Jon Powers: Welcome to Experts Only Podcast sponsored by CleanCapital. Learn more 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, honored today to have Mona Dajani on, who is a global leader and a partner in the energy infrastructure and water team at Pillsbury Winthrop Shaw Pittman, both in their New York and London offices. I asked Mona to join us after reading an article that she recently wrote in GreenTech Media, where she talks about some of the challenges in underwriting and understanding energy storage as an investment. Something I think many folks in the market are talking about today. Mona’s got experience seeing multiple deals in the renewable space over 20 years, has advised multiple acquisitions, financing. She serves on public boards, like the American Council on Renewable Energy, as well as been ranked as one of the best leaders in America. Mona will help guide us through some of the challenges that we’re seeing today in energy storage and help me and hopefully you as well better understand the frame that we should be looking at this market, not just today, but over the next 10 years. I hope you enjoy. Mona, thanks so much for joining us at Experts Only. Mona Dajani: Thank you very much for having me on your show. Jon Powers: You have an absolutely fascinating background, before you ended up doing the work you’re doing today at Pillsbury. I want to talk through your, I would call your origin story. How did you decide to get into renewable energy? You’ve been in this space for almost two decades and really have helped shape how the market’s developed and really diving into the deal side, which is somewhat unique over time. First let’s step back and say why renewable energy, what got you interested in that space? Mona Dajani: There were a variety of reasons, but probably the biggest one was I find it very interesting and challenging. And I feel that I’m also giving back to the world and hopefully leaving it in a better place after I leave. Jon Powers: That’s great. That’s great. Was it renewable energy first or law first? What was your path into the merger of those two careers? Mona Dajani: Well, I, many years ago as right out of college, I worked at Enron in Houston, so I was doing energy. I also have an engineering degree, so I was doing energy and then I started going more into the corporate. And then I married the energy with the law, and along the way got an MBA. And I really was just, I really loved putting deals together in the space where there was a lot of different challenges and different challenges. And it was a very, a new market, a new frontier. And I was very excited to be part of it and be a pioneer in its development, both from a financial/legal/policy point of view. Jon Powers: Interesting. I mean, you’ve got to really be able to tackle all of those different challenges when you get into renewable energy. Because looking at whether it be state by state or global versus domestic, there’s no just out of the box market we’re living in. It’s piece by piece per deal. But I do want, because you’ve been in it for so long in a very positive way and seen it progress, as you’ve begun to grow in this space and see these deals come together, what are some of the trends that you have really began to see in the DG market that have changed from where we were, say 10 years ago? Mona Dajani: Let’s see. I think that … well, first of all it is, I’m very excited to see that renewable energy has outpaced coal. And that’s very exciting. And that wind and solar have accounted for more than 50% of total us renewable power generation, which I like. I like that there are declining costs and rising capacity factors of renewable energy sources, along with increased competitiveness of battery storage, drove growth. I’m seeing levelized cost of onshore wind and utility scale solar have declined, along with offshore wind. I’ve also seen a great decline in lithium ion battery storage. And this decline in battery storage has begun to really start making an indent on renewable and making intermittent wind and solar increasingly more competitive with traditional dispatchable energy sources. Mona Dajani: I saw significant demand from a lot of different market segments, as well as overall consumer sentiment remaining positive. I’ve seen renewable energy consumption increasing and also industrial consumption as well as US corporates getting into renewable energy and power purchase agreements. I think I saw more than a 5.9 gigawatts in the first half of 2019 last year. Jon Powers: Yeah. It’s amazing the leadership we’re seeing out of corporate America in this space. Mona Dajani: Yeah, it totally is. I’m seeing a lot of that it’s just very bullish. I think that we’re watching the tariff, what’s going on in China. Solar developers are optimistic. So, that’s really great. I think that the cost competitiveness has really been huge in this space. And the rapidly declining renewable energy costs and the maturation of energy storage are really enabling renewables to compete and replace coal and AG, gas and nuclear. Jon Powers: Let me ask you, putting your legal hat on. Pillsbury’s one of the leading firms in the country helping to manage some of these acquisitions. And as we’re getting more into these complex, it’s no longer just a pure solar PPA. There are still pure solar PPAs, right? And wind PPAs. But now we’re looking at incorporating … We’ll talk more about storage here in a second. But the deal’s just becoming even more complex. Right? And you’ve got a lot of folks out in the market who will claim to be experts on things like solar power storage. But it’s hard to be an expert on something that didn’t even exist five years ago. So, what are you seeing from the legal acquisition side that has be developing in the market? As I imagine you’re seeing probably more competition of folks who claim to be able to do what you guys can do. Mona Dajani: Yeah, I mean, look, there’s definitely much more competition. Because like anything else, they see more opportunity. But this space still is very small. There are a handful of really constants who are utility scale developers. There are usually a small number of tax equity investors that expand and shrink depending on where we are in the market. And I also see that there’s a lot more complexity. You know the expression that they say, “You don’t know what you don’t know.”? And it really, I see it when either a lot of money is spent on a deal that doesn’t close because they fail to see some of the red flags at the beginning of the deal that they should have. Mona Dajani: Or the other thing is, I see is that something happens, which is inevitable. I was working on a deal recently where there was a credit rating change. And the inexperienced don’t know how to deal with that. And it’s just easiest to just kill the deal and move on. And that’s not really economical. It’s not cost effective or efficient for anyone in this space. And it’s very much a relationship-driven space. I’ve been in this space, as you noted, for more than 20 years. I know a lot of the C level people, not only in the United States, but abroad. In Asia, in Europe, a lot in Europe, in the Middle East. And we also help put deals together and structure them. Mona Dajani: And if we have some kind of hiccup, we’re able to talk to all the sides, depending on which. Side you’re on. But I mean the bankers, the tax equity, if there’s any, the buyer and seller, and try to come up with a way to make the deal work, if it makes sense. But usually it’s very, I see a lot where … And our difference is that we know the industry, we know the people, we know the nuances of the different technologies. We also know and we’re willing to introduce new financing mechanisms and trends, new ways to close a deal. And a lot of it depends on the relationships that you have and the trust. Jon Powers: Yeah, absolutely. You’ve done a really great job getting out from behind your desk at a law firm and spending time, for instance, in the board of directors of ACORE, right? And engaging the media. What have those experiences taught you, not just about the market, just in as a leader, about getting involved with the broader discussions that are happening around the space? Mona Dajani: Well, I think that first of all, I enjoy getting out there and meeting people in our industry and working with them. I enjoy it. I love being on the board for ACORE, it’s an organization. As you know, I’ve been reelected. I’m the only attorney, as well, on the board. Everyone that’s on the board is a recognized like market leader in renewable energy, barring none. I mean, if you look at it and see the people on there, it’s just the top. So I’m very privileged to share the board, all the members of the board and to hopefully shape the direction of ACORE, which has been a tremendous organization under the leadership of Greg Whetstone, amazing leader. And other people within the ACORE organization that support ACORE to really be an international leader in the space. Mona Dajani: And it’s not only, ACORE is not only an organization to network, but also look at what cutting edge industry trends. Because they’re happening right there at the board. I’m watching it happen or sometimes creating it. And that’s really truly very exciting. And ACORE has also been responsible for policy as well at the federal level, as well as the state level at certain states, with respect to really promoting all forms of renewable energy. Jon Powers: Yeah, I mean I think ACORE is uniquely seated compared to the other industry groups that have their singular vertical focus, right? Whether it be the solar industry or wind or the Energy Storage Association. Greg has really helped ACORE look across the different verticals. ACORE, to their credit, was one of the first ones with that, what was it called? The Renewable Energy Finance Forum, I think, really to bring the finance piece into the conversation in a unique way. Mona Dajani: Right. It’s absolutely critical, the financing piece. You have to understand that piece to accelerate and unlock capital for renewable projects or they’re not going to get done. Jon Powers: Exactly. Exactly. Mona Dajani: Yeah, so … Jon Powers: I do want to dive into a little bit of meat here, specifically around energy storage. So the trigger for this conversation was a phenomenal piece you wrote in GreenTech Media in December, Challenges Remain in Understanding Energy Storage as an Investment. I saw the article and realized I wanted to dive deeper into this with you. Because for me I’ve seen storage as a holy grail for DG for the last decade. And we’re now only seeing it come to the market in real scale, but not without significant challenges. People on this podcast have talked about energy storage being similar to the solar market 10 years ago. But as you pointed out in your article, it’s just more complicated than that. Jon Powers: It’s not as simple as a 20 year off take and you produce X and you pay Y. Because there’s a bunch of different business models and policy implications to batteries and how you manage that. So starting off, how are you involved in the energy storage market on the deal side? And what are some of the current trends that you’re seeing today as the market’s really begun to develop? Mona Dajani: Yeah, so what I do, what I’ve been doing a lot is … there’s a lot of industry demand for 100% clean energy. Jon Powers: Yeah, absolutely. Mona Dajani: And as I said in the article, that has really pivoted our market. And now you’ll see corporations whereby they want to be in this space and economics, profit, is actually secondary. And they’re more focused on the ESG and really committing to clean energy, sustainable energy, et cetera. So what I see is a lot of … what I do, is I will put the deals together. Usually there’s different parties to the transactions that are already in discussion. And then I help crystallize how the deal could look like. And then I will, depending on what side I’m representing, because it really does vary whatever side I’m on. Mona Dajani: But at the end of the day I think everyone has the same end point, which is to finalize the deal. But having either storage, either as a standalone asset or by adding it to an existing power source is very individualized. And there’s different risks and returns from every project that’s different. Because you have to understand how each project deploys power. That’s highly variable. Some are able to generate income, while others can charge and deploy energy, while others just deploy. And then there’s interconnection considerations and co-location as well. So it’s very … you have to understand the intricacies of the ultimate project, the asset management of it, to mitigate the risk and to optimize as much as you can, the full potential of the investment. Jon Powers: And are you seeing … so you mentioned in the article, specifically the Orset Project down in Texas, which is, I think if I read it correctly, over 400 megawatts. Are you seeing more utility scale solar plus storage today coming through the deals? Or are you beginning to see stuff happening at the commercial industrial DG level as well? Mona Dajani: I’m seeing a lot in both utility scale and DG. And also with, they call it digital infrastructure. Data centers and bundled with cell phone towers, as well as … they’re calling it digital infrastructure. What I introduced, what I wanted to show in the article was just a couple big ones. Because I thought that would be more attention grabbers. Jon Powers: Yeah, of course. Mona Dajani: Because people have heard of them, because people have heard of them. But there is quite a bit also in the DG space and there’s a lot that we haven’t heard about. I mean, I just picked two that I know that people would have heard of. Jon Powers: Yeah, no, absolutely. That’s why I raised it because I feel like it’s more than just the utility scale. And I think one of the challenges, I think you talked about the current costs versus the resiliency energy security paradigm that they’re trying to solve, whether it be data centers or cell phone towers. In these deals, as they’re coming together, putting my hat when I was at Bloom a few years ago before starting to Clean Capital, and it was often that the off taker, the end user would want the resilience but didn’t understand how to cost it into the, for instance, the price per kilowatt hour. Right? So then comparing that to what they had today, just from the utility, are you seeing those off takers becoming more mature in their ability to analyze that almost energy is a storage package or energy as a service package? Mona Dajani: Yeah, I mean we’re still in the infancy stages. I mean, I will tell you that when I first started doing this for my first wind project over 20 years ago, everyone was afraid of construction risk. And no one would take that risk and now it’s so mainstream, everyone wants to take it. So what I’m seeing a lot in energy storage is a focus on the technology. And that’s why there’s a heavy emphasis on the digital infrastructure. So those that can understand that. The technology, understand that it is a cost competitive source of supply. And if they can understand the total value stack. You really need to understand finance, you need to understand power, you need to understand the how of what the technology is to store enough electricity to capture the renewable wind or solar generation. So it’s certainly poised for accelerated growth. But I still think that it’s almost, it’s like offshore wind, which is that- Jon Powers: Oh, interesting. Mona Dajani: At least here in the US, not in other areas, in other places. Here in the US it’s still in its infancy. So I think that you can see black and white data points in connection with costs, but a lot of the value stack is still, and what makes sense to make a project successful is not as cut and dry as it would be for solar or wind. Jon Powers: Yeah. Well, can we run with that technology chain for a second? Because I feel like there is a misunderstanding as people are starting to wrap their head around storage, where you’ve got the STEM’s and the AMS’s of the world, who are really a software solution. Right? Trying to financially maximize the deployment of the battery, whatever the battery is. Right? Because then there’s the technology of the actual hard battery. Whether it be a Tesla battery or lithium ion or some of the other ones that are being developed around the country. Are you seeing people being able to separate out those different technologies? Or do they see it as a package? Do they risk it differently? Because I think people, it’s getting to be hard to finance … it’s still hard to finance some of these because people don’t know if the company behind, whether it be the technology, whichever one you choose, is even going to be here in five years. Because a lot of them were startups only five years ago. Mona Dajani: Right, right. Exactly. Jon Powers: Yeah. So how are you getting, how do you see … Maybe I should maybe ask it more directly. How are you seeing folks in the finance industry getting more comfortable with those different technology risks? Or are they getting comfortable? Mona Dajani: I think that they are, there’s technologies that support energy storage. And I think the trick is what are the favorable energy storage technologies? And I think that that’s tough. I think that it really depends on … they come in different forms. The key commonality is to draw electric energy from the grid on command and discharge most of this energy back to the grid at a later time. And this ability to flexibly move the energy across time, is a tool that can be applied in many different applications. But a lot of this depends on what is the balancing supply and demand? And is this done on a hourly basis? Is there a buffering power flow? Do we need to store energy for downstream capacity? Mona Dajani: So it’s energy storage technologies have different systems that can do this and store and hold. And they vary in terms of what they can hold, how they can hold and the time over which they can store without significant loss. And some can operate at a grid level, absorbing the surplus energy from the grid and then delivering it back. And some can operate at the consumer level. But it’s just, you’ll notice that, which I found interesting that a lot of the different energy storage technologies, the company will usually focus on one segment. Whether it’s a flywheel system or whether it’s a battery system or whether it’s just using lithium, which I find interesting. You know what I mean? Jon Powers: Yeah. Mona Dajani: So I think that batteries for example, they’re usually analyzed together as super capacitors. They have high energy density, but low power density storage media. And that’s why super capacitors are mainly used in hybrid renewable energy storage media to support other storage media, like lithium and sodium sulfide and zebra and nickel and led assets. These are different dimensions for renewable energy use, that is based on the, like I was talking about, the life cycle. So, it’s very difficult to … I would tell you, like with energy storage, like with ACORE, I don’t want to focus on a particular technology. I want to be agnostic about the energy. Because it really is very much a project-per-project basis. And of course like Tesla is going to support Tesla. It’s just different. It’s just very different. And it’s just based on what the application for the energy storage is being used for. Jon Powers: Yeah. It’s just making it harder to actually be able to finance at scale. Right? Mona Dajani: Right. Jon Powers: Where it’s just unique. Mona Dajani: Right, right. And I would just say what’s critical from a financing perspective is that they need to be … to be financeable, they have to have some kind of, we need to know that a technology works. It’d be great if there was more than a pilot project or that there was enough successful projects that use this type of technology. That is something we like to see. Because that tells us that there’s bankability on this. It’s not so new that we’re taking technology risk. Because that’s what we want in financing and bankability, is we want certainty as much as possible. Jon Powers: Where do you see, just looking ahead now, right? If you can pull out your crystal ball and look out to … We’re at 2020, the launch of a new decade. If we looked back in 2030 at where the storage market is, and I’d say maybe the renewable market as a whole, where are we going to be in 10 years? Mona Dajani: I think that there’s going to be further growth, I’ll just speak in general, in the renewable energy sector, in the technologies. I think that there’ll be increased innovation and collaboration among multiple different, and sometimes completely unlikely stakeholders. I think that we are going to continue to be moving renewables in the electricity markets as utilities and regulators prefer clean energy to replace retiring old dirty power generators and to choose to save costs as well as addressing climate change concerns. I think that there’ll be a growth in US offshore wind sector. I think that’s a new area for us here in the United States, which we’re learning from our European counterparts that are here now. Mona Dajani: And I think that will bring multiple opportunities for industry players and for manufacturing and for port infrastructure projects. I see a lot of grid resiliency will be also a growing driver for renewable deployment, as utilities and their customers will demand renewable energy to be combined with storage solutions. There’s still some, as we know, although it’s starting to, the fog is starting to clear. There’s still trade tariff and administration policy concerns that will keep the industry, we’ll be on the lookout. But I do see a lot of people- Jon Powers: Yeah, that’s right. I mean, looking at 10 years from now. I feel like hopefully we’ll have smoothed out of the rollercoaster of the last four years. Right? And even if there was another four years of this, the growing trends are still supporting the market here, which is great. Mona Dajani: Yes. And I see that technology is absolutely key, in addition to capital AND financing here, to having this grow. But it looks like … I’m very, I’m bullish and I see a lot of new opportunities and I see that this is just a new phase for our industry that is on an upward trajectory. Jon Powers: That’s great. So I’m going to completely change topics here for a second and end with a personal question. You are a, not only leading deal maker in renewable markets, but you’re also a trained chef and sommelier, who as I understand, can open a champagne bottle with a saber. How did that happen? How did that happen? Mona Dajani: I’m one of those people where I live life to the fullest. And I love to cook, I did go to cooking school. It’s very relaxing for me and another … Very close to eating very well and cooking is wine, which changes the taste of fat and salt basically from the food that’s in your mouth. So I became a sommelier in wine and I also have about … and there’s quite a number of people in this space that have seen it. I have a saber, a saber is a special knife. I had one that was handmade for me as a gift, as a working gift. And it’s about maybe two and a half feet and I use it to slice off the top of champagne bottles. And there’s a whole trick to that, but I did go to the hospital a few times on my hand. Jon Powers: Yeah, I was going to ask about your fingers. Mona Dajani: That’s another podcast. That’s another podcast. But I do have amazing closing dinners that I personally will be the chef de cuisine. And I do wine tastings and I sometimes, not all the time, bring my saber. Depending on where we are. And sometimes I’ll bring my saber also when we’re at the end of a deal and we have to … You either sign or we’re going to a saber on you. Jon Powers: You’ll lose a finger. Mona Dajani: It’s a prop. It’s a prop. It’s a funny prop. Jon Powers: I love it, Mona. Mona Dajani: So yeah, so I love it. So, yes. Jon Powers: For our listeners that will replace our standard end of interview question. I think that’s a really interesting thing. And Mona, some other time at a conference over drinks I’ll tell you, when I first moved to Washington DC I actually lived in the wine cellar of a woman who founded the Christie’s Wine Auction. And literally that was my … I was starting a nonprofit, had no money, so she let me sleep in a cot in her wine cellar for a summer. It was a very educational for me. So, awesome. Mona Dajani: That’s awesome. Wow, great. I’d love to hear that story. Jon Powers: Well Mona, thank you so much. So much great information. For folks that are not familiar with the article we mentioned, you can go to Green Tech Media and pull it up. It’s, Challenges Remain in Understanding Energy Storage as an Investment. We’ll link to it from our website, CleanCapital.com. As always, you can get more podcast interviews and suggest folks we should be talking to at CleanCapital.com. I want to thank our producers, Lauren Glickman specifically, for her help setting this up, and Carly Baton, who helps us a Clean Capital. We look forward to a future conversation, Mona. And I was really honored to have you on here today. Mona Dajani: No, the honor is mine, thank you so much. This has been really fun. I appreciate your time. Jon Powers: Thanks so much. And for our listeners, as always, good to CleanCapital.com To learn more and I look forward to continuing the conversation. Jon Powers: Thanks for listening to today’s conversation. Find more episodes on CleanCapital.com, iTunes, or wherever you get your podcasts. 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