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Powering Up Energy Transformation

Koch companies have invested $1.7 billion to scale up the next generation of energy technologies while increasing energy efficiency, reducing emissions across existing operations

January 19, 2022

min read

Guided by a Vision of continuous innovation and transformation, Koch companies have made significant new investments in the renewable energy space across electric battery, energy storage and solar infrastructure value chains, while increasing efficiencies, using fewer resources and reducing emissions throughout existing energy operations.

Of the $3.5 billion Koch Strategic Platforms (KSP), a new Koch Investments Group business, has invested since the beginning of 2021, more than $1 billion has gone toward energy transformation technologies. KSP’s investments have centered on industries with strong tailwinds and massive potential. 

Koch Strategic Platforms has invested $761 million across multiple focus areas

KSP’s investment strategy relies not only on capital but capabilities. Its investments apply capabilities from across Koch companies, such as Molex, Koch Engineered Solutions, KBX Logistics, SRG Global and others, demonstrating Koch’s ability to help drive the next wave of innovation at scale, internally and externally. Collectively, Koch companies have made $32 billion in technology investments in recent years.

These investments have been guided by the company’s deep-seated belief in “creative destruction”— a recognition that it must continually innovate, improve and reinvent as shifts occur. 

For example, the levelized cost of energy – a measure of how much a technology will cost over its lifespan – has fallen rapidly for sources such as wind and solar, and it has been trending down for batteries, too. 

“By helping these companies efficiently grow through investment and capability support, we are helping to make a broad array of energy sources, both traditional and new, more accessible to consumers,” said Jeremy Bezdek, KSP’s managing director of energy transformation. “By investing in areas such as the battery value chain and solar, we are investing in ways that will help bring costs down.”  

Moreover, these investments aren’t limited to one form of energy and are working toward solutions that are economically viable without subsidies or other market intervention.  

“Some people are surprised we’re investing in this space, but we see potential in all forms of energy as the market demonstrates their non-subsidized demand,” Jeremy said. “The fact is, our involvement has been well-received because we approach these investments as partnerships rooted in mutual benefit.”

This approach, focused on innovation, capability and mutual benefit, has enabled KSP to make investments that not only benefit external partners but also help multiple Koch companies transform, said Ryan Potter, the director of Koch Labs at KSP.

“As Koch and external companies build mutually beneficial relationships, they start to learn from each other. And when they get closer to a market solution, it transforms both companies,” Ryan said. “KSP’s flexible capital helps create new mutually beneficial relationships.”

The transformations within Koch’s existing energy and related operations are helping to increase efficiencies, eliminate waste and use fewer resources. These innovations provide more opportunity for employees to learn, grow and transform. 

At Koch company Flint Hills Resources’ refineries, Molex and FHR developed a state-of-the-art sensor-based leak detection system enabling timely detection and repair of small leaks, resulting in reduced emissions, improved safety and lower costs. At its Pine Bend facility in Minnesota, FHR invested $125 million in a technology that converts ammonia and sulfur into fertilizer, and another $120 million in a combined heat and power system, further improving FHR Pine Bend’s operations and making it one of the most energy efficient refineries in the United States.

Koch Fertilizer’s manufacturing facilities have worked for years to reduce their energy and resource consumption, lessening the need for natural resources such as natural gas and water. These ongoing efficiency increases have earned three Koch Fertilizer facilities certification as operating in the top 25% of fertilizer manufacturers in the U.S. for energy efficiency by the Environmental Protection Agency. “It’s the cumulative impact of everything we’ve been doing for the last 10 years,” said Pascal Van Teeffelen, Koch Ag & Energy Solutions executive vice president of operations and compliance.

INVISTA, a Koch company that produces materials such as Nylon 6,6 used to improve performance in vehicle operation by reducing vehicle weight and optimizing battery system design, has invested nearly $2 billion to deploy an advanced production technology that is more efficient and reliable, uses less energy, virtually eliminates benzene in the production process, and also transforms how people work. “What an operator and mechanic used to do is very different now,” said Jerry Grunewald, vice president, operations innovation at INVISTA. “These investments have enabled overall processes to become more efficient.”

KSP engages these and more Koch businesses and subject matter experts to help its portfolio companies achieve their goals and create mutual benefit. Coined the Koch Labs concept, the operating model leverages the breadth and depth of diverse Koch companies, from data analytics to electronics and consumer products to commodities.

“The companies in which we invest benefit from access to Koch’s highly developed capabilities,” Ryan said. “Koch mutually benefits from these relationships because we gain new knowledge about rapidly evolving industries and innovations.”

“It’s a win-win, dedicated to creating an ecosystem that continually addresses new and emerging challenges in energy transformation and more – from facility construction to middle- and last-mile delivery,” Jeremy said.

Creating cross-industry collaborations, such as those initiated by KSP, is critical. In a recent survey of automotive stakeholders commissioned by Molex—another Koch company driving innovation in the battery space—33% said greater collaboration between original equipment manufacturers and traditional suppliers is most likely to drive innovation forward.

This is why, Koch is actively building knowledge systems around emerging energy technologies in addition to capital investment, tapping external knowledge and applying internal capability to create more value.  

“These partnerships are only beginning,” Jeremy added. “KSP’s investments will continue wherever Koch sees opportunity to match its capabilities with opportunities that can mutually benefit Koch and other growth-oriented companies.”

Other companies in the energy transformation space are taking notice, setting the stage for future investments. “They recognize we’re not just commodity capital,” Jeremy said. “We bring capability and help support powerful transformation.”