PROFILE JEFF MCDERMOTT The revolutionary

Jeff McDermott used to run hoping for an extension to the grant pro - at UBS – gramme, which under current plans will stop accepting applications on 1 October 2011. but now he’s turning his 25 “Thank goodness for the ITC cash grant years of deal-making experi - programme because that’s really been a well executed, well thought-out programme,” ence to the clean technology McDermott says. “I think that’s the one that sector. He talks to Gloria had the biggest impact in 2009 because it’s been very straightforward.” Gonzalez The Department of Energy’s (DOE) loan guarantee programme has been less helpful, but that is not the department’s fault, McDermott says. DOE staffers are working around the clock to give developers insight into the process and programme requirements ack in early 2008, Jeff McDermott’s and get loan guarantees out, he says. But these teenage son came to him for some technologies are difficult to analyse and the Badvice about following his dad into a career on agency has to work with the Office of Wall Street. McDermott’s suggestion? That his Management and Budget to stay within its best might be to orientate a career in financial means. finance towards the clean technology sector “We’re very sympathetic to the DOE,” given its importance to America’s future. McDermott says, adding that he thinks the loan Suddenly, McDermott had a thought: what if guarantee programme will eventually make a the clean-tech industry was right for him too? difference to a number of technology compa - McDermott had made a name for himself nies. in investment banking after graduating from the But Congress remains “politically paral - University of California at Berkeley with a dual acquisitions, restructurings, private placements ysed”, creating enormous challenges for the degree in economics and political science in and project financings. For example, the firm clean-tech sector. McDermott expresses frus - 1981. He worked for some of the biggest play - aids companies with market-ready technolo - tration that the best clean-tech research is ers in the industry, starting at Drexel Burnham gies that have perhaps raised $50 million –100 conducted in the US, but the jobs are created Lambert, later joining million from venture capitalists or corporate mostly in Asia because of the absence of a sup - (which eventually became a unit of ) investors, and are looking to expand their portive policy framework. before moving to UBS Investment Bank. At investor base. The company also helps project “I just think that’s a pity for my children and UBS, he directed the global investment banking developers deploying renewable or alternative my children’s children,” McDermott says. department, which posted revenues in 2006 of technologies access debt and tax equity to “Without a clear policy framework and with a more than $4.5 billion. build facilities. fractious US Congress, our best technology But after spending close to 25 years work - “We’re empowering the green industrial will create jobs outside the US.” ing for large, global financial institutions, and energy revolution,” McDermott says. McDermott felt he had reached the peak of his “We’re helping the most promising companies chosen profession. “It was time to look for a cross the chasm to full-scale deployment of nother challenge is the need to new mountain,” he says. their technologies.” go head-to-head with entrenched That mountain proved to be the clean-tech Many of these renewable energy develop - fossil fuel interests. “The hydro - sector. UBS had been involved in a few solar ers survived a tough 2009 due to policy help carbon lobby is spending a lot of transactions, so he was broadly familiar with from the US government. A change in the tax Amoney to preserve their privileged position,” the industry. But he began talking in earnest code passed by Congress in February 2009 McDermott says. “We’re hopeful at some point with CEOs and venture capitalists in the sector allowed biomass, wind and other renewable this polarisation will end and we get some kind about their issues and problems. In the autumn energy projects that could claim tax credits of policy framework that’s going to enable of 2008, he decided to start his firm, Greentech against energy production to choose temporar - green jobs.” Capital Advisors, offering financial advisory ser - ily to receive an up-front investment tax credit Ideally, whatever policy the government vices with a 100% focus on the alternative (ITC) normally reserved for solar projects. In adopts would be technology agnostic, as sever - energy and clean-tech sectors. the economic stimulus package, the US govern - al renewable technologies show great promise, “I believe that’s the megatrend that’s going ment also allowed project developers that wish McDermott says. He cites BrightSource to change my kids’ generation,” McDermott to receive cash payments in lieu of the tax cred - Energy and SolarReserve, which are making says. “I just fell into the right industry at the its to apply for a federal government grant pro - tremendous progress in demonstrating that right time.” gramme that has paid out more than $2 billion utility-scale solar will be an effective technolo - In building his -based firm, he has to project sponsors. Since the grant programme gy and deliver electricity in a cost competitive drawn many of his staff from major financial only funds projects that are up and running, it’s way. Ram Power has encouraging projects to institutions like the companies he has spent his been most effective in financing photovoltaic effectively deliver geothermal electricity in the career working for. But these banks, and global solar and wind facilities, he says. developing world, he adds. such as Siemens and GE, are not The programme has been a “resounding Whether Congress passes comprehensive set up to innovate in this sector because they success”, McDermott believes. Last year, devel - energy and climate legislation remains to be are locked into certain behaviours and mind - opers would have struggled to replace the tax seen, but adoption of a US federal renewable sets, he says. “These are enormously capable equity investors that had bankrolled develop - electricity standard would be a step forward, and powerful companies, but they’re not inno - ment in the US over the preceding years, and he says. “I don’t think anyone in Washington can vators,” McDermott says. tax equity investment is still not back to levels foresee what’s going to happen in Washington,” Greentech Capital advises on mergers and seen in 2007 and 2008. Greentech is therefore McDermott adds. EF

32 APRIL 2010 ENVIRONMENTAL FINANCE