August 17, 2021 - 8:56 am
Founder’s Story: Ken Davies and Birch Infrastructure, a Renewable Energy Startup in Traverse City
In 2017, Ken Davies, his wife Emily, and their twin boys moved to Emily’s hometown of Traverse City, Michigan. Ken and Emily had spent the previous ten years moving around the country building careers in energy, with Ken working in renewable energy at large tech companies including Google and Microsoft. Now, they were looking to establish roots for their family.
Four years later, Traverse City is home not only to the Davies family but also to the strategy and innovation team of Birch Infrastructure (“Birch”), a company co-founded by Ken at the 20Fathoms startup incubator in 2018. Birch develops data center industrial parks and the renewable energy infrastructure needed to power them. It is the latest startup to see success in Traverse City’s growing tech and entrepreneurship sector, made possible in part by 20Fathoms and local capital investment firm Boomerang Catapult.
As Birch prepares to graduate from the 20Fathoms incubator, Ken shared his story with us, from working in-house at Big Tech companies to founding and growing a startup in Traverse City.
Becoming Big Tech’s Energy Expert
Ken developed an early interest in renewable energy strategy. After earning two degrees in engineering from Cornell University, in 2005 he headed to Boulder, Colorado – the epicenter of renewable energy in the United States at the time. “I pieced together a graduate degree from the University of Colorado, Boulder in renewable energy before any such program existed,” he said.
In 2008, after spending two years in Houston as an energy consultant, renewable energy began taking hold in Silicon Valley and Ken joined Google as a cleantech venture capital investor, first for Google.org and later as an advisor for Google Ventures. As Google’s own energy use grew, Ken transitioned to the data center infrastructure group, where he was responsible for the company’s renewable energy strategy. “As Google’s footprint grew, the company was spending hundreds of millions of dollars annually on power, but were doing it without a renewable energy strategy,” he said. “To help address this, I started Google Energy and structured the first wholesale corporate renewable power purchases in the market.”
Ken was Google’s internal energy expert, but as a young professional in his mid-20s he was still seeking the opportunity to learn more about his industry, especially from other experts in the field. He chose to leave Google after three years, a decision which, he says, “most people thought was crazy.”
Over the next five years, Ken continued to work at the forefront of renewable energy strategy and investment, first as director of a venture capital group for a utility company and then as managing director of a startup brokering virtual power purchase agreements for major tech companies. In 2016, he joined Microsoft as the Director of Renewable Energy before being named Director of Innovation for the Energy Strategy & Research department. He was responsible for overseeing Microsoft’s wholesale renewable energy and portfolio management strategies to manage the economic and environmental risk associated with purchasing nearly $1 billion of electricity worldwide annually.
“Purchasing renewable energy is the right thing to do for major corporations, but my experience led me to see that the way it was being done at the time wasn’t sustainable,” said Ken. “The companies who were purchasing renewable energy were assuming huge amounts of risk when they entered into contracts. Looking for a better and more financially sustainable way for corporations to purchase renewable energy led to the birth of Birch.”
Founding Birch and a New Approach to Developing and Delivering Renewable Energy
When the 20Fathoms startup incubator and coworking space opened in 2018, Ken was the first to move in and set up his dedicated desk workspace. At the time, he was working remotely for Microsoft from his Traverse City home and was ready to get out of his basement and back into a professional office. Soon, he began to think more seriously about starting his own company.
“I knew what I wanted to do but working at 20Fathoms gave me more confidence to actually do it,” he said. “I was surrounded by other entrepreneurs who took the risk and they survived. Also, I talked to Casey Cowell [Founder and Principal of Traverse City investment firm Boomerang Catapult], and he said, ‘You should do it.’ I upgraded to a private office at 20Fathoms and got started on Birch.”
Ken partnered with another renewable energy industry expert, Jim Howell of Portland, Ore., who now serves as co-founder and CEO of Birch. Ken became the company’s Chief Strategy Officer, in addition to co-founder. They established Birch — a member-owned, public benefit limited liability company serving hyperscale data center clients.
Soon, they received their first outside investment from Casey which kicked off a $7 million raise. “Casey’s investment gave us additional confidence and allowed us to start hiring in Traverse City,” Ken said. “Our first hire was Camden Brown, our Director of Commercial Strategy, who was living in Chicago at the time. He is from Traverse City originally and boomeranged back to join us at Birch.”
Birch grew quickly and over the past 12 months partnered with a pair of private equity firms to grow the company’s two — complementary but distinct — business lines. First, through a joint venture with Quinbrook Infrastructure Partners, Birch is developing hyperscale data center campuses in rural communities throughout the United States, providing utility infrastructure to power cloud computing platforms. Second, through a partnership with The Carlyle Group, Birch is developing and delivering renewable energy to power these data centers and others.
For Ken, the most important part of their work is providing Birch’s clients with a substantial reduction of risk and cost uncertainty. This goes back to the energy industry problem that Ken saw firsthand earlier in his career – the risk that companies assumed when they entered into renewable energy contracts – and it is what sets Birch apart from the traditional approach.
“Data center companies are software companies, not experts in commodity risk,” said Ken. “But through their energy consumption and associated renewable energy contracts, they find themselves operating as commodity trading companies and they lack the expertise for this. At Birch, we know how to structure and analyze commodity risk and that’s our role: we serve as risk managers while providing energy infrastructure as a service with long-term contracts and fixed prices at or below local utility rates.”
Growth and Graduation
Birch will soon be onboarding their fifth employee to the Traverse City strategy and innovation team. (They have an additional 30 employees who work remotely or from the company’s Portland office). Spurred by the need for expanded office space, Birch will be graduating from 20Fathoms – the fourth scalable tech startup to graduate from the incubator since its founding in 2018. Previous graduates are Atlas Space Operations, HealthBridge, and SampleServe. A graduation celebration is planned for September 30.
After 10 years on the move establishing his career, and another three years launching Birch, Ken is now looking forward to slowing down and focusing on the next stage. “Startups don’t starve – they drown in opportunity,” he said. “As an entrepreneur, you have to be judicious with which of these opportunities to pursue and which to pass up. With our recent capital investment from Quinbrook and Carlyle, we are in a position to dig in and focus on our business. We’re planning for continued growth, including here in Traverse City.”