Los Angeles: Pooja Goyal, 41, brings a unique personal insight to Carlyle Group Inc., where she leads the renewable and sustainable energy team and co-heads the infrastructure group. Over the past 12 months, Carlyle’s infrastructure platform has committed approximately $1.275 billion of capital to investments, or 230% of the amounts in the prior years combined, Goyal says.
A native of Mumbai, Goyal says her early experiences in India showed her how essential reliable infrastructure is for a community. At the University of Pennsylvania she received degrees both from the school of engineering and applied science and from the Wharton School. A research project on catastrophe bonds led her to a job at Goldman Sachs Group Inc. and eventually to Carlyle, where she’s a partner. Goyal spoke with Bloomberg Markets in late June about her career and the opportunities she sees today. The interview was edited for length and clarity.
Brian Eckhouse: Was there anything in your childhood that hinted at a career focused on energy, climate, or natural disasters?
Pooja Goyal : My family comes from a town in India called Mathura, and I used to spend my summers there. We didn’t have access to consistent or reliable electricity; we didn’t have access to a clean water supply; wastewater systems are not reliable. I have some very specific memories around how infrastructure impacted our day-to-day lives. So, for me, infrastructure—and more specifically clean sustainable infrastructure—has been an important theme that’s driven a lot of my decision-making.
BE : Can you share any of those memories?
PG : This is a very specific example because I remember it in a great amount of detail. The summers out there used to get very hot—consistently mid- to high 90s. In the evenings we would actually spray cool water on the rooftops and sleep on the rooftops because that would be cooler than sleeping indoors. We not only didn’t have air conditioning, but power outages were fairly consistent, which would make it impossible to sleep indoors. You have monkeys out on these rooftops. But more than that, you don’t have any privacy, which is not particularly reassuring from a safety perspective.
I used to remind myself that I’m only visiting for the summer, but my family lived there throughout the year. When you don’t have your basic needs met, how do you think about education? How do you think about economic development? So, for me, infrastructure is just very critical in terms of driving social as well as economic development. I do think sustainable infrastructure actually does that in an equitable manner.
BE : Have you always wanted to work on something that would make a tangible difference for society?
PG : I come from a family of very strong-willed women. My maternal grandmother had four daughters. That is very tough when you have four daughters and no sons growing up in India. So between my grandmother and my mother—who was married off before she could go to college—and my mother’s three sisters, I was taught from a very young age that it was incredibly important for a woman to be financially independent.
The one thing that was driving me the most through my academics, even ultimately through my professional career, has always been the need to be financially independent. That has been very, very important to me because I’ve seen what financial dependence on a father or a husband can do to a woman. I’ve been able to find a career where I can get that financial independence yet also focus on things like sustainable infrastructure, climate change that has a direct impact on the quality of life of people across the board.
BE : Do your experiences in India play any role in how you make investment decisions?
PG : I think it’s informed my decision-making. It’s informed my tenacity when pursuing these kind of opportunities, and that has come through in my work product as well as my work ethic.
BE : If you’re presented with an opportunity, I’m sure you’re going into a model and making sense of the math and investment returns. But do you also bring your own sense of how towns or cities or governments could benefit?
PG : Absolutely. I understand the appeal and the potential around distributed generation, for example. A simple thing like solar panels on a rooftop, or solar heating for hot water purposes, there is real potential around that where you can find a way to disintermediate a transmission system or a centralized utility system. That is very obvious to me. My firsthand experience informs me there, and the unit economics obviously make sense.
I think I have a true understanding for what the scale potential around those kind of opportunities can be. At the same time, having grown up in an emerging market, I also understand the practical limitations of doing business sometimes in those markets. It is different, the process around government approvals, permits, financing, working with utilities, the public sector or private sector. The dynamics can be very different and nuanced in markets outside of, let’s say, OECD [Organization for Economic Cooperation and Development] countries.
BE : Which sectors of infrastructure most excite you right now?
PG : I’m very interested in the energy transition impact on transportation. The first phase of the transition was more about renewables, but the next stage—the electrification of our transportation fleet—will present some very unique investing opportunities. Everyone talks about electric vehicles—of course electric vehicles are interesting—but I am talking about second- and third-order impact on energy consumption as a result of more electric vehicles on our roads. For example, vehicle-to-grid technology and its potential for further disruption of how electricity is produced and consumed.
The further decentralization of electricity will result in winners and losers, which will provide for more investment opportunities. I am very interested in that. I don’t think that is just a U.S.-based phenomenon or a European phenomenon—that could have some interesting repercussions globally.
BE : Are there any sectors that you really focused on or haven’t focused on because of what you saw in India?
PG : Projects that I tend to scrutinize with a great amount of detail are projects that have an impact on a local community or a local ecosystem. So if you are going to have a mega utility-scale project, I really like to look into how much a developer team or a management team has worked with that local community to understand what the potential impact of disruption during the development or construction phase would be.
Even if the economics on the project make sense, even if you have the right contracts in place, the right permits in place, the right financing arrangements in place, it is very important to understand what the people factor might be that impacts the ultimate success of the project.
BE : How did you get such an early start in renewables?
PG : I started in the leveraged finance group at Goldman, where I was working on catastrophe bonds. That team also worked on some very innovative financial solutions for energy and power companies, by utilizing risk management strategies, such as commodity derivatives, to either increase the quantum of financing or to reduce the cost of that financing. I developed a very strong understanding of capital markets and corporate finance along with a very deep understanding of how commodity markets worked. After doing that for three years, I decided I wanted to move to an investing role and really be in the driver’s seat as it relates to commercial outcomes.
At the same time, the alternative energy investing group at Goldman, which was focused on renewables, was looking for someone with a strong corporate finance and commodities background because they were transitioning from focusing on project finance and leasing to a business that focused more on growth and private equity investing in renewable energy companies. I joined that team in 2005, so I’ve been doing renewables for a little over 16 years now.
BE : What were renewables like in 2005? Solar in the U.S. was years away from the mainstream.
PG : Renewables in 2005 included wind, solar, but also biofuels, specifically ethanol. Ethanol was a big investment theme.
We ended up investing in companies that manufactured solar equipment, companies that developed renewable energy projects. It was very, very entrepreneurial. It was almost easier than renewables investing is right now because it was less competitive. It was exciting to cover the entire spectrum because you could invest in manufacturers, service providers.
BE : How does the recent enthusiasm for decarbonization and electrification compare with the earlier cleantech booms?
PG : The cost to produce electricity using wind and solar has declined meaningfully, and an industry becomes more relevant when it is less reliant on government subsidies.
I’m someone who comes from a fundamental commodities background. Commodities are based on supply and demand. A commodity is a commodity, which means an electron is an electron. While there might be people willing to pay a green premium because that electron is green, vs. [an electron] coming from a fossil fuel-based energy source, in order to reach scale you need to be able to produce an electron as cheaply and reliably as possible. And that is what is different this time around about renewables vs., let’s say, in ’07 or ’08.
The other thing is batteries and storage are helping a lot because batteries are making renewables dispatchable. The biggest issue with renewables has been that they are intermittent sources of electricity like wind and solar, and so they cannot really displace dispatchable sources of electricity. Batteries are changing the equation there. They’re not entirely there, but they are helping that. And then there is a focus on climate change and ESG [environmental, social, and governance] that wasn’t the case in ’07, ’08.
In March of last year, as the pandemic was playing out in the Western Hemisphere, I was a little worried that climate change and ESG might take a back seat, but that has not happened. So all of those factors are contributing to the story being much more scalable and real right now compared to what it was in ’07 or ’08.
BE : What does the world not fully appreciate about decarbonization and electrification?
PG : There is momentum around decarbonization, but the world needs to understand that this is a transition that’s going to play out over the next 10, 20, or 30 years. I like to tell people, “This is not a revolution, this is a transition.” A transition will require transition fuels, will require consistent investment. What you need to do is be patient, be strategic, and think about this as a multidecade process.- Bloomberg