Backing the Future Before It Was Obvious

Dan Gross (BA '92, MBA/MEM '98) paid his own way to renewable-energy conferences when his employer thought wind and solar were a curiosity. Three decades later, he has helped write the rulebook for clean-energy finance, taught a generation of Yale students how it actually works, and just led the largest IPO of a nuclear technology company in history.

When Dan Gross arrived at GE Capital in 1998, he wanted to work on wind and solar. The reaction has stayed with him for the better part of thirty years. “I want to work on wind and solar. And people looked at me like, that’s so cute, but we do real energy,” he recalls. So he spent his first years financing coal-fired power plants, offshore oil and gas, and combined-cycle gas, and used his evenings, weekends, and his own money to chase the work he wanted to do more than anything.

Today, “real energy” looks rather different, and so does Gross. He is Chief Financial Officer of X-energy, a developer of advanced small modular nuclear reactors and fuel. He is a lecturer at Yale, where his Renewable Energy Project Finance course has been oversubscribed for years, he sits on the advisory board of the Yale Center for Business and the Environment (CBEY), and he is a graduate of Yale College, the School of Management, and the School of the Environment. The throughline across all of it is the same instinct that made his GE colleagues smile: a willingness to commit to things long before the rest of the market agrees they matter.

An indulgence for a changing planet

Gross traces the urgency back to childhood. “Before ecotourism was a thing and had a name,” he says, his family’s one extravagance was travel to places undergoing dramatic ecological change, including a canoe trip up a tributary of the Amazon. His parents took the family on these trips with the understanding that if they didn’t see it then, they may never see it at all. That, he says, “ingrained in me a sense of urgency to do something about climate.”

Because most of those trips were to lower-income, industrializing countries, they also planted a second idea: technological leapfrogging. Just as some countries skipped landlines and went straight to mobile phones, nations still building out their power infrastructure could begin with something more sustainable than a coal-fired power plant. Renewables in emerging markets became his passion. Though, as he would learn, the world did not yet have the tools to finance it.

He came to Yale already knowing what he wanted to do, majoring in economics and environmental studies and then completing the joint School of the Environment and School of Management degree in 1998, well before anyone called this a field. “If I wanted to meet with all of the students at Yale who were interested in renewable energy finance,” he says, “I would have lunch with Elliot Mainzer, and that was it.” Mainzer is today the president and CEO of the California Independent System Operator.

“We do real energy”

Pursuing renewables inside GE Capital meant, in his words, “toiling in obscurity,” striving to win attention and internal resources to staff his own deals. He found allies in unlikely corners of the company, people who weren’t assigned to renewables but donated their lunch hours because they wanted to learn. “I cobbled together this kind of ragtag team of people who just cared,” he says.

The breakthrough was a piece of financial structuring. A financial model that GE was well-versed in involved owning and leasing commercial aircraft, capturing the depreciation benefits of ownership. Gross realized that owning a wind or solar project under a long-term power purchase agreement looked remarkably similar. The instrument was called tax equity, and at the time, it was applied inconsistently across the market. GE’s corporate tax group agreed to pursue it for renewables on one condition: that Gross secure a private letter ruling from the IRS blessing the structure.

An adverse decision here could have cast a cloud over the entire sector. Thankfully, the ruling came back favorable, the first one of its kind. Word spread, and competitors filed Freedom of Information Act requests to see exactly how GE had done it. The IRS, rather than issue more individual rulings, published a safe-harbor rule that was, Gross notes, essentially the GE deal verbatim. It became the standard for tax equity that endures, with tweaks, to this day.

“In many respects, I feel kind of like the grandfather of tax equity as applied to renewable energy,” Gross says. Tax equity “is not the most efficient way to raise capital,” nor the best incentive a government could design to build clean-energy infrastructure. But it let GE scale, and for a time made the company the largest tax-equity investor in American renewables.

That era also revealed something else about Gross. One colleague, an IT specialist, pulled him aside to say the work mattered and that he wanted in. Gross began mentoring him over a standing series of lunches, handing him term sheets to dissect, then helped move him onto the commercial side and wrote his recommendation to Harvard Business School, where he was admitted on the strength of that very story. “I think that maybe part of that experience informed my desire to be a teacher,” Gross reflects.

Learning to speak utility

GE taught Gross a discipline, but a narrow one: project finance for energy, learned first on fossil fuels. He considers that grounding an advantage. “I learned to speak utility,” he says, to understand how the grid functions without renewables, and therefore where renewables fit and where they don’t. Many people who never worked in conventional energy, he argues, miss that realism about both the role and the limits of renewables.

But project finance could only reach so far. When Gross spotted next-generation solar manufacturers worth backing, GE’s answer was a version of “that’s not what we do here.” The firm wanted twenty-year contracts, and you cannot turn a manufacturer into a power plant. Goldman Sachs offered the pivot: out of project finance and into private equity, investing in the manufacturers and developers whose businesses sat adjacent to contracted cash flow rather than inside it. There, he learned to be a private-equity investor, carrying his project-finance toolkit with him.

Raising Hudson and surviving Clean Tech 1.0

At Goldman, Gross and his colleagues built what he believes was the largest, and certainly among the most profitable, clean-tech private-equity portfolios in the United States. When the partner he reported to left to start his own firm, he asked Gross to join him. Hudson Clean Energy Partners, founded in 2007, was a spinout of that Goldman team, and it raised a little over a billion dollars for a first-time clean-tech fund, closing in 2009, enormous for its moment, especially considering its timing post financial crisis.

Convincing investors meant confronting their skepticism head-on. The biggest worry was dependence on subsidy: the economics didn’t stand on their own, relying on the U.S. investment tax credit or European feed-in tariffs, and that government support could be withdrawn. It was a real vulnerability — when Congress repeatedly let the wind production tax credit lapse, the market lurched from growth to standstill, and retroactive tariff changes in Europe undermined confidence in sustained support. A secondary question was of technology risk: should the firm back first-of-a-kind technologies, or back more proven players and help them scale?

What Gross discovered about himself on the fundraising road was that he was a persuasive storyteller, able to lay out a narrative that gave investors confidence that the risks could be managed. And he traces that skill to an unexpected source: “The single most valuable skill that I learned as an undergraduate at Yale College was in an improv comedy group.”

Improv taught him not to panic without a script, to read a room, to sense when people are losing the thread and meet them where they are, and “to tell the same story a hundred times but never actually tell it the same way.” More important than any single course, “than anything I learned in finance or economics,” he says, “was actually improv, and I use it all the time.”

Hudson had genuine highs, including a major exit Gross led himself. It also lived through what he calls Clean Tech 1.0, the implosion of solar and wind valuations between 2011-2013. “It was a scary and difficult time to be an investor,” he says, and the lessons came as much from failure as from success. The one he has internalized most is about discipline: knowing when to double down on an investment that is working and when to begin neglecting the ones that never will.

“It’s not so much about picking the very best portfolio,” he explains. In the venture capital space, plenty of companies won’t survive; the art is “having the discipline not to fall in love with everything,” and developing an instinct for “who to continue to support and who to neglect.”

From investor to operator

Gross’s last role before becoming an operator was still an investor’s. As co-head of Amazon’s Climate Pledge Fund, seeded with an initial $2 billion, he looked for technologies that could help Amazon decarbonize or operate more sustainably, fund them, support their early traction, and eventually become a major customer. Rivian was the template. Amazon had committed to electrifying its fleet of delivery vans, and its order for 100,000 of them materially improved the odds that Amazon's equity investment in Rivian would succeed, with the gain on that investment rewarding Amazon for adopting the technology early. 

One focus area changed his mind about a technology he had once opposed. “As an undergraduate, I was adamantly anti-nuclear,” he says, convinced it was reckless to create waste that stays deadly for millennia for the short-term convenience of cheap power. Time out of school reversed his view. He came to believe “there’s no way to decarbonize without nuclear,” and that the existing fleet and its waste management have an exceptional operating safety record. Measured on a deaths per-unit-energy basis, he points out, the U.S. nuclear industry “is hands down the safest” compared with solar, wind, or fossil fuels. As for the waste: all the spent fuel from the entire history of the U.S. commercial fleet (which supplies roughly 20 percent of our power) would, in long-term storage, “fit in an area the size of a super Walmart.”

The clincher was reliability. Wind and solar are, in his words, “awesome,” but data centers “need to be available 24/7 when the sun isn’t shining, when the wind isn’t blowing, and when four hours of battery storage doesn’t get you there.” Without high-availability, load-following power, Amazon could not decarbonize. Gross led the team hunting for the right nuclear technology, and that search led to an investment in X-energy, where Amazon became the company’s largest financial investor at the time, and Gross took a board seat.

Over roughly a year and a half on the board, he earned the leadership’s trust and came to believe deeply in the technology and the team. After one board meeting, a dinner with the CEO turned, organically, into a conversation about whether he might become CFO. He decided it was a chance to “double down on a single technology that I really believe in and a management team that I really believe in” and took the job. 

The bet has already produced a milestone. As CFO, Gross led X-energy’s initial public offering, which priced four dollars per share above its marketed range and raised $1.1 billion in net proceeds, which X-energy’s investment bankers described as the largest IPO by a nuclear technology company in history.

The most oversubscribed class nobody expected

Gross has taught Renewable Energy Project Finance for about a decade, to roughly 175 students a year, and for the past five-plus years, demand has outstripped the seats and teaching assistants available. Every year, he says, he assumes there can’t possibly be this many people interested. “Renewable energy project finance is a subspecialty of a subspecialty, and it’s an obscure one at that,” he says. Every year he is proven wrong.

Students across the School of Management, the School of the Environment, and Yale College, he finds, would rather work in wind and solar and geothermal development and finance than in banking or consulting, because they want to be part of the solution. The field rewards that instinct: it is multidisciplinary — part lawyer, part financier, part engineer — and even a junior financial modeler becomes the point of truth for a deal. It also, he notes plainly, can support a family comfortably.

After years working beside people he describes as jaded by long careers in finance and energy, his students are his antidote. “Something that gives me hope for the future is the level of enthusiasm that comes from Yale students,” he says, which is, finally, why he teaches. Asked where his single greatest remaining opportunity for impact lies, he doesn’t hesitate that it isn’t his own work but his students’: “The scale of what they will do is so much bigger than me. I feel good about being a part of it.”

The commitment has been considerable. Teaching from Seattle while at Amazon, Gross lectured largely over Zoom at 6 A.M. Pacific time and flew to New Haven one week a month. This past spring, he taught the course while simultaneously leading the X-energy IPO, a heavy lift he undertook because it mattered to him.

Twenty years of practitioners in the classroom

Asked to reflect on CBEY at twenty, Gross points to what he considers its most important contribution: helping Yale see the value of practitioners teaching students and preparing them for real-world jobs. He describes his own course as “unorthodox at Yale,” because “there’s no textbook. We don’t read a single academic article. Students have to read a real loan agreement.” They work through a power purchase agreement and a construction contract, and build a financial model that grows more complex each week until it rivals a Wall Street model. “It’s a simulation of what the job is,” he says, preparation that helps students interview well, decide whether they want to be in the industry at all, and hit the ground running in summer internships.

That his course exists at all is a CBEY story. Stuart DeCew, the center’s executive director, was challenging advisory-board members to make contributions, financial or programmatic, to students. Gross, who had guest-lectured about project finance a handful of times to a favorable response, offered to expand a ninety-minute talk he had created for such occasions into something more. It became a roughly fifteen-hour module taught as part of Richard Kauffman’s Financing Green Technologies course. The student response, “this should be a standalone course,” turned his sub-unit into a standalone course.

Gross would like to see more of it. The advisory board, he points out, is full of experts in environmental health and safety, sustainable real estate, and more, any one of whom could build a curriculum that would resonate with some subset of students. Growing that instructor-practitioner model, with the funding to support it, is what he hopes the next twenty years will bring. “It’s a really meaningful way for professionals to have a positive impact on the future,” he says, “and a great way to help set up students for success.”