Speaker 1: This is Tom Rowland's Reese, and you're listening to Switched
Speaker 1: on the bn EF podcast. Today we're bringing you a
Speaker 1: recording from our BNF Summit New York, which took place
Speaker 1: on the twenty ninth and thirtieth of April. The panel
Speaker 1: featured on this episode is titled Sustaining Momentum in US
Speaker 1: Renewable Investments and it's all about the shifting sounds of
Speaker 1: clean energy spending in the US. Conditions for investment appear
Speaker 1: to broadly be improving, with interest rights easing, inflation in decline,
Speaker 1: and growing renewable energy demand sources including power hungry AI
Speaker 1: models and data centers coming online. Last year, US clean
Speaker 1: energy investment grew by fifty billion dollars, a huge leap
Speaker 1: over the average from the previous few years. Yet hurdles remain.
Speaker 1: Price cannibalization, curtailment risks, and the tariffs and policy shifts
Speaker 1: enacted by the Trump administration are all giving potential investors pause.
Speaker 1: In this episode, the panelists discuss business models and strategies
Speaker 1: that can allow investments in the US clean energy space
Speaker 1: to keep growing. The panelists include Andrew Gongaware, Managing director
Speaker 1: at bm Matt Reinsfeiler, Senior vice president for Finance and
Speaker 1: Capital Markets at Invenergy, Miguel Pina, Managing director and head
Speaker 1: of Project Finance for the Americas at BBVA, and Kareeine
Speaker 1: still partner Apollo Global Management. The panel was moderated by
Speaker 1: Paul ez Karno, a senior associate from our solar team.
Speaker 1: For more information regarding BNF summits, including our upcoming BNF
Speaker 1: Summit Munich on May twentieth, ant view recordings from previous
Speaker 1: events had to about dot BNF dot com slash Summit.
Speaker 1: Now let's hear from our panelists.
Speaker 2: Thanks everyone for coming. Thank you also for you for
Speaker 2: being here and taking some time to hear a little
Speaker 2: bit more optimistic takes.
Speaker 3: I'll try my best.
Speaker 2: The clean energy industry in the US has gone through
Speaker 2: lots of a lot of ups and downs.
Speaker 3: I think we all.
Speaker 2: Are very familiar that there's been policy uncertainty for a
Speaker 2: long time, something sometimes for the good, sometimes.
Speaker 3: For the worst.
Speaker 2: So our goal here is to bring esteam clean energy
Speaker 2: industry experts to really to really share with us how
Speaker 2: they manage the risks, how they deal in times of
Speaker 2: high uncertainty, and what's the silver lining what are the
Speaker 2: reasons to remain optimistic. I mean, I'd love to start
Speaker 2: with Andrew, because I have you so far away for me.
Speaker 2: Can you set the stage for us and explain a
Speaker 2: little bit what are the risks that the sector is
Speaker 2: facing today and how are developers and financiers like yourself
Speaker 2: managing those risks and trying to stay sane at the
Speaker 2: end of the day as well.
Speaker 4: I'm sure Matt will have a view here as well,
Speaker 4: But I think the greatest risk is obviously uncertainty that
Speaker 4: goes well beyond our industry, but I think in our
Speaker 4: industry in particular with the anticipated attacks bill and tax
Speaker 4: reform and the implications that that might have for things
Speaker 4: like the Investment Inflation Reduction Act, there's just a lot
Speaker 4: of uncertainty in front of decision making in the sector.
Speaker 4: And so I think is as management teams and banks
Speaker 4: like ourselves and investors like Corinn look at the landscape,
Speaker 4: we have to think a little bit differently and look
Speaker 4: for opportunities in different places and manage risk a little
Speaker 4: bit differently. You know, for the developers, that's where am
Speaker 4: I going to invest my dollars in development? You know
Speaker 4: where there headwinds around permitting, what can I actually procure
Speaker 4: for with some certainty around cost. There is in the
Speaker 4: market a lot that's going to get built. There's been
Speaker 4: a lot that's been safe Harbord, there's a lot of
Speaker 4: equipment in country. There are a lot of projects that
Speaker 4: are permitted and very far along you know that we're
Speaker 4: going to I guess the question is really, are we
Speaker 4: going to see you know, one hundred gigawatts of new
Speaker 4: renewables over the next five years or so, or is
Speaker 4: it going to be two hundred? So you know, either way,
Speaker 4: there's a tremendous amount of capital that's going to go
Speaker 4: into the sector and a tremendous amount of construction that's
Speaker 4: going to happen. So I think it just becomes an
Speaker 4: element of picking your spots. Whereas I think a broad
Speaker 4: subset of developers could be very successful because there was
Speaker 4: a wide open landscape. I think now where you have
Speaker 4: the most talented management teams, you're going to see some
Speaker 4: differentiation across platforms where high quality management teams who've lived
Speaker 4: through cycles, who've managed through tax credit uncertainty, are going
Speaker 4: to be successful. And those are the places where I
Speaker 4: think we'll see folks like Corinn and folks like Miguel
Speaker 4: and myself putting our capital.
Speaker 3: Absolutely Crean, that's Andrew named you as well.
Speaker 5: Yeah, that recommendation go ahead.
Speaker 3: How do you fund?
Speaker 2: How do you find those those spots and opportunities in
Speaker 2: these times of uncertainty.
Speaker 6: Look, I think Andrew's spot on. We are in kind
Speaker 6: of I would say, kind of the apex of uncertainty
Speaker 6: for US renewables with the confluence of tariffs and the
Speaker 6: ir and still honestly some supply teain dynamics that you know,
Speaker 6: were we continue to work through, for instance, in the case.
Speaker 5: Of highvoltage equipment, taking up to.
Speaker 6: Kind of like five years to get for certain projects.
Speaker 6: Look as we take a big step back and look
Speaker 6: at it.
Speaker 5: You know, we're Apollo. We're a large.
Speaker 6: Alternative asset manager or six seven hundred and fifty billion
Speaker 6: we invest across the capital structure.
Speaker 5: We've made a huge commitment to.
Speaker 6: Be investing in energy and energy transition over fifty eight
Speaker 6: billion to day, and even during.
Speaker 5: Times of uncertainty.
Speaker 6: You know, we've always viewed ourselves as contrion and so
Speaker 6: we seek to deploy capital even in time periods like this.
Speaker 6: We see operating assets like near term operating assets as
Speaker 6: pretty attractive today. We believe there's been a change in
Speaker 6: the risk adjusted return for those very prudent underwriting of
Speaker 6: kind of development development platforms. But the long term tailwinds,
Speaker 6: in our mind, are still there. The need for energy demand,
Speaker 6: it's still there, and renewables.
Speaker 5: Continue to be one of the.
Speaker 6: Most cost effective, quickst to market methods of delivery.
Speaker 3: Migad, I'd love to bring it in here.
Speaker 7: No, I mean a little more to say, I definitely
Speaker 7: agree there are tailwinds. The renewable energy is efficient, is needed.
Speaker 7: Everyone agrees we need more energy, and in the short
Speaker 7: term definitely is one of the easiest way to get
Speaker 7: very much needed energy. And we have been extremely focused
Speaker 7: in the US in prayer finance, which is what my
Speaker 7: department does in doing this type of transactions. And there
Speaker 7: is no change of strategy at all, despite the obvious
Speaker 7: headwinds that we've got right ahead of us. But it's
Speaker 7: true there's going to be a PI can choose as
Speaker 7: things are more complicated. You are not all the projects
Speaker 7: are going to be built. Some which would have been
Speaker 7: built in a more benign macroeconomic environment regulatory environment would
Speaker 7: probably not be built, but there are there was such
Speaker 7: a huge pipeline to be built, so many plans, so
Speaker 7: many developers, that even if some of them do not materialize,
Speaker 7: there's still a huge market which are going to keep
Speaker 7: us very very busy. And I would say in the end,
Speaker 7: prior finance is you know, you need to present a
Speaker 7: fully funded sources and justice proposal. That is unavoidable. There's
Speaker 7: nothing we can do to avoid that situation. So we
Speaker 7: will need all the more the due diligence to make
Speaker 7: sure that we can present a credible case to the committees.
Speaker 7: And we I mean I have just been in a
Speaker 7: committee for two big transactions which have been a proof,
Speaker 7: but the level of the diligence is higher because the
Speaker 7: committee wants to know what is the credible plan in
Speaker 7: case things go wrong, which people are much more aware
Speaker 7: to how things may get complicated just out of a
Speaker 7: blue sky, and therefore you need a good answer for that.
Speaker 7: If not me be final and it may be one
Speaker 7: hundred percent bulletproof of course, otherwise what would be doing
Speaker 7: very little business. But at the same time you need
Speaker 7: to provide a good solution with a lot of the diligence,
Speaker 7: making sure that you are working on those best projects,
Speaker 7: products would have room to improve if anything doesn't go
Speaker 7: according to plan. And surely, I say this again, working
Speaker 7: with the best in class responsors which give you that
Speaker 7: guarantee that they know and they have the experience to
Speaker 7: manage through what can be definitely choppy waters.
Speaker 2: And I love that you finished with working with best
Speaker 2: in class developers and developing platforms and mat I'd love
Speaker 2: to bring you in here.
Speaker 3: Energy has been around for a while.
Speaker 2: Well, you're the private the biggest privately held developer.
Speaker 3: In the country.
Speaker 2: You've been pretty much doing everything you can build and
Speaker 2: finance within the broader energy sector. Can you walk us
Speaker 2: through what how you're approaching these next couple of years.
Speaker 2: How are you focusing on projects, What are the key
Speaker 2: things that you have prioritized when it comes to try
Speaker 2: to bring projects to fruition and helping race at secure financing.
Speaker 8: Sure happy to try to address that. I think the
Speaker 8: biggest thing that's really helpful right now is the tailwinds.
Speaker 8: Everyone mentioned. We're kind of living in the times of
Speaker 8: an unprecedent amount of load growth. We're having utility customers
Speaker 8: and large C and I customers coming to us, and
Speaker 8: they don't really have, you know, projects that they're able
Speaker 8: to buy. They don't have enough projects that they're able
Speaker 8: to procure from. So the demand is real, and you know,
Speaker 8: customers are really focused on certainty and making sure that
Speaker 8: their projects are going to actually show up, and given
Speaker 8: sort of the uncertainty everyone has mentioned, I think that
Speaker 8: gives in entergy frankly a leg up because they know
Speaker 8: that we have a long track record of execution and
Speaker 8: being able to navigate periods of uncertainty and get projects built,
Speaker 8: you know, on time and on budget. In terms of
Speaker 8: risks around you know, IRA and potential tax credit reform,
Speaker 8: I think as an industry, we're very accustomed to those
Speaker 8: types of risks and it's something that we've been dealing
Speaker 8: with for you know, the better part of two decades.
Speaker 8: At this point, we thought that we were kind of
Speaker 8: out of the woods in that front when the IRA
Speaker 8: was passed, but now you know, people are speculating that
Speaker 8: we might might be experiencing some changes there too, So
Speaker 8: I think again it's it's a level of risk that
Speaker 8: we're accustomed to as a developer, and assuming that if
Speaker 8: you assume that kind of past precedent for how to
Speaker 8: deal with these types of things will be kind of
Speaker 8: what is expected of potentially grandfathering projects. I think we
Speaker 8: have a pretty high degree of confidence as to how
Speaker 8: you do that. And I guess the last piece I
Speaker 8: would I would kind of mention is just kind of
Speaker 8: now more than ever, I think it's really important just
Speaker 8: to have kind of be working with strong relationship counterparties,
Speaker 8: both from an off take perspective and also equipment procurement perspective.
Speaker 5: I think it's very.
Speaker 8: Clear that given there's a lot of uncertainty right now,
Speaker 8: you really need to be kind of solutions oriented and
Speaker 8: address issues that come up that neither party expects. And
Speaker 8: so having counterparties that you're able to solve problems together
Speaker 8: with is really important because at the end of the day,
Speaker 8: one no part of the supply stack of that off taker, developer, supplier,
Speaker 8: our ecosystem is going to want to take all of
Speaker 8: the risk themselves, and so finding ways to work through
Speaker 8: that and sharing in some of the risk that exists
Speaker 8: is incredibly important to kind of solve problems and get projects.
Speaker 2: Bill Yeah, and in our conversations and if you go
Speaker 2: to a renewable conference in the US, the demand growth
Speaker 2: and the load growth mantra is essentially you know, all
Speaker 2: over the place, and it's another way of saying, we're
Speaker 2: justifying higher PPA prices, higher prices.
Speaker 3: For the end off taker.
Speaker 2: How much room do we still have for the industry
Speaker 2: to raise PPA prices further and how much more will
Speaker 2: off takers be willing to absorb those higher prices? And
Speaker 2: Karina love to start with you, and then I'll go
Speaker 2: to Miguel and Andrew.
Speaker 5: Yeah. I think what we found is that.
Speaker 6: There is a significant amount of demand and that people
Speaker 6: are going to price off take relative to the demand
Speaker 6: the forward curve on the level of additionality that the
Speaker 6: asset provides. And by additionality, I mean it's a new
Speaker 6: renewables asset coming on the grid and it's providing kind
Speaker 6: of new green energy to the grid. I think if
Speaker 6: you're checking all those three boxes, it's near term, it's
Speaker 6: providing kind of immediate demand relief, it's new green power.
Speaker 6: Maybe it's even a hybridized asset. I think you're looking
Speaker 6: at like a pretty significant premium to the forward curve, right,
Speaker 6: But if the forward curve goes up twenty percent, does
Speaker 6: that premium still stay the same as is it still
Speaker 6: at twenty forty percent premium.
Speaker 2: Right.
Speaker 6: I think the market will speak in the long run.
Speaker 6: But today, if you are able to check a lot
Speaker 6: of those boxes, I think there's a very robust market,
Speaker 6: I believe. Speaking one of your colleagues last night, she said, globally,
Speaker 6: sixty three gigs of corporatep is signed in the last year,
Speaker 6: sixty three gigats like the whole US installed what forty
Speaker 6: giga watts of power? Right, So it's pretty remarkable the growth.
Speaker 3: Yeah, and me?
Speaker 2: And what are in the deals you're underwrite when you're
Speaker 2: looking at those up and coming you mentioned benign projects
Speaker 2: essentially parts that have some weak spots.
Speaker 3: How have you.
Speaker 2: Seen PPA prices and the PPA contracts and the projects
Speaker 2: that are coming at your desk?
Speaker 3: How how much room.
Speaker 2: Has a developer really had to renegotiate and bring a
Speaker 2: deal to you that that is financiable.
Speaker 7: No, we have seen quite renegotiations of PPA close and
Speaker 7: market prices that they had stayed out of the market,
Speaker 7: and they have been renegotiated with the companies because it
Speaker 7: made all perfect sense. In the end is offer and demand.
Speaker 7: The need that people have for energy that is unabated
Speaker 7: so far. So it is going to be there, and
Speaker 7: we have seen that, you know, for starting from the
Speaker 7: very lowest on the twenties and twenty one, we're still
Speaker 7: seeing some projects which can come back to us With
Speaker 7: those PPAs. It's so difficult to justify because the prices
Speaker 7: are so low. Now it's probably gone to the other side.
Speaker 7: But I think as long as the demand say, it's
Speaker 7: the offer definitely. I mean, the classic formula tells you
Speaker 7: that prices should go up, and that's what we what
Speaker 7: we expect. And with all these headwinds, there is not
Speaker 7: going to be more offer but actually less offer if anything,
Speaker 7: and the demand doesn't have any indication that is going on.
Speaker 7: So I would think there should be a good opportunity
Speaker 7: for prices to be renegotiated up. What especially there is
Speaker 7: need because the final cost of the projects increases.
Speaker 3: Yeah. Absolutely.
Speaker 2: Let's let's switch gears a little bit to the broader
Speaker 2: M and A market, and I'd love to bring Andrew in.
Speaker 3: Now, how has the m and A, the.
Speaker 2: Clean energy m and A market changed over the past Actually,
Speaker 2: let's say since November, what are the notable differences. Who's
Speaker 2: coming in, who's pulling out? How would you really describe it?
Speaker 2: How would you describe the state that we are.
Speaker 4: I would say it's highly varied across different investor bases
Speaker 4: and different corporates, developer sponsors who made a capital. There
Speaker 4: are certainly more questions today about should I be launching
Speaker 4: in this market or should I not be launching into
Speaker 4: this market then certainly we would have seen in November.
Speaker 4: The conversations are more around what are the catalysts for
Speaker 4: having more certainty or launching into a better environment. And
Speaker 4: one of the big lynch pins for that is certainly
Speaker 4: tax reform and the outcomes of tax reform and what
Speaker 4: that means for the industry. But that's a big discussion
Speaker 4: that's changed since so November is how do I map
Speaker 4: launching a process to raise capital or sell my business
Speaker 4: in the context to what's going on in the broader
Speaker 4: macroeconomy and the regulatory environment. So that's a big change.
Speaker 4: I think the other changes we have started to hear
Speaker 4: some LP's foreign investors say there is a higher bar
Speaker 4: for investing in the US today than there was before.
Speaker 5: We need to have a.
Speaker 4: Good story as to why this investment in this environment.
Speaker 4: So without question, there is a little bit less I
Speaker 4: guess movement the movement is slower in the market now.
Speaker 4: Having said that's as we said before, there's a tremendous
Speaker 4: amount of load growth, there's a tremendous amount of development
Speaker 4: going on.
Speaker 3: There are lots of.
Speaker 4: Projects that need to get built over the next twelve
Speaker 4: to twenty four months. That there are still people that
Speaker 4: need to go out and raise capital, There are still
Speaker 4: people that need financing for their projects, and so so
Speaker 4: there's still a tremendous amount of activity.
Speaker 5: It's just started.
Speaker 4: To to focus more is I think Carin said around
Speaker 4: near term operating and operating assets and things that are
Speaker 4: going to get in the ground sooner rather than later,
Speaker 4: versus you know, paying for a tremendous amount of growth
Speaker 4: and a development pipeline. And so I think that's changing
Speaker 4: the way that people approach the market.
Speaker 2: Yeah, I'd love that you finished with that, because something
Speaker 2: that Matt and I were talking about backstage is so
Speaker 2: who's going to build those early stage pipelines.
Speaker 3: Who's going to bring projects to to a status where.
Speaker 2: Investors will be comfortable investing, banks will be.
Speaker 3: Comfortable lending to So, Matt, I think we can just
Speaker 3: recreate what.
Speaker 2: We're talking about, like what do you need to bring
Speaker 2: projects to a certain level of bankability, and who's going
Speaker 2: to who's going to fill that gap now to sure
Speaker 2: keep a new energy supply coming.
Speaker 8: I mean, I think the people that are best suited
Speaker 8: to do that are the ones that have a robust
Speaker 8: pipeline because you're often having to make down payments on
Speaker 8: equipment much sooner than you would otherwise like on projects,
Speaker 8: and so having multiple avenues to deploy that equipment if
Speaker 8: you have a project that is delayed or doesn't get
Speaker 8: a permit, being able to redeploy it elsewhere is a
Speaker 8: huge risk mitigation strategy that is really necessary when you're
Speaker 8: you're ordering that type of equipment, not just transformers, but
Speaker 8: solar panels, what other equipment you're ordering kind of well
Speaker 8: in advance of when you would otherwise prefer for projects.
Speaker 8: So that's one aspect, and I think the other piece
Speaker 8: in order to make those kinds of long term procurement,
Speaker 8: you actually have to have the capital to do that.
Speaker 8: So kind of the well capitalized developers that you have
Speaker 8: access to development capital, have the balance sheet to be
Speaker 8: able to do that, I think are going to be
Speaker 8: much better suited to take on those types of risks
Speaker 8: than you know, a smaller developer that might only have
Speaker 8: a couple of projects and not much of a balance sheet.
Speaker 3: Yeah, yeah, Green, I'd love your take.
Speaker 2: And if you sit on the board of a couple
Speaker 2: renewable energy developers pretty diversified across the country, what are
Speaker 2: the conversations with them, like, what are they talking about?
Speaker 3: What are you telling them asking them?
Speaker 6: Yeah, it's a great question. Look, I agree. I think
Speaker 6: capitalization for DEVX and pre MCV spend fundamental today. Fundamentally,
Speaker 6: it's really really tough with an absolute zero balance sheet.
Speaker 5: All that being said, I mean, we're.
Speaker 6: A highly active investor in the middle market for infrastructure
Speaker 6: and for renewables, and we have found in some of
Speaker 6: the conversations that we have with our businesses that are
Speaker 6: active utility scale developers like Direct Renewables, is that they
Speaker 6: have really strong knowledge in one market. They're really really
Speaker 6: good in, for example, PGM, and they just have extraordinary
Speaker 6: landowner relationships, and those landowner relationships catalyze other landowner relationships
Speaker 6: and they lean into aggraboltaics and they lean into these
Speaker 6: competitive advantages. They're not the size of Inventergy, and they're
Speaker 6: not the size of next Era, right, but they're incredibly
Speaker 6: highly successful in their own market right, and so whether
Speaker 6: it be community solar, whether it be utility scale solar.
Speaker 6: You know, having that local market knowledge, intel and superior
Speaker 6: execution I think really can drive powerful outcomes for renewable
Speaker 6: energy development businesses, even if you're not quite at the
Speaker 6: same size and scale.
Speaker 2: Yeah, and again what's an andrew Then same question, what
Speaker 2: is the opportunity for outsiders?
Speaker 3: What is the opport if that localized knowledge is so essential.
Speaker 7: Well, it's essentially you need to play to your restrengt.
Speaker 7: I mean, it's not a matter of size, it's a
Speaker 7: matter of your expertise ability to take it forward to
Speaker 7: sort out all the difficulties which exists always under any cycle.
Speaker 7: They only change in size and scope. There are always difficulties.
Speaker 7: Taking our pride finance to completion is never easy. So
Speaker 7: you need to be working with people who know what
Speaker 7: they're doing and have the real expertise and do it
Speaker 7: efficiently and being sufficiently adapt at changing the strategy according
Speaker 7: to whatever is happening in the market, whatever that is.
Speaker 7: And that is the way we look at it from
Speaker 7: us when we think of the great developers, we are
Speaker 7: not thinking so much Astore right on the balance sheet.
Speaker 7: We're not thinking because it's pride finance in general. So
Speaker 7: I'm not thinking so much Astre who has the big
Speaker 7: pocket so that they can give me a double a
Speaker 7: guarantee or whatever. I'm thinking of Toll, Who's going to
Speaker 7: give me the guarantee that whatever plan I'm present into
Speaker 7: committee that is deliverable because they know how to do it.
Speaker 7: They have studied properly. The contingencies are sufficient and everything
Speaker 7: is going to be probably not according to plan that
Speaker 7: never happens, but surely sufficiently close to the plan so
Speaker 7: that we are going to get to the completion without
Speaker 7: any drama and the prayer will start producing energy as
Speaker 7: suspected and as promised. That is the way we normally
Speaker 7: do it. So for us, the sponsor is key. But
Speaker 7: is the expertise, the name and the ability of the
Speaker 7: e sponsor to deliver the completion of the project and
Speaker 7: a successful operation. That is the real key aspect that
Speaker 7: we are looking.
Speaker 3: On, right, Yeah, Andrew, same question. Yeah.
Speaker 5: I think.
Speaker 4: The opportunity for outsiders is vast and it's differentiated. These
Speaker 4: developers in energy Durrell salit Ridge. They need to recycle
Speaker 4: capital from d risk assets into growth and new development assets.
Speaker 4: So there's a big opportunity to invest in de risked
Speaker 4: operating renewable assets forty nine percent stakes, you know, eighty percent.
Speaker 3: Stake, you know, what have you.
Speaker 4: There's a lot of that product in the market for investors.
Speaker 3: Number one.
Speaker 4: Number two, I think, as Karin said, you know, it's
Speaker 4: great to be in energy and to have you know,
Speaker 4: open ended capital like Blackstone and CITYPQ behind you. But
Speaker 4: I think the Karin's absolutely right. There's lots of regional
Speaker 4: expertise and there's there's lots of competitive advantages beyond capital
Speaker 4: that people can establish and exploit. I think where management
Speaker 4: teams gets in trouble is when they start to move
Speaker 4: away from their competitive advantage. And so as you think
Speaker 4: about you know, as as we give advice to people
Speaker 4: and thinking about where to put your money, it's it's
Speaker 4: in those management teams that know what they're good at,
Speaker 4: know what they're not good at, and they're focusing the
Speaker 4: capital in the right places. I think more often than not,
Speaker 4: where we've seen folks get into trouble is where they
Speaker 4: go greatly expand teams and SGNA burn and in the
Speaker 4: hopes that all of this development is going to come
Speaker 4: to fruition or start to place too many bets on
Speaker 4: the development side without bringing home the.
Speaker 3: De risk assets first.
Speaker 4: So I think having the discipline to really work through
Speaker 4: management team diligence and execution diligence is the key to
Speaker 4: taking advantages of those opportunities.
Speaker 2: Yeah, so Korean, where's the next Inventergy going to come from?
Speaker 3: What's Is it going to be a.
Speaker 2: Merger of a bunch of smaller developers with very well
Speaker 2: recognized presence in different markets, or is someone organically going
Speaker 2: to grow with a deep balance sheet, deep backers and
Speaker 2: going to slowly but steady keep growing across the entire country.
Speaker 5: Do you have a crystal ball to tell me? Because
Speaker 5: then we can just invest rate.
Speaker 3: I just left it. I just left it in the back.
Speaker 5: Uh, look at it.
Speaker 6: It's kind of unwritten and hard hard to know.
Speaker 5: Right.
Speaker 6: Had we rewound the clock ten years, would we have
Speaker 6: known that Inventergy was.
Speaker 5: Gonna What did you say you owed thirty gigs? I
Speaker 5: think we've commercialized over thirty three commercialized.
Speaker 6: Congratulations, amazing, Like we were. You know, Andrew and I
Speaker 6: used work work a g together, you know, over a
Speaker 6: decade ago and we we financed in entergyes, you know,
Speaker 6: transactions then and I would have never have guessed that.
Speaker 5: You guys would have emerged into this powerhouse, right.
Speaker 6: And it's a function of you know what Andrew said,
Speaker 6: like discipline and management team and leaning into your strengths.
Speaker 6: It's also a function of capitalization. I to be honest,
Speaker 6: I don't I don't know.
Speaker 5: It could be mergers.
Speaker 6: There's a lot of companies in the United States doing this.
Speaker 5: Could could some of them come together?
Speaker 3: Sure?
Speaker 6: It could be or growth, Yeah, I mean, I think
Speaker 6: it can go a multitude of ways. It's just it's
Speaker 6: just about it's about execution through these uncertain times and
Speaker 6: and kind of keeping the vision and the capitalization in the.
Speaker 5: Right place right.
Speaker 2: And that's I like that to maybe pivot into some
Speaker 2: of the structural market obstacles, setting aside you know, craziness
Speaker 2: in DC tariffs, yes, tariffs no, I ra yes, Ira No.
Speaker 2: Over the past couple of years, permitting transmission has become
Speaker 2: central part of the conversation. And you we were not
Speaker 2: hearing about transmission as much as we do today a
Speaker 2: few years ago with the reforms that without having to
Speaker 2: look at whether the reforms will work out whether there's
Speaker 2: going to be permitting reform. What what have you seen
Speaker 2: i'l star with Matt. What have you seen an interconnection
Speaker 2: cues that has anything changed at all since it different
Speaker 2: regional grid operators started introducing que reforms. Has there been
Speaker 2: a notable improvement or are we still in a wait
Speaker 2: and see approach.
Speaker 3: Where we just still don't.
Speaker 2: Know whether there's going to be any any improvement anytime soon.
Speaker 8: Yeah, I mean, I think just from like an interconnection
Speaker 8: queue perspective, it still seems like it's really kind of
Speaker 8: the main bottleneck in these projects in terms of you know,
Speaker 8: data submission to having an actual interconnection agreement in hand.
Speaker 8: It can be you know, a number of years before
Speaker 8: you have that, and I don't see that changing anytime soon,
Speaker 8: frankly for onshore generation. But it's one of the reasons
Speaker 8: why we think that development of you know, long distance
Speaker 8: HVDC transmission is really important to enable continued load growth
Speaker 8: and being able to serve that load with additional not
Speaker 8: just renewable supply, but but you know, all forms of supply.
Speaker 8: And so we have a number of large HBC transmission
Speaker 8: projects that we're in the process of developing that you know,
Speaker 8: we think, will you know, be really impactful being for
Speaker 8: being able to unlock that you know, that load potential,
Speaker 8: that load growth that's happening, and being able to supply
Speaker 8: additional uh, you know, reliable, low cost power to those users.
Speaker 3: Yeah, and let's stay with you for a second.
Speaker 2: Why we all know it doesn't matter how deep you
Speaker 2: are in the industry, building transmission is extremely challenging and
Speaker 2: you're going to be waiting decades, even like at least
Speaker 2: more than ten years. What was a rationale behind In
Speaker 2: Energy's bed on building transmission. Was it as a as
Speaker 2: a compliment to you know, all of the onshore wind
Speaker 2: that you brought to operation.
Speaker 3: Was it for new development? What was it logic? There?
Speaker 3: Can you walk us through a little bit of you know,
Speaker 3: what the broader vision is for transmission in the company?
Speaker 8: I mean, I think it's really just responding to a
Speaker 8: problem that we identified that needs to be solved and
Speaker 8: wanting to to have a say in controlling the way
Speaker 8: that it solved. We see a lot of opportunity to
Speaker 8: create new generation opportunities through additional transmission, and at the
Speaker 8: end of the day, that's what we're looking to do
Speaker 8: is develop more more generation, and so you really create
Speaker 8: additional load opportunities for yourselves by creating being able to
Speaker 8: deliver into markets and and access really customers that need
Speaker 8: the load or that need the supply, you know. And
Speaker 8: obviously the demand growth has really kind of helped accelerate
Speaker 8: that need. And you know, we're seeing a lot of
Speaker 8: opportunities to to you know, supply different large, large load users.
Speaker 2: Yeah, and there's often the talk about, on the one hand,
Speaker 2: we should build more transmission, on the other hand, we
Speaker 2: have no other option, but more battery storage come to
Speaker 2: the grid.
Speaker 3: What how does screen?
Speaker 2: How does battery storage complement the broader strategy that you're
Speaker 2: the companies you're involved in, How does that complement that?
Speaker 6: Yeah, Look, battery storage has been a place we've been
Speaker 6: active for a long time, through our involvement with Broader Reach.
Speaker 5: Power a few years ago, which was.
Speaker 6: A standalone front of the meter battery storage company with
Speaker 6: assets in California and Texas UH and then in conjunction
Speaker 6: with many of our renewables investments today either hybridized assets
Speaker 6: or stand alone battery storage is incredible and honestly, what
Speaker 6: it's done for the URCOT grid has been incredible helping
Speaker 6: manage you know, both ancillary services and periods of you know,
Speaker 6: rapid power increases in power demand. I think in any
Speaker 6: market where we're seeing traumatic renewable penetration, the addition of
Speaker 6: storage has proven to quell volatility and provide ancillary services
Speaker 6: that are helpful forward stability, and so, you know, I
Speaker 6: think we'll continue to see.
Speaker 5: Battery storage deployment.
Speaker 6: I think it's it's been really interesting. I sat through
Speaker 6: a panel here on tariffs and seeing, you know, what
Speaker 6: the range of outcomes are on change of cost of
Speaker 6: batteries may impact batteries storage.
Speaker 5: Deployment on a go forward basis.
Speaker 6: But I think it's it's always been kind of hypothetically
Speaker 6: very complimentary to battery to renewables, and then as the
Speaker 6: cost has come down and the technology has improved and
Speaker 6: the software has improved, now it's it's definitively complimentary.
Speaker 2: Yeah, And how does that the despite the clearly the
Speaker 2: obvious benefits of batteries. And there's been pretty good years
Speaker 2: for battery operators in Texas where they've been able to
Speaker 2: capitalize in a lot of volatility, but the revenue start
Speaker 2: and especially a long term beyond five years, it's extremely unpredictable,
Speaker 2: and a lot of financing assumes like five year payback periods,
Speaker 2: which in the world of long term clean energy soid
Speaker 2: WENT projects, is very very short.
Speaker 3: How do you, especially in the current situation.
Speaker 2: That we're at now, how are you looking at batteries it?
Speaker 7: Yeah, well, I think there's a lot of interests. We're
Speaker 7: very comfortable, we are very active. So is the banking world.
Speaker 7: I mean, there's nothing especial off BVVA presently, as Kareem
Speaker 7: was mentioning, because there is so much into is so
Speaker 7: much value in when you add a lot of renewables
Speaker 7: in all the balancing act and all the ancillary service
Speaker 7: that the battery we can provide. But at the same time,
Speaker 7: it is true trading revedeos it's difficult to take. I
Speaker 7: think we banks have got more comfortable with merchant risk
Speaker 7: over the years. It was not an easy one, but
Speaker 7: we got there, and I think surely we can take
Speaker 7: an amount of trading merchant risk, which is not what
Speaker 7: we use two ten years ago. With the batteries. We're
Speaker 7: still struggling with it, and I think it's the banking
Speaker 7: industry in general, some more than others, but overall, you
Speaker 7: can say that the industry is not completely comfortable because
Speaker 7: it's very difficult to predict and you don't want to
Speaker 7: just to rely on an independent study which you cannot
Speaker 7: follow and which is a kind of black box. Still
Speaker 7: have what's going to be the price of the energy
Speaker 7: at eight in the morning or versus three pm in
Speaker 7: the afternoon on the fifth of July of twenty thirty three,
Speaker 7: which is like maybe not, but I'm not capable of
Speaker 7: going to committee and try to explain what's the logic
Speaker 7: is to make sense or not. So we are struggling
Speaker 7: one way of doing it, and that's what we have
Speaker 7: started working. Is all right, the closer you are to
Speaker 7: the current date, the easier is to have a good
Speaker 7: visibility as to how it's going to work, because I mean,
Speaker 7: all those things take time to change. The whole energy
Speaker 7: metrics doesn't change over line, and therefore we have been
Speaker 7: taking some merchant risk, trade and risk in the short term,
Speaker 7: let's say five years. But then you need to switch
Speaker 7: sooner rather than later to something of a tolling agreement
Speaker 7: so that you can get your investment repaid even if
Speaker 7: for whatever reason the overall picture changes and those revenues
Speaker 7: and those.
Speaker 3: Duck curve is.
Speaker 7: Not as as high as you would expect, So we're
Speaker 7: playing with that well, we get more comfortable with the
Speaker 7: way the model works. What are the assumption and leaving
Speaker 7: aside all this discussion about headwinds stir winds. I think
Speaker 7: it's going to take time. We're going to get there,
Speaker 7: but we banks. I think we need to still to
Speaker 7: learn more what is the in and out of those
Speaker 7: models to make sure that we can do a good,
Speaker 7: thorough responsible decisions to what kind of risk we are taken.
Speaker 3: Interesting.
Speaker 2: Please join me in thanking all of our speakers here
Speaker 2: and thank.
Speaker 4: You for listening.
Speaker 6: Today's episode of Switched On was produced by Cam Gray
Speaker 6: with production assistance from Kamala Shelling.
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