mistakes and then learn from them, said one energy expert. With the expansion into Houston, Greentown Labs aims to build a bridge between the Boston and Houston metro areas to have the best and brightest engineering and business minds in energy working together.
“It helps to legitimize Houston as a place to invest and come up with new ideas,” said Ryan LeVasseur, managing director of real estate for Rice Management, which manages Rice University’s endowment fund.
Greentown Labs is raising $7.5 million, enough for the first 3 years of operation. Funding will come from venture capital firm American Family Insurance Institute for Corporate and Social Impact and the private equity firm SCF Partners. Partners and supporters of the labs include Chevron, NRG, Shell, BHP, ENGIE North America, and Sunnova. Tudor, Pickering, Holt, and Company (TPH) will provide strategic and financial advice.
“With Greentown Labs now here, we have a terrific new partner in our efforts to build the energy industry of the future,” said Bobby Tudor, chairman of TPH.
