Co-founder and CEO, REsurety, Inc.
I went in knowing what I wanted to do, but from a skill set, reputation and network perspective, I wasn’t ready. Tuck gave me the opportunity and the resources to pursue my goals.
As the cost of renewable energy becomes increasingly competitive with fossil fuels, one big barrier remains on the road toward a clean energy economy. In the power business it’s called intermittency—a ten-dollar word for the fact that the sun does not always shine and the wind does not always blow.
At Tuck, Lee Taylor T’12 recognized that intermittency presents more than an engineering problem to be solved by better storage and a smarter electrical grid. It also poses a substantial business challenge. How could power companies hedge the uncertainty of weather against a backdrop of shifting price and demand? When Taylor came to Hanover in the fall of 2010, there was no answer to that question.
“The concept of weather-driven risk on the supply side—how windy is it on a given day, and whether or not it’s windy when temperatures rise and power prices spike—is an entirely new class of risk,” says Taylor, co-founder and CEO of REsurety, Inc. A few forward-looking insurance companies were eying the space, but needed a deeper understanding of the market as well as help structuring and settling the transactions. That’s where Taylor came in. His first-year project and independent study at Tuck, both with classmate Erik Kankainen T’12, was a deep dive into the intricacies of hedging weather risk in the renewable power generation business. The next year they published an academic paper on the subject, and before the Tuck term finished in the spring of 2012 Taylor was looking for investors.
It did not go well.
“We started raising money right after Solyndra had gone bankrupt and every VC was running screaming from the clean-tech industry, so we failed miserably trying to fundraise through traditional channels,” says Taylor. Eventually he turned to a program called Upstart. “It allowed you to essentially securitize yourself and sell off shares in your personal future income to raise money for a business, and the only way you can get out of it is through death.”
It was quite a leap for a person whose expertise is in mitigating risk, and whose natural inclination is caution. “I've been told by members of our board that REsurety is the single most conservative entity in their portfolio,” Taylor says. “We're swinging for the fences like any other venture-backed company but doing so in a way that runs a little less aggressively close to the edge.” Nearly five years on, the firm is redefining the way energy companies approach risk in the promising but volatile wind energy industry.
Tuck has been an integral part of that success, says Taylor, who developed an interest in clean energy and quantitative analysis as an undergrad.
“I went in knowing what I wanted to do, but from a skill set, reputation and network perspective, I wasn’t ready. Tuck gave me the opportunity and the resources to pursue my goals.” The network was invaluable as well. One of Taylor’s biggest investors is Andy Palmer T’94, three of his First-Year Project advisers remain actively involved in the business, and the Tuck network has become a talent pipeline for Taylor’s growing company.
At Tuck, Taylor honed his quantitative skills and validated the premise that one can find success in bringing together diverse parties. Taylor also was struck by the responsiveness of the administration. As a first-year, he and fellow T’12 Wade Barnes went to Faculty Director Robert Hansen to ask for a course on energy finance, which Tuck did not offer at the time. Hansen promptly recruited one of the leading scholars in the field, Ehud Ronn of the University of Texas’s McCombs School of Business, to teach the course.
“Tuck didn’t just go and find someone who was willing to spend time in Hanover. They found the guy who you would want teaching that course,” he says, adding that the school has built off of that commitment with the Revers Center for Energy. “That really impressed me.”
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