“Turning buildings into Teslas” is a lofty goal, but that's exactly Donnel Baird's mission. The CEO and founder of BlocPower has created a company that's working to get buildings across the U.S. off of fossil fuel-powered heating and cooling systems and onto electric heat pumps and solar panels.
But Baird wants to ensure those Tesla-esque buildings aren’t just available to the rich: BlocPower’s decarbonization mission is starting in low-income communities. Environmental justice is at the core of the Brooklyn-based startup’s business, and for Baird, that focus isn’t just about doing what’s right: It’s also good business. BlocPower has raised over $100 million to green urban buildings, including a $5.5 million grant from the Bezos Earth Fund and $30 million from Microsoft.
Even though it’s part of the company’s slogan, Tesla might not be the right comparison for BlocPower. The electric cars are a classic example of the “green premium”: pretty expensive, and still out of reach for most people. By contrast, Baird told Protocol that his goal is for BlocPower to be the Walmart or Amazon of clean tech, as in he wants to drive costs down and make electrification affordable “for every American.”
In Baird’s view, BlocPower’s investors are in it not just because they’re “nice people,” but because they see that serving low-income families with clean energy is a $5 trillion market opportunity.
He sat down with Protocol to talk about the future of sustainable homes, what’s needed to electrify the country at scale and the tech industry’s role in bringing about true climate justice.
This interview has been edited for brevity and clarity.
Obviously the IRA was just passed, and part of it is consumer tax credits for the built environment. Do you feel like that’s enough action from a policy standpoint to get heat pumps into the mainstream, or is there additional federal or state legislation that is necessary?
There’s always more federal legislation that’s needed. Fighting climate change is going to be a lifelong pursuit if we’re lucky. But I do think it’s an incredible start. In terms of this, [with] the Senate bill, the research and development money that’s in the Chips Act for climate change — which a lot of people are not talking about — as well as the president’s use of the military Defense Production Act, which incentivizes domestic manufacturing, we have a lot of policy pieces in place that are more than enough to jumpstart a massive building electrification movement in the U.S.
Now we, as the private sector and citizens, have to take it and go off to the races.
Are you already seeing the ripple effects of this bill on BlocPower’s business?
Everyone’s really excited and interested. Homeowners are really interested in what’s in it for them. If they get a new electric vehicle or charging station or heat pump, how much money are they entitled to? We’re seeing a lot of interest in that. Venture capitalists and investors are looking to make money off of the coming green boom.
Electrical retrofits are expensive, and the lowest-income homeowners are likely to be left behind in the transition. How do we deal with that?
I think the [Inflation Reduction Act] bill was written in a way that provides more capital to low-income households. Just like the student loan policy that came out recently, households over a certain income level won’t be able to access the rebates. There’s provisions in the home electrification bill that are similar. So families that have the lowest income are the ones getting the highest rebates. That’s just on the equipment side.
On the labor side, we can create hundreds of thousands of jobs for low-income and working families to electrify and decarbonize buildings. And by training and hiring these new low- and moderate-income workers, we’re increasing the labor supply, which will reduce the cost of electrification overall across the entire industry. The policy is going to bend the entire cost curve of home electrification.
Energy costs are a much higher percentage of overall income in a low-income household, so when you reduce energy costs, that matters more financially to low-income customers. I would expect that there would be increased demand for home electrification, as long as it’s affordable, which is our job at BlocPower: to make sure that all this stuff is affordable for low-income people.
A growing number of cities are implementing gas bans in new construction, but there's not a ton being done for existing building stock. How do we go about fixing old buildings?
New York City has a law on the books that fines all existing building owners if they don’t figure out how to reduce greenhouse gas emissions by huge percentages over the next three years. Boston, Ithaca and Menlo Park are all passing laws and legislation that are advising or mandating all buildings to do retrofits and reduce carbon emissions.
What are the biggest challenges for cleaning up existing buildings' carbon emissions?
When you’re designing a building from scratch, it’s easy to design when you’re starting from a tabula rasa. In an existing building in cities like New York, where you have buildings that were built 100 years ago, some of them were designed to burn coal to heat the buildings. Well, now we get coal to gas, oil to heat pumps.
A lot of cities, hundreds, have said by 2040 or 2050, they’re going to 40%, 50% or even 100% decarbonize, but several cities are going further. We want to partner with them and demonstrate that it can be done.
So you have to redesign the energy system, and in many instances you have to replace the roof or the windows or remove lead, mold and asbestos. Or you have to redesign the plumbing systems and the architecture, but we think it’s worth it. And it’s the only way to reduce greenhouse gas emissions. The good news is that once you do the project, the buildings save money on their energy costs, and they’re healthier, more comfortable and more valuable when you resell the building.
The other challenge of decarbonizing buildings is not just installing the technology in homes to move them off gas and into electricity, but also the challenge of reducing emissions in the electric grid. How can we ensure building policy and grid policy link up?
I think grid policy is always inextricably related to building policy. Building policies drive demand, and future demand of energy is what dictates grid policy. Regulators and policymakers for the energy grid across the country are constantly reviewing how much future and current demand is on the grid. And so they just need to incorporate the fact that there’s going to be increased electricity demand and decreased fossil fuel demand from the grid. The energy companies also need to shift to renewable energy, and they’re doing that all over the country, not only because it’s the right thing to do but because the cost of renewable electricity is now cheaper. So I don’t think we’re going to have as difficult a time as other people may imagine.
Global supply chain issues have been affecting everything, including heat pump parts. Can you talk a little about this, and what the challenges are specifically?
We’ve seen delays in terms of heat pumps being shipped, delivered and installed. While a lot of firms are Japanese, a lot of the firms we partner with like Daycon, Mitsubishi, Fujitsu, do have manufacturing facilities in the U.S. Mitsubishi North America is headquartered in Georgia, and they have a new heat pump facility in New Jersey. Daycon has a factory in Texas. So when you look at President Biden and what the senators did in terms of the military Defense Production Act, the R&D money in the Chips bill and the manufacturing dollars in the IRA, we are going to see a very robust investment in domestic manufacturing of electric vehicles, EV batteries and charging stations. You can’t access some of the tax credits unless you have an American-made vehicle, so there is an investment in the heat pump supply chain that’s going to streamline the industry over time and lower costs. Europe is going to be relying on us in many ways to produce heat pumps at scale, so we can supply heat pumps to Europe in kind of a Marshall Plan 2.0. Supply chain disruptions were particularly acute 12 months ago, less so now.
What city or region is doing a good job in transitioning to clean homes, and how can others replicate this success?
Menlo Park has said that every building in the city has to be electric and fossil fuel-free by 2030. San Jose has said that as well, but they haven’t hired us to implement that, while Menlo Park has. We salute all the cities that are saying they’re going to be 100% fossil fuel-free in the building sector in seven years. A lot of cities, hundreds, have said by 2040 or 2050, they’re going to 40%, 50% or even 100% decarbonize, but several cities are going further. We want to partner with them and demonstrate that it can be done. New York City has the most aggressive green buildings climate law in the world that Mayor de Blasio passed, which fines buildings sometimes $1 million dollars a year if they don’t reduce greenhouse gas emissions, and those fines start in 2024 and increase as we head into 2020, 2030. It’s not a 100% reduction in greenhouse gas emissions, but it is significant that there’s a financial penalty attached. We really like what New York, Ithaca, Menlo Park and San Jose are doing and encourage other cities to follow those models.
What is on BlocPower’s agenda for the next six to 12 months? What projects are you most excited about?
For us, it’s Ithaca, Menlo Park and New York City. BlocPower is responsible for helping these three cities complete a substantive majority of building electrification projects in their city. So in New York City, we have 1,000 workers that we’re going to send building to building to electrify buildings. In Ithaca, we’re the program manager to figure out, implement and finance how they decarbonize 6,000 buildings over the next seven years. In Menlo Park, we’re the program manager to decarbonize 10,000 buildings over the next seven years. We’re very excited about our partnerships with these local governments.
We have a partnership with Microsoft and with Goldman Sachs where they’ve loaned us about $100 million to invest in greening low-income buildings across the cities. We have a partnership that we’re developing with the Bezos Earth Fund where we’re building digital models of 125 million buildings across America to help homeowners and elected officials figure out how to target which buildings are easiest to electrify. What kinds of equipment do we need to manufacture to put into all the buildings? What kind of workers do we need to train? Do we need more electricians, and if so, do they need to be trained on wiring or PB installation and inverters? Jeff Bezos is working with us so we can really provide a road map for how we decarbonize millions of homes across America. So we’re really excited about that.
For BlocPower to achieve its goal of decarbonizing American homes, it requires a confluence of many things all working out: policy alignment, political action and technology and supply chain issues, as well as the cooperation and buy-in of private investors and American homeowners themselves. Which of these areas is the biggest challenge, and why?
It depends on what day you’re asking [laughs]. I would say labor supply, or skilled workers who can do electrical work, plumbing and deal with the removal of hazardous materials like lead and asbestos from folks’ basements. Removing these materials, wiring buildings and installing all-electric heating systems requires a lot of green-collar workers. And right now America has a shortage of skilled construction workers of any kind, which is why millennials can’t buy homes: because there’s just not enough skilled workers to put up the houses.
That labor supply is a big problem, but what a massive opportunity. As someone from a low-income community and [who] is very concerned about employment opportunities and wealth-building for low-income families, I know that there’s millions of Americans that we can train and hire to solve this labor crisis and create the labor pool that’s going to lower prices for everyone.
Why should climate justice be a core part of the tech industry’s climate goals?
It’s just inefficient to hire a bunch of rich kids to make products for rich people. There’s a massive market opportunity for the rest of the country, the rest of the world. We need products and services, and there’s just more of us. So if you’re going to get your MBA and be like, “I’m going to invent Uber for dog walking,” I mean, great. But there are real problems around the world that families are facing, and it’s a real privilege to use technology to meet those challenges.
