The Growing Market for Building Retrofits

Making existing buildings more energy efficient and resilient to extreme weather events driven by climate change represents a substantial, multi-billion dollar business opportunity. However, access to this market has proven challenging for low-income communities, hindered by issues such as ineffective incentive programs and difficulties in determining the most impactful upgrades for specific structures.

Introducing BlocPower’s Innovative Approach

BlocPower, a New York-based startup, offers a unique solution to identify, develop, and profit from building upgrades in underserved communities. Founded by a long-time advocate for energy efficiency and associated job creation, the company is dedicated to providing well-compensated employment opportunities within the communities it serves.

Securing Significant Funding

The company has successfully secured $63 million in combined equity and debt financing to further its mission. This includes an $8 million equity investment from leading venture capital firms and a $55 million debt facility, partially structured by Goldman Sachs, designed to fund BlocPower’s redevelopment projects.

Broad Industry Interest and Government Support

These financial commitments are not solely philanthropic. A wide range of entities – including healthcare providers, utility companies, real estate developers, and property managers – have a significant stake in the success of this burgeoning market. Furthermore, over $1 billion is anticipated to be allocated towards weatherization and building upgrades within the pending stimulus package currently under consideration by Congress.

A Personal Connection to Community Revitalization

For BlocPower’s founder, Donnel Baird, the revitalization of buildings and the creation of quality jobs within local communities is deeply personal. Born and raised in Brooklyn’s Bedford-Stuyvesant neighborhood, Baird witnessed the devastating effects of violence and unemployment during the crack epidemic and economic downturn of the 1980s and early 1990s.

Driven by a Desire for Opportunity

Experiencing violence firsthand, including an incident on his commute to school, fueled Baird’s determination to “create jobs for disconnected Black and brown people,” preventing them from experiencing the hopelessness and lack of opportunity that can perpetuate cycles of violence.

From Activism to Entrepreneurship

Following a family relocation to Stone Mountain, Georgia, Baird pursued higher education at Duke University. He then became a climate activist and community organizer focused on the development of green jobs. This path led him to a role in Barack Obama’s presidential campaign and an offer to join the administration in Washington, D.C.

Recognizing Implementation Challenges

Baird ultimately declined the position in Washington, opting instead to work on implementing the initial stimulus package aimed at promoting green jobs. It was during this experience that he identified the core problem that would inspire the creation of BlocPower – the challenges inherent in implementing large-scale building upgrades.

The Risk of Inconsistent Retrofits

“If you have 10 buildings on a block built by the same developer, retrofitting them without proper assessment could lead to dangerous outcomes,” Baird explained. “In some buildings, you might inadvertently trap carbon monoxide, while others could achieve significant energy savings.”

A Comprehensive Assessment Process

Prior to undertaking any retrofit project, Baird emphasizes the need for thorough assessment. This includes evaluating the potential for asbestos contamination, understanding existing heating, ventilation, and cooling systems, and determining the specific upgrades required.

BlocPower’s Software-Driven Solution

BlocPower addresses this core challenge through proprietary software that analyzes a building’s construction by creating a digital twin based on blueprints and public records. This digital model allows the company to identify necessary upgrades, secure financing, and manage the retrofit process, ultimately capturing the value of energy savings and carbon offsets.

The Importance of Financing

Securing financing is crucial to BlocPower’s success. Without access to loans for upgrades, government funding remains inaccessible. “The $7 billion allocated for green building investment failed to deliver results because of this financing gap,” Baird stated. “BlocPower’s software can simulate building characteristics using government records, reducing assessment costs.”

Origins at Columbia University

Baird, along with co-founder Morris Cox, developed BlocPower while attending Columbia University’s business school, aiming to overcome technical and financial obstacles to community-based renewable retrofit projects.

A Pivotal Moment and a Sacrificed Grade

Prior to graduation in 2014, the company secured a contract for energy efficiency retrofits and was invited to pitch to the president at the White House. However, the pitch conflicted with a mandatory final exam. Baird chose to attend the pitch, winning the contract but failing the class.

Facing Investor Skepticism

Following this success, Baird sought funding in Silicon Valley, meeting with over 200 investors. Many were wary of cleantech investments, having experienced losses during the first cleantech bubble.

Securing Early Investment

Andreessen Horowitz initially declined to invest, citing a policy against cleantech. However, after working with Mitch Kapor, Baird secured a meeting with Ben Horowitz, who, along with Kapor, ultimately invested in BlocPower.

Demonstrating Proof of Concept and Scaling Up

Since its launch, BlocPower has completed retrofits in over 1,000 buildings, demonstrating the viability of its approach. With the new revolving credit facility, the company is poised to expand its operations, including a $30 million contract with New York utility companies contingent on successful retrofits and verified energy savings.

Expanding to New Markets

BlocPower is also initiating projects in Oakland and Chicago.

Beyond Energy Savings: Public Health Benefits

Margaret Anadu, a managing director at Goldman Sachs, highlighted the broader benefits of building retrofits. “BlocPower is demonstrating that commercial solutions can improve public health in underserved communities, create quality jobs, and reduce carbon emissions,” she stated.

Additional Revenue Streams

Investor and director Mitch Kapor identified potential additional revenue streams linked to the public health benefits of building upgrades. “There are known connections between buildings and pollution, impacting public health. Hospitals may be incentivized to improve health outcomes, and BlocPower could be compensated for reducing carbon emissions and improving air quality.”

Social Impact and Political Alignment

Both Kapor and Baird emphasize the social impact of BlocPower’s work, viewing the creation of green jobs as a catalyst for social justice and a means of rebuilding alliances with working-class voters. Baird believes that providing employment opportunities is the most effective argument for climate change policies that have faced resistance from some union workers.

“We will not be able to pass meaningful climate legislation unless workers and people of color are actively engaged and advocating for change,” Baird asserted. “We must enact legislation that facilitates large-scale green infrastructure investment.”

A Model for Community Engagement and Political Action

Baird cited the Oakland pilot project as an example of how climate policies can create jobs and mobilize political action. “In Oakland, we’re training local workers of color and putting them to work on these projects. This model requires them to contact their representatives, like Chuck Schumer, to advocate for progressive green building legislation.”