Yachtz Radcliff on Managing Alternative Energy Funds
What exactly do you do as an alternative energy hedge fund manager?
My company, Radcliff Capital, manages the U.S. Infrastructure and New Energy Economy Fund. To put it simply: We are a private fund that invests in a broadly diversified portfolio of leading companies in the alternative energy, energy efficiency, and infrastructure industries, such as Solar, Wind, the Transmission (Smart) Grid, Battery, Geothermal, Infrastructure and Energy Efficiency, Alternative Fuels, Carbon Trading, etc.
What is your reason for focusing on alternative energy?
In short, there are four factors: (1) First and foremostâthe era of cheap oil is overâwhich is a function of the simple economics of supply and demand: declining supplies and accelerating long term demand fueled by explosive growth in developing countries such as China and India has already started a global energy arms race, (2) for national security, environmental and economic reasons, there has been a meaningful shift in policy and regulatory favoritism from big oil towards to more efficient and cleaner, renewable energies, (3) surging inflows of venture, entrepreneurial, and intellectual capital, technological innovation, and economies of scale will further drive the costs of alternatives downward, thereby accelerating their competitiveness with even the cheapest fossil fuels; and (4) ultimately it is these industries that have beenâeven in the recessionârebuilding and reshaping the U.S. economy, and who are leading it into the next age of global economic growth.
Do you have any stats or predictions about US alternative energy and its future?
1. Global investment in clean energy topped $243 billion last year, surging 30 percent from $186.5 billion in 2009, according to a report by Bloomberg New Energy Finance. This is up 30% from a revised figure of $ 186.5 billion in 2009, and makes 2010 easily the strongest year so far for investment in clean energy â double the figure recorded in 2006 and nearly five times that from 2004. Â This is a spectacular result, beating previous record investment levels by a clear margin of more than $50 billion.
2. In the U.S. in 2009, cumulative wind capacity increased by 39% and cumulative solar PV capacity grew nearly 52% from the previous year.
3. In the United States, renewable energy has been capturing a growing percent of new capacity additions during the past few years. In 2009, renewable energy accounted for more than 55% of all new electrical capacity installations in the United Statesâa large contrast from 2004 when all renewable energy captured only 2% of new capacity additions.
4. $80 Billion began being deployed in long-term investments in renewable energy and energy efficiency when the Stimulus Bill was passed in 2008.
Tell me about your typical day.
There is no typical day, but they average between 12-14 hours. A majority of my time is spent on reading, research, and financial modeling. I also usually spend a couple hours on the phone each day, which involves anything from discussing strategy with advisors and specialists, talking to industry contacts, companies weâre looking at, and our clients.
Is your position a "job" or is it more of a lifestyle?
I love learning about new technologies, processes, and what is going on in the world. The pace of innovation and changes we are witnessing is extraordinary. Staying up until the late hours of the night on a regular basis is definitely voluntary for me, but like many areas of finance, running a fund is not merely a job. Without question it is a lifestyle.
What are the most enjoyable â and most frustrating â parts of your job?
There are a lot of misperceptions about the industries we focus on. Talking about the field and our research can be immensely rewarding. Unfortunately, there can be a political dimension to some of these issues, and some people have very entrenched, dogmatic views. Reasoning with dogmatism is always a challenging and frustrating process.
Do you expect there to be a growing demand for jobs in alternative energy investing?
Even during the recession, weâve seen an unprecedented acceleration of investment and growth in what I call the New Energy Economy. In my opinion, it is these areas that will drive the next global macroeconomic cycleâso yesâI do indeed see an accelerating demand for jobs in these areas.
What sort of educational background is necessary, or what experience/skill sets are required?
When people inquire about my educational background and I tell them itâs from Northwestern University, they assume itâs from Kellogg (the business school at NU). Theyâre invariably surprised to learn my background is from philosophy, not business. In my view, education is necessary but not sufficient. Itâs very important seek out and work with leaders in your field.
Photo credit: Yachtz Radcliff