Terry O’Day Exits Environment Now for NRG & Electric Car Market

With eight years tenure as Executive Director of Environment Now at an end, which accomplishments are you most proud of?

I have been very fortunate to do this work at Environment Now. The foundation is a pillar in the environmental community, and I’m proud to have been involved in supporting our partners in a couple of major achievements over this time. One includes launching ten new Waterkeeper programs, from the Oregon border all the way down to the tip of Baja California, where we’re protecting over 1000 miles of coastline. A second achievement was driving logging levels down on our public lands and national forests to their lowest levels on record for the last two years. And third, we helped found the coalition that established and ultimately passed Measure R on the November 2008 ballot. That raises $40 billion to invest in transit in L.A. County, and I think the investment of these dollars in our county’s transportation infrastructure will transform the region.

During your tenure much has evolved in California with respect to environmental policy, our economy, and civic investment. What have you learned? How has Environment Now matured?

Over the last eight years the environmental movement has grown and also matured. More environmentalists are taking positions of leadership in the region and state. More and more people are self-identifying as environmentalists. There are more environmental organizations doing increasingly diverse things today. There’s a whole consumer movement on environmentalism. 

Environment Now’s niche has become more defined, and it aims to provide support to activists who are taking on some of the hardest challenges, some of the longest odds, and who are not afraid to ruffle feathers to get measurable results in California.

When we last spoke a few years ago you noted that it was hard for Environment Now to address transportation issues due to the distributed nature of the pollution generated. Given your early background in EV car rentals and given your new position with NRG, is your answer the same? If not, why?

I still think it’s hard. The Measure R results that we got would have been difficult to predict. In 2005 we asked ourselves why we had stopped making progress on the air pollution of the basin, and most of the scientists at the time said that although cars were getting cleaner, vehicle-miles traveled are increasing. We decided at that time to focus the air program towards strategies that reduce vehicle-miles traveled, particularly in support of transit investment. That’s what led to the organizing that set the stage for Measure R. We now have great organizations in place that Environment Now has the relationships and expertise to continue to support. But it’d be hard to predict doing another Measure R. It’s a category that is still difficult, and in the case of transportation, technologies are a big part of the solution. Much technological innovation is left to the private sector. The role of Environment Now is to hold the line on some of the policy supports for the investments that we need to grow technology, such as zero-emission vehicle mandate and the stringent air quality management plans from our air district. That role is important but is still a challenging one because it’s so technical and the benefits are so distributed, as I’ve said before.

What about your new work with eVgo and NRG? Can you tell us the mission, purpose, and role you’ll play?

When I left the EV movement years ago I had ideas about things I wanted to accomplish and was unable to because cars just stopped coming into the market. Today, looking at how this market is different, I see a few factors. One, the research reports that you get today are coming from Deutsch Bank and Boston Consulting Group and other notable names of Wall Street. In the past Edison Electric Institute and other trade associations in the electric utility industry were the only ones to do this. Two, Silicon Valley has caught notice of this industry, and there are a lot of start-ups now throughout California, particularly in the Valley, that are recreating basic technologies that will make electric vehicles possible. Three has to do with the rise of China. Readers of your journal know the strategies of the Chinese auto industry skip over ICE technology; so all these things said to me that the electric vehicle market is back, and I didn’t want to sit on the sidelines for it. Fortunately I found a company that is aggressive and that has a smart business model that I think accomplishes some of those things I felt I didn’t get to do in my first effort with electric cars. 

Talk about NRG and the eVgo work you’re undertaking.

NRG has a subsidiary called eVgo. The model is built to address the question: “Assuming these battery-electric cars are great, what will be the barriers to adoption for consumers?” The answers that have come back are range anxiety (you’re afraid of running out of electricity in your car) and upfront capital costs for a charger (after plunking down $35,000 on a car you’ll find out that you have to also buy a charger for $1,000 and pay $1,000 for its installation). Additionally, most people don’t know what they pay for their electricity on a per kilowatt basis, at the margin, or at different times of day. The NRG business model offers simple plans for consumers—the drivers of electric cars—and says, “instead of paying those upfront capital costs for a charger, we will give you a 36-month lease on a charger installed in your garage.” Under Texas pricing that’s $49. More, we’ll pay the electricity for that charger and give you a flat cost of $10 a month. So now you don’t have to wonder how much your electricity costs compared to gasoline; you’ll know all of your home fueling needs. Third, addressing the range anxiety piece, NRG, in the markets where it’s opening, is investing millions of dollars in private capital to build a high-speed charging network that will fuel a Nissan Leaf for 50 miles in 15 minutes. The third package would offer you access to that charging network for an extra $30 a month. Under the Texas pricing that’s $89 a month total, and all of your fueling costs are fully covered. I think this is a model that increases penetration for electric cars because it overcomes those barriers. The surveys that NRG has done asking consumers how likely they were to buy an electric car change when they hear a description of the eVgo business model. NRG has found that there’s a 150 percent increase in a number of people likely to buy an electric car after they hear about the eVgo business model. This is a model that I think is market expanding and helps to hasten the adoption of electric cars.

You recently were in Houston, which is working with eVgo and NRG to roll this program out. What did you learn during that site visit?

The people working in the eVgo business are dedicated and on-mission. As a Californian I didn’t know what to expect in Houston. I found in oil and gas country that we have a headquarters of dedicated professionals who are working out of a converted Hummer dealership to bring this business model to the world. Houston is a city that has really begun to embrace a conversion towards electric vehicles. In fact, there are other start-ups offering services in Houston, and there’s great support from the city, which has a large fleet of electric vehicles and good leadership. 

You can still be a proud Californian, Terry! Isn’t Laura Spanjian running that program and isn’t she a San Franciscan and Stanford grad like yourself?

That’s exactly right. She was plucked right out of San Francisco to run the sustainability program and by all accounts has been very successful. 

So what do you see in the medium term regarding the success or failure of electric vehicles in penetrating the market?

I think this time it’s going to work. The policy supports are in place, the consumers are viewing things differently, and there are new business models to help make adoption happen this time. Things to look for will be sales figures for Nissan, which is the company that has committed to large battery-electric vehicle production runs. The success of these early plug-in electric vehicles—there’s a new Prius plug-in coming and there’s the Chevy Volt on the market—depends on how much the consumers driving these cars begin to demand all-electric miles and begin to increase electric range. Next, I’d watch for the innovations that are driving improvements in technology and driving reductions in costs.  Nissan is building a 150,000-unit lithium ion battery pack factory in Tennessee, and a number of California companies have solutions that are bringing down the costs of this equipment so that we can reach mass adoption levels. While you won’t see those adoption levels in 2012, you will see some real advances in the underlying performance and cost of the technology. 

I know you’ll discuss this at our VerdeXchange VX2012 conference in late January, but give us an insight into how the infrastructure part of eVgo, the installation of charging stations, is likely to roll out. 

The company is building its network in Houston and in Dallas-Fort Worth and has committed now to open up the Washington DC market. I am tasked with maintaining the company’s relationships in California and considering opportunities in California, but we haven’t committed yet to bringing this business model here. There are a lot of free electric chargers going into the market today from Department of Energy grants through our sources and others. We’re waiting to see how the market sorts out from that activity. My hope is that we’ll find a business model that works here, but as it stands today, it is hard to compete against free.

In closing, may we assume you penned and left a letter in your desk for your successor offering advice and counsel. May we ask you to share your counsel?

Yes, of course. Principally it calls for the expansion of the work that Environment Now is doing now by taking successful models we’ve funded and amplifying them with other funding partners. We have very successful work in our coastal program that has very high leverage from a grant-making point of view. It attracts other resources and operates very much like a loan. In this economy, philanthropists are looking for ways to increase their leverage and increase their results. We have some models at Environment Now that can be attractive to do that. Staying on mission, focusing on those things that have been successful, is the first part.

I’d say the second part is continuing to bring up the young activists in the movement. We have helped young organizations mature, particularly in our work with Baja California where we founded a handful of Waterkeepers on the peninsula. Their organizations and the individuals who lead them are really just beginning to take control of the tools of democracy that we take for granted here in the U.S. Those organizations are becoming more and more sophisticated with each year. Environment Now’s role has been unique, being on the ground and witnessing this growth, seeing them for all of their beauty and warts, and working through the challenges so as they grow they can begin to attract funders and get bigger and better results. Sticking with that work is the second important piece to the mission.