Jon Powers: Welcome to Experts Only podcast sponsored by CleanCapital. Learn more on CleanCapital.com I’m your host, Jon Powers. Each week, we explore the intersection of energy, innovation and finance with leaders across the industry. Thank you so much for joining us. Jon Powers: Welcome back to Experts Only podcast. We have a really special episode today. It’s a anniversary episode where we are having a conversation with Lisa Jacobson, the president of Business Council for Sustainable Energy, and Ethan Zindler, who’s the head of Americas for Bloomberg New Energy Finance, Bloomberg NEF. For the last eight years, BCSE and Bloomberg NEF put together a Factbook that is helping to tell the story about the revolution that’s happening in the energy space, both in production, delivery and consumption. This year’s Factbook in particular, really talks about the transition over the last decade and the acceleration of what’s happening in the clean energy marketplace. Jon Powers: This is a similar episode that we did last year looking at the 2019 Factbook. What I love about this conversation is the research and data that both Ethan brings to the table and then the advocacy experience that Lisa brings to the table is very powerful and can help really continue to move forward the momentum we need on a policy perspective in this marketplace. There are tools in this Factbook that we can all use. I use it all the time in public speaking and outreach. You can find it at BCSE.org and I think you’ll learn a lot from this conversation. Enjoy. Jon Powers: Thanks so much, Lisa and Ethan for joining me on Experts Only. Lisa Jacobson: We’re happy to be here. Jon Powers: For our audience, this is not the first time you heard us talk about the Bloomberg NEF and Business Council for Sustainable Energy Factbook. We did it previously last year. With the 2020 edition out, this series has done just an amazing job documenting the revolution that we’re seeing in energy production and delivery and consumption across the US. Before diving into the actual report, and I do want to talk about some of the reflections of what we’ve seen in the last decade and what you hope to see in this coming decade, just to level set everyone, can you talk a little bit about, Ethan, why Bloomberg decided to partner with BCSE on this and what you guys see coming out of this report every year? Ethan Zindler: Sure. Again, thanks, Jon, for hosting. Thanks, Lisa, for partnering with us on this. The goal of the Factbook is pretty simple, which is to provide facts. I’m based in Washington and someone who is part of a firm that tries to provide hard economic research and data to those in the investor community primarily, and others in the energy field who are trying to make money or avoid losing money on the energy transition. So part of what I see as the goal of this is simply to provide that same level of sort of up to the, literally up to the minute kind of information to policymakers here so they are as clued in about all the exciting changes that we’ve seen gone on in the energy world as people like you and others are at the moment. Jon Powers: Lisa, for the Business Council, you and your members do such an amazing job helping to tell the story of where the market is, where it’s going, and help bringing a different voice around advocacy into Washington so that it’s not just about what we’re doing for the environment, but it’s about jobs and the economy and finance and development. How does the Factbook empower your members and what do you guys do with it when you’re going up to the Hill or to state capitals and other places to help advocate for policy? Lisa Jacobson: Well, thanks, Jon, and yes, the Factbook has really become the foundation of all of the organization’s work. Business Council for Sustainable Energy is primarily a policy advocacy organization. We work in Washington DC for federal policy, but we also work at state and local levels. As you know, we also have a strong interest in the international energy and climate change agenda. So we participate in the UN Framework Convention on Climate Change process. We also participate in the Clean Energy Ministerial process. At any given year, there might be other international forums of interest to us. It really started about 10 years ago when the project launched. BCSE had invited at the time, NEF, New Energy Finance. Ethan and his team did come talk to our board and we were beginning to see some dramatic changes. But across the sectors that we work in, natural gas, renewable energy, energy efficiency, it wasn’t yet really well understood. Then people weren’t knitting it together in a way that was understandable to policy makers. Even to some of us around the table as we were trying to describe the… Lisa Jacobson: We’re companies and associations, but when we’re talking to policy makers, we didn’t really have a handle on it in a holistic way. So that was really the demand. We needed it to better understand what was happening to our own industries and how it related to our peers, but we also needed a resource that would focus on the sectors that we represent and do it in a way that was fact-based and that focused on economics and that we could present it to policy makers in a user-friendly fashion. I think the Factbook really does that. Policymakers aren’t the only audience. It’s obviously journalists, it’s the public and it’s industry. When we look at who really uses the Factbook, about 40% of our downloads each year are from industry. So there’s a real need for industry to understand these changes as well. We take this with us everywhere we go. Right now, we are kind of in our roadshow period. We just released this a month ago and we are talking to many policy makers and partner organizations about the findings. It’s really an exciting time. Jon Powers: Yeah, it is an exciting time. The fact that you take this both the industry to state capitals to Capitol Hill and tell just a phenomenal story. Really, what I love about this Factbook this year is it’s a chance in 2020 to look back over the last decade. You guys framed it up so well that 2010 delivered the decade of clean energy, we saw renewable energy nearly double, jobs in the space just absolutely hockey stick in growth. As you look back at this last decade, what is some of the things that surprised you the most that made it, what you guys call, the decade of profound transformation? Ethan Zindler: Gosh, I don’t know where to begin. You just mentioned a bunch of them, but I think, and maybe this is just because I tend to focus more on power generation, less on efficiency than Lisa does [crosstalk 00:07:10] than me, but the fact that basically, our demand for energy overall and proactivity in particular has basically been flat for a long period of time. The interesting thing about the last decade is that it actually was a very long period of sustained economic growth. It wasn’t blockbuster growth, but it was growth. We had GDP growth every year of the decade coming out of the great recession. Yet, our demand for energy basically stayed flat through the decade. So that to me, at least was a surprising thing if you look at it across the full piece. Lisa Jacobson: Yeah. Two things I’ll highlight is affordability number one. We were just at a presentation at the Environmental Protection Agency and one of the comments and discussion we were having with some of those folks was around cost reduction. One of the slides that Ethan put up was basically looking at power purchase agreement prices in different markets in the United States and contrasting kind of the benchmark price range. Then he overlaid, in this case, wind and solar PPA price ranges in different regions. I don’t think I would’ve… I would’ve hoped, but I don’t think I would have thought 10 years ago that un-subsidized wind and solar would be more competitive than the benchmark price in as many markets as it actually is in the United States now. So I think that is very surprising to me, but a hopeful surprise, it’s a good news story. Lisa Jacobson: That’s just two areas, but could look at battery storage prices coming down 85% a decade. You can look at energy efficiency initiatives and business model changes which lower costs. Then that is a good segue to the next kind of surprising thing when I look at the data, is really this empowered consumer and looking at the corporate side, but it also is happening in residential settings, just the ability because of technology and cost reductions for entities in our economy to manage their energy choices. I don’t think I would have imagined it at the scale that it’s happening right now. Lisa Jacobson: For the corporate PPAs in particular on renewable energy, at the end of 2019, it was 13.6 gigawatts of corporate PPA signed for renewable energy. That is huge. When you compare that to what’s being built and kind of the generation mix changes, that’s a really strong signal that this is an economic choice and that it’s not going to be completely constrained by regulatory change, which can be very slow and very painful. I know you know that well. Jon Powers: Yes. Lisa Jacobson: So I think those things I wouldn’t have anticipated that basically, the power of corporate purchases would be a dominant factor in what’s driving renewable energy growth. I don’t think I would have anticipated that it is right now, in this moment in time so powerful in that way. Jon Powers: Yeah, I find it interesting that it’s not just the fact that they’re making this commitment, so they have now sophisticated energy procurement offices that really didn’t exist 10 years ago, no one had an office that was pushing on policy in Virginia to help bring renewable energy like Google does or really sophisticated PPA acquisition teams like Apple and Amazon and Walmart. That development is really creating these corporate behemoths that are helping to drive the market for actually, CleanCapital, right? It’s actually who we work with, which is really exciting. Jon Powers: So if 2010 to 2020, maybe not facing headwinds, but there was a slog and a continued growth as the momentum began to come in place. Now, we’re facing the next decade where you talked about storage prices coming down for instance. Right? But we’re still in the nascent part of the storage market. But you’ve got, I think it’s 40% of Americans now live in states that have 100% RPSs including Virginia, which having been a previous Virginia resident, I never thought would happen. You’re seeing state level policies changing because of the work that, Lisa, you and your team are doing. The markets are really starting to break out here. Jon Powers: What do you s expect to see maybe in increments of maybe the next five years of this Factbook, and then maybe decade back? Are these numbers going to kind of continue to the trajectory going on? Do you feel like changes in was- There’s a lot of questions here. Sorry. … changes in Washington, if they happen, will help continue to accelerate the growth of renewables in the space? From your depth of experience you’ve gained looking at this for the last eight years, help us envision where we’re going. Ethan Zindler: With the caveat that this is not what you would call facts, but more- Jon Powers: Sure. Ethan Zindler: … hypothesis, and really more of to be clear, the NEF of Bloomberg, the NEF’s position and thoughts in terms of where we see things. Lisa Jacobson: … it’s important that you’ve had really diving into this data for a decade, right? So the thought analysis going into that hypothesis is very well defined compared to folks that are just maybe getting into- Ethan Zindler: Yeah, no, thank you. It is. I would say that, look, we think that in the short-short run we have a boom in particularly, this calendar year, and we’ll set aside coronavirus entirely for a moment, but assuming no coronavirus impact, this is scheduled to be the biggest year ever for renewable energy installs in the United States in part because last year was the biggest year we ever saw for renewable energy investment- Lisa Jacobson: Right. Ethan Zindler: … in clean energy in the United… So there’s a bit of an echo effect. Also, we’re coming up towards the end of the tax credits are ramping down and so that’s kind of front loading some activity and why we think you’ll see such a bumper crop of activity this year in particular. We do think the market probably goes down to somewhere to eight to 10 gigawatts of renewable billed per year over the next three or four years after that and then comes back up again. The challenge overall is of course, the US… The great news for US competitiveness is that we’re not really demanding a lot more energy or electricity. As for new build though, of course the opportunities are really about replacing existing stuff. You can only build so much new stuff in a year anyway as a result of that general trend as we continue to phase through and phase out our existing coal fleet overall. So that’s that probably on renewables. Ethan Zindler: On the electric vehicle front, the electric vehicle market in our view, continues to be driven to a large degree by very direct subsidies. The tax credit cap on the number of electric vehicles that both Tesla and GM can sell to consumers where the consumer gets the full $7,500 tax credit in their pocket, that cap inhibits the market a bit. Literally at this moment, there’s conversations about trying to extend those credits and how that might fit within the [inaudible 00:14:37] et cetera, et cetera. But our view on electric vehicles looking three to four years out is that none of that will really matter because the cost of an EV will be so competitive that sales will just take off. Again, that’s our projection theory, but also it’s based on hard facts, which is that we know that as the number of battery manufacturing facilities come online, the price declines and we’ve seen that now for 10 years. Our projections on batteries are simply based on the next tripling of worldwide manufacturing that we literally can see happening because the plants are being built as we speak. So that’s why we’re very optimistic about that overall. Ethan Zindler: But the last thing I would just say about this is that the last 10 years have been so dramatic in terms of the amount of change that we’ve seen. One of the things, points that I always like to leave audiences with when I get a chance to speak to those, especially people in utility executives is that have one of the most dangerous and riskiest assumptions that you can make is that where we are right now is where we will be 10 years from now. The level of change and the transition that’s underway has so much momentum now that that it’s hard for me to see that and not continuing. Now exactly how far we go and what the permutations will be obviously are to be determined, but the world we live in now is a world of change and that’s going to continue. Jon Powers: Yeah, that’s a great point. Lisa, it sort of leads into the next question for me is I actually recently wrote a piece actually called it from Gretta to the board room where arguing that the cultural transformation around climate is deepened and happening in a way that I think may have been in the early part of the century, but then sort of faded because of the stakeholder pushback against it. But now, it’s changing in a way that I believe it’s pretty permanent, but we’re also seeing boardrooms change. You talked about corporate PPAs for instance. You’ve got BlackRock leading the way on major commitments around investing. You even had Jim Cramer come out recently, calling him sort of the death knell of the oil stocks, which was a fascinating commentary by him. But I want to get back to the corporate side for a second. You do have these corporate behemoths that have done a wonderful thing by leading by example, but do you see that trickling down now into sort of the next level of companies who may not have the resources of an Apple, in a Walmart and a Google that do these massive procurements? Lisa Jacobson: Well this is clearly an area where Bloomberg NEF has done a lot of looking. So I will let Ethan maybe share a couple more thoughts on that, but I think the answer for large companies is yes. Just as we saw the Carbon Disclosure Project- Jon Powers: Right. Lisa Jacobson: … and corporate sustainability initiatives evolve over, really going back I guess to the late eighties and then in the period of the beginning of the 2000s. Really, that’s when the CDP really took off with their questionnaires and the like. Those companies are in the spotlight and there’s a lot of opportunity. It’s not just work. It is a lot of work, but there’s a lot of opportunity. One of the things that I look at and we focus on this a little bit in the Factbook is yes there is corporate renewable energy purchases, but now there’s green fleet initiatives. Jon Powers: Right. Lisa Jacobson: There are energy efficiency initiatives that have always been important. But now, there’s much more sophisticated optimization that can be had. I really think this is a significant thing. One of the questions that we have and we haven’t actually really talked about this much, Ethan, and you try to fill this market niche, it’s how do we capture small and medium size companies? I guess we could also… We’re now talking about the corporate sector, but it also is important for communities. How do we enable all that wish to benefit from clean affordable energy to have access to it? There’s a lot of market movers and they may be very big and structures are getting more comfortable for them, but there’s a whole lot of other players that are interested. Jon Powers: Yeah. The reason I asked the question because I feel like we engage with a lot of those sort of mid market size companies, or we engage with the city manager of a small city in Massachusetts who doesn’t have the capacity or the resources to even… Doing a PPA for them, they may do one or two. They could be significant if they do them correctly, but they don’t have a team of analysts around them that are executing, but they’re so critical for that next phase. Ethan Zindler: I would just agree with all that and say that look, small and medium enterprises often do business with bigger enterprises. Jon Powers: Right. Ethan Zindler: So if you’re Apple and you’re putting pressure on all your suppliers to be green, then that can frankly, first effects the Foxconns, which are not small companies, but there are others further down the chain. I do think the influence of bigger companies will eventually be felt by smaller companies and entities. The only thing that I point out of course is that the good news is that this stuff is generally cost competitive. Yes, this may be new to you if you’re a small business or a small government agency, but the numbers can pencil out in many cases. If you take the time to do the work, you can figure out how it can work for you. Ethan Zindler: Even anecdotally, had started hear some talk of municipals and co-op utilities demanding more from more clean energy. These are frankly often, particularly the rural co-ops, have often been the ones that have been kind of most reluctant and resistant and even they are starting to see that it actually might be cheaper to buy clean energy than to continue to buy power from their very old, nearby coal plant. The good news is that the economics are on the industry side and eventually, everyone gets the memo. Jon Powers: Yeah. I would love to see your PPA overlay slide by the way. That sounds really fascinating. I want to ask one more specific policy question. I did want to get into the tools of the Factbook, which I think people should understand how to use it and what the work they’re going to be hopefully advocating for. But looking at specifically, we’re seeing now the step down in the ITC, pressure on the PTC you’ve talked about the electric vehicle taxes and some of the other sort of federal policies that have been in place that are starting to move away. What implication do you see maybe in that first phase down the ITC that maybe we will be a trend here for the next two or three years if we keep taking steps down, unless the government does reverse it? Ethan Zindler: Well, I don’t think that solar phase is quite the same level of pressure as wind does- Jon Powers: Yeah. Ethan Zindler: … in terms of… You haven’t historically seen quite the same kind of the peak, the classic PTC cliff in solar. It’ll be a great experiment. It may not be an easy one for a lot of people, but I would point out that our research from elsewhere in the world has pretty consistently shown that when the value of subsidies for solar are reduced, that the cap exes come down too. Jon Powers: Right. Ethan Zindler: I wouldn’t be shocked to see that happen here. There’s a substantial difference in the dollar per watt cost of a residential EV system in the United States versus one in Germany or Australia or other parts of the world. I don’t entirely frankly, understand why that exists. But I also do think that the removal of some of the subsidy will put a lot of cost pressure on US players, both residential, commercial and utility scale basis. Frankly, we’ll find out just how cheap you can do solar for- Jon Powers: Right. Ethan Zindler: … cheaper than we’re doing it right now. Jon Powers: Interesting. As someone who finances have started to see [inaudible 00:22:55], it’s great to see we can keep doing it cheaper and make sure the returns are there. Lisa, can you talk a little bit about the Factbook is such a great tool for folks that maybe aren’t full time evangelists or advocates or policy people, but that can go to their state capital and advocate for changes around some of the policies. Can you talk about some of the tools that the Factbook has that that can help them? Lisa Jacobson: Sure. Well, I think first and foremost, it’s all available for free and you can get the Factbook off the BCSE’s website. There are a lot of tools on the website that make it easy to navigate and we encourage everybody to check them out. Also, we’d like your feedback if there are things that you don’t see or ways to make it easier to find what you’re looking for, we would like to know. But you mentioned states. So one of the tools that I can mention is that we do spin off datasets for states. Maybe it’s like 10 different benchmark stats that we pull and we put them out on the website for free and individual state fact sheets. Every state has some additional information that you can gleam from the backup project. Then we also take out all the relevant state and regional data and we put that in one deck and we have that easily accessible on the Factbook website. Lisa Jacobson: So that gives you a sense of, when we’re looking on a more sector specific or cross cutting area and we have a breakout of state and regional information, all that is in one place. So if I were going to be going to a state capital, and you know BCSE does do this. For state X, I would go to the Factbook website and I would download that fact sheet and bring it with me. Or when I’m here in Washington and I’m going to an office in a particular state, I will bring that information with me. We use it a lot again, for pretty much all engagements we have, whether they’re policy makers or other audiences. The fact my book really is a cornerstone of our work because we think policy is best when it’s based on facts. Jon Powers: Yeah. Lisa Jacobson: Sometimes the trends don’t the way you want and you want to accelerate it or at least not see a deviation. Then there are times when things are just not going the way you want and you really need to ramp it up. All data, no matter what it shows is important data. Jon Powers: Yeah. Actually, we look at, give you a sense of how… We’ll look at it at CleanCapital. We actually look across the states and help identify for us, where the top targets are for the next iteration of projects that are going to be coming out. That type of data, there’s nowhere else we can really get it unless you’re really diving in and paying, nothing against Ethan’s business model, but diving in and paying BCSE or BNEF or others right now to do it. It’s really powerful and for advocates out there, it’s a great way to get your law makers sort of educated on what’s happening in the market. Lisa, one thing you did say is you talked about the fact side of this, I have applauded the fact that you guys have such phenomenal data and such fact based evidence. In this world we’re living in today where facts are becoming less and less relevant sometimes and the debate, how do you guys really amplify sort of the Bible that you’re bringing forward here, which is so powerful? Lisa Jacobson: I think the best way to do it, we are a business organization- Jon Powers: Yeah. Lisa Jacobson: … is let the businesses speak because I can go into any policymaker and say, “X technology is very affordable,” right? But when a business comes in and says it or the business says, “I’m a part of this transformation and I generate and create jobs in our town,”, ears perk up and people know that in many cases, even if they’re in the sector, it has to pencil out and they’re not doing it just on ambitions and hopes alone. They are doing it because they may share that passion, but they also know that it’s viable. So I think for us, that’s the best voice we can bring to the table. Now, we also have, as you know, Clean Energy Business Network under the BCSE banner, which is small and medium sized businesses, which I think in some cases, certain audiences are even more compelling- Jon Powers: Right. Lisa Jacobson: … because they really are community members. We know a lot of the updating of market rules that needs to occur really is at the most local level. Here in Washington, we have conversations. You mentioned our budget, our federal budget or on tax policy and that’s kind of really high up here at the federal level. But when you have to site community solar, farm, you got to get the community excited and involved. So having local businesses, which is what we can offer in addition to other community members participate in that conversation is really valuable and speeds change. Jon Powers: Can you talk about the business network for folks that don’t have the capacity to be, for instance, part of the core BCSE? How do folks sign up and become part of it? Lisa Jacobson: Yeah, I’d love to. Clean Energy Business Network is really easy. You just go to our website or there’s, www.CEBN.org, and you can sign up right there. They have lots of different programs. They offer business services, as well as engagement with policymakers in communities, as well as here in DC. There’s membership fees, but they’re very reasonable. Just to get basic information, they do every two weeks a newsletter, which is amazing. You get that for free. I think what they’re also trying to do in addition to promoting policy and educating on clean energy is build your business partnerships. So there’s a lot of networking that comes through the Clean Energy Business Network. I definitely would encourage anybody, and it really is very affordable, recognizing that small businesses, they’re worried about kind of keeping their operations going, but this is something that’s very affordable and very high value. Jon Powers: Is it an initiative of BCSE? Is it a program? What’s that… Lisa Jacobson: Yeah. It was started by Pew Charitable Trusts- Jon Powers: Right. Lisa Jacobson: … in 2008. Years ago, it transitioned from Pew to the BCSE. So it’s an independent initiative of the BCSE currently. Jon Powers: Excellent. That’s great. I did not even know about that. CleanCapital will be joining soon. As many of you should. Lisa Jacobson: Yay. Jon Powers: As many of you should. For folks that aren’t aware of BCSE, you can go to their website which is BCSE.org and find the Factbook there and all the tools that Lisa mentioned. We’ll have that linked at our CleanCapital website as well, CleanCapital.com. Is there any message you’d like to leave with with the audience before we sort of have you back next year to look back at actually, how the coronavirus affected all this? Ethan Zindler: I don’t know. I guess I would just say that at a point made earlier, but just the level of… The volume and the velocity of change in the sector is incredible and it is not looking like it’s going to let up anytime soon. Just being aware of where we are at this moment and also understanding those rates of change I think is important for anybody now involved in either policy-making or development or whatever because where we are now is it’s definitely going to be different from where we are two years, five years, 10 years from now. Getting the very latest information is really critical. That is one thing I’m very proud of about this Factbook is that we put it out as soon as we can into the new year about the immediate prior year because if you’re looking at data that is frankly, a year or two old, as you know, Jon, about even something as simple as the cost of a solar module- Jon Powers: Right. Ethan Zindler: … you can be really wrong. It’s really important to have very current data and information. Jon Powers: And Lisa, any thoughts? Lisa Jacobson: Well, just the audience that you have, all of the individuals and all the organizations and companies that listens to this podcast, you’re on the front lines and you mentioned Virginia. That’s just one example. There are many examples of change, but that happens because we all work together on a common goal. That’s where we got to be and we have some really ambitious essential objectives. We won’t get there if we don’t listen to each other, talk to each other and try to find a common path forward so that we can all succeed. The council is kind of a small microcosm of that ambition. We’re very diverse in terms of our business models and the sectors we represent, but we try to align and support each other. It’s not always easy, but that’s the premise. Yeah, I would just say look forward to being here next year hoping that what we’re experiencing in this very moment in time with the coronavirus subsides and we’re all able to focus on having good health and focus on other ambitions. Jon Powers: Yeah, absolutely. Well, first of all, thank you so much for taking the time today. I appreciate it as always and can’t wait to have you back next year. I sort of challenged the both of you guys now that you have almost a decade worth of data here and you didn’t turn this into a TED talk. It’s such phenomenal stuff. I use your data all the time when I’m speaking publicly because it does tell not just the facts, but a really incredible story about the growth of our market and really, the fact that we’re just in the beginning of this amazing clean energy revolution, so thank you. Lisa Jacobson: Thank you. Jon Powers: For our audience, you can get a copy of the Factbook at BCSE.org. I challenge you either to join BCSE or to join the Clean Energy Business Network so you can stay involved and utilize the tools and help tell the story of what’s happening both in your state capitals and in Washington DC. As always, please continue to listen and you can get more of our episodes at CleanCapital.com. Thanks to Carly Battin, our producer, and I look forward to continuing the conversation. Jon Powers: Thanks for listening in today’s conversation. Find more episodes on CleanCapital.com, iTunes or wherever you get your podcasts. If you like what you hear, be sure to subscribe and leave us a five star review. We look forward to continuing our conversation on energy, innovation and finance with you.