May 7, 2025 • 36 mins
Clean energy investment in the US grew $50 billion last year. With interest rates easing and inflation in decline, the market appears to be well positioned to meet skyrocketing power demand from sources like artificial intelligence and data centers. Yet it’s not all smooth sailing: price cannibalization, curtailment risks, tariffs and clean energy policy shifts from the new Trump administration all present challenges for investors. So what business models and strategies are required to keep the momentum going? At the 2025 BloombergNEF Summit New York, Pol Lezcano, a senior associate from BNEF’s solar team, moderated a panel titled “Sustaining Momentum in US Renewable Investments.” This episode brings listeners that panel, which featured Andrew Gongaware, managing director at BMO Capital Markets; Matt Ransweiler, senior vice president for finance and capital markets at Invenergy; Miguel Pena, managing director and head of project finance for the Americas at BBVA; and Corinne Still, partner at Apollo Global Management.
To learn more about BNEF’s Summits taking place around the world and to see recordings of BNEF Talks at previous Summits, head to https://about.bnef.com/summit/.
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Episode Transcript
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Speaker 1 (00:00):
This is Tom Rowland's Reese, and you're listening to Switched
on the bn EF podcast. Today we're bringing you a
recording from our BNF Summit New York, which took place
on the twenty ninth and thirtieth of April. The panel
featured on this episode is titled Sustaining Momentum in US
Renewable Investments and it's all about the shifting sounds of
clean energy spending in the US. Conditions for investment appear
(00:22):
to broadly be improving, with interest rights easing, inflation in decline,
and growing renewable energy demand sources including power hungry AI
models and data centers coming online. Last year, US clean
energy investment grew by fifty billion dollars, a huge leap
over the average from the previous few years. Yet hurdles remain.
Price cannibalization, curtailment risks, and the tariffs and policy shifts
(00:45):
enacted by the Trump administration are all giving potential investors pause.
In this episode, the panelists discuss business models and strategies
that can allow investments in the US clean energy space
to keep growing. The panelists include Andrew Gongaware, Managing director
at bm Matt Reinsfeiler, Senior vice president for Finance and
Capital Markets at Invenergy, Miguel Pina, Managing director and head
(01:08):
of Project Finance for the Americas at BBVA, and Kareeine
still partner Apollo Global Management. The panel was moderated by
Paul ez Karno, a senior associate from our solar team.
For more information regarding BNF summits, including our upcoming BNF
Summit Munich on May twentieth, ant view recordings from previous
events had to about dot BNF dot com slash Summit.
(01:29):
Now let's hear from our panelists.
Speaker 2 (01:41):
Thanks everyone for coming. Thank you also for you for
being here and taking some time to hear a little
bit more optimistic takes.
Speaker 3 (01:52):
I'll try my best.
Speaker 2 (01:54):
The clean energy industry in the US has gone through
lots of a lot of ups and downs.
Speaker 3 (02:00):
I think we all.
Speaker 2 (02:01):
Are very familiar that there's been policy uncertainty for a
long time, something sometimes for the good, sometimes.
Speaker 3 (02:07):
For the worst.
Speaker 2 (02:09):
So our goal here is to bring esteam clean energy
industry experts to really to really share with us how
they manage the risks, how they deal in times of
high uncertainty, and what's the silver lining what are the
reasons to remain optimistic. I mean, I'd love to start
with Andrew, because I have you so far away for me.
(02:30):
Can you set the stage for us and explain a
little bit what are the risks that the sector is
facing today and how are developers and financiers like yourself
managing those risks and trying to stay sane at the
end of the day as well.
Speaker 4 (02:45):
I'm sure Matt will have a view here as well,
But I think the greatest risk is obviously uncertainty that
goes well beyond our industry, but I think in our
industry in particular with the anticipated attacks bill and tax
reform and the implications that that might have for things
like the Investment Inflation Reduction Act, there's just a lot
(03:09):
of uncertainty in front of decision making in the sector.
And so I think is as management teams and banks
like ourselves and investors like Corinn look at the landscape,
we have to think a little bit differently and look
for opportunities in different places and manage risk a little
(03:29):
bit differently. You know, for the developers, that's where am
I going to invest my dollars in development? You know
where there headwinds around permitting, what can I actually procure
for with some certainty around cost. There is in the
market a lot that's going to get built. There's been
(03:50):
a lot that's been safe Harbord, there's a lot of
equipment in country. There are a lot of projects that
are permitted and very far along you know that we're
going to I guess the question is really, are we
going to see you know, one hundred gigawatts of new
renewables over the next five years or so, or is
it going to be two hundred? So you know, either way,
there's a tremendous amount of capital that's going to go
into the sector and a tremendous amount of construction that's
(04:12):
going to happen. So I think it just becomes an
element of picking your spots. Whereas I think a broad
subset of developers could be very successful because there was
a wide open landscape. I think now where you have
the most talented management teams, you're going to see some
differentiation across platforms where high quality management teams who've lived
(04:36):
through cycles, who've managed through tax credit uncertainty, are going
to be successful. And those are the places where I
think we'll see folks like Corinn and folks like Miguel
and myself putting our capital.
Speaker 3 (04:49):
Absolutely Crean, that's Andrew named you as well.
Speaker 5 (04:53):
Yeah, that recommendation go ahead.
Speaker 3 (04:58):
How do you fund?
Speaker 2 (04:59):
How do you find those those spots and opportunities in
these times of uncertainty.
Speaker 6 (05:04):
Look, I think Andrew's spot on. We are in kind
of I would say, kind of the apex of uncertainty
for US renewables with the confluence of tariffs and the
ir and still honestly some supply teain dynamics that you know,
were we continue to work through, for instance, in the case.
Speaker 5 (05:26):
Of highvoltage equipment, taking up to.
Speaker 6 (05:28):
Kind of like five years to get for certain projects.
Look as we take a big step back and look
at it.
Speaker 5 (05:36):
You know, we're Apollo. We're a large.
Speaker 6 (05:37):
Alternative asset manager or six seven hundred and fifty billion
we invest across the capital structure.
Speaker 5 (05:43):
We've made a huge commitment to.
Speaker 6 (05:45):
Be investing in energy and energy transition over fifty eight
billion to day, and even during.
Speaker 5 (05:52):
Times of uncertainty.
Speaker 6 (05:54):
You know, we've always viewed ourselves as contrion and so
we seek to deploy capital even in time periods like this.
We see operating assets like near term operating assets as
pretty attractive today. We believe there's been a change in
the risk adjusted return for those very prudent underwriting of
(06:14):
kind of development development platforms. But the long term tailwinds,
in our mind, are still there. The need for energy demand,
it's still there, and renewables.
Speaker 5 (06:26):
Continue to be one of the.
Speaker 6 (06:28):
Most cost effective, quickst to market methods of delivery.
Speaker 3 (06:33):
Migad, I'd love to bring it in here.
Speaker 7 (06:35):
No, I mean a little more to say, I definitely
agree there are tailwinds. The renewable energy is efficient, is needed.
Everyone agrees we need more energy, and in the short
term definitely is one of the easiest way to get
very much needed energy. And we have been extremely focused
in the US in prayer finance, which is what my
(06:55):
department does in doing this type of transactions. And there
is no change of strategy at all, despite the obvious
headwinds that we've got right ahead of us. But it's
true there's going to be a PI can choose as
things are more complicated. You are not all the projects
are going to be built. Some which would have been
built in a more benign macroeconomic environment regulatory environment would
(07:20):
probably not be built, but there are there was such
a huge pipeline to be built, so many plans, so
many developers, that even if some of them do not materialize,
there's still a huge market which are going to keep
us very very busy. And I would say in the end,
prior finance is you know, you need to present a
fully funded sources and justice proposal. That is unavoidable. There's
(07:43):
nothing we can do to avoid that situation. So we
will need all the more the due diligence to make
sure that we can present a credible case to the committees.
And we I mean I have just been in a
committee for two big transactions which have been a proof,
but the level of the diligence is higher because the
(08:04):
committee wants to know what is the credible plan in
case things go wrong, which people are much more aware
to how things may get complicated just out of a
blue sky, and therefore you need a good answer for that.
If not me be final and it may be one
hundred percent bulletproof of course, otherwise what would be doing
very little business. But at the same time you need
to provide a good solution with a lot of the diligence,
(08:27):
making sure that you are working on those best projects,
products would have room to improve if anything doesn't go
according to plan. And surely, I say this again, working
with the best in class responsors which give you that
guarantee that they know and they have the experience to
manage through what can be definitely choppy waters.
Speaker 2 (08:48):
And I love that you finished with working with best
in class developers and developing platforms and mat I'd love
to bring you in here.
Speaker 3 (08:58):
Energy has been around for a while.
Speaker 2 (09:00):
Well, you're the private the biggest privately held developer.
Speaker 3 (09:02):
In the country.
Speaker 2 (09:03):
You've been pretty much doing everything you can build and
finance within the broader energy sector. Can you walk us
through what how you're approaching these next couple of years.
How are you focusing on projects, What are the key
things that you have prioritized when it comes to try
to bring projects to fruition and helping race at secure financing.
Speaker 8 (09:28):
Sure happy to try to address that. I think the
biggest thing that's really helpful right now is the tailwinds.
Everyone mentioned. We're kind of living in the times of
an unprecedent amount of load growth. We're having utility customers
and large C and I customers coming to us, and
they don't really have, you know, projects that they're able
(09:48):
to buy. They don't have enough projects that they're able
to procure from. So the demand is real, and you know,
customers are really focused on certainty and making sure that
their projects are going to actually show up, and given
sort of the uncertainty everyone has mentioned, I think that
gives in entergy frankly a leg up because they know
that we have a long track record of execution and
(10:12):
being able to navigate periods of uncertainty and get projects built,
you know, on time and on budget. In terms of
risks around you know, IRA and potential tax credit reform,
I think as an industry, we're very accustomed to those
types of risks and it's something that we've been dealing
with for you know, the better part of two decades.
(10:34):
At this point, we thought that we were kind of
out of the woods in that front when the IRA
was passed, but now you know, people are speculating that
we might might be experiencing some changes there too, So
I think again it's it's a level of risk that
we're accustomed to as a developer, and assuming that if
(10:55):
you assume that kind of past precedent for how to
deal with these types of things will be kind of
what is expected of potentially grandfathering projects. I think we
have a pretty high degree of confidence as to how
you do that. And I guess the last piece I
would I would kind of mention is just kind of
(11:16):
now more than ever, I think it's really important just
to have kind of be working with strong relationship counterparties,
both from an off take perspective and also equipment procurement perspective.
Speaker 5 (11:31):
I think it's very.
Speaker 8 (11:32):
Clear that given there's a lot of uncertainty right now,
you really need to be kind of solutions oriented and
address issues that come up that neither party expects. And
so having counterparties that you're able to solve problems together
with is really important because at the end of the day,
(11:54):
one no part of the supply stack of that off taker, developer, supplier,
our ecosystem is going to want to take all of
the risk themselves, and so finding ways to work through
that and sharing in some of the risk that exists
is incredibly important to kind of solve problems and get projects.
Speaker 2 (12:11):
Bill Yeah, and in our conversations and if you go
to a renewable conference in the US, the demand growth
and the load growth mantra is essentially you know, all
over the place, and it's another way of saying, we're
justifying higher PPA prices, higher prices.
Speaker 3 (12:30):
For the end off taker.
Speaker 2 (12:32):
How much room do we still have for the industry
to raise PPA prices further and how much more will
off takers be willing to absorb those higher prices? And
Karina love to start with you, and then I'll go
to Miguel and Andrew.
Speaker 5 (12:48):
Yeah. I think what we found is that.
Speaker 6 (12:53):
There is a significant amount of demand and that people
are going to price off take relative to the demand
the forward curve on the level of additionality that the
asset provides. And by additionality, I mean it's a new
renewables asset coming on the grid and it's providing kind
(13:13):
of new green energy to the grid. I think if
you're checking all those three boxes, it's near term, it's
providing kind of immediate demand relief, it's new green power.
Maybe it's even a hybridized asset. I think you're looking
at like a pretty significant premium to the forward curve, right,
But if the forward curve goes up twenty percent, does
(13:34):
that premium still stay the same as is it still
at twenty forty percent premium.
Speaker 2 (13:39):
Right.
Speaker 6 (13:40):
I think the market will speak in the long run.
But today, if you are able to check a lot
of those boxes, I think there's a very robust market,
I believe. Speaking one of your colleagues last night, she said, globally,
sixty three gigs of corporatep is signed in the last year,
(14:01):
sixty three gigats like the whole US installed what forty
giga watts of power? Right, So it's pretty remarkable the growth.
Speaker 3 (14:10):
Yeah, and me?
Speaker 2 (14:11):
And what are in the deals you're underwrite when you're
looking at those up and coming you mentioned benign projects
essentially parts that have some weak spots.
Speaker 3 (14:22):
How have you.
Speaker 2 (14:22):
Seen PPA prices and the PPA contracts and the projects
that are coming at your desk?
Speaker 3 (14:27):
How how much room.
Speaker 2 (14:29):
Has a developer really had to renegotiate and bring a
deal to you that that is financiable.
Speaker 7 (14:35):
No, we have seen quite renegotiations of PPA close and
market prices that they had stayed out of the market,
and they have been renegotiated with the companies because it
made all perfect sense. In the end is offer and demand.
The need that people have for energy that is unabated
so far. So it is going to be there, and
(14:56):
we have seen that, you know, for starting from the
very lowest on the twenties and twenty one, we're still
seeing some projects which can come back to us With
those PPAs. It's so difficult to justify because the prices
are so low. Now it's probably gone to the other side.
But I think as long as the demand say, it's
the offer definitely. I mean, the classic formula tells you
(15:19):
that prices should go up, and that's what we what
we expect. And with all these headwinds, there is not
going to be more offer but actually less offer if anything,
and the demand doesn't have any indication that is going on.
So I would think there should be a good opportunity
for prices to be renegotiated up. What especially there is
(15:41):
need because the final cost of the projects increases.
Speaker 3 (15:45):
Yeah. Absolutely.
Speaker 2 (15:48):
Let's let's switch gears a little bit to the broader
M and A market, and I'd love to bring Andrew in.
Speaker 3 (15:53):
Now, how has the m and A, the.
Speaker 2 (15:56):
Clean energy m and A market changed over the past Actually,
let's say since November, what are the notable differences. Who's
coming in, who's pulling out? How would you really describe it?
How would you describe the state that we are.
Speaker 4 (16:11):
I would say it's highly varied across different investor bases
and different corporates, developer sponsors who made a capital. There
are certainly more questions today about should I be launching
in this market or should I not be launching into
this market then certainly we would have seen in November.
(16:38):
The conversations are more around what are the catalysts for
having more certainty or launching into a better environment. And
one of the big lynch pins for that is certainly
tax reform and the outcomes of tax reform and what
that means for the industry. But that's a big discussion
(16:59):
that's changed since so November is how do I map
launching a process to raise capital or sell my business
in the context to what's going on in the broader
macroeconomy and the regulatory environment. So that's a big change.
I think the other changes we have started to hear
some LP's foreign investors say there is a higher bar
(17:25):
for investing in the US today than there was before.
Speaker 5 (17:30):
We need to have a.
Speaker 4 (17:31):
Good story as to why this investment in this environment.
So without question, there is a little bit less I
guess movement the movement is slower in the market now.
Having said that's as we said before, there's a tremendous
amount of load growth, there's a tremendous amount of development
(17:53):
going on.
Speaker 3 (17:53):
There are lots of.
Speaker 4 (17:55):
Projects that need to get built over the next twelve
to twenty four months. That there are still people that
need to go out and raise capital, There are still
people that need financing for their projects, and so so
there's still a tremendous amount of activity.
Speaker 5 (18:09):
It's just started.
Speaker 4 (18:10):
To to focus more is I think Carin said around
near term operating and operating assets and things that are
going to get in the ground sooner rather than later,
versus you know, paying for a tremendous amount of growth
and a development pipeline. And so I think that's changing
the way that people approach the market.
Speaker 2 (18:31):
Yeah, I'd love that you finished with that, because something
that Matt and I were talking about backstage is so
who's going to build those early stage pipelines.
Speaker 3 (18:40):
Who's going to bring projects to to a status where.
Speaker 2 (18:43):
Investors will be comfortable investing, banks will be.
Speaker 3 (18:46):
Comfortable lending to So, Matt, I think we can just
recreate what.
Speaker 2 (18:50):
We're talking about, like what do you need to bring
projects to a certain level of bankability, and who's going
to who's going to fill that gap now to sure
keep a new energy supply coming.
Speaker 8 (19:05):
I mean, I think the people that are best suited
to do that are the ones that have a robust
pipeline because you're often having to make down payments on
equipment much sooner than you would otherwise like on projects,
and so having multiple avenues to deploy that equipment if
you have a project that is delayed or doesn't get
(19:27):
a permit, being able to redeploy it elsewhere is a
huge risk mitigation strategy that is really necessary when you're
you're ordering that type of equipment, not just transformers, but
solar panels, what other equipment you're ordering kind of well
in advance of when you would otherwise prefer for projects.
So that's one aspect, and I think the other piece
(19:49):
in order to make those kinds of long term procurement,
you actually have to have the capital to do that.
So kind of the well capitalized developers that you have
access to development capital, have the balance sheet to be
able to do that, I think are going to be
much better suited to take on those types of risks
than you know, a smaller developer that might only have
(20:09):
a couple of projects and not much of a balance sheet.
Speaker 3 (20:12):
Yeah, yeah, Green, I'd love your take.
Speaker 2 (20:14):
And if you sit on the board of a couple
renewable energy developers pretty diversified across the country, what are
the conversations with them, like, what are they talking about?
Speaker 3 (20:25):
What are you telling them asking them?
Speaker 6 (20:27):
Yeah, it's a great question. Look, I agree. I think
capitalization for DEVX and pre MCV spend fundamental today. Fundamentally,
it's really really tough with an absolute zero balance sheet.
Speaker 5 (20:43):
All that being said, I mean, we're.
Speaker 6 (20:45):
A highly active investor in the middle market for infrastructure
and for renewables, and we have found in some of
the conversations that we have with our businesses that are
active utility scale developers like Direct Renewables, is that they
have really strong knowledge in one market. They're really really
(21:08):
good in, for example, PGM, and they just have extraordinary
landowner relationships, and those landowner relationships catalyze other landowner relationships
and they lean into aggraboltaics and they lean into these
competitive advantages. They're not the size of Inventergy, and they're
not the size of next Era, right, but they're incredibly
(21:29):
highly successful in their own market right, and so whether
it be community solar, whether it be utility scale solar.
You know, having that local market knowledge, intel and superior
execution I think really can drive powerful outcomes for renewable
(21:50):
energy development businesses, even if you're not quite at the
same size and scale.
Speaker 2 (21:54):
Yeah, and again what's an andrew Then same question, what
is the opportunity for outsiders?
Speaker 3 (22:00):
What is the opport if that localized knowledge is so essential.
Speaker 7 (22:05):
Well, it's essentially you need to play to your restrengt.
I mean, it's not a matter of size, it's a
matter of your expertise ability to take it forward to
sort out all the difficulties which exists always under any cycle.
They only change in size and scope. There are always difficulties.
Taking our pride finance to completion is never easy. So
(22:25):
you need to be working with people who know what
they're doing and have the real expertise and do it
efficiently and being sufficiently adapt at changing the strategy according
to whatever is happening in the market, whatever that is.
And that is the way we look at it from
us when we think of the great developers, we are
(22:45):
not thinking so much Astore right on the balance sheet.
We're not thinking because it's pride finance in general. So
I'm not thinking so much Astre who has the big
pocket so that they can give me a double a
guarantee or whatever. I'm thinking of Toll, Who's going to
give me the guarantee that whatever plan I'm present into
committee that is deliverable because they know how to do it.
They have studied properly. The contingencies are sufficient and everything
(23:08):
is going to be probably not according to plan that
never happens, but surely sufficiently close to the plan so
that we are going to get to the completion without
any drama and the prayer will start producing energy as
suspected and as promised. That is the way we normally
do it. So for us, the sponsor is key. But
is the expertise, the name and the ability of the
(23:31):
e sponsor to deliver the completion of the project and
a successful operation. That is the real key aspect that
we are looking.
Speaker 3 (23:38):
On, right, Yeah, Andrew, same question. Yeah.
Speaker 5 (23:41):
I think.
Speaker 4 (23:43):
The opportunity for outsiders is vast and it's differentiated. These
developers in energy Durrell salit Ridge. They need to recycle
capital from d risk assets into growth and new development assets.
So there's a big opportunity to invest in de risked
operating renewable assets forty nine percent stakes, you know, eighty percent.
Speaker 3 (24:09):
Stake, you know, what have you.
Speaker 4 (24:10):
There's a lot of that product in the market for investors.
Speaker 3 (24:13):
Number one.
Speaker 4 (24:14):
Number two, I think, as Karin said, you know, it's
great to be in energy and to have you know,
open ended capital like Blackstone and CITYPQ behind you. But
I think the Karin's absolutely right. There's lots of regional
expertise and there's there's lots of competitive advantages beyond capital
that people can establish and exploit. I think where management
(24:37):
teams gets in trouble is when they start to move
away from their competitive advantage. And so as you think
about you know, as as we give advice to people
and thinking about where to put your money, it's it's
in those management teams that know what they're good at,
know what they're not good at, and they're focusing the
capital in the right places. I think more often than not,
where we've seen folks get into trouble is where they
(24:59):
go greatly expand teams and SGNA burn and in the
hopes that all of this development is going to come
to fruition or start to place too many bets on
the development side without bringing home the.
Speaker 3 (25:14):
De risk assets first.
Speaker 4 (25:16):
So I think having the discipline to really work through
management team diligence and execution diligence is the key to
taking advantages of those opportunities.
Speaker 2 (25:29):
Yeah, so Korean, where's the next Inventergy going to come from?
Speaker 3 (25:35):
What's Is it going to be a.
Speaker 2 (25:37):
Merger of a bunch of smaller developers with very well
recognized presence in different markets, or is someone organically going
to grow with a deep balance sheet, deep backers and
going to slowly but steady keep growing across the entire country.
Speaker 5 (25:54):
Do you have a crystal ball to tell me? Because
then we can just invest rate.
Speaker 3 (25:58):
I just left it. I just left it in the back.
Speaker 5 (26:00):
Uh, look at it.
Speaker 6 (26:03):
It's kind of unwritten and hard hard to know.
Speaker 5 (26:08):
Right.
Speaker 6 (26:08):
Had we rewound the clock ten years, would we have
known that Inventergy was.
Speaker 5 (26:13):
Gonna What did you say you owed thirty gigs? I
think we've commercialized over thirty three commercialized.
Speaker 6 (26:18):
Congratulations, amazing, Like we were. You know, Andrew and I
used work work a g together, you know, over a
decade ago and we we financed in entergyes, you know,
transactions then and I would have never have guessed that.
Speaker 5 (26:33):
You guys would have emerged into this powerhouse, right.
Speaker 6 (26:37):
And it's a function of you know what Andrew said,
like discipline and management team and leaning into your strengths.
It's also a function of capitalization. I to be honest,
I don't I don't know.
Speaker 5 (26:51):
It could be mergers.
Speaker 6 (26:53):
There's a lot of companies in the United States doing this.
Speaker 5 (26:56):
Could could some of them come together?
Speaker 3 (26:58):
Sure?
Speaker 6 (26:59):
It could be or growth, Yeah, I mean, I think
it can go a multitude of ways. It's just it's
just about it's about execution through these uncertain times and
and kind of keeping the vision and the capitalization in the.
Speaker 5 (27:15):
Right place right.
Speaker 2 (27:18):
And that's I like that to maybe pivot into some
of the structural market obstacles, setting aside you know, craziness
in DC tariffs, yes, tariffs no, I ra yes, Ira No.
Over the past couple of years, permitting transmission has become
central part of the conversation. And you we were not
(27:40):
hearing about transmission as much as we do today a
few years ago with the reforms that without having to
look at whether the reforms will work out whether there's
going to be permitting reform. What what have you seen
i'l star with Matt. What have you seen an interconnection
cues that has anything changed at all since it different
(28:00):
regional grid operators started introducing que reforms. Has there been
a notable improvement or are we still in a wait
and see approach.
Speaker 3 (28:10):
Where we just still don't.
Speaker 2 (28:12):
Know whether there's going to be any any improvement anytime soon.
Speaker 8 (28:16):
Yeah, I mean, I think just from like an interconnection
queue perspective, it still seems like it's really kind of
the main bottleneck in these projects in terms of you know,
data submission to having an actual interconnection agreement in hand.
It can be you know, a number of years before
you have that, and I don't see that changing anytime soon,
(28:38):
frankly for onshore generation. But it's one of the reasons
why we think that development of you know, long distance
HVDC transmission is really important to enable continued load growth
and being able to serve that load with additional not
just renewable supply, but but you know, all forms of supply.
(29:01):
And so we have a number of large HBC transmission
projects that we're in the process of developing that you know,
we think, will you know, be really impactful being for
being able to unlock that you know, that load potential,
that load growth that's happening, and being able to supply
additional uh, you know, reliable, low cost power to those users.
Speaker 3 (29:23):
Yeah, and let's stay with you for a second.
Speaker 2 (29:27):
Why we all know it doesn't matter how deep you
are in the industry, building transmission is extremely challenging and
you're going to be waiting decades, even like at least
more than ten years. What was a rationale behind In
Energy's bed on building transmission. Was it as a as
a compliment to you know, all of the onshore wind
that you brought to operation.
Speaker 3 (29:48):
Was it for new development? What was it logic? There?
Can you walk us through a little bit of you know,
what the broader vision is for transmission in the company?
Speaker 8 (29:57):
I mean, I think it's really just responding to a
problem that we identified that needs to be solved and
wanting to to have a say in controlling the way
that it solved. We see a lot of opportunity to
create new generation opportunities through additional transmission, and at the
end of the day, that's what we're looking to do
is develop more more generation, and so you really create
(30:23):
additional load opportunities for yourselves by creating being able to
deliver into markets and and access really customers that need
the load or that need the supply, you know. And
obviously the demand growth has really kind of helped accelerate
that need. And you know, we're seeing a lot of
(30:44):
opportunities to to you know, supply different large, large load users.
Speaker 2 (30:51):
Yeah, and there's often the talk about, on the one hand,
we should build more transmission, on the other hand, we
have no other option, but more battery storage come to
the grid.
Speaker 3 (31:02):
What how does screen?
Speaker 2 (31:04):
How does battery storage complement the broader strategy that you're
the companies you're involved in, How does that complement that?
Speaker 6 (31:13):
Yeah, Look, battery storage has been a place we've been
active for a long time, through our involvement with Broader Reach.
Speaker 5 (31:19):
Power a few years ago, which was.
Speaker 6 (31:24):
A standalone front of the meter battery storage company with
assets in California and Texas UH and then in conjunction
with many of our renewables investments today either hybridized assets
or stand alone battery storage is incredible and honestly, what
it's done for the URCOT grid has been incredible helping
(31:44):
manage you know, both ancillary services and periods of you know,
rapid power increases in power demand. I think in any
market where we're seeing traumatic renewable penetration, the addition of
storage has proven to quell volatility and provide ancillary services
(32:06):
that are helpful forward stability, and so, you know, I
think we'll continue to see.
Speaker 5 (32:12):
Battery storage deployment.
Speaker 6 (32:13):
I think it's it's been really interesting. I sat through
a panel here on tariffs and seeing, you know, what
the range of outcomes are on change of cost of
batteries may impact batteries storage.
Speaker 5 (32:23):
Deployment on a go forward basis.
Speaker 6 (32:25):
But I think it's it's always been kind of hypothetically
very complimentary to battery to renewables, and then as the
cost has come down and the technology has improved and
the software has improved, now it's it's definitively complimentary.
Speaker 2 (32:42):
Yeah, And how does that the despite the clearly the
obvious benefits of batteries. And there's been pretty good years
for battery operators in Texas where they've been able to
capitalize in a lot of volatility, but the revenue start
and especially a long term beyond five years, it's extremely unpredictable,
(33:05):
and a lot of financing assumes like five year payback periods,
which in the world of long term clean energy soid
WENT projects, is very very short.
Speaker 3 (33:15):
How do you, especially in the current situation.
Speaker 2 (33:17):
That we're at now, how are you looking at batteries it?
Speaker 7 (33:20):
Yeah, well, I think there's a lot of interests. We're
very comfortable, we are very active. So is the banking world.
I mean, there's nothing especial off BVVA presently, as Kareem
was mentioning, because there is so much into is so
much value in when you add a lot of renewables
in all the balancing act and all the ancillary service
that the battery we can provide. But at the same time,
(33:42):
it is true trading revedeos it's difficult to take. I
think we banks have got more comfortable with merchant risk
over the years. It was not an easy one, but
we got there, and I think surely we can take
an amount of trading merchant risk, which is not what
we use two ten years ago. With the batteries. We're
(34:02):
still struggling with it, and I think it's the banking
industry in general, some more than others, but overall, you
can say that the industry is not completely comfortable because
it's very difficult to predict and you don't want to
just to rely on an independent study which you cannot
follow and which is a kind of black box. Still
(34:23):
have what's going to be the price of the energy
at eight in the morning or versus three pm in
the afternoon on the fifth of July of twenty thirty three,
which is like maybe not, but I'm not capable of
going to committee and try to explain what's the logic
is to make sense or not. So we are struggling
one way of doing it, and that's what we have
(34:44):
started working. Is all right, the closer you are to
the current date, the easier is to have a good
visibility as to how it's going to work, because I mean,
all those things take time to change. The whole energy
metrics doesn't change over line, and therefore we have been
taking some merchant risk, trade and risk in the short term,
(35:04):
let's say five years. But then you need to switch
sooner rather than later to something of a tolling agreement
so that you can get your investment repaid even if
for whatever reason the overall picture changes and those revenues
and those.
Speaker 3 (35:21):
Duck curve is.
Speaker 7 (35:22):
Not as as high as you would expect, So we're
playing with that well, we get more comfortable with the
way the model works. What are the assumption and leaving
aside all this discussion about headwinds stir winds. I think
it's going to take time. We're going to get there,
but we banks. I think we need to still to
learn more what is the in and out of those
(35:43):
models to make sure that we can do a good,
thorough responsible decisions to what kind of risk we are taken.
Speaker 3 (35:50):
Interesting.
Speaker 2 (35:52):
Please join me in thanking all of our speakers here
and thank.
Speaker 4 (35:56):
You for listening.
Speaker 6 (36:07):
Today's episode of Switched On was produced by Cam Gray
with production assistance from Kamala Shelling.
Speaker 7 (36:12):
Bloomberg NIF is a service provided by Bloomberg Finance LP
and its affiliates. This recording does not constitute, nor should
it be construed, as investment in vice, investment recommendations, or
a recommendation as to an investment or other strategy. Bloomberg
ANIFF should not be considered as information sufficient upon which
to base an investment decision.
Speaker 6 (36:30):
Neither Bloomberg Finance Lp nor any of its affiliates makes
any representation or warranty as to the accuracy or completeness
of the information contained in this recording, and any
Speaker 2 (36:39):
Liability as a result of this recording is expressly disclaimed.
This is Tom Rowland's Reese, and you're listening to Switched
on the bn EF podcast. Today we're bringing you a
recording from our BNF Summit New York, which took place
on the twenty ninth and thirtieth of April. The panel
featured on this episode is titled Sustaining Momentum in US
Renewable Investments and it's all about the shifting sounds of
clean energy spending in the US. Conditions for investment appear
(00:22):
to broadly be improving, with interest rights easing, inflation in decline,
and growing renewable energy demand sources including power hungry AI
models and data centers coming online. Last year, US clean
energy investment grew by fifty billion dollars, a huge leap
over the average from the previous few years. Yet hurdles remain.
Price cannibalization, curtailment risks, and the tariffs and policy shifts
(00:45):
enacted by the Trump administration are all giving potential investors pause.
In this episode, the panelists discuss business models and strategies
that can allow investments in the US clean energy space
to keep growing. The panelists include Andrew Gongaware, Managing director
at bm Matt Reinsfeiler, Senior vice president for Finance and
Capital Markets at Invenergy, Miguel Pina, Managing director and head
(01:08):
of Project Finance for the Americas at BBVA, and Kareeine
still partner Apollo Global Management. The panel was moderated by
Paul ez Karno, a senior associate from our solar team.
For more information regarding BNF summits, including our upcoming BNF
Summit Munich on May twentieth, ant view recordings from previous
events had to about dot BNF dot com slash Summit.
(01:29):
Now let's hear from our panelists.
Speaker 2 (01:41):
Thanks everyone for coming. Thank you also for you for
being here and taking some time to hear a little
bit more optimistic takes.
Speaker 3 (01:52):
I'll try my best.
Speaker 2 (01:54):
The clean energy industry in the US has gone through
lots of a lot of ups and downs.
Speaker 3 (02:00):
I think we all.
Speaker 2 (02:01):
Are very familiar that there's been policy uncertainty for a
long time, something sometimes for the good, sometimes.
Speaker 3 (02:07):
For the worst.
Speaker 2 (02:09):
So our goal here is to bring esteam clean energy
industry experts to really to really share with us how
they manage the risks, how they deal in times of
high uncertainty, and what's the silver lining what are the
reasons to remain optimistic. I mean, I'd love to start
with Andrew, because I have you so far away for me.
(02:30):
Can you set the stage for us and explain a
little bit what are the risks that the sector is
facing today and how are developers and financiers like yourself
managing those risks and trying to stay sane at the
end of the day as well.
Speaker 4 (02:45):
I'm sure Matt will have a view here as well,
But I think the greatest risk is obviously uncertainty that
goes well beyond our industry, but I think in our
industry in particular with the anticipated attacks bill and tax
reform and the implications that that might have for things
like the Investment Inflation Reduction Act, there's just a lot
(03:09):
of uncertainty in front of decision making in the sector.
And so I think is as management teams and banks
like ourselves and investors like Corinn look at the landscape,
we have to think a little bit differently and look
for opportunities in different places and manage risk a little
(03:29):
bit differently. You know, for the developers, that's where am
I going to invest my dollars in development? You know
where there headwinds around permitting, what can I actually procure
for with some certainty around cost. There is in the
market a lot that's going to get built. There's been
(03:50):
a lot that's been safe Harbord, there's a lot of
equipment in country. There are a lot of projects that
are permitted and very far along you know that we're
going to I guess the question is really, are we
going to see you know, one hundred gigawatts of new
renewables over the next five years or so, or is
it going to be two hundred? So you know, either way,
there's a tremendous amount of capital that's going to go
into the sector and a tremendous amount of construction that's
(04:12):
going to happen. So I think it just becomes an
element of picking your spots. Whereas I think a broad
subset of developers could be very successful because there was
a wide open landscape. I think now where you have
the most talented management teams, you're going to see some
differentiation across platforms where high quality management teams who've lived
(04:36):
through cycles, who've managed through tax credit uncertainty, are going
to be successful. And those are the places where I
think we'll see folks like Corinn and folks like Miguel
and myself putting our capital.
Speaker 3 (04:49):
Absolutely Crean, that's Andrew named you as well.
Speaker 5 (04:53):
Yeah, that recommendation go ahead.
Speaker 3 (04:58):
How do you fund?
Speaker 2 (04:59):
How do you find those those spots and opportunities in
these times of uncertainty.
Speaker 6 (05:04):
Look, I think Andrew's spot on. We are in kind
of I would say, kind of the apex of uncertainty
for US renewables with the confluence of tariffs and the
ir and still honestly some supply teain dynamics that you know,
were we continue to work through, for instance, in the case.
Speaker 5 (05:26):
Of highvoltage equipment, taking up to.
Speaker 6 (05:28):
Kind of like five years to get for certain projects.
Look as we take a big step back and look
at it.
Speaker 5 (05:36):
You know, we're Apollo. We're a large.
Speaker 6 (05:37):
Alternative asset manager or six seven hundred and fifty billion
we invest across the capital structure.
Speaker 5 (05:43):
We've made a huge commitment to.
Speaker 6 (05:45):
Be investing in energy and energy transition over fifty eight
billion to day, and even during.
Speaker 5 (05:52):
Times of uncertainty.
Speaker 6 (05:54):
You know, we've always viewed ourselves as contrion and so
we seek to deploy capital even in time periods like this.
We see operating assets like near term operating assets as
pretty attractive today. We believe there's been a change in
the risk adjusted return for those very prudent underwriting of
(06:14):
kind of development development platforms. But the long term tailwinds,
in our mind, are still there. The need for energy demand,
it's still there, and renewables.
Speaker 5 (06:26):
Continue to be one of the.
Speaker 6 (06:28):
Most cost effective, quickst to market methods of delivery.
Speaker 3 (06:33):
Migad, I'd love to bring it in here.
Speaker 7 (06:35):
No, I mean a little more to say, I definitely
agree there are tailwinds. The renewable energy is efficient, is needed.
Everyone agrees we need more energy, and in the short
term definitely is one of the easiest way to get
very much needed energy. And we have been extremely focused
in the US in prayer finance, which is what my
(06:55):
department does in doing this type of transactions. And there
is no change of strategy at all, despite the obvious
headwinds that we've got right ahead of us. But it's
true there's going to be a PI can choose as
things are more complicated. You are not all the projects
are going to be built. Some which would have been
built in a more benign macroeconomic environment regulatory environment would
(07:20):
probably not be built, but there are there was such
a huge pipeline to be built, so many plans, so
many developers, that even if some of them do not materialize,
there's still a huge market which are going to keep
us very very busy. And I would say in the end,
prior finance is you know, you need to present a
fully funded sources and justice proposal. That is unavoidable. There's
(07:43):
nothing we can do to avoid that situation. So we
will need all the more the due diligence to make
sure that we can present a credible case to the committees.
And we I mean I have just been in a
committee for two big transactions which have been a proof,
but the level of the diligence is higher because the
(08:04):
committee wants to know what is the credible plan in
case things go wrong, which people are much more aware
to how things may get complicated just out of a
blue sky, and therefore you need a good answer for that.
If not me be final and it may be one
hundred percent bulletproof of course, otherwise what would be doing
very little business. But at the same time you need
to provide a good solution with a lot of the diligence,
(08:27):
making sure that you are working on those best projects,
products would have room to improve if anything doesn't go
according to plan. And surely, I say this again, working
with the best in class responsors which give you that
guarantee that they know and they have the experience to
manage through what can be definitely choppy waters.
Speaker 2 (08:48):
And I love that you finished with working with best
in class developers and developing platforms and mat I'd love
to bring you in here.
Speaker 3 (08:58):
Energy has been around for a while.
Speaker 2 (09:00):
Well, you're the private the biggest privately held developer.
Speaker 3 (09:02):
In the country.
Speaker 2 (09:03):
You've been pretty much doing everything you can build and
finance within the broader energy sector. Can you walk us
through what how you're approaching these next couple of years.
How are you focusing on projects, What are the key
things that you have prioritized when it comes to try
to bring projects to fruition and helping race at secure financing.
Speaker 8 (09:28):
Sure happy to try to address that. I think the
biggest thing that's really helpful right now is the tailwinds.
Everyone mentioned. We're kind of living in the times of
an unprecedent amount of load growth. We're having utility customers
and large C and I customers coming to us, and
they don't really have, you know, projects that they're able
(09:48):
to buy. They don't have enough projects that they're able
to procure from. So the demand is real, and you know,
customers are really focused on certainty and making sure that
their projects are going to actually show up, and given
sort of the uncertainty everyone has mentioned, I think that
gives in entergy frankly a leg up because they know
that we have a long track record of execution and
(10:12):
being able to navigate periods of uncertainty and get projects built,
you know, on time and on budget. In terms of
risks around you know, IRA and potential tax credit reform,
I think as an industry, we're very accustomed to those
types of risks and it's something that we've been dealing
with for you know, the better part of two decades.
(10:34):
At this point, we thought that we were kind of
out of the woods in that front when the IRA
was passed, but now you know, people are speculating that
we might might be experiencing some changes there too, So
I think again it's it's a level of risk that
we're accustomed to as a developer, and assuming that if
(10:55):
you assume that kind of past precedent for how to
deal with these types of things will be kind of
what is expected of potentially grandfathering projects. I think we
have a pretty high degree of confidence as to how
you do that. And I guess the last piece I
would I would kind of mention is just kind of
(11:16):
now more than ever, I think it's really important just
to have kind of be working with strong relationship counterparties,
both from an off take perspective and also equipment procurement perspective.
Speaker 5 (11:31):
I think it's very.
Speaker 8 (11:32):
Clear that given there's a lot of uncertainty right now,
you really need to be kind of solutions oriented and
address issues that come up that neither party expects. And
so having counterparties that you're able to solve problems together
with is really important because at the end of the day,
(11:54):
one no part of the supply stack of that off taker, developer, supplier,
our ecosystem is going to want to take all of
the risk themselves, and so finding ways to work through
that and sharing in some of the risk that exists
is incredibly important to kind of solve problems and get projects.
Speaker 2 (12:11):
Bill Yeah, and in our conversations and if you go
to a renewable conference in the US, the demand growth
and the load growth mantra is essentially you know, all
over the place, and it's another way of saying, we're
justifying higher PPA prices, higher prices.
Speaker 3 (12:30):
For the end off taker.
Speaker 2 (12:32):
How much room do we still have for the industry
to raise PPA prices further and how much more will
off takers be willing to absorb those higher prices? And
Karina love to start with you, and then I'll go
to Miguel and Andrew.
Speaker 5 (12:48):
Yeah. I think what we found is that.
Speaker 6 (12:53):
There is a significant amount of demand and that people
are going to price off take relative to the demand
the forward curve on the level of additionality that the
asset provides. And by additionality, I mean it's a new
renewables asset coming on the grid and it's providing kind
(13:13):
of new green energy to the grid. I think if
you're checking all those three boxes, it's near term, it's
providing kind of immediate demand relief, it's new green power.
Maybe it's even a hybridized asset. I think you're looking
at like a pretty significant premium to the forward curve, right,
But if the forward curve goes up twenty percent, does
(13:34):
that premium still stay the same as is it still
at twenty forty percent premium.
Speaker 2 (13:39):
Right.
Speaker 6 (13:40):
I think the market will speak in the long run.
But today, if you are able to check a lot
of those boxes, I think there's a very robust market,
I believe. Speaking one of your colleagues last night, she said, globally,
sixty three gigs of corporatep is signed in the last year,
(14:01):
sixty three gigats like the whole US installed what forty
giga watts of power? Right, So it's pretty remarkable the growth.
Speaker 3 (14:10):
Yeah, and me?
Speaker 2 (14:11):
And what are in the deals you're underwrite when you're
looking at those up and coming you mentioned benign projects
essentially parts that have some weak spots.
Speaker 3 (14:22):
How have you.
Speaker 2 (14:22):
Seen PPA prices and the PPA contracts and the projects
that are coming at your desk?
Speaker 3 (14:27):
How how much room.
Speaker 2 (14:29):
Has a developer really had to renegotiate and bring a
deal to you that that is financiable.
Speaker 7 (14:35):
No, we have seen quite renegotiations of PPA close and
market prices that they had stayed out of the market,
and they have been renegotiated with the companies because it
made all perfect sense. In the end is offer and demand.
The need that people have for energy that is unabated
so far. So it is going to be there, and
(14:56):
we have seen that, you know, for starting from the
very lowest on the twenties and twenty one, we're still
seeing some projects which can come back to us With
those PPAs. It's so difficult to justify because the prices
are so low. Now it's probably gone to the other side.
But I think as long as the demand say, it's
the offer definitely. I mean, the classic formula tells you
(15:19):
that prices should go up, and that's what we what
we expect. And with all these headwinds, there is not
going to be more offer but actually less offer if anything,
and the demand doesn't have any indication that is going on.
So I would think there should be a good opportunity
for prices to be renegotiated up. What especially there is
(15:41):
need because the final cost of the projects increases.
Speaker 3 (15:45):
Yeah. Absolutely.
Speaker 2 (15:48):
Let's let's switch gears a little bit to the broader
M and A market, and I'd love to bring Andrew in.
Speaker 3 (15:53):
Now, how has the m and A, the.
Speaker 2 (15:56):
Clean energy m and A market changed over the past Actually,
let's say since November, what are the notable differences. Who's
coming in, who's pulling out? How would you really describe it?
How would you describe the state that we are.
Speaker 4 (16:11):
I would say it's highly varied across different investor bases
and different corporates, developer sponsors who made a capital. There
are certainly more questions today about should I be launching
in this market or should I not be launching into
this market then certainly we would have seen in November.
(16:38):
The conversations are more around what are the catalysts for
having more certainty or launching into a better environment. And
one of the big lynch pins for that is certainly
tax reform and the outcomes of tax reform and what
that means for the industry. But that's a big discussion
(16:59):
that's changed since so November is how do I map
launching a process to raise capital or sell my business
in the context to what's going on in the broader
macroeconomy and the regulatory environment. So that's a big change.
I think the other changes we have started to hear
some LP's foreign investors say there is a higher bar
(17:25):
for investing in the US today than there was before.
Speaker 5 (17:30):
We need to have a.
Speaker 4 (17:31):
Good story as to why this investment in this environment.
So without question, there is a little bit less I
guess movement the movement is slower in the market now.
Having said that's as we said before, there's a tremendous
amount of load growth, there's a tremendous amount of development
(17:53):
going on.
Speaker 3 (17:53):
There are lots of.
Speaker 4 (17:55):
Projects that need to get built over the next twelve
to twenty four months. That there are still people that
need to go out and raise capital, There are still
people that need financing for their projects, and so so
there's still a tremendous amount of activity.
Speaker 5 (18:09):
It's just started.
Speaker 4 (18:10):
To to focus more is I think Carin said around
near term operating and operating assets and things that are
going to get in the ground sooner rather than later,
versus you know, paying for a tremendous amount of growth
and a development pipeline. And so I think that's changing
the way that people approach the market.
Speaker 2 (18:31):
Yeah, I'd love that you finished with that, because something
that Matt and I were talking about backstage is so
who's going to build those early stage pipelines.
Speaker 3 (18:40):
Who's going to bring projects to to a status where.
Speaker 2 (18:43):
Investors will be comfortable investing, banks will be.
Speaker 3 (18:46):
Comfortable lending to So, Matt, I think we can just
recreate what.
Speaker 2 (18:50):
We're talking about, like what do you need to bring
projects to a certain level of bankability, and who's going
to who's going to fill that gap now to sure
keep a new energy supply coming.
Speaker 8 (19:05):
I mean, I think the people that are best suited
to do that are the ones that have a robust
pipeline because you're often having to make down payments on
equipment much sooner than you would otherwise like on projects,
and so having multiple avenues to deploy that equipment if
you have a project that is delayed or doesn't get
(19:27):
a permit, being able to redeploy it elsewhere is a
huge risk mitigation strategy that is really necessary when you're
you're ordering that type of equipment, not just transformers, but
solar panels, what other equipment you're ordering kind of well
in advance of when you would otherwise prefer for projects.
So that's one aspect, and I think the other piece
(19:49):
in order to make those kinds of long term procurement,
you actually have to have the capital to do that.
So kind of the well capitalized developers that you have
access to development capital, have the balance sheet to be
able to do that, I think are going to be
much better suited to take on those types of risks
than you know, a smaller developer that might only have
(20:09):
a couple of projects and not much of a balance sheet.
Speaker 3 (20:12):
Yeah, yeah, Green, I'd love your take.
Speaker 2 (20:14):
And if you sit on the board of a couple
renewable energy developers pretty diversified across the country, what are
the conversations with them, like, what are they talking about?
Speaker 3 (20:25):
What are you telling them asking them?
Speaker 6 (20:27):
Yeah, it's a great question. Look, I agree. I think
capitalization for DEVX and pre MCV spend fundamental today. Fundamentally,
it's really really tough with an absolute zero balance sheet.
Speaker 5 (20:43):
All that being said, I mean, we're.
Speaker 6 (20:45):
A highly active investor in the middle market for infrastructure
and for renewables, and we have found in some of
the conversations that we have with our businesses that are
active utility scale developers like Direct Renewables, is that they
have really strong knowledge in one market. They're really really
(21:08):
good in, for example, PGM, and they just have extraordinary
landowner relationships, and those landowner relationships catalyze other landowner relationships
and they lean into aggraboltaics and they lean into these
competitive advantages. They're not the size of Inventergy, and they're
not the size of next Era, right, but they're incredibly
(21:29):
highly successful in their own market right, and so whether
it be community solar, whether it be utility scale solar.
You know, having that local market knowledge, intel and superior
execution I think really can drive powerful outcomes for renewable
(21:50):
energy development businesses, even if you're not quite at the
same size and scale.
Speaker 2 (21:54):
Yeah, and again what's an andrew Then same question, what
is the opportunity for outsiders?
Speaker 3 (22:00):
What is the opport if that localized knowledge is so essential.
Speaker 7 (22:05):
Well, it's essentially you need to play to your restrengt.
I mean, it's not a matter of size, it's a
matter of your expertise ability to take it forward to
sort out all the difficulties which exists always under any cycle.
They only change in size and scope. There are always difficulties.
Taking our pride finance to completion is never easy. So
(22:25):
you need to be working with people who know what
they're doing and have the real expertise and do it
efficiently and being sufficiently adapt at changing the strategy according
to whatever is happening in the market, whatever that is.
And that is the way we look at it from
us when we think of the great developers, we are
(22:45):
not thinking so much Astore right on the balance sheet.
We're not thinking because it's pride finance in general. So
I'm not thinking so much Astre who has the big
pocket so that they can give me a double a
guarantee or whatever. I'm thinking of Toll, Who's going to
give me the guarantee that whatever plan I'm present into
committee that is deliverable because they know how to do it.
They have studied properly. The contingencies are sufficient and everything
(23:08):
is going to be probably not according to plan that
never happens, but surely sufficiently close to the plan so
that we are going to get to the completion without
any drama and the prayer will start producing energy as
suspected and as promised. That is the way we normally
do it. So for us, the sponsor is key. But
is the expertise, the name and the ability of the
(23:31):
e sponsor to deliver the completion of the project and
a successful operation. That is the real key aspect that
we are looking.
Speaker 3 (23:38):
On, right, Yeah, Andrew, same question. Yeah.
Speaker 5 (23:41):
I think.
Speaker 4 (23:43):
The opportunity for outsiders is vast and it's differentiated. These
developers in energy Durrell salit Ridge. They need to recycle
capital from d risk assets into growth and new development assets.
So there's a big opportunity to invest in de risked
operating renewable assets forty nine percent stakes, you know, eighty percent.
Speaker 3 (24:09):
Stake, you know, what have you.
Speaker 4 (24:10):
There's a lot of that product in the market for investors.
Speaker 3 (24:13):
Number one.
Speaker 4 (24:14):
Number two, I think, as Karin said, you know, it's
great to be in energy and to have you know,
open ended capital like Blackstone and CITYPQ behind you. But
I think the Karin's absolutely right. There's lots of regional
expertise and there's there's lots of competitive advantages beyond capital
that people can establish and exploit. I think where management
(24:37):
teams gets in trouble is when they start to move
away from their competitive advantage. And so as you think
about you know, as as we give advice to people
and thinking about where to put your money, it's it's
in those management teams that know what they're good at,
know what they're not good at, and they're focusing the
capital in the right places. I think more often than not,
where we've seen folks get into trouble is where they
(24:59):
go greatly expand teams and SGNA burn and in the
hopes that all of this development is going to come
to fruition or start to place too many bets on
the development side without bringing home the.
Speaker 3 (25:14):
De risk assets first.
Speaker 4 (25:16):
So I think having the discipline to really work through
management team diligence and execution diligence is the key to
taking advantages of those opportunities.
Speaker 2 (25:29):
Yeah, so Korean, where's the next Inventergy going to come from?
Speaker 3 (25:35):
What's Is it going to be a.
Speaker 2 (25:37):
Merger of a bunch of smaller developers with very well
recognized presence in different markets, or is someone organically going
to grow with a deep balance sheet, deep backers and
going to slowly but steady keep growing across the entire country.
Speaker 5 (25:54):
Do you have a crystal ball to tell me? Because
then we can just invest rate.
Speaker 3 (25:58):
I just left it. I just left it in the back.
Speaker 5 (26:00):
Uh, look at it.
Speaker 6 (26:03):
It's kind of unwritten and hard hard to know.
Speaker 5 (26:08):
Right.
Speaker 6 (26:08):
Had we rewound the clock ten years, would we have
known that Inventergy was.
Speaker 5 (26:13):
Gonna What did you say you owed thirty gigs? I
think we've commercialized over thirty three commercialized.
Speaker 6 (26:18):
Congratulations, amazing, Like we were. You know, Andrew and I
used work work a g together, you know, over a
decade ago and we we financed in entergyes, you know,
transactions then and I would have never have guessed that.
Speaker 5 (26:33):
You guys would have emerged into this powerhouse, right.
Speaker 6 (26:37):
And it's a function of you know what Andrew said,
like discipline and management team and leaning into your strengths.
It's also a function of capitalization. I to be honest,
I don't I don't know.
Speaker 5 (26:51):
It could be mergers.
Speaker 6 (26:53):
There's a lot of companies in the United States doing this.
Speaker 5 (26:56):
Could could some of them come together?
Speaker 3 (26:58):
Sure?
Speaker 6 (26:59):
It could be or growth, Yeah, I mean, I think
it can go a multitude of ways. It's just it's
just about it's about execution through these uncertain times and
and kind of keeping the vision and the capitalization in the.
Speaker 5 (27:15):
Right place right.
Speaker 2 (27:18):
And that's I like that to maybe pivot into some
of the structural market obstacles, setting aside you know, craziness
in DC tariffs, yes, tariffs no, I ra yes, Ira No.
Over the past couple of years, permitting transmission has become
central part of the conversation. And you we were not
(27:40):
hearing about transmission as much as we do today a
few years ago with the reforms that without having to
look at whether the reforms will work out whether there's
going to be permitting reform. What what have you seen
i'l star with Matt. What have you seen an interconnection
cues that has anything changed at all since it different
(28:00):
regional grid operators started introducing que reforms. Has there been
a notable improvement or are we still in a wait
and see approach.
Speaker 3 (28:10):
Where we just still don't.
Speaker 2 (28:12):
Know whether there's going to be any any improvement anytime soon.
Speaker 8 (28:16):
Yeah, I mean, I think just from like an interconnection
queue perspective, it still seems like it's really kind of
the main bottleneck in these projects in terms of you know,
data submission to having an actual interconnection agreement in hand.
It can be you know, a number of years before
you have that, and I don't see that changing anytime soon,
(28:38):
frankly for onshore generation. But it's one of the reasons
why we think that development of you know, long distance
HVDC transmission is really important to enable continued load growth
and being able to serve that load with additional not
just renewable supply, but but you know, all forms of supply.
(29:01):
And so we have a number of large HBC transmission
projects that we're in the process of developing that you know,
we think, will you know, be really impactful being for
being able to unlock that you know, that load potential,
that load growth that's happening, and being able to supply
additional uh, you know, reliable, low cost power to those users.
Speaker 3 (29:23):
Yeah, and let's stay with you for a second.
Speaker 2 (29:27):
Why we all know it doesn't matter how deep you
are in the industry, building transmission is extremely challenging and
you're going to be waiting decades, even like at least
more than ten years. What was a rationale behind In
Energy's bed on building transmission. Was it as a as
a compliment to you know, all of the onshore wind
that you brought to operation.
Speaker 3 (29:48):
Was it for new development? What was it logic? There?
Can you walk us through a little bit of you know,
what the broader vision is for transmission in the company?
Speaker 8 (29:57):
I mean, I think it's really just responding to a
problem that we identified that needs to be solved and
wanting to to have a say in controlling the way
that it solved. We see a lot of opportunity to
create new generation opportunities through additional transmission, and at the
end of the day, that's what we're looking to do
is develop more more generation, and so you really create
(30:23):
additional load opportunities for yourselves by creating being able to
deliver into markets and and access really customers that need
the load or that need the supply, you know. And
obviously the demand growth has really kind of helped accelerate
that need. And you know, we're seeing a lot of
(30:44):
opportunities to to you know, supply different large, large load users.
Speaker 2 (30:51):
Yeah, and there's often the talk about, on the one hand,
we should build more transmission, on the other hand, we
have no other option, but more battery storage come to
the grid.
Speaker 3 (31:02):
What how does screen?
Speaker 2 (31:04):
How does battery storage complement the broader strategy that you're
the companies you're involved in, How does that complement that?
Speaker 6 (31:13):
Yeah, Look, battery storage has been a place we've been
active for a long time, through our involvement with Broader Reach.
Speaker 5 (31:19):
Power a few years ago, which was.
Speaker 6 (31:24):
A standalone front of the meter battery storage company with
assets in California and Texas UH and then in conjunction
with many of our renewables investments today either hybridized assets
or stand alone battery storage is incredible and honestly, what
it's done for the URCOT grid has been incredible helping
(31:44):
manage you know, both ancillary services and periods of you know,
rapid power increases in power demand. I think in any
market where we're seeing traumatic renewable penetration, the addition of
storage has proven to quell volatility and provide ancillary services
(32:06):
that are helpful forward stability, and so, you know, I
think we'll continue to see.
Speaker 5 (32:12):
Battery storage deployment.
Speaker 6 (32:13):
I think it's it's been really interesting. I sat through
a panel here on tariffs and seeing, you know, what
the range of outcomes are on change of cost of
batteries may impact batteries storage.
Speaker 5 (32:23):
Deployment on a go forward basis.
Speaker 6 (32:25):
But I think it's it's always been kind of hypothetically
very complimentary to battery to renewables, and then as the
cost has come down and the technology has improved and
the software has improved, now it's it's definitively complimentary.
Speaker 2 (32:42):
Yeah, And how does that the despite the clearly the
obvious benefits of batteries. And there's been pretty good years
for battery operators in Texas where they've been able to
capitalize in a lot of volatility, but the revenue start
and especially a long term beyond five years, it's extremely unpredictable,
(33:05):
and a lot of financing assumes like five year payback periods,
which in the world of long term clean energy soid
WENT projects, is very very short.
Speaker 3 (33:15):
How do you, especially in the current situation.
Speaker 2 (33:17):
That we're at now, how are you looking at batteries it?
Speaker 7 (33:20):
Yeah, well, I think there's a lot of interests. We're
very comfortable, we are very active. So is the banking world.
I mean, there's nothing especial off BVVA presently, as Kareem
was mentioning, because there is so much into is so
much value in when you add a lot of renewables
in all the balancing act and all the ancillary service
that the battery we can provide. But at the same time,
(33:42):
it is true trading revedeos it's difficult to take. I
think we banks have got more comfortable with merchant risk
over the years. It was not an easy one, but
we got there, and I think surely we can take
an amount of trading merchant risk, which is not what
we use two ten years ago. With the batteries. We're
(34:02):
still struggling with it, and I think it's the banking
industry in general, some more than others, but overall, you
can say that the industry is not completely comfortable because
it's very difficult to predict and you don't want to
just to rely on an independent study which you cannot
follow and which is a kind of black box. Still
(34:23):
have what's going to be the price of the energy
at eight in the morning or versus three pm in
the afternoon on the fifth of July of twenty thirty three,
which is like maybe not, but I'm not capable of
going to committee and try to explain what's the logic
is to make sense or not. So we are struggling
one way of doing it, and that's what we have
(34:44):
started working. Is all right, the closer you are to
the current date, the easier is to have a good
visibility as to how it's going to work, because I mean,
all those things take time to change. The whole energy
metrics doesn't change over line, and therefore we have been
taking some merchant risk, trade and risk in the short term,
(35:04):
let's say five years. But then you need to switch
sooner rather than later to something of a tolling agreement
so that you can get your investment repaid even if
for whatever reason the overall picture changes and those revenues
and those.
Speaker 3 (35:21):
Duck curve is.
Speaker 7 (35:22):
Not as as high as you would expect, So we're
playing with that well, we get more comfortable with the
way the model works. What are the assumption and leaving
aside all this discussion about headwinds stir winds. I think
it's going to take time. We're going to get there,
but we banks. I think we need to still to
learn more what is the in and out of those
(35:43):
models to make sure that we can do a good,
thorough responsible decisions to what kind of risk we are taken.
Speaker 3 (35:50):
Interesting.
Speaker 2 (35:52):
Please join me in thanking all of our speakers here
and thank.
Speaker 4 (35:56):
You for listening.
Speaker 6 (36:07):
Today's episode of Switched On was produced by Cam Gray
with production assistance from Kamala Shelling.
Speaker 7 (36:12):
Bloomberg NIF is a service provided by Bloomberg Finance LP
and its affiliates. This recording does not constitute, nor should
it be construed, as investment in vice, investment recommendations, or
a recommendation as to an investment or other strategy. Bloomberg
ANIFF should not be considered as information sufficient upon which
to base an investment decision.
Speaker 6 (36:30):
Neither Bloomberg Finance Lp nor any of its affiliates makes
any representation or warranty as to the accuracy or completeness
of the information contained in this recording, and any
Speaker 2 (36:39):
Liability as a result of this recording is expressly disclaimed.
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