Oakland, CA: Capital of the deep tech energy transition
Some of the most prominent startups in the deep tech energy transition are located in the Oakland area. This high density places the region as the capital of the energy transition in future decades.
Background
Oakland and its surrounding towns (Berkeley, Alameda, San Leandro, etc.) are located in Alameda County. Alameda County stretches along the east bank (East Bay) of the San Francisco Bay from Berkeley in the North to Fremont in the South. Some of the most prominent deep tech startups in the energy transition are located in Oakland and its surroundings (Fig. 1). I have not seen a similar density in other energy transition hubs (i.e. Boston, Houston, etc.) This high density will increase the momentum of the region as the center of the deep tech energy transition. Oakland has gained this role because of its central location, a history of heavy industry, proximity to educational and capital resources, and relative affordability. Disclaimer: I love Oakland and live nearby, which may affect my analysis. Nevertheless, I have provided the evidence necessary for readers to make their judgments.
Location, location, location
The proximity to UC Berkeley and the Lawrence Berkeley National Lab (LBNL) has been critical to the role of Oakland as an energy transition hub. These centers have produced a steady stream of scientists, engineers, and business professionals to start and grow such startups. In particular, the Activate program at LBNL has incubated Cuberg, Inlyte, Twelve, Sepion, Fervo, Brimstone, Limelight, and Form among other successful startups. Founders and early employees who moved to the area for Activate’s two-year incubation period have tended to put down roots and grow their companies in the region.
Stanford University and Silicon Valley VCs are just a 45-minute drive away. Stanford has also been a source of engineers and entrepreneurs. Companies like Cuberg, Inlyte, Sila, Fervo, Molten, Twelve, and others were founded by Stanford alumni. The VC firms surrounding the university (DCVC, Capricorn, Khosla, A16Z, Sutter Hill, etc.) have been major sources of funding for Oakland area startups. The proximity of Silicon Valley VCs has been critical to the growth of the area’s startup sector. Some climate-focused VCs, like Powerhouse VC, are even headquartered in Oakland. I consider Powerhouse’s Watt It Takes podcast tied with Shayle Kann’s Catalyst podcast as the top two podcasts about energy transition startups. Watt It Takes episodes are often recorded in Powerhouse’s Oakland offices.
The East Bay (i.e. Alameda County) is more affordable than Silicon Valley (i.e. Santa Clara County). The price of housing is one of the most important contributors to this affordability gap. The median housing prices in Oakland ($710k), Alameda ($1.1M), and Berkeley ($1.2M) in Alameda County are lower than those in Santa Clara ($1.6M), Mountain View ($1.6M), and Palo Alto ($2.8M) in Santa Clara County. Silicon Valley hosts the fastest-growing and highest-margin startups, which are mostly in software. Heavy industries generally have lower margins and slower growth than enterprise and consumer software companies. The relative affordability of the Oakland area helps deep tech startups attract and retain their workforce.
All six routes of the Bay Area Rapid Transit (BART) train system are centered in Oakland (Fig. 2). The BART connects the Bay Area’s three major cities, two of its major airports, and many of its outer suburbs. Oakland can easily attract workers residing throughout the Bay Area because of its location at the center of the BART system. Oakland is also home to engaging museums, good food, fun bars, diverse cultures, interesting hikes, and stimulating activities. It is the kind of city that attracts the energetic and adventurous types who enjoy working in startups.
The Matthew effect of accumulated advantage
Social scientists refer to the accumulation of advantages to a person or group as “the Matthew effect.” The principle is named after the parable of the talents in the book of Matthew: “For to everyone who has will more be given, and he will have abundance; but from him who has not, even what he has will be taken away.” The Matthew effect also applies to regions. New York City attracts new financial institutions, Los Angeles attracts new movie studios, and the Bay Area attracts new tech companies. Oakland has a history of heavy industry, which is partly responsible for the current wave of startups. I expect that the city’s advantage in the deep tech energy transition will grow as these startups mature.
West Oakland is home to the Port of Oakland, which is one of the busiest ports on the West Coast. It is also at the intersection of major East-West and North-South rail lines. Its position on the San Francisco Bay and access to transportation made the region the center of the Bay Area’s heavy industries in the 19th and 20th centuries (Fig. 3). The automotive industry bloomed in the region starting with a Chevrolet plant in 1916. A map of the area from 1926 shows companies like Commercial Acetylene Supply, Detroit Steel Products, Westinghouse High Voltage Insulator, Penzoil, and Linde Air Products among others. West Oakland has been economically damaged from the offshoring of the country’s heavy industries in recent decades. However, it still has many space, manufacturing, transportation, and licensing resources for hosting such industries.
The automotive industry continues its presence in Alameda County with the Tesla plant in Fremont, CA. Bay Area battery companies like Sila Nano and Our Next Energy (ONE) are automotive industry suppliers. Chevron, one of the world’s largest oil & gas (O&G) companies, is headquartered in the Bay Area (San Ramon, CA). This O&G giant operates a major refinery in Richmond, CA, which is just north of Alameda County. Richmond is also the headquarters of SunPower, a clean energy pioneer, with expertise in semiconductor manufacturing for photovoltaics. I have met many engineering leaders in Oakland’s deep tech startups who used to work for one of these two companies. The chemistry and high-temperature manufacturing expertise of Chevron and SunPower, respectively, has helped grow these deep tech startups.
Within the Bay Area, Alameda County has some of the clearest rules on the operations of industrial facilities (e.g. rules on the handling of industrial solvents). Just as Delaware’s clarity on business law has made it the preferred state for incorporating US companies, Alameda County’s clarity on heavy industry has made it the preferred destination for the Bay Area’s deep tech startups.
Discussion
Despite the hype, we are still in the early stages of the energy transition. Changes in the energy industry are measured in decades, not years. Tesla introduced its first mass-market vehicle (Model 3) in 2016. The oldest startups listed in Fig. 1 (Sila Nano and Twelve) also began operating in the East Bay within the past decade. Nevertheless, according to the “Matthew effect,” the high density of deep tech energy transition companies in Oakland and surrounding towns will beget even higher density in the future. I expect that Oakland, CA will be seen as the capital of the energy transition in the years to come.
The fundamentals of the area’s proximity to education, capital, transportation, and manufacturing resources will remain the same. In addition, the region will continue to build expertise in relevant fields. For example, electrochemistry has become the king-science of the energy transition. It is the core science of battery companies like Cuberg, sustainable aviation fuel (SAF) companies like Twelve, and metal processing companies like Magrathea. The LinkedIn profiles of engineers at many of these companies show that they have worked in other startups in the area. The cross-pollination of talent between these startups will mean that the most experienced electrochemists in the world will reside in the Oakland area.
Oakland’s position as an energy transition hub has been helped by its proximity to Silicon Valley VCs. Other parts of the Bay Area have seen similar specialization of industries. For example, there is a concentration of biotech companies in South San Francisco and a concentration of semiconductor companies in Santa Clara. Many of these companies also draw their funding from the VC firms located in Palo Alto and Menlo Park. As the Oakland energy transition hub matures, I would expect that more energy- and climate-focused VCs, like Powerhouse, will appear in Oakland.
From Tehran to Oakland
"No damage So Oaklandish Deep rooted In the town Where we compound soul And street music"