sustainable

HEROESg re e n l e a d e r s i n fo c u s

Bryan Martin

Catching the First WindLYNN JURICH

Empowering Homes

Larry Burns

EVolving Mobility

Mindy Lubber

Climate Warrior for Good

Victorien Erussard
Floating on H20

4Bryan Martin

5

Catching
the First Wind
Bryan Martin is the Founder and CEO of D.E. Shaw Renewable Investments (DESRI), which owns and operates renewable energy facilities
in North America, and Head of the D.E. Shaw group’s US Private
Equity business, where he helped found and lead Deepwater Wind.
Photo Credit: Joan Sullivan

You started investing in renewable energy projects for the D.E. Shawgroup back in 2005, and since then have been a very successful
investor in renewable energy. What’s your investment thesis?

Is renewable investing by big oil and gas companies just green marketing or are we seeinga real shift in their diversification strategies?

My overarching theme has always been technology change. I started
my career investing in public oil and gas companies at Fidelity. At
the time, 3-D seismic was changing the way smaller entrepreneurial
companies could find oil and gas and compete against the major
oil companies. New desktop computing allowed you to see what’s
underneath the earth’s crust and visualize it. This was a time ofsignificant technology change in the industry, which fundamentallyshifted the economics of finding oil and gas. What we’re seeing
in renewables is very similar – a technology shift in which renewables have become cheaper than large centralized thermal power
plants. Big utilities have had to embrace new technologies to staycompetitive. Since 2005, we’ve focused on investing in renewables.

The large oil and gas companies have struggled
because they seek scale and speed at the sametime. Offshore wind does offer scale, and theirinterest there is genuine. To be effective andcompetitive in renewables they need to learn
more about project financing and be open toutilizing it. The major oil companies have not
had to use cheap financing very often because
they have such big balance sheets. But at theheart of driving power prices down is driving
capital cost down, and the cheapest capital you
can get is often project finance. Without that it’svery hard. The oil companies have not been very
tolerant of building their projects in a way that
supports project financing. Therefore I don’t
think it is greenwashing, but a genuine learning
curve they’re going through that many independent power producers have already mastered.

A replacement cycle is going on in North America. Many of thepower plants in the U.S. were built in the 1950s, ’60s and ’70s,
with a 40-year expected life. These now have to be replaced, andrenewable power is an excellent, cost-competitive alternative evento nuclear power. In certain markets, renewables have been thecheapest power, even going back to 2005. For example, when we
started investing in Hawaii that year, wind was much cheaper thancoal or natural gas. We also started working on offshore wind incertain East Coast markets. In each market, our strategy has been
to identify the appropriate and cheapest technology to replace thepower source that is going offline.

Bryan Martin

You were instrumental in the success of Deepwater Wind, the catalyst for offshore wind to
take off in the U.S. What did you learn about
managing stakeholders - governmental andadvocacy constituents, as well as private sector
opponents?

Stakeholder management and permitting matter! And the biggest factor driving success ispaying attention to the needs of the markets
that we’re serving. We were fortunate to be earlyin the development of the offshore business in
the U.S., thereby solving for the replacement
cycle needs. New England had some of the oldest power plants in the country, and some ofthe hardest power plants to replace because of
population density. The only way to solve fordemand in these markets was to utilize offshorewind.
Our strategy was to build as far from shore as
possible to serve our stakeholders. The reality is that people don’t want to see the windfarms, and the good thing is that the economics are roughly the same building them close
to shore or farther out. Block Island was a bit
different; the siting decision there was driven
by permitting. It is much easier to permit anoffshore wind farm in state waters than in federal waters. Block Island happened to be morethan 10 miles offshore, and still in state waters.
Unfortunately, it still had to be built much closer
to shore than we would like, hence we made it
as small as possible and worked closely with thecommunity to gain their support. We achieved
80% local approval, which is huge. But that was

4Bryan Martin

5

Catching
the First Wind
Bryan Martin is the Founder and CEO of D.E. Shaw Renewable Investments (DESRI), which owns and operates renewable energy facilities
in North America, and Head of the D.E. Shaw group’s US Private
Equity business, where he helped found and lead Deepwater Wind.
Photo Credit: Joan Sullivan

You started investing in renewable energy projects for the D.E. Shawgroup back in 2005, and since then have been a very successful
investor in renewable energy. What’s your investment thesis?

Is renewable investing by big oil and gas companies just green marketing or are we seeinga real shift in their diversification strategies?

My overarching theme has always been technology change. I started
my career investing in public oil and gas companies at Fidelity. At
the time, 3-D seismic was changing the way smaller entrepreneurial
companies could find oil and gas and compete against the major
oil companies. New desktop computing allowed you to see what’s
underneath the earth’s crust and visualize it. This was a time ofsignificant technology change in the industry, which fundamentallyshifted the economics of finding oil and gas. What we’re seeing
in renewables is very similar – a technology shift in which renewables have become cheaper than large centralized thermal power
plants. Big utilities have had to embrace new technologies to staycompetitive. Since 2005, we’ve focused on investing in renewables.

The large oil and gas companies have struggled
because they seek scale and speed at the sametime. Offshore wind does offer scale, and theirinterest there is genuine. To be effective andcompetitive in renewables they need to learn
more about project financing and be open toutilizing it. The major oil companies have not
had to use cheap financing very often because
they have such big balance sheets. But at theheart of driving power prices down is driving
capital cost down, and the cheapest capital you
can get is often project finance. Without that it’svery hard. The oil companies have not been very
tolerant of building their projects in a way that
supports project financing. Therefore I don’t
think it is greenwashing, but a genuine learning
curve they’re going through that many independent power producers have already mastered.

A replacement cycle is going on in North America. Many of thepower plants in the U.S. were built in the 1950s, ’60s and ’70s,
with a 40-year expected life. These now have to be replaced, andrenewable power is an excellent, cost-competitive alternative evento nuclear power. In certain markets, renewables have been thecheapest power, even going back to 2005. For example, when we
started investing in Hawaii that year, wind was much cheaper thancoal or natural gas. We also started working on offshore wind incertain East Coast markets. In each market, our strategy has been
to identify the appropriate and cheapest technology to replace thepower source that is going offline.

Bryan Martin

You were instrumental in the success of Deepwater Wind, the catalyst for offshore wind to
take off in the U.S. What did you learn about
managing stakeholders - governmental andadvocacy constituents, as well as private sector
opponents?

Stakeholder management and permitting matter! And the biggest factor driving success ispaying attention to the needs of the markets
that we’re serving. We were fortunate to be earlyin the development of the offshore business in
the U.S., thereby solving for the replacement
cycle needs. New England had some of the oldest power plants in the country, and some ofthe hardest power plants to replace because of
population density. The only way to solve fordemand in these markets was to utilize offshorewind.
Our strategy was to build as far from shore as
possible to serve our stakeholders. The reality is that people don’t want to see the windfarms, and the good thing is that the economics are roughly the same building them close
to shore or farther out. Block Island was a bit
different; the siting decision there was driven
by permitting. It is much easier to permit anoffshore wind farm in state waters than in federal waters. Block Island happened to be morethan 10 miles offshore, and still in state waters.
Unfortunately, it still had to be built much closer
to shore than we would like, hence we made it
as small as possible and worked closely with thecommunity to gain their support. We achieved
80% local approval, which is huge. But that was

6Bryan Martin

7

a unique situation; in the future the industry
should refrain from building wind farms thatclose to shore.

tried to take that approach for many years, we’refinding more people come to us because they
believe that our projects will get done.

Offshore wind in Europe is a relatively mature
market and Europeans have been trying foryears to build projects in the U.S. Yet Deepwatercontinues to be one of a very few that has won
multiple U.S. contracts. What has been theircompetitive advantage?

What are the similarities to onshore wind?

The U.S. and Europe are completely different
markets. The European market tends to benefit
more from central planning, so a country canmandate that a project will get built and makesure all the resources required will be there to
support the company. Much of their offshorebusiness got built when the technology wasless mature, and they needed large utilities tobe successful.

The onshore renewable business takes moretime because you need to learn to work in 30-35
different submarkets and states. But they all
share several things: price matters; selling thepower and the size the utility wants matters; andactive stakeholder management, whether it’sneighbors, birds, or bats, matters. And project
delays make your customers unhappy because
producing the power that was promised is critical to utilities: they need it for their replacement
cycle.
So if you go back to 2005, did the future panout the way you expected back then?

The U.S. is much more cost-sensitive, and here
the renewable market is actually very large,
mature, and more successful than any market in the world in driving down the cost of
power. To succeed, one needs to embrace all
the local stakeholders, meet the requirement tobe cost-competitive, and avoid the tendency tobelieve that engineering is the most importantpart. Here, often a better project for the customers is a smaller project that doesn’t require
the utility or state to buy more power than theyneed – even though this costs slightly more
and isn’t the optimal engineering solution. In
Europe, one would choose the larger, optimallyengineered project.

It has taken a lot longer, and there were definitely more ups and downs than I expected. But
the thesis we wrote up in 2005 is remarkably
close to what happened: the first offshore windfarms are happening in states that we identified
then. Their size is roughly consistent with what
we thought, and stakeholders we thought we’dneed to be sensitive to are actually the mostconcerned. Most importantly, our fundamental
belief – that good projects do end up getting
built – came to pass.

The sale of Deepwater to Ørsted sought toaccomplish the best of both worlds: applyingØrsted’s engineering expertise and capability in getting projects built to smaller projects
that have been so successful in offshore U.S.
development.

It’s very hard to predict the timing, but I think
there’s potential to double that capacity number.
It could get close to 5GW. I do not believe thata lot of offshore wind will be built elsewherein the U.S. It will be highly concentrated in the
Northeast.

GTM predicts that 2 GW of offshore wind will
be built over the next five years in the U.S. Is
that a good estimate?

Photo Credit: Joan Sullivana very difficult place.
Do you see floating offshore playing a big rolein places like California and Japan, with dense
populations but deep continental shelves, where
drilling and traditional turbines are cost-prohibitive?
Ironically, floating offshore wind technology
could become popular in shallower waters but
current technology doesn’t allow that yet. Oneof the things that would make offshore windcheaper is to reduce the cost of foundations,
so I’m very hopeful. But within current leases,
floating doesn’t work now. In the East, we canbuild an awful lot within about 30 miles of shore
and fairly shallow water. In California, you get
two miles offshore and you’re in much deeper
water, which is why floating wind works greatout there. They also don’t have a lot of hurricanes.

first successful state renewable energy credit
system. It was the Texas wind boom that kicked
off falling power prices. And his motivator
wasn’t necessarily green energy. He was way
ahead of his time in understanding that renewable energy drives down the price of power ina market. Texas has some of the lowest power
prices in the country, and it’s due to the work
he initiated in the late 1990s.

Who is your sustainable hero and why?
I can’t stress the importance of stakeholder
groups enough. In the U.S., the fishermen, or
the local permitting authority, or coastal zone
management can stop a project. That doesn’t
happen in Europe. To us, stakeholder management is central to the way we do business, which
is why we’ve been successful on complex projects. For example, we are hyperfocused on thetypes of grass we plant at solar projects, anddoing innovative things beyond what’s required,to make sure that we don’t have storm waterrunoff to our neighbors’ soil. And because we’ve

What is the biggest impediment for offshore
wind growth in the Northeast?
The biggest impediment is cheaper renewableenergy alternatives, but they can never achieve
the scale that is needed in the Northeast. In
the Southeast, you can settle for other alternatives that are easier to implement and far lower
cost, so you don’t need to go offshore. The only
place in the U.S. you really need to go offshore
is New England, and parts of the West Coast;
however, from a regulatory standpoint, that’s

The first would be Gov. Gina Raimondo in Rhode
Island, who embraced the benefits to a local
economy of innovating a very large-scale industry, and provided leadership when there were anumber of other states better situated to be firstmovers. She was a real catalyst for launching
the whole industry, and it’s hard to find thatkind of leadership in politics.
The second one is George W. Bush as governorof Texas, who rarely gets credit for starting the
Photo Credit: Joan Sullivan

6

Bryan Martin

7

a unique situation; in the future the industry
should refrain from building wind farms thatclose to shore.

tried to take that approach for many years, we’refinding more people come to us because they
believe that our projects will get done.

Offshore wind in Europe is a relatively mature
market and Europeans have been trying foryears to build projects in the U.S. Yet Deepwatercontinues to be one of a very few that has won
multiple U.S. contracts. What has been theircompetitive advantage?

What are the similarities to onshore wind?

The U.S. and Europe are completely different
markets. The European market tends to benefit
more from central planning, so a country canmandate that a project will get built and makesure all the resources required will be there to
support the company. Much of their offshorebusiness got built when the technology wasless mature, and they needed large utilities tobe successful.

The onshore renewable business takes moretime because you need to learn to work in 30-35
different submarkets and states. But they all
share several things: price matters; selling thepower and the size the utility wants matters; andactive stakeholder management, whether it’sneighbors, birds, or bats, matters. And project
delays make your customers unhappy because
producing the power that was promised is critical to utilities: they need it for their replacement
cycle.
So if you go back to 2005, did the future panout the way you expected back then?

The U.S. is much more cost-sensitive, and here
the renewable market is actually very large,
mature, and more successful than any market in the world in driving down the cost of
power. To succeed, one needs to embrace all
the local stakeholders, meet the requirement tobe cost-competitive, and avoid the tendency tobelieve that engineering is the most importantpart. Here, often a better project for the customers is a smaller project that doesn’t require
the utility or state to buy more power than theyneed – even though this costs slightly more
and isn’t the optimal engineering solution. In
Europe, one would choose the larger, optimallyengineered project.

It has taken a lot longer, and there were definitely more ups and downs than I expected. But
the thesis we wrote up in 2005 is remarkably
close to what happened: the first offshore windfarms are happening in states that we identified
then. Their size is roughly consistent with what
we thought, and stakeholders we thought we’dneed to be sensitive to are actually the mostconcerned. Most importantly, our fundamental
belief – that good projects do end up getting
built – came to pass.

The sale of Deepwater to Ørsted sought toaccomplish the best of both worlds: applyingØrsted’s engineering expertise and capability in getting projects built to smaller projects
that have been so successful in offshore U.S.
development.

It’s very hard to predict the timing, but I think
there’s potential to double that capacity number.
It could get close to 5GW. I do not believe thata lot of offshore wind will be built elsewherein the U.S. It will be highly concentrated in the
Northeast.

GTM predicts that 2 GW of offshore wind will
be built over the next five years in the U.S. Is
that a good estimate?

Photo Credit: Joan Sullivana very difficult place.
Do you see floating offshore playing a big rolein places like California and Japan, with dense
populations but deep continental shelves, where
drilling and traditional turbines are cost-prohibitive?
Ironically, floating offshore wind technology
could become popular in shallower waters but
current technology doesn’t allow that yet. Oneof the things that would make offshore windcheaper is to reduce the cost of foundations,
so I’m very hopeful. But within current leases,
floating doesn’t work now. In the East, we canbuild an awful lot within about 30 miles of shore
and fairly shallow water. In California, you get
two miles offshore and you’re in much deeper
water, which is why floating wind works greatout there. They also don’t have a lot of hurricanes.

first successful state renewable energy credit
system. It was the Texas wind boom that kicked
off falling power prices. And his motivator
wasn’t necessarily green energy. He was way
ahead of his time in understanding that renewable energy drives down the price of power ina market. Texas has some of the lowest power
prices in the country, and it’s due to the work
he initiated in the late 1990s.

Who is your sustainable hero and why?
I can’t stress the importance of stakeholder
groups enough. In the U.S., the fishermen, or
the local permitting authority, or coastal zone
management can stop a project. That doesn’t
happen in Europe. To us, stakeholder management is central to the way we do business, which
is why we’ve been successful on complex projects. For example, we are hyperfocused on thetypes of grass we plant at solar projects, anddoing innovative things beyond what’s required,to make sure that we don’t have storm waterrunoff to our neighbors’ soil. And because we’ve

What is the biggest impediment for offshore
wind growth in the Northeast?
The biggest impediment is cheaper renewableenergy alternatives, but they can never achieve
the scale that is needed in the Northeast. In
the Southeast, you can settle for other alternatives that are easier to implement and far lower
cost, so you don’t need to go offshore. The only
place in the U.S. you really need to go offshore
is New England, and parts of the West Coast;
however, from a regulatory standpoint, that’s

The first would be Gov. Gina Raimondo in Rhode
Island, who embraced the benefits to a local
economy of innovating a very large-scale industry, and provided leadership when there were anumber of other states better situated to be firstmovers. She was a real catalyst for launching
the whole industry, and it’s hard to find thatkind of leadership in politics.
The second one is George W. Bush as governorof Texas, who rarely gets credit for starting the
Photo Credit: Joan Sullivan

8

Bryan Martin

This document is provided for your information only and does not convey investment advice or anoffer of any type with respect to any securities or other financial products. The D. E. Shaw groupdoes not endorse any information and/or beliefs discussed in the document and makes no representation as to their accuracy or adequacy. Please note the date of the document as the information
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