Ithaca, New York: If You Can't Do It Here, You Can't Do It Anywhere

How a town in NY tried, and failed to prove the business case for electrification.

Electrification is possible.

It's not simple, it's not easy, but it is possible. And what that means is if we can electrify one building, it means that we can electrify a whole block of buildings.

If we can electrify a block of buildings, it means that we can electrify a neighborhood.

If we can electrify a neighborhood, it means that we can electrify a city. And if we can electrify a city, that means we can electrify a country.

Donnel Baird - (ex)CEO and founder of BlocPower - TED talk 2023

Well, that was then and this is now - and the world is looking very different.

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Ithaca’s Electrification Dream: A Bold Vision That Flickered Out

Once upon a time, (er… way, way back in 2019) Ithaca, New York—a picturesque college town nestled in the Finger Lakes region—set its sights on becoming the poster child for electrification in America. With its progressive spirit, Ivy League pedigree from Cornell University, and a community eager to tackle climate change, Ithaca seemed like the perfect candidate to lead the charge toward a fossil-fuel-free future. The plan was bold: decarbonize thousands of buildings, swap out gas-guzzling heaters for cutting-edge electric heat pumps, and show the world that even a small city could make a big dent in the fight against climate change. But as the years have ticked by, that shining vision has dimmed. Ithaca’s grand experiment, it seems, has stumbled—and the town’s failure to deliver on its promises offers a sobering lesson in the gap between ambition and execution.

Ticking all the Boxes

Ithaca’s electrification journey kicked off with a lot of fanfare. In 2019, the city adopted the Ithaca Green New Deal, a sweeping resolution that aimed to achieve carbon neutrality by 2030—an aggressive timeline that put it ahead of many larger cities. At the heart of this plan was a massive push to electrify everything, from homes to businesses. The idea was simple but “revolutionary”: replace fossil-fuel-based heating systems with electric alternatives, powered by renewable energy sources like solar and wind. By 2021, the city had partnered with BlocPower, a clean-energy company promising to bring affordable, efficient electrification to underserved communities. The goal? Retrofit 6,000 buildings in Ithaca—about a quarter of the city’s total stock—within a few short years.

BlocPower was a darling of the progressive ESG funding movement hitting the high notes on social justice, climate action, inclusion and equity as well as - “promising a win-win-win (lower energy bills, lower pollution, investor profits)”. (Lee Harris)

Good question.

BlocPower raised over $250 million by 2023—from high-profile investors like Goldman Sachs, Andreessen Horowitz, and Microsoft’s Climate Innovation Fund (various sources and here).

Brooklyn-based cleantech company BlocPower is squarely positioned with a mission to fight climate change while solving social injustices, focusing on renewable energy, reduction of carbon pollution, and urban redevelopment in lower-income areas. (cnbc)

In case climate, social justice, urban redevelopment, green jobs was not enough - well there was also all the AI buzz-word salads to throw in for good measure.

And those sophisticated investors threw money at it… better hope it wasn’t your pension fund being all green and goodly.

Lemmings

It was a dazzling vision. Ithaca wasn’t just aiming to reduce emissions; it wanted to prove that electrification could work at scale, even in a town with older buildings, cold winters, and a mix of affluent and low-income residents. The national spotlight turned toward Ithaca, with headlines touting it as a model for the future. If a small city could pull this off, maybe the rest of the country could follow suit. The stage was set for Ithaca to shine, or at least it was if you were a “true believer”.

As recently as a year ago, the obvious cheerleaders were…. cheering despite the clear signs of a massive train wreck.

Where the Lights Went Dim

Fast forward to today, and the reality is starkly different. Reports have trickled out—some from local voices, others from investigative journalists—that Ithaca’s electrification dreams have hit a wall. Take BlocPower’s role, for instance. Two years after promising to transform 6,000 buildings, the company has reportedly installed just one heat pump in Ithaca. For a project meant to revolutionize the town’s energy landscape, that’s not a stumble; it’s a faceplant. (Other sources note that as many as… 10 buildings have been in fact “electrified”…).

This looks like a classic case of hope meeting an “inspirational” founder¹ meeting cheap money.

Not Ithaca

BlocPower’s pitch for making electrification profitable centered on a combination of innovative financing, cost reduction strategies, and leveraging government incentives to create a scalable, revenue-generating model. The company aimed to decarbonize buildings—particularly in underserved, low- and moderate-income communities—by replacing fossil fuel systems with electric alternatives like heat pumps, while ensuring the process was economically viable for building owners, investors, and BlocPower itself. Here’s how they articulated their approach (summery by AI):

1. No-Money-Down Financing and Equipment Leasing: BlocPower offered building owners a no-upfront-cost model, where the company covered the installation of electrification systems (e.g., heat pumps, insulation upgrades). Owners would then lease the equipment from BlocPower, repaying through a separate payment structure designed to be offset by energy savings. The pitch was that these savings—estimated at 20% to 70% on annual energy bills—would exceed the lease costs, making the transition cash-flow positive for owners over time. This removed the barrier of high initial expenses, a major hurdle for cash-strapped communities.

2. Bulk Purchasing and Cost Reduction: BlocPower promised to lower electrification costs by bulk purchasing equipment, such as heat pumps, and streamlining the retrofit process. In Ithaca, for example, the city’s then-director of sustainability, Luis Aguirre-Torres, noted that BlocPower’s approach could reduce costs by 30% or more through economies of scale and efficient project management. By cutting "soft costs" (e.g., permitting, customer acquisition, and engineering), they aimed to make projects more affordable and profitable.

3. Revenue Streams for BlocPower: The company planned to generate profits through multiple channels: installation fees, financing fees from the leases, and enterprise contracts with cities and utilities. For instance, in New York City, BlocPower secured a $30 million contract with utilities contingent on verified energy savings from retrofits. This diversified income—tied to both service delivery and long-term financing—underpinned their profitability model.

4. Leveraging Government Incentives: BlocPower’s strategy heavily relied on tapping into federal, state, and local incentives, such as those from the Inflation Reduction Act, to subsidize projects. These incentives lowered the net cost for building owners and boosted returns for investors funding the leases. The pitch to investors, including big names like Goldman Sachs, was that equipment leasing would yield steady returns, amplified by public subsidies, even if profit margins were initially slim.

5. Software-Driven Efficiency: BlocPower developed proprietary software—like BlocMaps—to identify high-potential buildings, optimize retrofit designs, and monitor energy savings remotely. This tech reduced project overhead and risks, enhancing profitability by ensuring scalability and precision in execution. The company likened this to “turning buildings into Teslas,” blending efficiency with a high-tech appeal to attract investment.

The overarching narrative was that profitability didn’t just come from direct sales but from a self-reinforcing ecosystem: affordable upgrades for owners, job creation in communities (via programs like the Civilian Climate Corps), and investor returns fueled by a mix of private capital and public support. However, reports suggest this model faltered in practice—low profit margins, slow incentive rollouts, and rising interest rates strained the financial viability. The pitch was compelling on paper, blending social impact with profit, but execution revealed the fragility of its assumptions.

What went wrong?

Well maybe, just maybe, that when one progesses from PowerPoint and TED talks, to the real world of bricks and morter - there isn’t a business case for such inspirational ideas?

First, there’s the logistical challenge: retrofitting old buildings isn’t as simple as flipping a switch. Ithaca’s housing stock includes plenty of historic structures—charming, yes, but often plagued with outdated wiring, poor insulation, and tricky layouts. Installing heat pumps and other electric systems in these homes requires time, money, and expertise—resources that may have been underestimated.

Then there’s the funding question. Electrification isn’t cheap, and while Ithaca secured some grants and partnerships, the costs of scaling up so quickly might have outpaced the available cash. BlocPower, tasked with driving the effort, has faced criticism for overpromising and underdelivering, not just in Ithaca but in other projects too. Posts on X (here and here) and scattered news reports suggest the company’s focus on hype—think flashy press releases and big promises—may have outstripped its ability to execute. Interestingly, those X posts are from 2023 - just 2 years after Ithaca contracted with BlocPower.

Funny how the correlation of hype and subsequent failure seems to be a recurring theme in the “Energy Transition”.

FT - 2019. Mobisol had really cool offices in Berlin… and a non-viable business plan. Rock Stars indeed.

If You Can Build It Here

The town’s failure should be a salient lesson for everyone because it had so much going for it. Ithaca wasn’t some sprawling metropolis with endless red tape; it was a tight-knit community with a progressive bent and a clear vision. If it couldn’t pull this off, what does that say about bigger cities with more complex challenges? Maybe Ithaca bit off more than it could chew. Or maybe it just didn’t have the right partners or resources to turn its spark into a steady flame. Or maybe there is simply no business model - and that any such plans will require - wait for it - government (tax payer) funding.

Ithaca’s dream of being the poster child for electrification has faded into something else: a warning sign. It’s a reminder that the road to a greener future is paved with more than just ambition—it takes a hard-nosed view on energy economics. Ithaca set out to light the way. Instead, like so many others, it is kindly provided a sobering reality-check.

Meanwhile in New York City, Local Law 97 is progressing with the entierly impossible mandate of electrification of heating. Lessons not learned (yet)

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For my next TED talk

Electrification is really difficult and expensive.

It's not simple, it's not easy, althought it might be possible - but it will be really expensive. And what that means is if we can electrify one building, it does not mean that we can electrify a whole block of buildings.

If we can’t electrify a block of buildings, it means that we can’t electrify a neighborhood.

If we can’t electrify a neighborhood, it means that we can’t electrify a city. And if we can’t electrify a city, how on earth do you think we can electrify a country?

I won’t hold my breath waiting for my invitation to TED

1. TIME’s 100 Next in 2022, Forbes’ Sustainability Leaders in 2024, and Goldman Sachs’ 100 Most Intriguing Entrepreneurs in 2021