The path to zero waste.
EXCLUSIVE: This Davis company has raised a major financing round for its clean-energy technology
Davis-based Sierra Energy is getting a major capital infusion from a large private investment fund, in a deal that could speed up the commercialization of Sierra’s clean-energy technology and lead to the creation of new manufacturing jobs.
The investment is believed to be $57 million, according to sources in the Davis business community.
Neither Sierra Energy nor the investor, SteelRiver Infrastructure Partners, would confirm the amount, however. Both said in a statement that the investment would give SteelRiver a minority interest in Sierra Energy’s holding company.
Sierra Energy, headed by Davis entrepreneur Mike Hart, has developed a system to process garbage into fuel, without toxic byproducts. Its technology could prove attractive as governments and businesses seek to reduce trash in landfills that would otherwise emit methane, a greenhouse gas believed to contribute to climate change.
SteelRiver’s investment is likely to bring Sierra’s “game-changing” technology from demonstration phase to commercialization, said Chris Kinney, CEO of SteelRiver. “The investment should be sufficient to commercialize the hardware and bring it out into the marketplace.”
SteelRiver, with offices in San Francisco and New York, manages $2.5 billion. It invests in large infrastructure projects such as power plants, electric transmission systems, ports and water projects. Its investment portfolio also includes Trans Bay Cable LLC, which brings electricity to San Francisco under San Francisco Bay.
The firm’s investment in Sierra Energy will be held in its SteelRiver Infrastructure Fund North America.
Sierra Energy has been working for a dozen years to commercialize its FastOx gasifiers, which process garbage into fuel. That fuel can be used to generate electricity or can be upgraded into transportation fuels including gasoline, diesel and hydrogen.
Sierra has been preparing to bring its technology to market by offering working plans to customers that they could use to assemble their own gasifier systems.
The new investment will allow Sierra to build and deliver working systems itself, Hart said in an interview.
“It allows us to go from delivering intellectual property to becoming a manufacturer,” he said.
Hart said he has 10 orders for systems, which cost $7 million apiece. Hart said he has not yet decided where he will begin assembling the units.
“A lot of people will be competing to be home to that assembly. That is a lot of jobs,” said Gary Simon, chairman of CleanStart, a Sacramento- and Folsom-based nonprofit that works to facilitate the development of clean technology ventures in Northern California.
“This is a huge success for Mike Hart. He’s done well with growing that company from the ground up,” Simon said.
Simon stressed the importance of home-grown companies such as Sierra Energyto the local clean-technology economy. Those kinds of firms develop roots and tend to stay in the area. Simon said the investment was $57 million.
The system Sierra plans to build is called the FastOx Pathfinder. It is expected to be able to process 20 metric tons of trash per day and generate 1 megawatt of electricity.
Hart said he expects global demand for the FastOx units, driven partly by the 2015 Paris agreement on climate change. At the Paris Climate Change Conference last December, 195 countries adopted a legally binding deal to reduce global warming. The accord will take effect in 2020.
“We are thrilled for Mike and for Sierra,” said Cleveland Justis, executive director of the Child Family Institute for Innovation and Entrepreneurship at the UC Davis Graduate School of Management. “They are getting good interest. It is much-needed energy into the system of entrepreneurship in the region.”
The graduate school of management puts on the Big Bang business plan competition, where students develop business ideas and are judged on their presentations for prospective investors.
Hart first got involved with waste gasification when judging a Big Bang business plan competition at UC Davis in 2003. He heard a pitch involving technology developed at Kaiser Steel for waste gasification. Hart launched Sierra Energy to bring that technology to market.
Hart is also CEO of Sierra Railroad Co., which operates 140 miles of rail lines in Northern California, including the popular Skunk Train, which shuttles tourists through the Mendocino County redwoods.
He is also developing a co-working space in Davis called Area 52 in the building that previously housed flying car company Moller International. Area 52 will serve as an incubator for startup industrial and manufacturing companies.