Jon Powers (00:19):

Welcome to today’s webinar. We’re just going to give it about one minute for folks to dial in and we’ll get started. Welcome to today’s webinar. We’re just going to give it about about 30 more seconds and we’ll get started here.

(01:38):

Hi, my name’s Jon Powers. I’m the president of Clean Capital. Welcome to Clean Capital’s Webinar, the I R A anniversary, reviewing the one year of clean energy policy finance and technology. Just to talk a few housekeeping notes quickly, the webinar is being recorded and it’s also going to be available after we conclude. We’re also going to use it as an episode of Experts Only Podcasts. So you’ll hear me talk a little bit about that in the beginning and throughout the episode. Before we do dive in, there will be a possibility for q and a. You can enter your q and a through the webinar portal, and I will manage that in asking questions to our audience. Our focus today is both the celebration of the I R A, which passed just over a year ago, and we’re going to talk about both the opportunities it’s creating, some of the challenges and things we need to work on as we celebrate this one year anniversary.

(02:39):

Since last August, companies have announced more than 270 billion in planned clean energy projects that are expected to deliver more than 170,000 new jobs here in the us. It’s an exciting time for us in the solar and storage industry. Over 150 gigawatts of new solar manufacturing capacities coming online. We’ll hear a lot that and 65 gigawatts standalone energy storage, manufacturing as well, bringing that domestic manufacturing capability here to the us. However, we are facing the hottest consecutive days the world has ever seen. This summer wildfire smoke has shut down places like New York City here in Buffalo where I am. You’ve got record breaking heat in the Southwest and the waters of Miami or have seen earth shattering climate records making the ocean there feel like a bathtub.

(03:31):

Today we’re going to dive into some of the successes this monumental climate bill as provided for us, but it really is about the action we take following that legislation, and I really go to the next slide. Please want to focus on the fact that really for the first time in our history have we seen the alignment of policy, technology and finance in a way that we can finally make a generational impact on the climate crisis. The next slide, we’re seeing the public demand in social demands for change. Many folks know the social impact that our friend Greta has made driving the cultural efforts to force climate action, but also at the highest levels in corporate America. You have Larry Fink, who clearly a few years ago led the way of BlackRock driving finance in the climate space, but you also have corporate leaders committing to things like a hundred percent renewable energy goals and more.

(04:31):

The next slide, the public consensus for climate action is real. A lot of us have worked in this space for well over a decade, and the public consensus for that action over the last decade has really come a long way. We are now in a place where the majority of Americans and a bipartisan level support climate action, and I think that has helped push forward. What was this once in a generational piece of legislation we’ll talk about today? Next slide. We’re going to get into the nuts and bolts of the legislation and talk about both the policy, the politics, how it’s helping to drive technology, how it’s helping to bring private sector capital into the market. But isn’t this policy isn’t a standalone piece of legislation. It works hand in hand with the bipartisan infrastructure bill that was also passed just prior to that. And when you look at these two pieces of legislation together, it is the most consequential action we’ve ever taken on climate driving, public policy and public dollars into everything from electric vehicles to new technologies and manufacturing for solar, for storage to transportation, energy efficiency and so much more.

(05:48):

That’s helping to really bring together private dollars, which we’ll get into as well. But it’s important to also note in the next slide, we have the technology we need to solve this crisis. Folks recognize Jimmy Carter standing in front of the White House, and I think many of us in the industry know the story how after the next administration took those panels off the White House, but solar panels aren’t a new technology. It’s what’s happened over the last decade as efficiency has come to the manufacturing side of the market, to the supply chain, to those folks that know how to install and finance to the policy perspective, getting projects in the ground in states that many thought would never happen. So we have the technology to solve this and we’re going to talk a lot about the increase of the domestic manufacturing and the job opportunities that we’re seeing around this technology.

(06:42):

And finally, on the finance side for the next slide, each quarter by quarter, we’re seeing new players coming into this space. One of the reasons Tom Burn was on and I started Clean Capital in 2015, was to help bring a better cost of capital in the clean energy space. At that time, it was very much high level private equity that was looking to do projects. Now you have everyone from life insurance companies to pension funds and others who now see climate action not only as a priority, but assets like solar and storage being solid investments. And as a result we’ve got over a trillion dollars invested into the energy transition in 2022. We need to continue to hit that pace and net more, if not more, to stay below the two degrees challenge of the climate crisis. And we’ll talk more about the finance side as well to the next slide.

(07:36):

So as we said, we’re here to talk about both policy, technology and finance. So I want to introduce Alex McDonough. Alex has worked as an advisor and an executive and a consultant both in the clean energy and climate space. He is a partner at Pioneer Public Affairs and prior to that had been the vice president for policy at Sunrun. And prior to that I knew Alex when he was working for the Senate Democratic leader, Harry Reed, leading his policy and energy and environment. He and I have worked together a lot with the Clean Energy for America efforts that are helping to drive advocacy on these issues. And Alex not only is a native of Las Vegas but lives in Washington dc. Alex, thanks so much for joining us.

Alex McDonough (08:22):

Yeah, thanks for having me. And Jon, I want to give a shout out back to you for being a leader on for the industry and on policy and also for all the folks listening in. If you haven’t read Jon’s op-ed in the Buffalo News with Senate Democratic leader, Chuck Schumer. It’s well worth a read and just really nails the points that we’re trying to make here today about the importance of I R A and how it’s just beginning to deliver. Exactly. So yeah, as Jon said, I worked in the Senate for Senate Democrats for Senate Democratic leader Harry Reid for 11 years on his energy and environment policy, and spent four years working in the solar industry. And now I advise advocacy groups and industry folks on clean energy and policy and issue campaigns. Also want to give a shout out for the efforts that Jon mentioned with Clean Energy for America to help organize people working in the clean energy industry to support things like the I R A.

(09:35):

And we also recently launched a political action committee, C four A action to give the community a place to engage politically and really exercise their influence and power in a new way. So jumping in, it’s important to my top point here is the first two years of the Biden administration are history changing for what they are accomplishing on climate and manufacturing. When I worked in democratic leadership, got to have the opportunity to work hand glove with the Obama White House and they got big things done on healthcare, Obamacare and proposed the climate, the clean power plan, but the political door never opened for us to get something done of this scale and this comprehensive, the I R A combined with the bipartisan infrastructure law and the chips and science bill for semiconductor manufacturing will probably be some of the most monumental pieces of manufacturing and climate legislation that we’re going to see in our lifetimes.

(10:51):

I don’t think there’s an exaggeration. These bills are already starting to reorient the US economy towards an industrial policy that with some, if we’re able to protect it, we’ll survive for generations and hopefully be a foundation for us to keep building on. These policies are unique, especially the I R A because it creates market incentives on both sides of the supply and demand equation for our energy supply chain. So it’s matching a scale up of solar batteries, EV deployment, other clean energy deployment together with the manufacturing credits to onshore the equipment for those industries. And what we’re seeing is together they’re both mutually reinforcing drivers for each other. And so in the effort to lobby and advocate for the I R A, there are a lot of great talking points used and numbers thrown around about how transformative this would and I think we’re actually seeing it play out before our eyes, which is incredibly exciting.

(11:59):

The numbers don’t lie. Jon ran through a few of them that the I R A has already driven 270 clean energy project announcements. Digging into those numbers, as you can see on this slide, I think it’s really important. This is not just a clean energy and climate story. This is a manufacturing story around 240 of those projects are manufacturing. This is 91 new battery plants, 65 EV plants, 84 solar and wind plants, all manufacturing. It’s really creating a foundation for a powerful industrial base to scale clean energy deployment on in the future and creating a large number of jobs to boot. If you break down the 170,000 new job number between all those announcements, that’s around 600 jobs per each plant. Some are a lot more, some are less, but these are very significant facilities and creating an incredible framework for clean energy economy. If we can go to the next slide.

(13:10):

So the success is palpable. We’re really excited about it, but we have a lot to protect, and I don’t want to sound dramatic, but this protecting this progress could become policy warfare. The I R A is a political target for these three reasons. Republicans didn’t vote for it, it was passed on a party line vote two, it spends a lot of money, although some of that money are in the form of tax credits that aren’t actual outlays from the federal government. And three, it’s on the brink of being a breakout success. And I think that that last point is probably the most important because it is creating, it makes a political target, but will be our biggest defense and offense. At the same time, the I R A tax credits alone are expected to leverage $1.1 trillion in private investment in clean energy over the next 10 years.

(14:11):

I said are expected, but this is my own math, but Credit Suisse actually has very similar math estimating $1.7 trillion in combined private and federal investment over the 10 year time horizon. These are numbers and concentrated investment in both manufacturing supply chain and deployment that I think were probably pretty much unimaginable five years ago O. But nonetheless, IRA is going to be especially vulnerable if we have major political leadership change in 2024 before these are fully established. So implementation is key. Deployment is key, and making sure that the story is told about these facilities that are supported by the I R A and are all key, we expect we’re seeing some of the G O P attacks on I R A evolve in real time. They’ll use China as an excuse to try to put limitations on programs as they’re already doing with the electric vehicle tax credits as people get spooked and look for compromises that sacrifice one program over another. We’ll see the G O P try to exploit any fracture among the coalition that supported the I R A in order to chip away at the policies. But I think what that reinforces is that we need to look at the I R A as a comprehensive climate policy that’s built on an industrial policy framework and we need to protect it as such.

(15:57):

We know this is possible. We know it’ll require vigilance. I’ve talked to Jon about this a number of times that Obamacare, it was target number one for years after it was passed in the 20 20 12, the 2014, even the 2016 election cycles, it was front and center, but now it’s becoming baked into our health insurance system and I think it actually provides somewhat of a template for us to know that we can protect these policies, double down on them and ensure that they’re successful. Making me even more optimistic about that, that trajectory is that there’s been a lot of news about Republican districts getting most of the project dollars. I think you’ve seen the ranges from just over 50% to 80% of I R A dollars. It’s kind of hard to pin down, but they know that these projects are being announced in their districts. We know it and it’s a good thing. But what we really need to see is that it doesn’t matter politically until the factories are producing and the people in the districts are working there, announcements don’t necessarily protect them, but once these facilities are in these districts, the folks are employed, it’ll be an incredible story to tell. It’ll be our best offense and I think we have a pathway to building on these policies in years to come. So with that, I’m going to stop there and pass it back to Jon.

Jon Powers (17:33):

Thanks Alex. And we’re going to dive more into the politics of this and what we all need to be doing to keep this fight going a little bit later with Alex. But next I’m going to dive into technology and my good friend Marta Stoker. Marta and I have been co-conspirators in the climate fight on the communication side prior to when she was Q cells and she was serving a climate power. For those that don’t know, climate power is a real force in driving the conversation around climate change here at home. But now she’s serving as the director of public relations at Q Cells North America, who’ve been doing some really incredible stuff here in the us. And Mar, I’ll turn it over to you.

Marta Stoepker (18:13):

Awesome, thanks Jon. Actually, it was a presentation you gave in the Senate, your operation free group when I was in the Senate, I think in 2009 when I was like, okay, or maybe 2010 when I said I’m sold on clean energy. This is absolutely what we need to be doing. It’s a national, yeah, so you’ve been inspiring me for years, so thank you for having me today. I’m really excited to talk about what Q Cells is doing. I’m looking at Alex’s numbers and I’m like, Ooh, we’re the 2.5 billion of that 270 billion. I love it. So I just want to talk a little bit about what we were doing before and after the inflation reduction Act, just to kind of give folks a story of what good industrial policy can do to put clean energy manufacturing into hyperdrive. So next slide. Alright, so we actually have been operating a pretty big solar manufacturing facility starting in 2019. So we opened our doors, 300,000 square foot factory, not a small factory in Dalton, Georgia. We hired 750 people to build 1.7 gigawatts of solar power in 2019. So to kind of contextualize that a bit more, 1.7 gigawatts of solar is the equivalent of the Hoover Dam for one year of generation. That’s a lot of energy. So we got up and running, did really well. So next slide please.

(19:38):

Oh sorry, go back. There we go. That’s our factory. In 2020, may of 2022, we actually announced what we’re doing. Well, we’re going to continue to grow. So we announced another 170 million to expand this footprint. We hired 535 more people and we also added another 1.4 gigawatts of capacity. So kind of essentially of another Hoover dams worth of energy that we were building in this facility back in the day. So we really had an incredible start in Georgia and we did grow, but it wasn’t until the inflation reduction act that we really were able to grow at a faster pace and also to make investments that are historic on a wide for a lot of different reasons. So next slide please. So in January of this year, we made one of the biggest investments, the biggest investment in solar manufacturing to date. And what makes this investment so incredibly important is not only are we building solar panels in America, we are the first and only company that is going to be building the entire supply chain in one facility in Georgia.

(20:45):

So right now, majority of these components that are built to go into a solar panel like Ignite wafers and cells, 80% of those components are manufactured in China. 97% of wafers, which is a really key component to building a solar panel is made in China. So there isn’t a very healthy global clean energy supply chain market for companies to rely on, which is why the inflation reduction Act was so important because it allowed us to make an investment as big and bold as this. So 2.5 billion also included yet another expansion of our current factory in Dalton. So it’s a big deal, people, what can I say? All right, next slide please.

(21:33):

Alright, so that’s actually the future. That’s a fund. That’s what our new factory is going to look like. Come and see it. And so I just want to talk about what this investment does on what bigger scale. So first, as I said, this is the only vertically integrated solar supply chain that we’ll have in one company that will in America big, big deal to break some of those monopolies over the supply chain. Right now we’re going to be manufacturing in Georgia 8.4 gigawatts of solar power every year. So 1.3 million homes, a lot of homes. We’re going to have 4,000 people working in solar careers in solar making these panels every single day. We run 24 hours a day. So we are up and running every single day and these folks are on the ground making it happen, but also it requires construction of these manufacturing facilities.

(22:18):

And so there’s about 8,500 indirect jobs as a result of this in terms of climate impact, pretty big impact. So the amount of solar that we are about to make is going to be almost 10 million metric tons of carbon reduction. Huge. And then we are the largest solar manufacturer outside of China. So this is really putting America on the map to be a global competitor for solar. I also want to stress that we are thinking about sustainability as it relates to our footprint. We are a manufacturer, we need energy. Energy requires a lot in the backend. And so we are also thinking through how are we making sure our new factories are, sustainability is at the core of that we are making the most energy efficient, sustainable solar panels on the planet. Next slide please. I’ll get into that a little bit more.

(23:15):

Beyond that, we announced to do ignite wafer and sell, but one of our affiliates within the Hanwell group, which is our parent company, we were like, let’s even do more. Let’s do more of the supply chain. So we also announced that we are going to not just do some of those components, but we’re also going to be creating things like solar e v a and Backsheet stuff that’s not also really made in America right now. So we’re doing a lot of things for the first time as a company and really, really exciting to bring that technology to the United States. So this announcement was really exciting because President Biden tweeted it out, but also this is the Saran wrap of the solar panel. This is the things that keep it all together, which allows to make our products final. All right, next slide. But it’s not just making the products that’s important, it’s also really working with partners who are thinking innovatively.

(24:04):

And so we’ve had some really exciting announcements since the I R A that the I R A helped enable, including with Microsoft 2.5 gigawatt commitment with Microsoft, which is a leader in having corporate goals for reducing carbon. We also are working with R A C silicon and they’re one of two companies in America making polysilicon, which is a key component for solar manufacturers who are using polysilicon. And they are based in Moses Lake Washington. And they are largely powered by hydro, which means that our polys silicon, which is one of the most energy intensive parts of a solar panel, will be some of the cleanest polysilicon on the planet going into our panels. This plant shuttered in 2019, it’s opening up again this year in November, and we’re going to take a hundred percent of their polysilicon starting early next year. And it’s opening because we are able to make these bold investments on the supply chain.

(25:04):

So they’re going to be able to bring 250 people back to work at this plant because of the I R A. And then of course, we had this really exciting announcement with Summit Ridge Energy, which is a big community, solar developer community solar. I think the entire community solar that’s on the grid right now is maybe five gigawatts. This is 1.2 of gigawatts of community solar in one year. So it’s going to be a very big deal in terms of getting our panels into communities that don’t have a lot of land or have low income communities, energy communities. This just allows us to get solar to those harder reach places. So really exciting partnerships that are helping to kind of continue to move this technology forward in a sustainable way. All right, next slide please. And of course, this leads to market share. We’re doing really well. Q cells is number one in the market for commercial residential. One in three solar panels put on roofs in America is built by us and that only will grow if we continue to support these policies and make sure that they stay intact and continue to use it as a foundation to build on more of. So just so many exciting things that we’ve done in this last year to really be pushing this technology forward, onshore supply chain and create a lot of jobs in the process. And that’s what I got.

Jon Powers (26:24):

Awesome. Very inspiring marta. Super exciting stuff. And then finally I want to dive into finance with my co-founder Tom Byrne, Thomas Byrne, Tom, talk about inspiring. So and I served in Iraq together, that’s how we met. But Tom has really an amazing track record in clean energy, really working on projects very early as a lawyer before going on to serve as a general counsel for True Green Energy. And then coming up with the idea of Clean Capital, which we co-founded together in 2015. Thomas taught me about finance and we were really proud of what we’ve built here. I’m going to let him dive into how the I R A is affecting private capital. Tom,

Thomas Byrne (27:08):

Thanks very much, Jon. Eight years after co-founding Queen Capital with you. Thank you for finally inviting me to join one of your webinars. Finally made it. It’s great to be here with Alex and Martha as well. It’s really inspiring stuff. You

Jon Powers (27:24):

Needed some training, Thomas, but you’re good.

Thomas Byrne (27:28):

So when we look at the I R A, I think taking a step back and recollecting the surprise that was the I R A A year ago, a lot of us were in the doldrums thinking that there was not going to be a big policy change and then out came the I R A and the momentum started to gain steam. And when you started to unpack it, you realize that this was such an ambitious bill and now law that was being proposed that was going to fundamentally transform not just the clean energy economy here in the United States, but the economy more broadly. And Martha touched on a lot of those points, as did Alex, how the manufacturing component of it is such a fundamental part of the I R A I have not in my career seen a policy enacted that so fundamentally changed behavior that we are now bringing manufacturing into the United States.

(28:35):

And that’s because there’s an adder from the I R A, there’s all of these adders in the I R A and all of them have a story behind them. We were trying to incentivize L M I communities to be energized by clean energy, bring domestic content, is to bring the manufacturing into the United States and increase the jobs. We’re trying to reclaim Brownfields, which we’re doing through BQ Energy, which is a company that we bought last year. We’re trying to reimagine these landfills and these Superfund sites from dilapidated into clean energy. So the policy is so broad and so broad in its ambitions, not that it’s changing not just what we’re doing as clean energy professionals, but what we’re doing as society more broadly from finance perspective. Taking a step back to that part of this conversation, it brings certainty.

(29:36):

We have lived in a world since 2005 or so where certainty of finance was absent in our industry initially, the uncertainty of clean energy as an asset class led banks and lenders and investors to steer away from it. It was reliable. Venture capital was the only investor that would participate in the space in the early days. And then gradually we started to get more banks and more investors to participate from, call it 2010 to 2020. But it was overarching all of that, that growth in the finance space was still uncertainty. There was policy, it seemed like every two years we were debating the tax credits and extenders of the tax credits. And for so long that was the story. And then the I R A came and it brought certainty and it has the tax credits that are in place for an extended period of time.

(30:42):

It’s predictable and that’s exactly what the finance markets are looking for. So as you take a step back and think about what the I R A did from a finance perspective, it brought the certainty and clean capital is building on that certainty. So clean capital was started, Jon and I started this company back in 2016 and we started by investing in small scale assets. You could see here where we have grown over time year after year, we just keep adding more and more assets and we keep evolving as a company. We like to think of ourselves as investors in the clean energy transition. Most of what we do historically has been solar, but we’re increasingly investing in batteries. We have battery development projects throughout the country. We have invested more than a billion dollars into clean energy at this point with 460 megawatts total. But the industry has changed a lot since we founded the company now eight years ago. And we have changed with it. We now look at, we’re not just buying small scale solar assets, but we’re actually developing assets. We have a robust development pipeline at Clean Capital that is in multiple different states and we’re not just doing and we’re doing small scale solar, we’re doing the community solar that MAR was speaking about. We do, we large scale solar, we do batteries. We’re trying to be an investor throughout the sector. Next slide.

(32:21):

We’re all across the country. We’re even in Guam. We have a 37 megawatt asset in Guam. What we see here is a number of states that when you think about the federal policy that the I R A as a federal tool, there’s the driver at the state level of state policies and all these states that are shown here. While we have invested in all of them, they’re also not coincidentally have strong state policies. And so that certainty, again, getting back to the certainty is key to driving clean energy throughout the country. Next slide. When you think about bringing finance into, when you think about the I R A, the key piece of the I R A is that it’s driving more capital into clean energy. The statistics which some of which are highlighted here has shown that has come to pass the I R A.

(33:25):

Once the policy was in place, the dollars started to flow into it. A hundred billion in new private sector investments up from up 25% from the first half of 2022. So there is serious growth in the money that’s coming into the sector. One key component that I wanted to just touch on that I find to be one of the more exciting pieces of the I R A, so not yet used in force because the rules were just enacted for it is the transferability provision. So historically to get tax credits monetized, you would have to bring in an external tax equity investor through a complicated transaction partnership flips and sell leasebacks. And that was a complicated transaction that left a lot of capital on the sidelines. It was only a handful of banks and corporates that were taking advantage that were participating in the tax equity market.

(34:28):

And therefore it was a very illiquid market. We were relying on about 20 or so tax equity investors. In fact, I saw a statistic that JP Morgan and Bank of America comprise 50% of the tax equity dollars historically that have come into the market. And then a handful of other tax equity investors comprise the balance of the other 50%. The transferability provision is really exciting because it now allows, rather than having to invest directly into the project through one of these complicated transactions that usually scare people away, it allows you to now transfer the tax credit. And that tax credit could be 30%. If it has some of the editor that we discussed, it could get all the way up to 50% of the total project cost can generate tax credits of that amount. You can now take those tax credits and sell ’em. You can sell ’em for 95 cents on the dollar.

(35:32):

So now a lot of investors, a lot of financing, a lot of corporates, a lot of the folks who are touting their E S G credentials now have the opportunity to participate seamlessly in the clean energy market. That is a great opportunity. That is. And we are starting to see a burgeoning industry around tax credit transferability. There’s funds that are starting up to buy tax credits. There’s brokers that are starting to emerge to broker deals between buyers and sellers of tax credits. So I think this is one area that’s really exciting that should unlock a lot of capital because the amount of capital that’s needed to achieve the goals of the I R A to achieve the goals of the Biden administration on Clinton capital will not be satisfied. Not even close by the old stalwarts in the tax equity market. It’s going to be this transferability provision that gets a number of corporates off the sidelines to invest. And like I said, there’s a lot of them touting the importance of climate. There’s a lot of companies have made pledges, A lot of the big Silicon Valley companies have made pledges on climate and I implore them to get off the sidelines because their profits can be turned into tax credit acquisitions, which is good for them and obviously great for our industry as well. Next slide.

(37:01):

Good. So we’re going to turn it over to Jon. Alright,

Jon Powers (37:06):

Thanks Thomas. So first of all, if you guys have questions, please please enter them into the webinar portal. I’m going to drive a few rounds here and then moderate as are coming in. But I really want to first start looking at implementation. Here we are a year into the legislation and it wasn’t just the goal line. There’s a lot of work that has to be done around implementation, not just from policymakers by companies like Q Cells. So Marta, a lot of folks on the call today in the audience are developers for instance, and they’re looking at how to access domestic manufactured panels and equipment like you sort of presented. What’s a realistic timeline for them to be thinking about beginning to access those and getting them into their projects?

Marta Stoepker (37:52):

So for us, our factory, we’re actually pouring concrete I think this week and we hope to be up and running in a year or so. So keep in mind though, we’re building components that have never, again yet, they haven’t been built here, United States, they’re not being built here. So we will need some time to figure that out. But we hope to be moving forward and providing panels from poly to panel that are domestically sourced and made in America in the next year or so.

Jon Powers (38:19):

Awesome. Excellent. And Alex, for those that aren’t in Washington, the policy side of the implementation of the policy side is so critical. Whether it be talking about the work that folks at Department of Treasury and the I R S are doing, or a Department of Energy deploying dollars into programs or even Department of Transportation who’s looking at things like EV infrastructure, et cetera. Last year the Biden administration brought on John Podesta, who many of us have worked at from an advocacy perspective, but he really truly is a bureaucratic bureaucrat nightmare. He drives implementation across the agencies. The process can drive folks crazy, but it’s so important in terms of getting the rules right. Can you talk a little bit about the process that’s sort of underway in Washington and how folks should be thinking about either getting involved or at least paying attention to it?

Alex McDonough (39:12):

Yeah, so I mean Podesto is a godsend because he knows so much about how agencies function. He knows how to use White House to move agencies and he understands the process. So I would actually say that he’s not necessarily the bureaucrat’s nightmare. I think he’s actually the bureaucrat’s dream because he knows so much and understands and he’s able to unstuck so many of these things and this is the time that we really need that. Yeah, yeah. I mean

Jon Powers (39:49):

That’s a great way of putting it. He drives them to execute many more.

Alex McDonough (39:54):

Exactly. And that experience is invaluable, especially because we do know, I mean I think a ton of the folks on this call and all of us have experienced some, the anxiety, the frustration about the implementation of various programs and credit sitting around waiting for i r A to release guidance and you talk to the treasury department, weigh in with your comments and it’s hard to get a meeting and everything. But we also have to put that in the context of what this is. This isn’t just an extension of the investment tax credit for solar or the P T C for wind or a tweak to an existing program at Best Treasury is dealt with creating one or two new tax credits, but really they’re just kind of modifications of existing programs With the I R A, this is a whole new animal. There are bonus credits for, as Thomas was talking about, there’s a suite of bonus credits and adders that were added.

(41:00):

There’s hydrogen, there’s a storage credit. There are 45 x manufacturing production credits, there are EV tax credits, there’s the Greenhouse Gas Reduction Fund. There’s a whole bunch of new authority for Department of Energy loan guarantees. I can’t keep what’s straight between the I H A A and the I R A. And so you have a White House that’s only has a little bit more staff than it has in previous administrations to keep track of all the agencies. And you have agency staff that had been hollowed out during the Trump administration trying to get on track to implement these programs. So I don’t want to say that there haven’t been frustrations, but they are implementing programs and provisions at a pace that we’ve never, never done before. And the results are, despite these frustrations, we’re seeing project announcements. I mean, marta’s examples are incredible with, if you haven’t been and visited the Dalton facility, you should.

(42:04):

It’s incredible. And their plans for expanding are really exciting and that’s because they’re looking forward to implementing of things like 45 x and the domestic content bonus credit for manufacturing. So what I would say, just how do you get involved? How do you keep track of all this? You need to be on the list for the agencies, the email lists, track them, you participate in the processes, be patient with them and recognize that some of these things are being done incrementally specifically to do a little bit of trial and error and take your comments. And I’m very tax credit oriented, but if you look at how the administration, the treasury department’s release these tax credits, they’ve released them in interim guidance with a notice of proposed rulemaking, then they’ll do a proposed rule, then they’ll finalize that rule and that gives industry associations and advocacy folks to weigh in on the process and improve it as goes along.

Jon Powers (43:20):

Yeah. Just one quick follow up, Alex, based on a question we got in specifically on the tax credits, the direct payment provision for nonprofits, it’s still in the works, has it not been finalized, right? Is that correct?

Alex McDonough (43:34):

Interim guidance has been released, but then there is additional guidance on registering your projects for both direct pay and for transferability.

Jon Powers (43:46):

So the rules are still being really just finalized, but there’s at least some clearance. And I think, Tom, this sort of leads to my question for you. As clean capital is executing on a pipeline, not just for this year, but for beyond, how do we think about wrestling with some of those uncertainties? One specific question we got in the q and a was about transferability and some of the assumptions we have to think about there. How do we manage that within the uncertainty?

Thomas Byrne (44:17):

So with respect to that question on the market for credits, when transferability was first born, people thought it would be at least a 10% discount. And I’ve heard murmurs of it being more in line with the 95 cents on the dollar, but that market will be evolving a lot over the next year and we’ll find out what the right pricing is on that. It’s been a challenge to, on the one hand, make assumptions on a go forward basis, a year, two, three years out, juxtapose that with just near term waiting for rules we couldn’t make, don’t know what transferability assumptions to have yet. Two months ago we didn’t even run scenarios on transferability because we didn’t know what the rules would say and who could buy could sell exactly with precision. So there is a challenge with underwriting deals based on I r a legislation without the rules in place and without the markets fully built out. That’s just the maturation process we’re going to be going through, I’d say for the next 12 months. And then it will become, again, back to certainty, then it’ll be commonplace, then we’ll know what the market for credits are, we’ll build them into our forecasts and the market will be much more stable.

Jon Powers (45:45):

Yeah, thank you. So in this last round of questions, sort of combine the two that I shared with the panelists, but before doing that, I just want to answer Bruce’s question around the state and local level issues beyond doubt. Bruce, that is absolutely right on question. How are we managing now implementation of this down the state and local level and whether it be your local c a for certain states or groups like both Solar, there are ways to get engaged and depending on the state, it’s important for each of us to be part of those conversations at the state capital, especially if you have footprints in those states what some of the hurdles are. And unfortunately we’re still in a world that energy is a 50 state fiefdom and we have to play state by state. So making sure that we can take some of the lessons learned on states that we’re seeing accelerated things like storage and bring some of those lessons into the other states looking ahead and what else needs to happen to really get us to the goals of this legislation.

(46:50):

Alex, I want to talk politics for a second. You mentioned Obamacare as an example of something that those that are the fossil fuel industry funded efforts to undercut this legislation is real, the fight is real. You talked about the timeline of some of the implementation that needs not only happening real time right now, but something to take years. So elections really matter on the things that we care about here and this legislation isn’t rock solid. It is still something we need to continue to fight for. So what can folks on the line do to be part of that fight?

Alex McDonough (47:30):

I mean, you will see in the pundit press and the Capitol Hill newspapers, all this hand wringing about voters don’t know what inflation Reduction Act is and aren’t connecting it with the Biden administration or that it’s not clicking. And I think it’s a false narrative. I think that the biggest thing that people can do to reinforce these policies and make sure that they’re seen as both a policy and political success is share the stories. Marta and the Q Cells team are very good at this and generous with sharing their success. And we need to see as much of that as possible because these programs aren’t, they’re not designed to be around forever. They’re designed to jumpstart and fuel both manufacturing and production. And we need to show what they’re delivering and for people in the communities. And that has to happen at the state level.

(48:47):

So if you’re a company, they’re making an investment or a developer helping make sure that that’s translated to local newspapers, local government leaders, these folks are local advocacy organizations. They’re very, very influential within their communities. And maybe stop worrying so much about Washington DC because the communications really start at the local level. Every member of Congress runs for election in their district. Every senator runs for election in their state and the president is decided by elections that happen each individual state. So thinking about it as really a state by state, district by district, local by local project effort, I think is really how we make this thing work politically.

Jon Powers (49:47):

I always like to think of it as your voice really matters. And especially at the local level here in Buffalo, a group of us got together around the C R A, which is the effort to really go after some of the I R A issues and the solar tariffs this spring. And we had to educate our member of Congress who in this case actually happened to be a Democrat on the impact it was going to make here at home. It didn’t take a lot of effort. There are groups like Clean Energy for America that can help you on that, but we all need to be champions right now to see push this forward. Now, Marta, looking at this monumental piece of legislation, it’s not perfect. There’s still more needs to get done. Can you think about anything in terms of next steps to help improve the landscape and where we’re headed?

Marta Stoepker (50:33):

Yeah, of course. We really want to see some of these adders finalized, so we continue to build out our business plans. So yes, we’re trying to be patient, but it’s really important for us to make next steps on any investments. I will say a big thing that we’re seeing for us, because we sell panels to people who install them, we also develop our own projects, sales interest rates. They’re really high. And that’s a huge issue for I think low income to moderate income families who want rooftop seller for example, or even big developers who are trying to purchase panels. So that’s an important thing that needs to be looked at. And then interconnection issues. We need to be able to get these projects online so that more of our panels can be installed. And that is largely a state issue. So I think to what you guys were saying, Alex is saying like c a vote, solar, they do a lot on the state front to really address some of these barriers that exist. It’s not all a federal issue. So we really need to do that. And another piece that’s really important is thinking about the clean energy economy as a circular economy. So we can recycle our panels and we can make more clean energy from those components. So how are we making sure that we’re encouraging sustainable practices at the end of life of some of these products? And I think that that has yet to really be touched on from a policy standpoint.

Jon Powers (51:53):

Excellent. And Thomas, looking out as folks that are financing and investing in this space, I think there’s just a lot of excitement about what’s going on, but there’s still only a handful of players including Clean Capital, that really know how to do this and do this well. How should developers think about working with firms like us to get their projects in the ground? Yeah,

Thomas Byrne (52:19):

The challenge has always been developing projects that are ready for the capital markets, and that’s both institutional investors, lenders, and tax equity investors, which comprise the entire capital stack of a clean energy project. And getting it from development idea, getting a site lease to that place has historically been a challenge. Clean capital, fortunately we now work intimately with developers. We developed some of our own projects as well. So bringing that institutional approach to clean energy so that it makes it easy for new investors to participate in the clean energy space is key to the clean energy transition. You need more, we talked about tax credit investors, but lenders as well as infrastructure type investors like us to participate in droves to really drive the ambitions of the I R A and clean energy policy more broadly.

Jon Powers (53:22):

Excellent. Well thank you so much to each of our panelists for joining today, and thank you for those who’ve listened in and asked questions. We are really excited about the potential of the Inflation Reduction Act and what it can do to help solve the climate crisis and drive our clean energy economy forward. As always, you can reach out to get a recording of this, and as we mentioned, this is being recorded as a experts only podcast. So I specifically want to thank our producers, Colleen Young, Carly Batton, and Kara Pekk for helping to put this together. And you can get more episodes@cleancapital.com. We will be at re plus in Las Vegas in September, so reach out to meet with us. We’d love to talk about ways to partner and accelerate getting projects in the ground. So thanks so much. Thanks everybody for joining. Thanks, Bob. Thank you.