Jon Powers:

Welcome back to Experts Only. I’m your host, Jon Powers. I’m the co-founder of Clean Capital and serve as President Obama’s chief sustainability officer. On this podcast, we explore solutions to climate change by talking to industry leaders about the intersection of energy, innovation and finance. You can get more episodes@cleancapital.com.

Welcome to a special episode of Experts Only. Today I am joined by some distinguished colleagues and other executives at Clean Capital where we’re going to talk about what we saw in 2023, the trends we’re hoping to see in 2024 and where we hope the market’s going moving forward. The webinar, what’s Next? Solar and Storage Dynamics in 2024. So if you can see the visuals, you’re going to see some great slides, but the conversation’s also just as equally interesting. Get more episodes@cleancapital.com and we’ll be back in 2024 with a lot of more exciting conversations to be had about the trends we’re seeing in policy and technology and finance. Thanks so much for joining. I hope you enjoyed the conversation. Welcome to the Clean Capital. What’s next? Solar and Storage Dynamics in 2024. Webinar. We’re going to start in a minute. We’re just letting folks join. Well, thank you everyone for joining us today.

I’m Jon Powers, I’m the president and co-founder of Clean Capital. Today we wanted to have a conversation about what’s next and what 2024 looks like in terms of the progress we’re making towards solving the climate crisis and the role that solar and storage are going to play in that effort. We’re very excited about the progress our industry’s making. 2023 was a pretty monumental year and 2024. We’re very excited about some of the continued trends and successes, but also we’re very cognizant of some of the challenges we’re going to be facing. But we’ve seen major impacts to our economies with over 20,000 jobs last year being added to help navigate the work we’re doing. But we’re also recognizing the winds that we’re seeing in both the capital and debt markets and what renewable energy is facing, just battling on the ground to get things like permitting done and projects started.

But despite these challenges, that clean energy transition continues to move and make great progress, and our industry remains very resilient. So with 2024, only a few weeks away, I’m excited to be joined by my distinguished colleagues who are all clean capital executives, Belinda Bagley, who’s our general counsel and Chief investment Officer, Paul Kern, who’s our chief development officer, and Zoe Bey, who’s our chief operating officer. And what we’re going to talk about today is what we see as things that are going to be prioritized, elevated, and executed. Over the next year. We’re going to spend a little bit of time looking backwards and look at what we saw in 2023, and we’re going to spend a decent amount of time looking at what we are expecting in terms of 2024 and then really how the impacts of these things we’re working on will help us drive the broader outcome that many of us are working on, which is helping to solve the climate crisis.

So I’m going to just start off first and talk a little bit about where we are in terms of some of the broader trends. And the reality is this, this is an exciting term for our industry, but really it’s truly only the beginning capacity for solar continues to grow year over year. This is some great information by Bloomberg, new energy finance Factbook, but the key here is the trends, right? The trends for our industry and for renewables continue to be strong, but to sell the climate crisis they need to be stronger and we need to get more projects in the ground, more renewables in the pipeline, get our supply chains working smoothly and begin to enter more and more markets both nationwide but also internationally. But the good news for those of us that care about this stuff, and if you’re on this webinar you do, we are expecting significant growth, continue to move forward in all sectors and utility and non-residential and in residential, and the trends continue to be strong.

I think a lot of folks got very excited about a year ago, and this is my co-founder Tom and I at the White House as the announcement of the Inflation Reduction Act in September. This is in September of 22, and the inflation reduction act, without getting into the details, has a lot of very exciting things for both our industry and solar and storage, but also cumulatively for the climate crisis, whether it be some serious dollars going into upgrading the grid to efforts around energy efficiency for homes to billions of dollars being put into electric vehicle infrastructure or things like smart climate practices for agriculture. But the reality is once these pieces of legislation were passed, both the Inflation Reduction Act and the bipartisan infrastructure bill were truly only in the first or maybe second inning of seeing the impacts of these. And why is that?

To get these things. This is a map produced by the White House that showed of shows how the public investment dollars are beginning to flow in the projects all over the country and in some cases all over the world. When you look at Guam and the Mariana Islands and how on top of that private investment is beginning to roll on top of it, so whether it be manufacturing facilities or projects, there is a accumulation of growth as the public dollars in many cases are helping to move private dollars into the market. But some of the things that we see in terms of the rules around how we manage and we’ll execute on the IRA for instance are just really being defined. So as many folks familiar with projects know tax credits play a major role in our energy policy and the IRA just really doubled down on that and we’re seeing this is a great breakdown of the variety of ways tax credits will be affecting the energy mix, but even with this being in legislation, it takes time to roll out how this gets implemented.

In a good example, just looking at post the passage of the bill in October of 2022, the IRS put out six notifications for some key climate and clean energy incentives, and we’re only now getting the followed on initial guidance for things like energy communities or domestic content in direct pay. Those rules are still very much being developed and public comment periods are happening, treasury is being pushed by the White House, treasury is turning around and pushing the IRS. We’re seeing progress, but there are very clear rules on how this stuff has to move and we continue to execute and operate in an era of uncertainty around some of these rules as they’re being defined. But we expect some of that more definition to come next year, but also over the next few years. So when I talk about us being in truly the second inning of the progress we’re going to see from this monumental climate bill and the bipartisan infrastructure bill I think looked at 2022 was a pop champagne moment because this got passed 23 was putting in place the beginning of these rules and regulations 24 is we all have to be at the table helping our policymakers finalize these rules so we can begin to really implement and get some of these dollars working.

And I think that the uncertainty continues to come back into the projects that we’re all looking at day-to-day, understanding how we’re going to look at different tax credits or energy community adders, things like that. So that’s from a high level policy perspective. I do want to turn to Belinda Bago, who’s our chief investment officer, and we’re going to talk about some of the market challenges we’ve seen in 23 and how we expect them to look like in 2024. So Melinda, over the last year we’ve seen significant swings in the federal interest rates and almost sort a lack thereof when it comes to available debt on many projects in pipelines. How have you seen not just clean capital but the market begin to navigate this and how are we preparing ourselves to remain resilient and sort of key projects moving in 2024?

Melinda Baglio:

Hey Jon, thanks for the intro and I know I was joking right before we started that this is my first time appearing on the experts only podcast, but it is actually my second I remember now, so I’m a little less salty, but I think this is going to be a good conversation, so I’m glad we put this together. So I have been talking about this a lot at conferences and among other colleagues that I feel like we are in a perfect storm of challenges because as you were just talking about, we have the IRA, which is making additional tax credits available, but we are struggling to figure out how to monetize them because we have this perfect storm of increased tax credits and less tax equity capacity in the market and the traditional tax equity market on the one hand. And then at the same time, as you mentioned, we’re seeing these crazy high interest rates that I don’t think are going to come down really significantly anytime soon.

Although depending on who you ask, there’s different forecasts, but generally speaking, I think we’re all expecting these interest rates to stay relatively high, so that makes getting debt more difficult. Plus we have a debt market that is also has reduced capacity compared to years, previous years, and on top of that, more and more projects coming online, so it’s a perfect storm. You have more projects, more development happening, more need just a baseline for more tax equity and debt than you have this increase in tax credits from the IRA. We have new regulatory scheme with Basel three that is squeezing the traditional tax equity market. We have high interest rates, so it is a little bit of a perfect storm and it is quite challenging now to figure out how we are going to, as you said, keep the market moving and as always, I think, I hate the term solar coaster, but it is a term for a reason because we have seen these ups and downs before and there’s always a moment of, I’ll just call it anxiety because frankly that’s how I’m feeling.

There’s always this moment of anxiety where we can’t see the light at the end of the tunnel, but we always come out of it. We’re a very nimble industry creative industry, so on the tax credit side, we are seeing more and more transferability options in the market. I think from our perspective, being a CNI developer and owner, I would like to see more options for smaller scale projects than we are currently seeing, but I think it’s just a matter of time before we can get there. And on the debt side, I think we just need to start thinking outside the box and not looking at commercial banks as the only option for providing financing for our projects going to mean I think there’s going to be more securitizations, more private placements because we have to move outside of our traditional project finance structure in order to get financing for these projects.

Jon Powers:

Excellent. And then in terms of the latest, well, this is actually put towards Paul, I apologize.

Melinda Baglio:

That’s okay. I’ll talk about deal volume a little bit and we can scooch over to Paul, but I think because of this we are in moment where a lot of deals have not gone through. We’re coming off of a very frothy market where developers were making pretty big development dollars and I think many developers are still expecting to make a lot of money on their projects because of the market the way that it was and also because of the ITC adders. They’re thinking, well, my project has x, y, Z adder, so it should be worth that much more. The challenge is on the sponsor buyer side of these projects, all of the financing issues that we just talked about we’re struggling. We have those challenges to contend with. Then the other challenge which you mentioned Jon, is that we don’t quite know how these ITC adders are going to apply and what is going to be required to qualify. So as you said, we’re in the second of nine innings. We’re getting more clarity week by week, month by month, but there are still a lot of unknowns and I think as any good piece of legislation, it’s clear as mud in a lot of places and we’re not totally sure what our legislators meant and some things I think maybe were intended to go a different way and we just now have to contend with that and work through the details.

Jon Powers:

One thing before I go to Paul, Melinda, do you feel like looking back at this last year, if you looked at the first Q quarters, remember going to Philadelphia and the Renewable Energy Plus conference there and a lot of our competitors and others were having the same message we had, which we just weren’t seeing deals getting done, we were seeing bids all over the place. We’ve seen some of that begin to coalesce in the second half of the year and now I think what we are seeing in the capital markets that are affecting our pricing and developers are now understanding and having a better scale of what to expect. How do you sort of see that continuing forward into the next year?

Melinda Baglio:

Yeah, that’s a great point. Jon and I do think that the market is starting to adjust and react appropriately to the big picture. So developers are starting to understand if they want to sell their projects, so they’re going to have to price them in the context of the challenges that we just talked about on tax credits, on debt, interest rates, all of the above, and also understanding that those ITC adders are not set in stone, and so what we’ve seen a lot of in the market right now is, and this gets tricky and challenging, but negotiating with sellers what happens if the ITC adder does or does not come to fruition? Most people want to sell the deal and be done with it and be gone, but again, we have to be creative in how we structure the transactions to make sure that everybody is sharing the risk in the appropriate way.

Jon Powers:

Yeah, absolutely. So I want to turn to our chief development officer, Paul and talk a little bit about solar development. Paul, before we get into the numbers for a second, and I know we’ve got some slides supporting that. Can you talk a little bit about how Clean capital views partnering with developers and how we expect to be doing more of that in 2024?

Paul Curran:

Sure, Jon, I think the first thing you showed us chart before about how many more megawatts are going to come in. It’s a truth that there has to be about that many megawatts coming in, how our plants will retire because they’re going to age out. Many of them are fossil fueled and so forth, and there has to be more capacity to make electricity that comes online that can be from any source, but when you look at it holistically, it’s pretty clear that solar is going to be built in a big way. The challenge for clean capital and everybody else is to figure out, as Melinda said, how do we make that happen? Solar is a relatively quick asset. To deploy relatively quick means it takes three or four years to go from the beginning of a project. We got a call this week about a new site out west and we said, yep, probably we can get that done by 2027 or 2028.

So within that timeframe, we’re pretty sure that things are going to change. It’s hard to work through the ups and downs of the solar coaster. As Melinda said, interest rates changing, our prices changing all sorts of things and what Clean Capital’s been able to do is kind of fashion a couple of different products that make developers a little bit less risky as they go through it. I’ve been through it. I started up a development shop and worked through and you risk a lot of your own money and a lot of capital of your investors and friends and family. What Clean Capital is going to be able to do is to reduce that risk first off, but also bring expertise within clean capital. We have economists, we have political folks like yourself and Scotty and others that can monitor this so a developer can stick to what they’re really good at, which is development, find the right sites, work through the permitting process, work through the electrical interconnection process.

We’re good at that kind of thing. Generally speaking, developers know where these things should be cited in clean capital. We have our own opinions about that and we do our own development of course, but I think what we’re looking to do is to make sure the expertise we have and the support functions that we have are made available to our development partners so that we can move these things forward. We’re not giving folks a completely easy way of doing things within any development cycle of three years. The certainty is that the rules will change. It might be the state rules or the federal rules or the local rules, but things will clearly change as we go forward. As you look at this, the thing that’s obvious is that solar has gone from 4%, which I think is actually generous up to 48% in 2023 on this chart.

Coal has taken the opposite in terms of new generation additions. Basically, there are no new coal plants that have been planned or built over the last five or six years or even 10 years according to this chart, and I think that’s things that we will be seeing. What’s not shown on this chart is kind of the how many megawatts have to be added and just normal retirements, if you take it, it’s measured in the gigawatts if not terawatts, that have to be added over the timeframe of a decade. If you look at this, you’ve only got those four or five options on the bottom to choose from, and solar will become a major force as we move forward. The exact numbers C has got numbers of how many gigawatts will come along of 550 billion of investment is required over the next decade, and I think those types of numbers are real as we move along in clean capital, we have our own views of this.

Generally speaking, solar is popular if you do the projects well. We think that Brownfield makes a lot of sense. It’s a site that can reuse infrastructure, so if we have a coal-fired power plant that’s retiring unrelated to us, we don’t retire them and they’ve got transmission lines there and they’ve got some space there maybe from a coal ash pile or other locations. We think repurposing those to be put into service for solar generation makes an awful lot of sense. We’d work on landfills. Landfills are often located near major cities or in major cities where load is needed and so by collated locating generation with load, it just makes a lot of sense. So if we find the right sites and we can work through the issues that Melinda just went through, I think solar is going to be doing very well over the coming decade and if it doesn’t and then frankly some other technology will have to come forward. We are looking a little bit more heavily at battery storage to help with that problem of making sure that there’s enough capacity at the right time for the electric supply needs of the country.

Jon Powers:

Paul, before we get into the community solar piece, I think people are familiar with clean capital over time. Originally I was at private yield go by buying up operating assets and then really over the course of the last two years we’ve moved earlier buying assets and development beginning to support developers, beginning to do some self-development in the brownfield space that your team continues to lead. And then I think working now in partnership with developers who are bringing pipeline and as you mentioned we’re using our back engine to help support them and get more projects in the ground. How have you seen the mindset of the developers themselves change sort of post IRA where it used to be a lot of build and flip and now folks actually see the potential of wanting to stay around opportunities longer and maybe get a financial piece in it?

Paul Curran:

Well, I think developers always recognize the value of what they’re developing, if they’re any good at it. I think that every project starts with a pro forma economic model and you sit there and figure out how do I make this pencil and how do I move it forward? I think within the case of clean capital and the flexibility about forming partnerships where we can share some of the upside as we go forward or structure things so that the developers can stay associated with the deal, that’s an attractive proposition and it always will be. I think what we’re trying to do is to make sure that ultimately given the challenges that Melinda alluded to right now with high interest rates, given the challenges of regulations that are changing, that we create a platform through which developers can work through the various issues that come along, can see forward around those a little bit more and really can succeed with their projects both financially and obviously in terms of the megawatts that go to the grid.

Jon Powers:

And then the other key thing that we’re seeing from a trend perspective in 23 and interested in your thoughts on how it’s going to grow in 24, but community solar saw 14% growth just in the last quarter. Do you see community solar becoming more and more of our pipeline and sort of the broader national pipeline

Paul Curran:

Community? Solar is one of those things that people don’t really recognize what it is in many states yet. Community solar is really just, I get to choose where my electricity comes from at least on paper, and I think that’s a popular thing. It’s why wouldn’t you be able to say, I want my electricity to come from that solar plant down the street. That makes sense, and I think as people realize that I can buy my electricity preferentially from a source that I know and I like and so forth, it just makes sense. I think as people recognize that some of the early states that have done it in Minnesota, Massachusetts, New York and so forth, people when they realize what it is, really find it very, very popular. There’s very few little downside associated with being able to pick where I get my electricity from. So I think that model has been successful where it’s been deployed as a result, I think it’s going to be copied in states because it is something that consumer choice is a popular thing. It just makes a lot of sense. I believe that it’ll grow exponentially as we go forward, which will lead a lot more to what Melinda alluded to, which is basically smaller projects, maybe three to five megawatts located in communities that they can look at it, they can see it, and they can feel that they’re part of the new economy of solar generation.

Jon Powers:

Yeah, absolutely. I’m a community solar customer myself here in Buffalo. So before we get to Zoe too, I want to get to Kelly’s question, Paul, because I think this is very fitting in terms of timing is I think in 23 we saw a lot of projects going underwater in terms of PPAs that were executed historically in covid and supply chain issues and as well as the debt markets have made some of those PPAs almost unable to be built. I just actually came back from the sea of board meeting in Washington this week and this is a pretty avid conversation among a lot of the folks at the table we’re seeing those same trends, but now you’re beginning to see off-takers level setting and recognizing that, what do you see that, how do we navigate that in 2024 going forward?

Paul Curran:

Yeah, no problem. One of our people went to the TENEA conference down in Tennessee a couple months ago and TVA issued an RFP for new electricity and one of their speakers said that they got 15 projects that they had signed up and 13 of them came back within six months to say they couldn’t honor the product price any longer because of higher interest rates, higher equipment costs, higher labor costs and so forth. It’s an unfortunate process of changes in the market. Solar being more popular means that costs will go up and there is a need to make sure that projects will be financeable as you go along. We’re seeing the same thing on some of our projects and we’re working with solar off-takers to make sure that we can adjust the pricing to where both the buyer and the seller can be satisfied that it works for them from an overall deal point of view.

Jon Powers:

Excellent. Well, thank you Paul. Next I’m going to go to Zoe Berkery who is our chief operating officer and oversees both the internal operations of clean capital but also our asset management. Overall, I think it’s important for us not to lose sight of sort of current projects that are operating as we bring more and more online with significant increases in climate change and weather related events affecting those projects, things like severe smoke through the wildfires, not just in California these days, but also here in the northeast. Obviously we’ve got almost severe boiling oceans this summer in Florida, Florida. We’re going to see more and more of these wild impacts on our infrastructure, which include projects we own. What do we think about that needs to be considered going forward as we look to both build out as well as manage our assets?

Zoe Berkery:

Yeah, so I think kind of key jargon around fighting climate change has always been sort of in two buckets, mitigation and adaptation. Obviously the mitigating effort here is that we are building solar, we’re building clean energy to replace dirty emitting fossil fuel energy, but the reality is that those same mitigating efforts need to also adapt to our changing and increasingly frustrating reality that climate change is happening and that those sites are just as vulnerable to extreme weather changes as houses and other areas all around the world that are being affected on a daily basis. So some key ways that we look to adapt to that reality is we make sure that we are keeping a diversified solar portfolio. We have over 200 sites in 23 states and counting with multiple others under construction and gigawatts more under development, and we want to make sure that we are diversifying where those are located so that if there’s an extreme weather event in one area of the world, the rest of the portfolio is ideally still operating as we expect, and that we’re able to literally and figuratively weather those storms and still meet our returns and meet our revenue expectations and continue producing clean energy.

Just within the last two years, we’ve seen an uptick in effects on some of our sites from wildfires and heat waves, wildfires out west.

We’ve started to get used to them unfortunately, but then we also saw them impact our sites out east with some of the wildfires in Canada and the residual smoke that came down into the New England and New York area specifically. Then we also have sites in Guam that have experienced some issues with tropical storms and typhoons, but again, because of the diversified nature of our portfolio, we’ve been able to sort of navigate each of those in stride and sort of underlying all of that is also how we are managing our assets on a daily basis. It takes pretty hands-on focus on managing the daily operations equipment availability and production on site to ensure that we’re readying a site for anything that might be coming our way and that we’re well prepared should something hit our sites. So we’ve had an increased focus on our spare parts inventory that really helps in the cases of if something happens to the site, we have spares on hand and we can reduce that amount of downtime because we’re able to make that repair quicker.

A silver lining of covid and all the supply strain constraints that we experience across the industry really helps light that fire under us to improve that part of our operations and then making sure we’re stowing any trackers as needed and de-energize a site should that be necessary temporarily vegetation management kind of an afterthought in many models and out west in particular, it used to not be a focus, but I think with wildfires, people are increasingly focused on that piece as well. And then ensuring you just have good partners with o and m and technicians on the ground, it takes a village to operate these sites. It is not just energization on PTO or COD date and let it go. It’s sort of a daily focus and hands-on managing to make sure we’re producing as much clean energy as possible.

Jon Powers:

Yeah, I mean a lot of developers look at these things and then intend to hand them off when they get acquired. We actually are long-term owners, so if there’s any message you could bring forward to those developers and how we would start to view that long-term emphasis, I guess in terms of other structural or other things they should be thinking about that we’re going to be requiring.

Zoe Berkery:

Yeah, so it’s kind of a number of things. I think designing the site for the worst case scenario of climate, of course that can sometimes be a bit more expensive, but I think in the long run you will see insurance premiums be reduced as a result. There are amazing insurance brokers out there. We lean on our CAC quite a bit to just get their thoughts on what rates are looking like in a certain region, are there design adjustments that we can make in order to improve the resilience of the site and again, hopefully reduce costs over the long-term. And also I think to some of Paul’s points, making sure that the community is involved and engaged. We want to build trust with the landowners and know that we will have their back at the point of decommissioning and that we’ll be doing so responsibly and kind of having a more sustainability, holistic sustainability focus on the construction and then very far down the road, ideally ultimate decommissioning of the site where we would be recycling or donating panels accordingly.

Jon Powers:

Excellent. I’m going to get to some of the questions and I’m going to direct ’em at a couple of the different speakers just so you guys are ready. But I’m going to start out, I’m going to address two of them up front and then I think Melinda come to you on a question around structuring, but getting to the question around COP 28, the folks that weren’t tracking, we had the COP 28 just wrapped up this week, some big announcements around efforts to reduce fossil fuels or eliminate fossil fuels, which is really interesting. Definitely not enough info yet to really understand the impact that those announcements are going to have other than there seems to be a lot of excitement and the fact that we actually got the sum negotiation at the end was a good leadership by the folks on the ground there in the UUAU to get it done without getting the nuts and bolts of the actual cop agreement.

I think one of the things I found most exciting over the last 10 days following the momentum on the ground were the non-governmental commitments where you had major companies there talking about some of the goals that they’re setting, whether it be Microsoft or Google or others, the work that they’re anticipating to do more of both on addressing carbon overall but also really increasing their renewable footprint and trying to get more aggressive. So one of the questions is what do we see growing in terms of sector wise? And I think as we talked earlier, community solar in the DG space, we call it a middle market, not only CNI, we expect to accelerate a lot and continue to accelerate, but we’re also seeing more and more active corporates in this space wanting to do PPAs, et cetera. I don’t think that’s going to change drastically, but the ability to provide them the power they need as the demand for renewable continues to grow is something that we’re going to be looking to find partners to continue to address. One question for you Melinda, is around, other than acquiring a hundred percent of development projects, what type of investment structures do you find most appealing to developers and is how’s that changing with the infras rate environment?

Melinda Baglio:

Yeah, those are great questions. So first to speak about the structures, there are some developers out there that just want to sell the project and move on to their next thing. But I think given the high interest rate environment and some of the other market challenges that we’ve been discussing here, a lot of developers are thinking, well, actually I kind of want to stay in. I don’t want to just sell these projects and move on to the next thing because I think that I will be able to get a better return by staying in long-term. So we have seen and we’ve partnered with some developers where there is a joint ownership of projects so that the developer is not just getting a development fee upfront, but they’re also earning an additional earnout on the backend. So we’ve structured that in a few different ways, but it means they stay in the deal and hopefully the performance of the asset and market shifts hopefully in the future mean that they’ll be able to make up some of the development fee that they had hoped to get and are now not able to get because of the market changes, the increased costs in equipment, the interest rates, all the things that we just talked about.

And similarly, what I alluded to earlier on things like ITC adders where there’s uncertainty at NTP or pre NTP as to whether a project is going to qualify either because there’s some uncertainty about the project or because more likely there’s uncertainty about what the requirements are to qualify by structuring sort of a long-term partnership with the developer, they can share in some of that upside as well in the future. So that’s one, keeping the developer in the deal for the long-term as a partner of clean capitals so that the developer can realize additional return in the long run. Another thing that we’ve done is rather than simply buying projects at a specific milestone, NTP or some other milestone or working with developers that have a proven history of being able to develop projects successfully, have good strategies and investment ideas about where they want to be developing projects, and in some cases we’re willing to fund upfront some of their development pipeline and in exchange for some exclusivity on the pipeline, and that is also a better structure because you’re not putting all your cash in through the development period and then hoping that you can sell it.

Your economics are a little bit more locked in. Although of course we all have to share equally in adjustments for market market shifts.

Jon Powers:

Yeah, that’s super helpful. But when we talk about this on the BD perspective, I like to talk about the fact we’re trying to bring long-term capital to the front of the line and bringing that into the hands of the developers earlier, which can really provide better returns across the board. There are some questions around hydrogen here, and I just want to say we are not seeing a lot of solar plus hydrogen projects to date, but when you think about clean capital versus some of others in the market, we are truly infrastructure investors, right? We are investing to scale, so we may not be taking some of those earlier betts on new technologies yet we’re trying to bring capital into the infrastructure side of things. So we may not be seeing those hydrogen projects for instance yet, just because that’s not our sweet spot. I want to go to a question from Dave Flynn, Paul around storage and solar, and we’re really beginning to see more and more developers wanting to get into storage. Is there any sweet spot or advice that you see as we’re seeing more and more projects come through?

Paul Curran:

Yeah, first off, thank you Dave for the question. So where we were 10 years ago on solar, we are now on storage. Everything I said before about there will be more solar coming online is true, but in the areas where solar has already taken a strong foothold, so Texas and California and elsewhere, we’ve seen that there’s a need for storage in addition to solar. So when we get together in a year from now, Jon, to kind of replicate this session, I suspect we’re going to realize that solar and storage and more storage has become the big new kid on the block that has taken a real change in the market right now. Storage is a product that is relatively new. There are people that make storage systems and so forth, but there’s not 10 years of market data or performance data that Zoe and her team can really look at and learn best practices from.

In addition, as we go forward, storage is a more risky type of technology from a market point of view. Inherently you are moving power from one time of day to another and the markets as to what power is worth in the middle of the day versus at night are going to be very volatile. They always are. And how you can economically manage that going forward is going to be an important thing. Returns right now on storage projects are higher than they are on solar, accommodating for that risk, and I think you’re going to see that staying that way for a little bit of time until really we have a more robust storage market that goes forward. We’ve seen the infancy of that. I think we’re going to see that growth being even stronger than solar as we go forward through the next year.

Jon Powers:

Excellent. So I’m going to get the last question from Larry Bookers in part of this next part of the conversation. And thank you Larry for asking around I think some of the challenges that cop and I think some of the challenges around the consistent sort of international dialogue around climate. It is definitely challenging. I think there’s a lot of good solid positive trends though that we cannot avoid that I think even without the international community coalescing around the goals that we really need them to be doing. What’s exciting, I think for the first time we’re seeing at least domestically policy, technology and finance aligned in a way that they’ve never been before to really address the climate crisis, but there’s a long way to go. So looking at the president’s goals that he has set to really reduce by 50% plus by 2005 levels by 2030, we should have reduced about a 6% emissions reduction.

In 2022, we only dipped 1.5%. So just to level set, we are already behind the curve and we need to be going harder and harder to solve these challenges, meaning the transition needs to happen faster. So that means more projects in the ground, that means more alignment of the supply chain. And I think efficiencies across the market as we’re bringing more and more dollars, whether it be the sponsor equity, whether it be alignment around how these tax credits are actually going to work, it’s we’re going to need more and more debt products available for things like merchant storage and other areas that are really relatively new to the space. But to continue the reduction goals, we need to be pushing this transition faster and to achieve that, more and more capital needs to continue to flow into the solutions. If we’re going to hit the 2030 mark, it’s going to require over $10 trillion in new capital to go into projects.

Things like solar, wind, you were already seeing offshore wind slow, which is really challenging and many projects begin to fail. It’s going to take companies like Clean Capital and others to be able to access and bring that capital forward. But it’s going to take partners in the ground who are developing finding quality projects as well as it’s going to take all of us in the industry to talk about the successes of what we’re doing and to tell our story to both continue to build the political support, the policy support and the community support to do the things we need to be doing. And that’s going to take all of us and being active and willing to participate in the conversations of the importance of what we’re doing and why we’re doing it and the impact it’s having locally. So I think my challenge to everyone in the audience today is to think about the role you can play in 2024 to help push forward the policies we care about and to communicate and share the stories of what you’re seeing, both the obstacles of what you’re seeing, whether it be challenges at a local permitting event in a community you’re in, or the positives of getting projects in the ground and being able to communicate that out to the community.

Sometimes it takes a little extra effort, but that extra effort can go a long way in building support for future projects. So I know we have a limited time left. I really want to go around the horn just at the end here and ask the panelists, if we were sitting here in 2030 having this same conversation but actually looking backwards over the decade, how are the trends of what we talked about for 2024 going to be affecting where we are in 2030?

Melinda Baglio:

So I’m an optimist and I really think that the industry as a whole has done a very good job of getting creative and reacting positively to the challenges that we’re facing as a market. So while I can’t predict what’s going to happen in the next six, six years, I think in 2030 we’re going to be looking back at this time and say, wow, remember those days of 2023? Remember that that was a rough patch. But I think we’re going to have come out of it with some really interesting and innovative financing structures and partnerships because we are all committed to the big goal and we are committed to advancing the industry fighting climate change and doing everything that we can. So I don’t know what it’s going to be, but I have really high hopes and I’m optimistic that we will look back in six years from now and say, wow, look what we accomplished after that. Really scary time.

Jon Powers:

Absolutely, Paul,

Paul Curran:

Jon, first off, I look forward to that session in 2029. I’m a big fan of experts only.

We will be building a tremendous amount of solar in the next six years. It is necessary for the economy, it’s necessary for supplying the electricity that’s the lifeblood of the US system and the worldwide system. I think there’s going to be a lot more batteries. Clean capital is already mobilized, a lot of infrastructure internally to make sure that we’re ready for that type of new market that we’re going to need. I think that generally speaking, the public is going to be more accepting of their electricity coming from renewable energy and that’s what they expect is going to happen. I think you’re generally seeing that things like electric cars, which were unheard of five years ago, are now pretty much, yeah, see ’em all the time on the road. They work fine. Solar on people’s roofs, not an unusual event that a decade ago that was. I think you’re going to see renewable energy becoming incredibly mainstream in the next six years, and pretty much folks will be used to that as the way that things should be done. So I’m optimistic as well as Melinda, I think Clean Capital has a good machine for assisting with those projects to come to fruition, and I’m very optimistic that we’re going to be very successful in the next six years.

Jon Powers:

Excellent, Zoe.

Zoe Berkery:

So definitely Echo Melinda and Paul. But I think on a slightly more granular sort of lens, my hope is that by 2030 we have a much more closed loop supply chain on solar. I think that that will solve some of the problems that we are facing in real time. And really by the 2030s, Harvard Business Review and Irena have estimated that hundreds of millions of tons of annually waste will come from the solar industry due to some of the earlier, early stage projects. Then at that point becoming decommissioned, 95% of those panels of a panel is recyclable. So I think just even within the last five years and even in the last two years, we’ve seen such an onslaught of really smart, really innovative companies coming into that space, and I think that in 2030 our supply chain will look a lot different and that is a hope of mine. And I will also add kind of on the policy questions. I think we saw even during the most volatile times in federal policy to renewables in recent memory, the private sector did not slow down and we saw such rapid growth in our sector that we can’t sort of let some of the slowness of Cop 28 really deter us, and I think we’re still full steam ahead.

Jon Powers:

Yeah. Well first of all, thanks everyone for the optimism and Zoe, I agree with you on the circular economy efforts that have to happen, not just in our industry but all by 2030. I think what many of us underestimate is we are witnessing a generational transition and we are investing in that transition and from an infrastructure perspective and the engine’s just really getting revved. So the mid decade efforts of getting projects in the ground, getting clean electrons flowing, getting folks trained up to grow our workforce, which quarter by quarter we’re getting new, exciting people joining our mission to bring more solar storage and other clean energy and renewable efforts forward. All of those key pieces are aligning. But for me, the next year is a lot of blocking and tackling has to happen to just continue to accelerate that scale. We at Clean Capital, we’re a key role and looking for partners to continue to help with that as well.

I’m going to thank our panelists for joining today. As always, you can get more episodes of experts only@cleancapital.com. Please reach out to us to find ways to partner in helping to solve the climate crisis. We want to be working with innovative, exciting teams and finding ways to get dollars out the door and to quality projects. I’m going to thank folks for joining from the audience and specifically thank Cara, Colleen, and Carly for helping to put this together. We’ll be back in 2024 with other conversations about trends in the market, about things we’re seeing in terms of our projects and way to work more closely with this at Clean Capital. Well, thank you everybody. Have a great holiday season. Thanks, Jon. Thanks. Thank you. Thank you.