Houston gets clean energy incubator

Massachusetts lab plans site here to help launch startups

The nation’s largest clean energy incubator is expanding into Houston, testament that the city isn’t just an oil and gas town anymore and affixing a stamp of approval to its efforts to shift from fossil fuels to clean energy.

Greentown Labs of Somerville, Mass., said Tuesday that it will open a second U.S. location here next spring to capitalize on Houston’s role as energy capital of the world. Houston will soon be the energy transition capital of the world, Greentown Labs CEO Emily Reichert said during the announcement downtown.

The lab, which grew from a small group of startups nine years ago near the Massachusetts Institute of Technology in Cambridge, will provide space and funding to startups on the road to commercialization. The nascent ventures are expected to focus on carbon capture, hydrogen fuel technology, battery storage and other clean energy sources. The Massachusetts lab has helped launch 280 companies.

A site for Greentown Labs Houston wasn’t disclosed, but it will be near downtown, Reichert said. The lab is raising $7.5 million, enough for the first three years of operation.

Houston has tried in fits and starts to capitalize on its expertise and experience in fossil fuel ener

gy 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 conservative oil and gas industry, and few government policies that encourage green energy.

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.

“It starts to put us on the map for green energy,” said Ramanan Krishnamoorti, chief energy officer at the University of Houston.

Institutional reluctance has hampered Houston’s efforts to move beyond its oil drilling past. Only in recent years have renewables taken a more prominent role at oil conferences here, such as CERA Week by IHS Markit

and the Offshore Technology Conference.

To be sure, oil companies have had teams working on renewable energy projects, but most of the work was done in places such as California and Massachusetts.

But the industry’s shift toward clean energy was becoming impossible to ignore as Texas became the nation’s No. 1 wind producer and is carving out a leading position in large-scale battery storage as prices fall and technology improves.

A turning point came this year when the newly installed chair of the Greater Houston Partnership, Bobby Tudor, told hundreds of Houston business leaders that they needed to cut their greenhouse gas emissions and lead the transition to a low-carbon economy.

Tudor, chairman of the Houston investment firm Tudor, Pickering Holt & Co., told the executives that the time had come to publicly commit to reducing carbon emissions in their businesses and work to develop new

technologies, including carbon capture and alternative energy sources to reduce green house gases in the atmosphere.

“It was the first time anyone in authority in Houston said the city has to get off the dime on carbon sequestration,” said Jim Blackburn, professor of civil and environmental engineering at Rice University and an environmental lawyer in Houston.

Tudor’s speech gave the business community permission to discuss publicly what was being discussed privately, he said. It also provides a huge opportunity for economic development for a city that has struggled to land venture capital.

Of the top 10 U.S. cities for venture capital spending, only one in Texas — Austin — makes the list at $1.8 billion, compared with San Francisco, which is No. 1 with $24.1 billion, according to data firm Crunchbase News, which included investments through Jan. 2.

In Texas, Houston captured

13.3 percent of venture capital spending in 2019 compared with 61.1 percent for Austin and 14 percent for Dallas, according to Crunchbase.

The addition of Greentown Labs will likely spark more interest in investor funding, said Bob Harvey, president and CEO of the Greater Houston Partnership, an economic development group.

The addition also will reinforce Houston’s burgeoning culture of entrepreneurism and as a place where people can come to start a new business.

“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 Co., which manages Rice University’s endowment fund.

Greentown Labs started talking to Houston officials a year ago at CERAWeek about opening a lab here. The organization was drawn to the big energy companies, engineering expertise and the city’s effort to become carbon neutral by 2050.

Several companies have already signed on as project partners, including oil majors Chevron and Shell, power producer NRG Energy,

mining company BHP, French energy company ENGIE, and solar and energy storage service provider Sunnova.

Funding will come from venture capital firm American Family Insurance Institute for Corporate and Social Impact and the private equity firm SCF Partners. Tudor, Pickering, Holt & Co. 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,” Tudor said.