17 Nov 2016
Wired for Innovation
Weaving together a network to push wind-powered electricity wherever it’s neededby Deborah BlaggTopics:
Photography by Michael Stravato
From cofounding the first aerial tramway high above Costa Rica’s rainforest canopy, to helping a two-person wind-energy startup become an industry leader, to making a quixotic run for US Congress, Michael Skelly (MBA 1991) isn’t one to shy away from long-odds challenges. In his latest role, as founder and president of Houston-based Clean Line Energy Partners, he hopes to push the United States closer to what he considers an attainable national goal: a 30 percent reliance on renewable energy.
Skelly is committed to bringing thousands of megawatts of wind-powered energy to population centers across the country by expanding the US electric-transmission grid. “If you look at the wind-power equation, you quickly see that transmitting energy from rural wind farms across long distances to large cities is a big obstacle,” he says. “I figured the world didn’t need another Midwest wind developer as much as it needed someone who could figure out the transmission problem.”
The scope of the challenge becomes clear in Skelly’s description of Clean Line’s $2.5 billion Plains & Eastern Project, which will carry wind energy from the Oklahoma Panhandle region to customers in Arkansas, Tennessee, and other states in the Mid-South and Southeast. “Picture a 700-mile stretch of overhead, direct-current wires that requires easements from thousands of private landowners and approvals from dozens of federal, state, and town officials,” he advises.
“Developers of long-distance oil and gas pipelines are guided by modern regulations and an infrastructure blueprint,” Skelly explains. “But existing US electric lines were erected by utility companies several decades ago, to connect local customers to nearby fossil fuel sources. That means we need to invent a new network of long-distance transmission lines, and we have to establish all kinds of precedents as we move our projects along.”
A Patient Entrepreneur
In addition to its Plains & Eastern Project, Clean Line Energy Partners is involved in four similar endeavors in other parts of the US, all with the ultimate goal of selling transmission capacity to generators of renewable-energy seeking to get their product to market; or to utilities looking to access the lowest-cost clean power in the country. To make that happen, Skelly spends much of his time crossing the country to meet with investors, partners, lawmakers, suppliers, regulators, customers, landowners, and utility executives.
“This is a patience-testing, long-term project, but it requires an entrepreneurial mindset,” observes Skelly, who first began to consider what it takes to build businesses during a pre-HBS stint in the Peace Corps. Working in a small fishing village on the Panama-Costa Rica border, Skelly helped to make decisions about micro lending in order to generate small-business growth. “I didn’t know much about business, but when you’re trying to figure out where a $500 investment will do the most good, then you have to think a lot about things like resources and strategy,” he observes. “Even if you’re in a tiny town in the middle of nowhere, you can begin to understand the foundations of business success.”
At HBS, Skelly met professor James Austin, who helped to connect him with a biologist in Costa Rica who was exploring the feasibility of canopy tours of the rainforest. “I was interested in startups and had experience in Latin America, so it seemed like a good fit after HBS,” recalls Skelly. “We wound up building what was essentially a mile-long ski lift that takes visitors on an hour-long aerial tour through one of the most amazing ecosystems on this planet. In the process,” he adds, “we more or less invented canopy tourism.”
While putting together the tramway project, Skelly discovered an affinity for “working through details that involved real estate acquisition, financing, legal, technical, permitting, and regulatory issues,” that translated well to the field of energy development. In 1999, Skelly and his wife, Harvard Kennedy School grad and fellow Peace Corps veteran Anne Whitlock, moved to Texas, where he went to work at a two-person, family-owned wind-energy business that later became Horizon Wind Energy.
“It was a very small business, but we got lucky with land positions and were able to build it to pretty good scale,” notes Skelly, who served as the company’s chief development officer. “When it got too big for the family, they sold it to Goldman Sachs in 2005.”
Politics and Progress
Skelly stayed with Horizon until 2007, when he launched a bid for election to Congress as the Democratic nominee in the Seventh District of Texas.
“Key issues for me were energy and education,” says Skelly, “but I was a relative unknown, running as a Democrat in one of the most conservative districts in Texas. Let’s just say the outcome of the election was that I was the recipient of the silver medal!” he reveals with a rueful laugh.
By all indications, the defeat did little to dampen Skelly’s idealism or entrepreneurial spirit. In a 2008 Wind Power Monthly article, he called the election “a phenomenal experience” and likened it to launching a startup: “You start off, and everybody tells you it’s impossible. Then you’ve got to put together some money and you’ve got to put together a team. Then you’ve got to learn a lot and overcome a lot of obstacles.”
He didn’t wait long to find a new set of obstacles, launching Clean Line Energy Partners within six months of his election defeat. “I’ve always been a bit of an idealist and wanted to make contributions,” Skelly shares. “I think this company can do that.”
While conceding that, “in the US, we don’t like to do the kind of sweeping master plan” that would simplify the task of wiring the country for wind-power transmission, Skelly believes that consensus on renewable energy is growing, albeit “in a fragmented, state-by-state way.” In Texas, for example, he says there are hours when 40 percent to 50 percent of electricity usage is from wind, and realistic predictions indicate the average will reach 20 percent by 2020.
“The progress we’ve seen in Texas itself is a combination of good resources, good infrastructure, and friendly permitting policies,” he stresses. “And it’s supported by national tax policy that incentivizes wind.”
Greenways for Houston
Although he emigrated from Ireland as a small child and grew up in Virginia, Skelly has embraced life in Houston, where he serves on the Houston Parks Board and Houston Bike Share Board. He also regularly writes articles on transportation and urban development for the Houston Chronicle.
Anticipating empty nest-hood as the youngest of their three children prepared for college, Skelly and his wife recently bought and converted a 1910 brick firehouse in Houston’s scruffy East End neighborhood, which they now call home. “I’m really interested in urban development,” he offers as a footnote on the unusual move, “and especially in improving access to parks and greenways for everyone in Houston.”
One of Skelly’s recent columns in the Houston Chronicle urged the city to create a more walkable environment, along with other outside-the-box approaches to easing freeway congestion. “By rolling out the welcome mat for innovators,” he wrote, “we can begin to put a dent in what can otherwise seem like an intractable problem.”
Skelly says that HBS, especially the case method, helped him to forge his own approach to intractable problems. “That way of teaching puts you in kind of a tight box, and you have to think on your feet to articulate your way out of it,” he says. “It’s a skill that’s been tremendously helpful to me in all the different things I’ve tried to do to make the world a little better.”
Class of MBA 1991, Section A