While microgrids and distributed energy resources (DERs) have picked up in popularity over the past few years within a small, yet vocal audience of energy infrastructure enthusiasts – like myself – it has demonstrated slow adoption.
Most companies entering into the space tend to struggle predominately with a mix of finding sources of capital to finance projects or struggle with customer acquisition.
However, many startups – whether providing a new hardware or software solution – may find success tapping into the budgets of cities and towns in climate progressive states like NY or CA.
Follow The State & Utility Subsidy Programs
I’ve worked in the climate space and in local politics for years now – predominately focused on DERs. Among the most untouched sources of capital that are rarely reported on are the ones made available directly to local governments to adopt new energy infrastructure.
Startups can leverage these programs as a means to drive adoption of their systems – mainly because cost tends to not be the barrier for adoption.
ConEdison in NY subsidies up to 100% of EV charging infrastructure for approved towns as of writing this, NYPA may cover the entire cost of putting solar on government-owned properties should the capacity result in reasonable community solar economics, and NYSERDA subsidizes a significant portion of energy efficiency upgrades through grants provided directly to the town or city.
However, many startups tend to miss the chance to bid for these projects or introduce their alternative to local town or city councils.
How To Win RFPs For State-Funded Grants
Crafting your product to fit within the constraints of the grant and creating relationships within both the grant issuing organization and local towns and cities is extremely important. Larger entities like ChargePoint or Flo will have dedicated regional sales managers who go out and actively engage in local politics as a means to understand the challenges each community is facing – which results in making effective introductions of your solution at the right time.
The best way to win or be in strong consideration for these town or city level DER related grants is to be:
- Entirely or mostly subsidized by the grant giver
- Highly de-risked by the grant giver (if utility issuing grant, get pre-approved through utility, this helps bypass the “previous projects” concern)
Managing Sales Timelines & Burn Rate With Government Grants
As with any SMB sale or Enterprise sale, you must plan for a 6 – 18 month close time. However, for many deep tech cleantech solutions in the DER space looking to close their first “commercial sale” it’s best to start building relationships within your local community and engaging as a thought leader in your sector well before you’re ready to begin your commercialization phase.
Most early sales for startups when dealing with local towns or cities tend to come from personal relationships.
Programs like 76West in NY are a great example of how local city partnerships can result in funding opportunities for startups.
So, if you or a team member have time over a weekend – investing early in learning about funding opportunities being issued to local towns or cities – it is highly likely you can get your first few sales with a government – though you should plan to be as competitive as possible during the RFP process.
How Local Town Climate Funding Will Prove Valuable For Climate Focused Startups
These grants are issued to help move states closer to their overarching climate goals. With bipartisan support for new renewable and resilient grid infrastructure, there are new programs being introduced across the US to help each community tap into state funding to make the climate-friendly choice.
As startups begin to learn the landscape of these grants I fully expect to see this as a preferred route for many hardware and software DER startups to get an early customer. As these grants make DER projects rather de-risked for many of these local towns.
About The Author
Swarnav is the CEO of TouchLight, a utility backed energy company that develops grid-edge management software for residential and commercial properties.
Concurrently, Swarnav founded The Impact to help provide a platform for operators within the industry to share their opinions about how the cleantech space is evolving. He also is appointed as the Chairman for the Town of Yorktown’s CSC Task Force, where he helps with legislation and sustainability efforts within the town.
Swarnav has a background in building physical products and has been working in the energy space for a decade. He also holds 2 patents and is active in the tech, energy and finance industries.