Join us this week for a great conversation with Ethan Zindler, Head of Americas at Bloomberg New Energy Finance. Ethan’s career has taken him from baggage checker on the Clinton campaign to the White House to MTV to the early days of clean energy covering Cape Wind. For the last 12 years, as Head of Americas for Bloomberg NEF, he’s been at the helm when it comes to clean energy research, with industry leading data on deals and market reports, trends and forecasting. Today we have a great discussion about the market trends and the progress of the industry over the last 10 years. I hope you enjoy this conversation as much as I did. The full episode transcript is below.
The Launch of a Clean Energy Career: From the Clinton Campaign to the White House to MTV
Jon Powers (JP): Ethan, thank you so much for joining us. You know, you have a fascinating background and there’s a lot to cover with Bloomberg New Energy Finance, but I want to step back a little bit and talk about your broader personal history. You actually spent some time in the political scene working on a Clinton/Gore campaign and then later in the White House. What, first of all, what led you down that track in what was your role in the White House?
Ethan Zindler (EZ): So I was definitely a political sort of junky. I’m all the way from high school through college. I worked on a number of campaigns, the Clinton one you know about, because that’s the one where we won, before that I worked on the Dukakis campaign because I’m from Brookline, Massachusetts, which is where Dukakis is from. And then worked for Feinstein when she ran, but lost for governor, eventually she became senator. So I’d always just been really into politics and really, really into campaigns. And so I did that. Then when Clinton won,
JP: What was your role in the campaign?
EZ: The first half of the Clinton campaign, I was sort of a glorified baggage checker, in other words, I was in charge of making sure that the press didn’t lose their bags on the plane, which sometimes happened. For the second half of the campaign I had a great job where I was the “Youth Media Coordinator”. And my job was to get Clinton to do MTV and get Clinton to talk to college press and doing radio actualities for college radio stations. And all kinds of stuff that back then seemed really cool, hip and happening, but which now seems ancient as the Internet came away and basically made all that stuff seemed really old. But back then, believe it or not, getting a presidential candidate on something other than NBC, CBS or ABC was considered sort of unconventional. .
JP: Well, you were a pioneer then.
EZ: Yes, I was. Then at the White House I worked in the Office of National Service, which was the office that wrote the Americorps legislation and got that passed which was a big priority for president. Frankly it was more or less like a two line campaign promise that had almost no policy behind it. Then when we won it was like, wow, OK, we’ve got to actually make this happen. But luckily there was an office called the Office of National Service that had been established under Bush. And what we learned is that mostly what the people who had been in that office had been doing is writing press releases to sort of site different things that people had done in service but not actually been responsible for writing legislation or overseeing really anything. So that was, what was that? Americorps is a great program. It’s survived a lot of attempts eliminate it for sure.
JP: The transition from the White House to MTV. How did that happen?
EZ: At MTV, the one that’s maybe the most interesting was that I became their “web producer.” So in 2000, was the first year, pretty much that MTV had decided that they wanted to cover a presidential campaign on the Internet. Back then the idea of having like a website, well that was pretty unusual. So we did a lot of fun stuff to try and cover the campaign. We’re very much integrated with the folks who were covering the campaign on air as well. That’s the choose or loose group. It sounds incredibly antiquated now, but it was a lot of fun actually.
JP: So was Rock the Vote Around then?
EZ: Rock the vote was definitely very much about sort of registering people. Choose or lose, which is the MTV thing was about covering the campaign. I mean it was ultimately all about getting people registered to vote. So that was the end goal, but we really tried to take an even handed way of covering that campaign, the Bush Gore campaign, which of course then when it overtime for about a month, but it was a lot of fun. Right?
Making the Career Transition to Clean Energy
JP: So what lead from that to clean energy?
EZ:I f this sounds like a circuitous, career path, it’s because it was. I then went to businesses school and the thought was, well, you know, maybe I’ll do this and then I’ll come back and work in the media business some more. But I went to business school and then while I was there, I graduated at a time that was just the worst time, or at least at that point, what seemed like the worst time for anybody to get out of a business school program. My wife had just had a daughter and I looked at a lot of my fellow graduates and they really were having trouble finding jobs. I’m from New England originally and I spent a lot of time on Cape Cod as a kid and there was a job at the local newspaper there as the one and only business reporter for the Cape Cod Times. I knew that I figured I was qualified. I also figured I’d frankly be the lowest paid member of the Columbia Business School graduating class. But I would have a job and my wife and I were ready to get in New York Post 9-11, I think with a daughter. We were pretty much done for at least a while. I went to the paper and I loved it. I think it’s just a fantastic place to work and interesting people and real commitment to good journalism. So we picked up, we moved to West Yarmouth, Massachusetts where I lived and I covered stories and eventually I am getting to clean energy. I knew even at business school when I was looking at the Cape Cod Times that they were building or trying to build a major offshore wind project out there called Cape Wind. And I thought, wow, if I’m the business reporter, I guess I’ll get to cover that.
Covering the Cape Wind Beat for the Cape Cod Times
EZ: Frankly, it took me a good year at the paper before they let me touch the story because there were other people already covering it. It was the hottest story the Cape Cod times was covering. But eventually I got to cover it. So I got really familiar with the Cape Wind project, the controversy surrounding it. I knew the opponents. I know Jim Gordon well as the developer and did a lot of work. I tried to use my MBA as much as I could to try and think about the cash flows around that project and how it could pencil out and how it could work and all the things that are around it. It was a fantastic experience. On a good day you’d write a story that would make the front page and both sides would call and yell at you. It happened pretty frequently, with both the opponents and the supporters of the project.
JP: So what led from that into further research in clean energy and of course Bloomberg?
EZ: About three years into that, I loved it, but my wife was ready to move back to a larger urban area. So she moved down first. Then found out about this new outlet called New Energy Finance. It was just starting, of course, back then, it was a very small industry. I heard about this guy Michael Liebreich. He was starting a company in London. I was down here in DC and
Making the career move to the startup New Energy Finance: “The Saudi Arabia of Data”
EZ: I wish I could even remember the exact time but it about then and he said, hey, we’re going to start this thing up. And I’m actually at the time of new energy finance was, two things were, one, it was, it was very, very small. Two, I was going to be the first US employee. They had no employees in the United States at all. So I interviewed with him and I was like, oh, it sounds good, but like, what the hell is this going to be? And it’s a startup and I got a kid and you know, how am I going to make all this work? So he said, look, you know, if you want to check us out, if you fly over to London, if you pay for the ticket and then you take the job will reimburse for you if you don’t, then that ticket is on you. So I said, all right, so I flew over to London, showed up on a Saturday morning, and I went over to the office and I rang the bell and actually nobody answered and I thought this is a huge mistake and, but I spent the day talking with the CEO, Michael Liebreich, whose somebody I admire a great deal to this day. And I talked with about five other people and each one of the people I asked about New Energy Finance. I said, so what’s the business model in each one of them gave me a totally different answer and so, you know, but my belief was basically that these technologies were really exciting, that they would change the world that were, they were somewhat inevitable. And frankly that’s the one thing I give myself credit itself for, not for believing in the right company or anything or being a genius, but just believing that this stuff was actually going to grow. And so I was very fortunate and have been since then.
JP:And you’ve been able to see the growth of that industry. I mean, we’re now at a point where, we’re through the evolution of do these technologies even work and now it’s how do we drive down capital to get more implementation?
EZ: Exactly. So it was back in those days, it was just sort of like, will there be a good feed in tariff or strong subsidy? OK, that’s where there’ll be a market, Then that market disappears, you know, that still happens to some degree today, but you know, we’ve now definitely moved to the point where this stuff is legitimately economic.
JP: For our listeners, explain what Bloomberg New Energy Finance does and talk a little bit about the growth over the last really 12 years since you’ve been there.
EZ: It was called New Energy Finance and start up company. And again, there were about 20-25 of us when I joined in about 2005 and at the time basically we didn’t really know what the business was going to be other than we wanted to gather as much reliable data and information as we could about all this stuff that was happening and what the actual revenue model is going to be for us was far from clear. We used to joke was that we had sort of the Saudi Arabia of energy data. Everybody was just constantly logging deals and logging organizations and every scrap of data we could get, we put it into a database. The closest that we had come to an actual publication was that we would publish a newsletter every month, including one on the Americas, which I used to do. The reality of it is that was kind of it.
We started to get subscribers and grant people to access the data and that worked OK, but it didn’t generate a lot of money. At some point we said to ourselves, wait, OK, we’ve now been doing this for about three years. Why don’t we write more in depth research about the map, the trends, not just news, but like actually what’s going on. The micro economic stuff, we have all this data, we can analyze it ourselves and besides, nobody else is doing it and this industry is not that old that there are any super well established experts that we can’t potentially be those people. So we started and have sold access to the research that we produce and importantly access to the underlying data. I think that’s always something we’re trying to emphasize as differentiators that we don’t just say, OK, we think there’s this much wind that is going to get built next year. We say, OK, this is how much wind is going to get built. Here’s the excel sheet where you can take a look at the projects and where we think they’re going to be built and If you disagree, you know, go ahead. We shuffle the data and come up with a different forecast.
JP: You guys were playing Big Data. Before it was a cool thing,
EZ: Thankfully it was little big data because it wasn’t that much going on in the industry. It wasn’t that hard that you couldn’t have like a dozen of us basically just tap tap tapping stuff into a database.
The Professionalization of Clean Energy – The “Ponytail Factor”
JP: So over time with that growth, what have you seen in the industry and what are your projecting out as the exciting things for the industry moving forward?
EZ: My old friend Jody Roussel from the American Council on Renewable Energy (ACORE) used to joke about the ponytail factor. And so in the early days of clean energy, she used to say that the sign of progress was the decreasing number of men with ponytails. Little did she know that that was back 10 years ago. Now it’s man buns or whatever, I don’t know if that’s a good metric anymore. But back then you saw a sort of professionalization of the industry is more as frankly it became less people who are sort of advocates, even with great respect to people who are advocates. But it became less about advocates and more about money people and entrepreneurs and people who are hard headed and professional. And so definitely have seen a lot more of that and a lot more people have come in and certainly opportunists along with them, that’s for sure.
But look, you need that to make the industry grow. So that’s been a huge thing. And then I would say that the professionalization, the second thing has been commoditization I would say in terms of particularly around solar equipment as you know, the price of solar equipment has plummeted and it’s being driven by economies of scale more than anything. I think for a long time there, it was really all about technology, technology, technology, all these different types of technologies that were out there. And I think it’s still a fascinating industry in terms of the various technologies that could still change our world. But as you know, the things that have really come along had been more about scale and less, not less about technology, but there hasn’t been that kind of Super Eureka moment I would say for solar. It’s still basically the same technology was looking at 10 years ago. It’s just being done so much bigger and cheaper than it was.
JP: There’s less reliance on the concept of like the holy grail.
EZ: Yeah, it’s gotta be that one thing that just sort of changes our world. Even batteries people keep talking about in the same context, but batteries again, it’s scale. It’s really, really driven down costs.
Discussing Clean Energy Investment Trends: Clean Energy Investing is still “immature”
JP: So I’m going to dive into one of the recent reports you guys put out earlier this month at Bloomberg New Energy Finance reported that global investment in clean energy such as wind and solar, reached about $333.5 billion in 2017. It’s about a three percent rise from last year, but about seven percent off the record overall. What do you view as driving this trend and what do you think of those 2017 numbers?
EZ: I think the good news about the numbers, is that the price per unit of wind and solar and keep coming down. So if you keep posting dollar figures that are more or less in the same zone and we really have been somewhere in the neighborhood of $300 billion now for the last five or six years, you’re talking about more and more stuff getting built. I actually don’t have a final number on total clean energy built this year, but it’s probably going to be somewhere around a 150-160 gigawatts. It’s a lot of capacity and it’s a majority of the new power generating capacity that’s getting built typically in a year is now zero carbon and particularly if you include large hydro, definitely if you include nuclear. My first thing, is always evidence that we should not refer to this as alternative energy.
This is mainstream energy. There’s no question about that. I would say that’s the main sort of takeaway I would say from last year. The other thing is under underlying that of course is the phenomenon of China, which is just incredible. It continues to blow our minds, we have counted about 50 gigawatts of solar that got built in China last year. I think our high water mark in the US is like, I don’t know, 12 or 15 gigawatts. So that is A LOT of solar. Every time we think it’s just going to cool down a little bit. It just goes, it just goes and goes. So China’s roughly about half the world, about 40 percent of all total investment in the world went into China for clean energy.
JP: I want to come back to China, I want to come back to the international space cause it’s exciting that stuff is happening there. It’s equally exciting internationally, which is great for the industry. Going back to the $333 billion over last few years, the World Economic Forum put out a report last year that less than half a percent of institutional capital is invested in the space. It continues to rise, there is targets to reach one percent, which will be great. But looking at that $300 billion figure, do you guys breakdown where some of that’s coming from?
EZ: It’s interesting actually. There’s two kind of data sets in terms of dollars. So there’s also green bond financing, which is typically over $100 billion, but it is not an enough going to check what our final number is going to be for 2017, but it’ll be somewhere around that. It’s actually not a subset because while there’s some overlap, but there’s some differences as well and include some things that aren’t clean energy, just to be clear. The trend has been clearly upward on the part of institutional investors in some ways. I always sort of joke and say that that the way in which our industry raises money is still really immature. So you have ~$300 billion dollars and then, you know, the large majority of that is project finance. In the large majority of the project finance is simply money that’s raised through some form of syndication of debt.
There is a small handful of number of players, but we’re talking now, tens, hundreds of billions, the industry could and should and is in some cases raising money and larger chunks over the institutional markets through bond offerings and pension fund investment. So I think that’s the way things have to keep going. I think we’ll see more of that because I think amazingly enough there’s still a lot of people for whom they’re still like, wow, wind/solar, that’s kind of weird technology. What’s the risk about?, well wait a second guys. Like now we’ve got a lot of years of performance here to show that this works. Second, take the fuel price risk out of the equation.
Like don’t tell me that this is higher risk than projects where you really don’t know what your input costs are going to be over 20 year life span. So I think actually institutional investors are figuring that out. And on top of that, they are facing some pressure of course, to move away from investments in fossil fuels. So those two things combined and you definitely see some of the players, the California pension funds, like definitely been in it for awhile, but you see some interesting moves recently a Quebec pension fund bought a portfolio of Mexican wind projects. The Texas state teachers retirement fund is taking direct investments in renewables projects as well. So there’s more, just definitely more to come in that sense.
JP: It’s interesting you brought up the check size too because I think what we see in the market today is you’ve got folks that are beginning to get interested in, the education and the pressure is there from stakeholders. But there has to be the right check size for them to even take a look. And you know, unless you’re talking to utility scale solar or utility-scale wind, you know, putting that check size together is challenging. Right? And you’ve got an aggregate. But I think the projects now are out there in size and scale enough to begin to attract it.
EZ: I mean, look, we’re probably the most bullish about distributed solar, like almost anybody and we think it’s going to really revolutionize the world. The reality is it’s always going to be, I mean, if it gets bigger, it’s going to go from tens of hundreds of thousands of systems to millions of systems and it’s gotta get aggregated, right? It’s got to in order to keep driving the costs of finance down.
JP: Do you have a lot of those institutional is coming to you all for data?
EZ: We do. A bunch of them are clients. I would say this. So it’s interesting for us as a business is that it’s more often to be someone who’s directly involved in direct project finance of individual projects and less likely to be someone who’s at a pension fund for the reason you’re sort of saying that they haven’t done as much historically, but the more that the pension funds get involved, the better. And the other thing is, you know, our business now we’re part of Bloomberg, so our data and information is available over the Bloomberg terminal. Actually that’s where a lot of these large pension fund folks have terminal access, so a big part of what we’re doing is saying hello, you’ve got a terminal and if you’re interested in clean energy and hey, did you know, you could look up the last 10 wind farm financings in Texas if you want. See who did them. In many cases like, oh, I didn’t know that.
JP: You see them coming to some of the events too?
EZ: Yeah, they definitely come to the events we’ll have at our summit, which I’ll give a plug for an April. We’re definitely going to have a panel. You know, we’ve done it before. We’ll do another one to sort of do a lay of the land, will certainly have California where I presented on that. We’ll probably have someone from New York state represented on there. I think we’re trying to have someone who’s from Quebec, but we would like to also have, whether it’s Texas or somebody else, there’s some funds that are really been the, the most on the front foot on this stuff but more starting to come around now.
The Politics of Clean Energy in the U.S. under Trump Administration
JP: Before we go international, we’re sitting here in Washington DC, about six blocks away from the White House leading into 2017. There was a definite gasp, clean energy experts for fear of what was going to happen. But I think what we’re seeing federal policy aside, this has become a state level game. You know, the right things that moving the cost of capital is coming down. The cost of the panels are coming down, wind projects are being implemented in a conservative states that are getting champions. that I think none of us expected. We are a year into the Trump administration. Putting aside the solar tariff piece, what do you guys view as the effects of the administration without being political on the market.
EZ: I am glad you ask our monthly VIP brief that we do for clients and actually to the public. I’m supposed to write this month about the one year review of Trump because I wrote something right after he got elected in which I tried to be as optimistic as possible, at least in saying, look, that the guy is a businessman. So any rational business man, once they spend a little time, we’ll figure out that clean energy is a good deal for the US. And so we don’t want to actually kill it. A year later, I’m less optimistic that he’s a rational business man, let’s put it that way. I think the good news for the industry is that these guys, him and his administration, they do not understand how to pull the levers of power very well. And so they’ve certainly sought to lay a glove on the clean energy industry. So far I think they’ve been generally unsuccessful. I would argue that it’s largely that they don’t really know how this stuff works all that well. I think the Paris thing symbolically obviously was not great for the industry, but didn’t really make a difference on the day to day stuff.
JP: I’d argue just countered with the amount of momentum that came out of people who have been announcing. You had Nike go this week on renewable energy, wait a minute, if you’re not going to do, we will.
EZ: Corporate, certainly did, they jumped right into. There’s no question about that. But I think that the bullet that the industry largely dodged was tax reform. The tax credit at the federal level is the most important policy. Basically at the very end in the last year, as you know, they, they managed to more or less, I mean it’s complicated and getting into too much, but they more or less managed to um, get the tax credits exempted from what would have been a floor level type of policy, this BEAT provision without getting any more detailed than that. This is going to be very interested for project financing. There’s going to be a lot of rethinking and there’s going to be some reshuffling and in some ways what they did do at the end of the year will hurt the industry but not nearly as bad as it could’ve been.
JP: Yeah, I agree. Going back to what the levers conversation, I mean, you look across the bureaucracy and you can’t just put an executive order that you actually have to manage that executive order.
EZ: You can’t just tweet out that you’re not going to subject Florida off offshore drilling. There’s actually a process and the FERC thing and Secretary Perry’s effort to basically tell FERC what to do and say we want you to basically go reward coal fire generation and them saying, well actually that’s, that’s just not how this works. That to me is like kind of case in point of that’s not how the system works.
JP: It was refreshing to see them come out and show that the systems work.
EZ: Yeah, I mean there’s, you know, things take time as you know, you worked in government, right? It’s not like you don’t just wake up one morning and decide how you want things to go are you actually have to be very clear and strategic about it and they haven’t been so far.
The U.S. Role in the Global Clean Energy Market
JP: I’m going to talk about international. You talked about China, which is incredibly exciting and over two dozen countries last year invested more than a billion dollars in clean energy. What are we seeing out of the rest of the world and is our lack of leadership today stifling that or are we just falling behind?
EZ: That’s a good question. I mean, the one thing I will say about sort of the rest of the world question is, look, the Chinese view this as a strategic opportunity on a lot of different levels and they are moving very quickly to get their clean energy equipment out to more markets. There are actually a variety of reasons for that. One of which is because they’ve built an unprecedented volume of manufacturing capacity back home and they do not want idle plants so that they want and they need markets. The second thing is that the one way them to actually exercise some soft power is to show up in a country and say hello, we will build you a nice big wind or solar project. We will bring you the equipment and by the way we will finance it to, through the China Development Bank. And they are being very, very aggressive about that.
JP: It’s likely you will be using Chinese construction too.
EZ: We’ll create it and for countries that have lack of access to capital and are interested in clean energy. It’s almost like a turnkey solution. They’re doing other things too, where they’re actually buying local developers. I was just in Brazil last week where National Grid has bought a company called CPFL, which is a local developer and owner of assets. We’re seeing more and more of that take place. So I think the reality of it is, that we focus a lot on Chinese as manufacturers but they are also international financiers and now developers as well. From a global and climate perspective, great. If they have the cheapest capital and they can do it, you know, fantastic. From a US competitiveness perspective it is not so great.
Some Background on Bloomberg New Energy Finance
JP: Thank you for all of this. For folks that aren’t familiar with the Bloomberg New Energy Finance, how do they get involved? How they engage you guys?
EZ: Well firstly you can look us up on the web, but second of all, we have conferences, which are invite only, but we are certainly interested in people who want to attend or speak at those. We love having people read our stuff, which is, which is far from free but if you’re interested in subscribing, drop me a note.
Advice for Your Younger Self
JP: It’s interesting, we have a variety of listeners, folks that are really in the investment side. We’ve got students just learning about the space. So it’s quite an interesting group. So I always ask the same last question. Especially speaking to those folks just getting into the industry, if you could look back and you get quite an interesting sort of roller coaster of a career and you can give yourself a piece of advice coming out of high school or college. What would you say?
EZ: Well, first off is to myself, I would say you should be a better student and take it more seriously, I was actually a pretty bad high school student. Then I would also say, you know, it’s not the end of the world if you’re aren’t a great high school student because you can make it up in college. When I first joined this industry, it was very much a small industry which showed a lot of promise, now that we’ve reached some real scale and some scope and that’s great. There are a lot of great opportunities out there for people to get involved. I do think that, as you know, as a person who’s an entrepreneur, there’s still a lot of areas for startup and there’s the one thing I am struck by and we’re very, as I said, very optimistic about the sort distributed energy aspect of all this is there’s a lot of, there’s a lot of small projects to be done. There’s millions of small projects to be done and it ultimately those add up to a lot of value. And I think so it’s not always about going off and trying to figure out how you find that it’s $100 million dollar wind farm. It’s about figuring out how you finance a $1 million rooftop or even $200,000 rooftop. We model it and the economics look great, but at the end of the day you need like an army of people to actually do all of this. So I think local development is something which is always going to be an opportunity and if you’re really a self-starter, entrepreneur, and enterprising, and you live in a place where either a power prices are really high or b, it’s very sunny or c both of those things. You might want to look around and see like, is there anybody I could talk to you about how I actually help them think about putting solar here. Have they thought ever thought about doing solar and, and you know, can I chat with them about it? Because the answer in many cases is, Huh? I never really thought about that. And so I think those are where the opportunities lie.
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