Jon Powers: Welcome to Experts Only podcast, sponsored by Clean Capital. Learn more at 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. I’m your host, Jon Powers. We got a really interesting interview today with Greg Wetstone, who’s the President and Chief Executive Officer for ACORE, the American Council on Renewable Energy. I’ve interviewed Greg before in the past about ACORE and his background, but today, we really dive into a new report that ACORE has put out. In 2018, they launched a effort to get a trillion dollars of private investment by 2030 and the campaign is really focused on aligning things like the market and ensuring so the fundamentals are in place to grow the space and ACORE recently published and update on that report. You can find it at acore.org. And we’re going to talk a little bit about that report and where the market is today, as well as what we can expect post COVID, but the good news is, as Greg said, things will continue to be on track. We’ve seen over 68 billion of investment in clean energy last year alone, so really exciting stuff. Look forward to the conversation. Hope you enjoy. Greg, welcome back to Experts Only. Greg Wetstone: You bet. Thanks for having me, Jon. Jon Powers: Yeah, of course. It’s really exciting stuff you guys are doing at ACORE. In our previous episode, you talked a lot about the mission of ACORE but for folks that may not have heard it, could you just tell the audience about the American Council on Renewable Energy and your mission? Greg Wetstone: Sure. We’re a national nonprofit that promotes the transition to a renewable energy economy. That transition, that’s our mission. ACORE is a 501(c)(3) nonprofit. We have members that go across the renewable technologies and also across the transaction space. So we have developers and manufacturers and investors and utilities and big corporate off takers all really working together for that mission, to promote that transition. Jon Powers: That’s fantastic. And we talk a lot on this podcast about how the last decade was about the alignment of a lot of things in the market, policy, finance, technology, the solar installers, we going to get trained up and became a national thing. And we talk a lot about how the next 10 years is about real acceleration to 2030 so we can actually address our climate goals. This report you guys have put out really aligns well with that and I appreciate it because it aligns with my theory, but when you look back in 2018, you launched the Trillion Dollars By 2030 campaign to achieve a trillion in private sector investment in renewable energy and also enabling the grid, which is a critical part of that. First of all, it’s really interesting to see how this report can help align stakeholders around things like policy and market drivers, but take us back to 2018. What was the mindset at ACORE to put this report together? And talk a little bit about why did you choose 2030? Why did you choose a trillion dollars? What was the metrics that really helped bring that together? Greg Wetstone: Yeah, we were looking for a way to provide a longer term goal that’s consistent with the climate imperative. It’s not temperature linked but consistent with what our modeling suggest is the growth rate we need to be on to be even within shouting distance, and we wanted something that would allow us clarity to measure our progress. That was really important so that’s why we looked to finance. And obviously, we have the ability to connect with the investors and developers and get insight in how we’re doing there and those numbers are obtainable. We work closely with BNEF and we use their data and we wanted something that was ambitious, but that we think we have a real shot of getting to, and there we are. You can certainly argue that from a climate perspective, it’s a little more than a good start and yet it’s a stretch goal for this sector and we’re going to need… And we’ll discuss it more. Even though we saw a dramatic increase in 2019 in terms of our investment that allowed us to make real headway, we’ve got to increase substantially every single year between now and 2030, really, to make this goal stay in range. Jon Powers: Yeah. And just so folks are clear on this goal, you’re talking about a trillion dollars annually going out investment into these deals, correct? Or is that- Greg Wetstone: No, we’re, we’re talking about a trillion dollars in wind and solar and enabling grid technologies between 2018 and 2030. Jon Powers: In total investment? Greg Wetstone: In total investment. Jon Powers: Got you. Got you, that makes sense. So, now we’re at 2020. You guys recently put out a great report and survey about the update in progress, and for folks that don’t know, you can get that report at acore.org. So let’s talk about the progress over the last two years. I want to talk about the first pre COVID and then, of course, 2020. You cannot not talk about post COVID. Amazing market alignment happening, as you said, in 2019. Some the data really points to a booming year and investment. We at Clean Capital have been living that. That’s what we do every day, but you’ve set a 21% increase over 2018 levels. Can you set the stage for us on how far the industry has come from when you first published that report, before the COVID disruption that we’re seeing in the market today? Greg Wetstone: Yeah, we saw record investment levels in 2019, over $68 billion, which is substantial a lot of. Greg Wetstone: Lot of money. 21% increase. We’re seriously driving national economic growth and we’ve got a lot of employees to show for that across the clean energy sector and that’s renewables and efficiency together. You get on the order of 600,000 employees, so a really important part of the American economy and a lot of momentum just booming and expectations for dramatic growth in 2020, coming out of 2019. Just a tremendous amount of momentum. Jon Powers: Did you also have a little bit of one of that- Greg Wetstone: gigawatts- Sorry. Jon Powers: No, go ahead. No, go ahead. This is great. David, go ahead. Greg Wetstone: Yeah, just the amount of new power brought online went in solar exceeded 21 gigawatts. That’s just- Jon Powers: New power? Greg Wetstone: A ton of power. More than half of that winter corporate procurement. A lot of utility procurement and a lot of corporate procurement, a lot of wind and a lot of solar, almost equally divided, which is a very healthy dynamic. Jon Powers: Super healthy dynamic. And we just see that corporate procurement in the hunger for it to continue to grow, which is amazing. Can you talk a little bit about that $61 million? Or $61 billion? Sorry. Where is that money coming from? We talk a lot about the need for more institutional investors coming in so it’s no longer just private equity that’s putting this money to work. Are we seeing more pension funds and others really stepping their game up? Greg Wetstone: Yeah. We’re seeing more players coming into the sector. We’re seeing different kinds. Obviously, there’s a lot of tax equity, but there’s debt and equity and we have pension funds playing, sovereign wealth funds. It’s been a really attractive investment class that has brought more and more players into it as you see investors looking for solid returns and you see a trend toward sustainability oriented investment. That investment, obviously it’s attractive because you’re investing in things that are doing good. It’s also means you’re looking a little more long term and that has proven to provide better rewards for investors. So those funds have been outperforming the market. Jon Powers: Yeah. Even in these uncertain times, I think what’s been great about the solar asset class is folks continue to see that clean energy, renewable as a whole, is a very solid investment and aren’t backing away from it even in the midst of, I think, a lot of uncertainty in the market as a whole, which is- Greg Wetstone: Yeah, a digression, but that investment, ESG investing, has been recently the subject of a proposal from the Labor Department, Department of Labor under Erisa, which really is about protecting pension funds. And they issued proposed guidance that would establish new hurdles for pension advisors who want to invest in ESG funds on the thesis that they may not be adequately protecting the investors and the funds, despite the fact those ESG funds have outperformed the marketplace. So a crazy situation. We think it originated with the president’s earlier complaints that sustainability investing is discouraging folks from investing in the fossil sector. Think where all the ESG investors would be if two years ago, this rule had been out and they’d all been in the fossil sector instead of an ESG funds, how well they’d be doing now, poorly more, so that’s something we’re engaging on. It’s a digression crazy. Jon Powers: No, it’s actually super interesting. Have you seen any analysis comparing if people had put a dollar in two years ago into fossil versus today? And if not, it’s understandable, but I would love to highlight that. Greg Wetstone: I’ve seen the data on ESG funds versus the marketplace and there’s a lot of data there they’ve outperformed the market and since January, since COVID, they’ve outperformed the market dramatically. Jon Powers: Right. Interesting. Well, offline, I’m going to chase you for that data because that’s- Greg Wetstone: Yeah. Happy to share. I got all kinds of stuff on. Jon Powers: Yeah, absolutely. We’ll put that as much as we can share publicly for folks, because that I think that’s a really important conversation that needs to be happening. So I do want to hit on COVID because there’s no way to miss it in the progress of where we want to get to in a decade, but hopefully, over time, we’re going to see just a little bit of a blimp as we’re looking back in 2030, but COVID 19, it’s contributed substantially to job sector losses and it’s hitting a lot of parts of the industry. It’s downgraded analyst projections for 2020 and installations by over 20%. It’s constraining tax equity and other financing resources, but investors that you guys have surveyed remain optimistic that the growth over the next three years, that we were in ’18 and ’19, will continue. What do you think is contributing to that confidence? Greg Wetstone: Yeah. I think a few things. First of all, a sense that these headwinds are temporary. Even in 2020, you mentioned we are seeing projection about 20% below expectations. That is still putting us ahead of 2019, which was a phenomenal year. Jon Powers: Oh, that’s interesting. Greg Wetstone: We’re still going to grow as the projection. Just not as much, maybe a megawatt or a gigawatt or two and not the really booming increase we were anticipating, but still accelerating growth. Just less so. And in general, I think COVID has had much harder than utility scale. It’s so hard to go out to people’s houses. It’s harder to go door-to-door to sell, which is part of the business model in many cases. Jon Powers: Yeah. Letting people in your home to do work right inside. Greg Wetstone: Yeah, and the efficiency sector’s been crushed. It’s really tough there. Jon Powers: Oh, interesting. The resi efficiency sector? Greg Wetstone: I’m sorry? Jon Powers: The residential efficiency sector? Greg Wetstone: Yes, yes. And businesses too because is just harder to let other people in to wherever you are if you’ve got employees there or you’re at home. It’s just not a good time for that so we’ve been tracking the unemployment data and the job losses since March 1 exceed 500,000. About a fifth of that is in the renewable sector. We’ve gained some of those back in June, so in the renewable sector, we’re down about 84,000 jobs. We were down a 100 so we picked up some, but the lion share that we think, and we don’t have hard data where it is. The bureau labor statistics doesn’t disaggregate so we don’t have that classification, but everything we see suggests the lion share that is in the residential solar world. Jon Powers: Right, right, right. Interesting. Greg Wetstone: So utility scale is surviving pretty well, to begin with. Jon Powers: In the commercial industrial space, we’re not seeing a lot of slow down in terms of pipeline. Where we’re seeing challenges is actually in terms of things like just the permitting process, because some of the normal standard municipal meetings are being delayed by months or they’re being handled virtually and they’re not making decisions as easily and quickly and stuff. Greg Wetstone: Yeah. We’re seeing that across the board. Problems with permitting deciding, local decision making, and depending where you are, sheltering place can be an issue and there’s a concern, obviously, if the pandemic is resurging, we’re going to maybe see more shelter in place again and obviously, that’s not correct. Jon Powers: Yeah, absolutely. Well, interesting. So I’m going to wave a magic wand and hope by 2021 we’ve got some resolution to COVID that can bring back a little bit of the world as, maybe not normal because it’ll never be the same as it was, but the market is normal and we still need substantial growth of investment to get to these goals that you guys have laid out. And I know there’s stretch goals, but I applaud the fact that we’re really pushing the industry to get there, an increase of almost 28% annually. And how do we close the gap? Greg Wetstone: Yeah. I want to just emphasize in a way of a run up and giving, really, a more concrete answer to your prior question, too, why are people optimistic? Just essentially, the fundamentals in the sector are really strong. The fundamentals that have been driving growth all along and that’s continued improvement and cost effective and that just… Day to day, year to year, we continue to see wind and solar energy and also battery storage get cheaper and that’s not happening anywhere else in terms of electricity generation so that’s huge. That’s one, too. Demand remains strong for renewable power from businesses and from residential consumers. People want renewable power, particularly when we’re price competitive, and obviously, we have the advantage of predictable pricing over the longer term, so we’re not at the mercy of global fuel price gyrations. So obviously, that’s huge. And then we have really ambitious state and local targets too, but those state targets and the most populated states in the country, they’re driving a ton of growth and that continues, states are not back in a way, Jon Powers: Not at all. Yeah. progressive. Greg Wetstone: That’s key. And the other one, I would just mention, the climate issue just gets more important by the day. And obviously, that’s going to be a driver. That day is going to come where we have some federal policy that supports and facilitates what the ambitious states are trying to do, so all that is driving growth. Jon Powers: Yeah. I think if you could look at the last four years in particular, the most has become a really aggressive state game or you have to know and understand all these different communities, whether it be Minneapolis or what’s going on in now in Virginia as an emerging market. If there is a change in administration, how do you think the current Biden plan that’s been put on the table or more… I should take it out of just a Biden plan. There’s a lot of conversation right now around infrastructure and clean energy and so people are now looking at how to start to look at investments in late 2021 based on some of these adjustments that might happen. So if there is a turn in Washington, do we see the federal play coming back for folks and more guys? Greg Wetstone: I think so. I think that’s the expectation. Politics is cyclical and we’ll get our day. I’ve been saying that for some time. I still believe it. I’m old enough. I’ve seen it happen and then I’ve seen it go round again and I think it’s looking like it could certainly… The tea leaves right now suggest that if the election were tomorrow, we’d certainly be looking at a much friendlier environment for policy on climate. And I think we’re likely to see, really, a suite of policies and that’s what we put forward. We do have a report at ACORE advancing America’s climate leadership and that’s our premise, is that there’s no one silver bullet. We need a suite of policies. They include an ambitious, clean energy standard, a natural clean energy standard that provides backing and support for the states that are already aggressive and gets all the states moving. Greg Wetstone: Some form of carbon pricing is helpful. It’s not an answer in itself, but you need something so that you have incentives that work across sectors, not just the electricity sector. We’re going to need to upgrade our grid dramatically. We’re, at ACORE, working with a whole bunch of groups on a macro grid initiative. This was the breakthrough energy. Bill Gates supported this initiative and that’s really interconnecting our regional transmission infrastructure to make electricity flow much more efficient across the country. We can save consumers a ton of money and make the grid much more flexible, allow for a lot more renewable energy to play. And we need to connect, gather the high resource areas where there’s a ton of wind and great solar resource to the population centers of the country that our grid right now is really built to connect, initially, to hydro and then to coal. We need to connect to renewables. We can do that and save a ton of money. Those investments more than pay for ourself. They’re doing that in China. They’re doing it in Europe. We need to be making that investment. Jon Powers: Can I ask you a little more on that, Greg? Because I feel like that’s something I wanted to get into, is the technology that we need, it’s not just about financing. We need significant infrastructure technology improvements, or maybe not even technology improvements, but just infrastructure investments. Are you incorporating those into the trillion? Greg Wetstone: There’s a little bit a fine line there. So we include grid enabling technologies, but not investment in expanded transformation, which we need to do and is another whole category. Jon Powers: Sure. And then in that effort, the breakthrough effort- Greg Wetstone: What? Microgrid? Jon Powers: Microgrid, yeah. It’s a great name. What support/pushback are you getting from utilities in that space? And obviously, they’re seeing all their business models dramatically shift and change almost every year right now, but then you’re seeing those that you’d never thought would come to the table, like Dominion and Virginia step up their game when they get pushed politically to do some really interesting stuff. How are they playing with this? Greg Wetstone: Yeah. We’re working with utilities. Not all of them, not all of them to be clear, but we’ve got a lot of utility partners, a lot of utilities that understand we need more transmission. They’re working for more transmission and they recognize we’ve got an antiquated infrastructure. And it’s really important for our competitiveness in the 21st century. It’s interesting and there’s a big transmission element in the Biden Unity Plan that they recently announced, big transmission element in the select committee and the climate crisis report that came out a couple of weeks ago, so we feel like we’re making headway. Part of the challenge is really helping folks understand that transmission’s a big part of solving climate. Jon Powers: Huge part. Greg Wetstone: You can’t be a climate advocate and say you’re against transmission because we just can’t get there. We need all of it. We need a ton of distributed solar, but we need a ton of utility scale, everything. Jon Powers: No, that’s great. That’s great feedback. And I feel like, again, it’s about the really key blocking and tackling that’s got to happen over the next 10 years to accelerate, to get us to not just a trillion dollars, but to really help solve the climate crisis that we’re in. So first of all, challenge people to go to ACORE’s website, acore.org. If you’re in the industry and you’re not a member, sign up. Greg has done a wonderful job leading this organization and really, it’s a key player, both in Washington, but also in many states. And as Greg said, there’s going to be a lot of effort here to help push, hopefully, some pretty comprehensive policies forward. So for those of us that are down in companies that have huge policy budgets and policy teams, you can follow the lead of ACORE or some of the other industry groups and still play a really active and important role in those discussions. Jon Powers: Because having been on the other side of the seat in Washington, nothing is more powerful than a business owner from whatever district you’re in coming in and saying, “Hey, this is really important for jobs in our hometown.” So I challenge folks to take a look at these reports, take an active role in what ACORE is doing. Greg, if there’s any closing message that you want to put to the listeners to help us really achieve this trillion dollar goal by 2030, what would you say to them? Greg Wetstone: Yeah. Well, first, thanks for the kind word, Jon. I should learned to hawk ACORE like that myself. Jon Powers: I’ll do it for you, Greg. Greg Wetstone: Yeah, I appreciate. It’s great. I appreciate it. Jon Powers: In my former life I had to ask for a lot of money in fundraising, so I’m good at. Greg Wetstone: That’s all right. Let’s talk. So just stepping back, the big picture, what we saw and the worst of the pandemic, where the economy was completely, was a dramatic improvement in air quality across the country, certainly in the east better air quality than I’ve ever had in my lifetime, than I’ve seen and I’m old. So it’s an impressive and there was a sense that it was harked to times pass. You couldn’t get there without really having to hamstring the economy, but if you look at where states are going, all these 100% states and the effort to electrify the economy and go to electric cars and more electric heating and cooling, we can have that same level of pristine air quality and be on our way to solving the climate crisis if we, as a nation, go where those states are going and realize these high, renewable penetration goals and an electrified economy, and we can have that better air quality for the whole country. So there’s a vision here and there’s evidence of what we can achieve so that’s the objective, that’s what we’re striving for and the trillion dollars, it’s a marker along the way that helps us get there. So to – Jon Powers: But it’s important to know that we’re not asking for grants or public money, this is about driving private investment that is getting great returns to do something that hits all those benefits that you laid out, right? Greg Wetstone: Yeah, and a ton of jobs. Jon Powers: A ton of jobs. Greg Wetstone: So it takes consumers money in the end. Jon Powers: Yeah, absolutely. Well, Greg, thank you so much for joining us and thanks for the American Council on Renewable Energy for all the work you’re doing. You can always go to acore.org to get those reports. And as always, you can go to cleancapital.com to get more episodes of Experts Only. Greg, thank you for joining us. Greg Wetstone: It’s a pleasure, Jon. Anytime and appreciate, always, the help and support. Jon Powers: Absolutely. And I’m going to thank our producers, Carly Baton and Courtney Flynn for their work, putting this together and the team at ACORE for providing their information. Please go to cleancapital.com to get more episodes. And as always, 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 podcast. 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