Commentary: Can Houston lead on clean energy like it has on oil and gas?

By Marilyn Waite
Houston is diversifying to meet the market – and this could be good news for entrepreneurs solving energy challenges.

What do the new Secretary of State and Secretary of Energy have in common? They both hail from Texas, a state with a rich history of energy booms, busts, and yes, innovation.

Marilyn Waite leads the Energy Practice at Village Capital, a global venture capital firm that discovers, develops and invests in entrepreneurs solving real-world problems. She is the author of “Sustainability at Work.”

While Texas – and its main industry hub, Houston – might be synonymous with oil and gas, there are signs that the city is building an edge on new, cleaner forms of energy. Consider it an attempt to further diversify. And entrepreneurs are leading the movement.

Oil has a long history in Texas: it was first used by Native Americans for medicinal purposes. Today, there are more than 300 oil and gas companies operating in Houston alone, encompassing virtually the entire supply chain of the industry. Outside of lobster fishing in New England, few regions can claim quite such a chokehold on a market. But, as cities such as Pittsburgh have learned, over-reliance on any one industry can be harmful in the long run.

The 21st century has ushered in a wide set of challenges to the energy industry. Climate change and resource efficiency concerns have caused the industry to shift toward renewable energy resources like wind and solar energy (and to a lesser extent geothermal and biomass). Meanwhile, new innovations in fracking have opened up an abundant supply of domestic natural gas. As a result of oversupply, oil prices have bottomed out.

Houston began to diversify into industries beyond O&G, such as health care and transportation, especially after the oil crises of the 1970s and the oil glut of the 1980s. But faced with new energy challenges, there are signs that the city is looking to diversify from within the energy sector. But how?

The answer lies in innovation, entrepreneurship and investment. Station Houston and Good Works Houston are examples of entrepreneurship support organizations dedicated to innovation in Houston. Station connects entrepreneurs with mentors, talent, coworking space, accelerator programs, and investors, while Good Works supports entrepreneurs addressing social and environmental challenges. In 2016, The New Society Portfolio and Good Works Houston hosted an Investment Innovation Summit, gathering thought leaders, investors, and entrepreneurs solving energy challenges.

Houston-based energy startups are also emerging. M-Trigen manufactures micro combined cooling, heat and power systems designed to provide power for residential, commercial, industrial, military and government markets. Clare Magee, Houston-based Director at MP2 Energy, oversees the implementation of a solar product suite.

Last year the city hosted a gathering of investors who invest in energy startups beyond O&G, including those improving energy efficiency in long haul trucks. The Houston-based players were interested, from corporate VCs such as Schlumberger Ventures, Saudi Aramco Ventures, and Chevron Technology Ventures, to angels such as those from the Houston Angel Network.

The road to transforming the energy industry has not always been smooth. Surge Ventures, a top-ranked Houston-based accelerator fully dedicated to energy innovation, closed its doors in April 2016. The founder, Kirk Coburn, in an open online letter, cited lack of support from the oil and gas industry as a top reason for closing.

“We clearly were not solving a customer problem in the eyes of the old guard,” said Coburn. “…until the industry [is] faced with a real threat from an electron entrepreneur, the technologies that I am peddling (which are awesome by the way) will never be appreciated, nor valued appropriately.”

Encouraging signs, however, remain, indicating an increased appetite for supporting and investing in ventures that are solving energy challenges broadly, outside of the oil and gas industry. Houston has promise as a home for entrepreneurs solving challenges in energy sustainability.