April 3, 2025 • 28 mins
Today on the Clean Power Hour, Tim Montague interviews Tooraj Arvajeh, co-founder and CEO of Perl Street, a fintech platform designed to streamline financial operations for distributed energy resources. Tooraj shares his journey from sustainability engineer to fintech entrepreneur, explaining how his experience developing energy efficiency projects led him to identify a critical gap between engineering expertise and financial knowledge in the clean energy sector.
Perl Street addresses the financial complexity faced by companies developing and managing distributed energy resources (DERs) like rooftop solar, battery storage, EV chargers, and heat pumps. Tooraj explains how their platform helps third-party asset owners and managers transform individual machines into projects, bundle those projects into portfolios, and finally convert them into financial products that can attract institutional investment.
The conversation explores how Perl Street's technology helps customers like King Energy, who develop commercial rooftop solar across real estate portfolios, by automating complex financial workflows and consolidating data from multiple sources. Tooraj highlights the value proposition for independent power producers (IPPs): enabling scale, improving returns, and creating standardization that makes distributed energy assets as easy to invest in as utility-scale projects.
Listeners will gain valuable insights into the evolution of DERs from retail products to real estate investments to critical energy infrastructure and learn how financial technology is essential to unlocking capital at the scale needed to accelerate the clean energy transition. Tune in to understand the financial backbone that's powering the deployment of distributed energy resources across the country.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Tooraj Arvajeh (00:00):
When you have high interest rate or when you
have growth uncertainty,optionality is valuable, and
there is a price premium, and soyou know if, if you're looking
at like VR assets, an investoris willing to pay twice the
amount. That's $1 per wattcompared to utility scale. If
(00:21):
there is optionality forincremental investments, because
you're dealing with highinterest rates and you're
dealing with some uncertaintyaround growth or demand, are
intro (00:30):
you speeding the energy transition here at the Clean
Power Hour, our host, TimMontague, bring you the best in
solar, batteries and cleantechnologies every week. Want to
go deeper into decarbonization.
We do too. We're here to helpyou understand and command the
commercial, residential andutility, solar, wind and storage
industries. So let's get to ittogether. We can speed the
(00:52):
energy transition
Tim Montague (00:57):
today on the Clean Power Hour financial
infrastructure for speeding theenergy transition. My guest
today is toraj arvaje. He is theco founder and CEO of Perl
Street. Welcome to the show.
Tooraj Arvajeh (01:10):
Thank you so much, Tim for having me.
Appreciate it. I've reallyenjoyed
Tim Montague (01:13):
getting to know you a little bit, and there's a
lot to a lot to unpack here, soI would just encourage my
listeners to buckle up and butthis is, this is a very
interesting platform that coversa very broad swath of
infrastructure related to theenergy transition. And before we
(01:35):
get into Perl Street, though,toraj, tell us a little bit
about your background and howyou came to co founding Perl
Street.
Tooraj Arvajeh (01:45):
Absolutely.
Thanks. Tim, so I started myclean energy career back in, you
know, 2005 so this was, youknow, pretty much long time ago.
And even before, you know, AlGore's movie inconvenient truth
came out. I became asustainability engineer working
for large EPC firms in Canada,in Australia and us. And so my
(02:11):
job was to develop energyefficiency and clean energy
projects. I was mostly workingfor large mining manufacturing
companies at the time, and Iwitness many engineers like me,
while proficient at designingprojects technically, we, you
(02:32):
know, lack the financialexpertise to make them bankable
for deployment and investments.
So back in 2013 14, I co foundedEd, you know, a FinTech, a
startup in New York called Blockpower. And we were backed by,
you know, VC and assetmanagement funds. And, you know,
(02:55):
first hand, back in 2014 15, Ilearned that it was very
difficult to actually financeand deploy distribute energy
assets at scale that is neededto kind of generate the
financial returns for unlockinglarger scale capital. And these
experiences led me to launchtall Street, which, you know,
(03:18):
finances and builds the ourplatform business models to
scale up for deployment.
Tim Montague (03:25):
Cool, so remind me, I know about block power,
but I can't remember exactlywhat was the niche that block
was targeting.
Tooraj Arvajeh (03:36):
Yeah, so we were targeting mostly low income
neighborhoods in New York. Andto start with, yeah, and so we
were, you know, part of thetechnology company was around
building the project,origination and asset
management, but part of it wasreally raising the money from
(04:00):
large institutional funds likeGoldman Sachs, in order to
actually deploy capital at scaleinto, you know, building
electrification, heat pumps,upgrading, you know, old
buildings, old houses ofwarships, to become a lot more
efficient. And in, you know, sothat also later on, they can
become compliant with local line97 that was also a driving force
(04:23):
later on in New York. Yeah.
Tim Montague (04:26):
Okay, but so the the, the basic premise there is
reducing the carbon footprint ofthe built environment. Was
there, was there a specifictechnology that block is leaning
into?
Tooraj Arvajeh (04:40):
So we, you know, my primary role at the time was
really looking at the heatingsystems in these old houses of
warships, and really upgradingthe, you know, the boilers, air
air conditioning systems with amuch better heat pump
technologies, okay, and makethem a lot more efficient.
Information.
Tim Montague (05:00):
So building electrification, that's right,
that's right, yeah, okay, that
Tooraj Arvajeh (05:04):
process obviously becomes very
complicated when you're lookingat the large pipeline of
projects and and so you need tohave a proper, you know, so
FinTech platform to reallymanage that process end to end.
And that experience led me tolaunch Bell Street,
Tim Montague (05:19):
gotcha. Gotcha.
Yeah, yeah, I like this diagram.
So, so we're going to talk aboutPerl Street now, and go to
perlstreet.com, P, E, R, L, andgo to the About Us. And you'll
see this diagram, and it's gotmachines, projects, portfolios
and financial products and andthen you are the you are the
(05:42):
glue that makes all of this workmore efficiently. Theoretically,
right?
Tooraj Arvajeh (05:48):
That's right. So essentially, like, if you look
at machines, EV charges, heatpumps, you know solar you know
solar panels, they need tobecome projects. So that's the
first step to becomeinfrastructure as a service,
whether it's lease PPA ESA, butthen, when you're looking at
these small projects, you haveto actually bundle them into
(06:09):
portfolios in order to make themready for the capital market to
underwrite and to actuallyunlock, you know, funds towards
it. And so that's when it comesportfolios. So building those
aggregation and portfolios isreally what you're also focusing
on. And, yeah, so we'rebasically doing, you know, this,
(06:30):
this diagram, as you justdescribed, yeah.
Tim Montague (06:33):
And so if I'm a IPP, like King energy, we, we
had King energy CEO on the showrecently, thanks to you, you
know, and King is, is developingsolar projects on third party
owned real estate. These aremalls and warehouses, very
(06:55):
important part of the commercialreal estate segment, because
it's 90% of the real estate onthe market, and something that
was very hard to tackle forsolar historically, because the
the tenants were notincentivized to upgrade the
(07:16):
facility. But tell us, how doesPerl Street help a company like
King that is building thisfleet, a massive fleet of
distributed energy projectsacross the country.
Tooraj Arvajeh (07:30):
Absolutely, yeah, as as you know, as you
perfectly said, So King energyis one of our customers, and
they're essentially building a,you know, a large portfolio of
these commercial rooftop solarassets. And so, you know, if you
look at the financialoperations, it involves
(07:52):
origination, capital deploymentand an asset management. And so,
King energy, they are prettymuch, you know, doing this at
large scale for many, many smallyou know projects. And so what
they need a software platform toin order to consolidate and
normalize all of these financialdata into portfolios and and so
(08:14):
every you know and every projecthas its own project finance
model. And typically, financeteams usually use Excel
spreadsheets. Is there is, youknow, Excel is known to be the,
you know, the language of, youknow, programming language of
finance and our software. Whatit does, it actually doesn't
replace our customers complexExcel spreadsheets with some
(08:35):
standard templates or black boxsoftware codes. Instead, what we
do, we work with it, and we areable to read and parse these etc
spreadsheets and make them intoa database that now our
customers use to do all kinds ofsophisticated, you know, equity
debt financing, Tax Equitystructures, workflows and
(08:57):
waterfall calculations, allkinds of project insights and
accounting that is needed. And,you know, we also have very you
know, a suite of what we callintegration features. So we work
with major brands of solarinverters and batteries in order
to actually get the data forrisk management, variance
analysis, as well as, you know,CRM and ERP systems in order to
(09:22):
really make sure that the datais, you know, consistent across
all of the software productsthat our customers use.
Tim Montague (09:31):
So let's, let's just break down what's going on
in solar and battery storagefinance, deployment, asset
management. What is the state ofthe state in the US, and where
(09:51):
do we need to get better inorder to get the energy
transition done faster? That'sreally it's no there's no
question. I. Taraj, if theenergy transition is going to
happen, it is happening. It isgoing to happen. It's just a
question of how quickly, right.
Tooraj Arvajeh (10:08):
That's right.
That's right. I think if youlook at project life cycle,
right, the starting point isreally, how do you achieve, if
you think about scalability inthis you know, in this space
like, Okay, how do we make thisfaster and larger scale? The the
key point that we have toaddress first is what we call
(10:33):
project development. That is thestudy, right? And and so in the
D, R, S space, if you look atbehind the meter assets, mostly
for residential or commercialbuildings, is generally done by
contractors, energy engineers,facility managers. These are the
folks that are pretty much atthe forefront of identifying the
(10:56):
right opportunities for the realestate asset and, and, I think,
you know, the you know, thefirst you know, point of attack,
you know, you know attack isreally looking at how to equip
these, these professionals atthe real estate level to really
(11:16):
become, you know, projectdevelopers like, almost act as
ESCOs, right? And really, youknow, become part of these, what
we call energy servicescompanies. Like, how do you
develop these bankable projects?
So that is the first, the storyof the ER, and if you actually
(11:37):
look at the evolution of it, andthis is why the role of these
professionals is very importantis that initially VR it starts
as almost like a retail, youknow, green premium product,
like, if you look at Teslas asEVs, green premium product that
(11:57):
people just loved it and boughtIt Nest thermostat was actually
before that, right before Teslawas like a, you know, very good
looking nicely designedthermostat that people love. But
then later on, it actuallybecame part of virtual power
plants, right? And so initiallyit starts as a as a retail
product that people pay for, butthen when you tap that market,
(12:21):
then it becomes what we callreal estate investment. This is
where, essentially, you'relooking at the finance heavy
asset focused more model thatthe product is not sold as a
green premium, but as a greendiscount. Now you're looking at
energy savings or improved no onfor real estate assets now,
(12:43):
financing these assets really ismuch closer to real estate
investments, as opposed to,like, larger scale energy
projects. So pace is a goodexample of that. Pace is pretty
much like a real estate, youknow, a structured finance and
and so when you have this stagebefore you get to the energy
(13:04):
infrastructure, which is wherethe yours become, you know,
virtual power plants, or they,you know, defer, you know,
transmission and distributioninvestments, you really need to
build the pipeline of theseprojects at the real estate
level. And I think the firstpoint of, you know, attack is
really to enable these energymanagers contractors to become
(13:29):
seasoned ESCOs and, you know,project developers. And so
that's one of the tools that wehave on our platform, which
basically looks at all kinds ofrisks associated with real
estate investments, like, whatare the environmental title,
credit risks. It provides toolshow to price these projects as a
(13:51):
service, if you want to do it asan ESA or PPA, how to price it
properly. And that makes the youknow, the contract is a lot more
you know, intelligent andinformed in terms of how to
identify the right opportunitiesthat could become investment
opportunities.
Tim Montague (14:06):
The Clean Power Hour is brought to you by CPS
America, maker of NorthAmerica's number one three phase
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(14:27):
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Balance of System Requirements,go to chintpowersystems.com or
(14:49):
call 855-584-7168, to find outmore. Yeah. I mean, as. I'm
famous for saying, you know, 90%of rooftop solar projects die on
the vine. This is in thecommercial world because of
things like roof condition. Theroof is too old to solarize, but
(15:14):
perhaps too young for the ownerto go, Oh, I'm gonna put
$500,000 into putting a new roofon my building that could last
for 10 more years.
Tooraj Arvajeh (15:23):
That's right.
Tim Montague (15:25):
And, but, but, but it's very, it's very kind of
niche and specific to thefacility. And so, yeah, I'm just
curious. Like this seems I'mjust, I'm just being completely
transparent here, what, whatyou're doing at Perl Street,
(15:46):
seems to me to be veryambitious, and I am not afraid
of ambition. But is, is it likewhere the rubber meets the road,
like with King energy? Is that,is that a place where you are
getting lots of traction, or isit that you're getting a little
bit of traction in a lot ofdifferent places?
Tooraj Arvajeh (16:10):
So right now, are we are getting a lot, a lot
of traction in various specificmarkets of the R especially with
third party owners and assetmanagers, okay? Because when you
are a third party owner, right?
As opposed to, like a realestate company that owns bunch
of rooftop solar, when you ownbunch of rooftop solar, those
(16:31):
are not revenue generatingassets for you, really. They're,
you know, the assets that youknow maybe create some savings,
but they are not a revenuegenerating assets. But when you
move to the third partyownership structure now, you are
talking about assets that aresupposed to perform at certain
level, and you also haveinstitutional investors behind
(16:52):
you that are counting on, youknow, reliable information about
these assets and and so we'regetting a lot of traction in
that space of third partyownership of the your assets,
because there is mandate andthere is velocity to deploy
capital at larger scale, butalso perform much better than,
(17:14):
let's say, utility scaleprojects, because with these
assets, you generally haveshorter lead time. So you
develop, you know, rooftop solarwithin like 12 months, versus
put a larger scale utility mighttake like three to five years,
right? And so there's shorterlead time. There is
diversification of, you know,assets, because now you're
(17:37):
building a portfolio, and thatcreates a lot of financial
benefits. So the returnsexpectations would be, your
assets actually higher. And sothat's why technology becomes
very useful, as opposed to,like, just, you know, having a
lot of overheads and acomplexity in operation. Yeah,
Tim Montague (17:58):
yeah. So when you're I'm curious, like, how do
you, how do you propose thevalue proposition, if I'm an
IPP, you know, using some morestandard, you know, old school
(18:22):
approach of of spreadsheets andand Dropbox to, you know, doing
my business, so to speak, beforeversus after. And, yeah, so how
do you, how do you, how do youframe that value proposition?
Tooraj Arvajeh (18:44):
So the value proposition for, you know, the,
you know, the ER or solarrooftop company, a comes into
three things. One is a scalelike you want to get into
gigawatts of assets undermanagement, because that's how
you can attract much better, youknow, cost of capital from large
(19:08):
institutional investors. Sonumber one value proposition is
a scale. Number two is, well,you don't want to scale at all
cost. You need to have returns.
So number two is return, right?
Return is eventually whatmatters the most. You want to,
you want to generate good IRR onthese projects, right? 15% 20%
(19:30):
IRR. This is, you know, whatmakes it attractive for the your
assets, and the third isessentially a standardization
and unification. So what we wantto do, we want to make it very
easy as possible for an investoror a lender to look at, let's
say, hundreds of 500 KW solarrooftop projects, as they would,
(19:51):
you know, for like a 150megawatt largest skeletivity
project, right? So those are thethree things that we offer to
our COVID. Customers as as valueprops, yeah,
Tim Montague (20:03):
and this comes at a cost, of course, right? I
assume this is like asubscription model. And if I'm
a, if I'm a, a small scale IPP,with an ambitions to become a
medium scale IPP, what is, whatis the, what is the buy in, or
(20:27):
the length of contract, so tospeak, that I'm making to
onboard Perl Street. And howlong does that take? Like, what
is that onboarding process?
Tooraj Arvajeh (20:37):
Yeah, onboarding for us generally takes about a
month to three months, dependingon how, I guess, complicated the
existing, you know, dataarchitecture is, and so our
solution, you know, in terms ofthe return on investment for our
customers, is about reducing thelabor cost for both project
(21:00):
development and assetmanagement. And let's say, if
you're looking at, you know, a50, you know person, solar, you
know developer, generally, youknow, on average, I would say at
that size, they spend about a $5million for project developments
per year, and about a milliondollars for just Asset
(21:21):
Management and servicing. And sowe can pretty much reduce those
cost by, you know, 1 million, 1million and a half annually. And
so even with a subscription feethat we charge, let's say, 100k
150k year, we still improve thenet margin of the operation by
(21:42):
about 18% that the cost. Thekind of customers that
appreciates our return oninvestments are the high growth
customers, because they see lotsof growth without actually, you
know, adding a lot of overheads,and that improves the net margin
significantly.
Tim Montague (22:00):
Well, what else?
What else should our listenersknow about Perl Street and how
you see the world? I'm curiouslike, how big is the opportunity
that you are chasing? And whatelse should we know? Yeah,
Tooraj Arvajeh (22:17):
I think you know. DR is, as you mentioned in
the evolution is going through avery interesting, you know,
stage, which is now it'sbecoming part of what you know
from a real estate investment isnow becoming part of energy
infrastructure, another part ofthe critical infrastructure,
(22:40):
right? So they provide resilientsolutions such as backup power.
They also, you know, address thegrowing need for local energy
infrastructure without much youknow, missions and you know
policy sort of impacts. And sothe interesting phase that we
(23:04):
are right now seeing is that theours or distributed energy
resources are getting aggregatedinto virtual power plants to
meet peak demands. They alsoprovide very cost effective
hedging strategies for energyretailers, right? If you look
at, for instance, Texas Air cutenergy prices are very volatile.
(23:24):
And so, you know, for energyretailers, dr, is actually a
hedging mechanisms. And we seesimilar examples of that in
Australia, which is very similarto, you know, Texas from an
electricity market perspective.
So now you have this evolutionof the ER that, okay, this is a
very valuable criticalinfrastructure that can attract
a lot of, you know, privateequity funds, real estate funds,
(23:49):
that that can get really goodreturns. So the the the
opportunity here for folks is toreally take advantage of this
and really looking at buildinglarge portfolios and and, you
know, as we mentioned, there isthe there is optionality
involved. And this is, this iswhat the investors are looking
(24:10):
for when they come, when theycompare, let's say, utility
scale projects to a smallerscale Dr assets. Is that when
you have high interest rate orwhen you have growth
uncertainty, optionality isvaluable, and there is a price
premium, and so you know if, ifyou're looking at like Dr
(24:31):
assets, an investor is willingto pay twice the amount. That's
$1 per watt compared to utilityscale. If there is optionality
for incremental investments,because you're dealing with high
interest rates or you're dealingwith some uncertainty around
growth or demand, and you know,they generate the same sort of
NPVs, if you look at, you know,these two types of investment
(24:53):
strategies, even though there'sa premium to pay for the ER, so
these are the things that theseare. The opportunities that
investors are seeing, andinvestors are pretty much coming
to Pell street, looking for, youknow, portfolios to invest in or
to acquire. And if we work withdevelopers and contractors and
installers and enable them toactually aggregate these
(25:14):
projects, they can and, youknow, very good amount of income
by by origination of theseprojects,
Tim Montague (25:24):
everybody wants to save money, that's the only
guarantee in life. Really. Checkout all of our content at
cleanpowerhour.com Please giveus a rating and a review on
Apple or Spotify. Follow us onYouTube, reach out to me on
LinkedIn. I love hearing from mylisteners, and look forward to
(25:45):
seeing you at one of the energyshows coming up. You know, so
many great energy shows aroundthe country. I'll be going to
inner solar in February. Andwith that, taraj, how can our
listeners find you?
Tooraj Arvajeh (25:59):
Yes, they can find me at perlstreet.com, P, E,
R, L street.com and there's alink to my calendar. They can
book your time with me, and myemail is to ranch at perl
Street. Com,
Tim Montague (26:13):
fantastic. Well, with that, I'll say, let's grow
solar and storage. I'm TimMontague. The Clean Power Hour
is brought to you by CPSAmerica, maker of North
America's number one three phasestring inverter with over eight
gigawatts shipped in the US. TheCPS product lineup includes
string inverters ranging from 25kW to 350 kW, their flagship
(26:37):
inverter, the CPS 350 KW isdesigned to work with solar
plants ranging from twomegawatts to two gigawatts. CPS
is the world's most bankableinverter brand, and is America's
number one choice for solarplants, now offering solutions
for commercial utility ESS andbalance of system requirements
(26:59):
go to chintpowersystems.com orcall 855-584-7168, to find out
more, you.
When you have high interest rate or when you
have growth uncertainty,optionality is valuable, and
there is a price premium, and soyou know if, if you're looking
at like VR assets, an investoris willing to pay twice the
amount. That's $1 per wattcompared to utility scale. If
(00:21):
there is optionality forincremental investments, because
you're dealing with highinterest rates and you're
dealing with some uncertaintyaround growth or demand, are
intro (00:30):
you speeding the energy transition here at the Clean
Power Hour, our host, TimMontague, bring you the best in
solar, batteries and cleantechnologies every week. Want to
go deeper into decarbonization.
We do too. We're here to helpyou understand and command the
commercial, residential andutility, solar, wind and storage
industries. So let's get to ittogether. We can speed the
(00:52):
energy transition
Tim Montague (00:57):
today on the Clean Power Hour financial
infrastructure for speeding theenergy transition. My guest
today is toraj arvaje. He is theco founder and CEO of Perl
Street. Welcome to the show.
Tooraj Arvajeh (01:10):
Thank you so much, Tim for having me.
Appreciate it. I've reallyenjoyed
Tim Montague (01:13):
getting to know you a little bit, and there's a
lot to a lot to unpack here, soI would just encourage my
listeners to buckle up and butthis is, this is a very
interesting platform that coversa very broad swath of
infrastructure related to theenergy transition. And before we
(01:35):
get into Perl Street, though,toraj, tell us a little bit
about your background and howyou came to co founding Perl
Street.
Tooraj Arvajeh (01:45):
Absolutely.
Thanks. Tim, so I started myclean energy career back in, you
know, 2005 so this was, youknow, pretty much long time ago.
And even before, you know, AlGore's movie inconvenient truth
came out. I became asustainability engineer working
for large EPC firms in Canada,in Australia and us. And so my
(02:11):
job was to develop energyefficiency and clean energy
projects. I was mostly workingfor large mining manufacturing
companies at the time, and Iwitness many engineers like me,
while proficient at designingprojects technically, we, you
(02:32):
know, lack the financialexpertise to make them bankable
for deployment and investments.
So back in 2013 14, I co foundedEd, you know, a FinTech, a
startup in New York called Blockpower. And we were backed by,
you know, VC and assetmanagement funds. And, you know,
(02:55):
first hand, back in 2014 15, Ilearned that it was very
difficult to actually financeand deploy distribute energy
assets at scale that is neededto kind of generate the
financial returns for unlockinglarger scale capital. And these
experiences led me to launchtall Street, which, you know,
(03:18):
finances and builds the ourplatform business models to
scale up for deployment.
Tim Montague (03:25):
Cool, so remind me, I know about block power,
but I can't remember exactlywhat was the niche that block
was targeting.
Tooraj Arvajeh (03:36):
Yeah, so we were targeting mostly low income
neighborhoods in New York. Andto start with, yeah, and so we
were, you know, part of thetechnology company was around
building the project,origination and asset
management, but part of it wasreally raising the money from
(04:00):
large institutional funds likeGoldman Sachs, in order to
actually deploy capital at scaleinto, you know, building
electrification, heat pumps,upgrading, you know, old
buildings, old houses ofwarships, to become a lot more
efficient. And in, you know, sothat also later on, they can
become compliant with local line97 that was also a driving force
(04:23):
later on in New York. Yeah.
Tim Montague (04:26):
Okay, but so the the, the basic premise there is
reducing the carbon footprint ofthe built environment. Was
there, was there a specifictechnology that block is leaning
into?
Tooraj Arvajeh (04:40):
So we, you know, my primary role at the time was
really looking at the heatingsystems in these old houses of
warships, and really upgradingthe, you know, the boilers, air
air conditioning systems with amuch better heat pump
technologies, okay, and makethem a lot more efficient.
Information.
Tim Montague (05:00):
So building electrification, that's right,
that's right, yeah, okay, that
Tooraj Arvajeh (05:04):
process obviously becomes very
complicated when you're lookingat the large pipeline of
projects and and so you need tohave a proper, you know, so
FinTech platform to reallymanage that process end to end.
And that experience led me tolaunch Bell Street,
Tim Montague (05:19):
gotcha. Gotcha.
Yeah, yeah, I like this diagram.
So, so we're going to talk aboutPerl Street now, and go to
perlstreet.com, P, E, R, L, andgo to the About Us. And you'll
see this diagram, and it's gotmachines, projects, portfolios
and financial products and andthen you are the you are the
(05:42):
glue that makes all of this workmore efficiently. Theoretically,
right?
Tooraj Arvajeh (05:48):
That's right. So essentially, like, if you look
at machines, EV charges, heatpumps, you know solar you know
solar panels, they need tobecome projects. So that's the
first step to becomeinfrastructure as a service,
whether it's lease PPA ESA, butthen, when you're looking at
these small projects, you haveto actually bundle them into
(06:09):
portfolios in order to make themready for the capital market to
underwrite and to actuallyunlock, you know, funds towards
it. And so that's when it comesportfolios. So building those
aggregation and portfolios isreally what you're also focusing
on. And, yeah, so we'rebasically doing, you know, this,
(06:30):
this diagram, as you justdescribed, yeah.
Tim Montague (06:33):
And so if I'm a IPP, like King energy, we, we
had King energy CEO on the showrecently, thanks to you, you
know, and King is, is developingsolar projects on third party
owned real estate. These aremalls and warehouses, very
(06:55):
important part of the commercialreal estate segment, because
it's 90% of the real estate onthe market, and something that
was very hard to tackle forsolar historically, because the
the tenants were notincentivized to upgrade the
(07:16):
facility. But tell us, how doesPerl Street help a company like
King that is building thisfleet, a massive fleet of
distributed energy projectsacross the country.
Tooraj Arvajeh (07:30):
Absolutely, yeah, as as you know, as you
perfectly said, So King energyis one of our customers, and
they're essentially building a,you know, a large portfolio of
these commercial rooftop solarassets. And so, you know, if you
look at the financialoperations, it involves
(07:52):
origination, capital deploymentand an asset management. And so,
King energy, they are prettymuch, you know, doing this at
large scale for many, many smallyou know projects. And so what
they need a software platform toin order to consolidate and
normalize all of these financialdata into portfolios and and so
(08:14):
every you know and every projecthas its own project finance
model. And typically, financeteams usually use Excel
spreadsheets. Is there is, youknow, Excel is known to be the,
you know, the language of, youknow, programming language of
finance and our software. Whatit does, it actually doesn't
replace our customers complexExcel spreadsheets with some
(08:35):
standard templates or black boxsoftware codes. Instead, what we
do, we work with it, and we areable to read and parse these etc
spreadsheets and make them intoa database that now our
customers use to do all kinds ofsophisticated, you know, equity
debt financing, Tax Equitystructures, workflows and
(08:57):
waterfall calculations, allkinds of project insights and
accounting that is needed. And,you know, we also have very you
know, a suite of what we callintegration features. So we work
with major brands of solarinverters and batteries in order
to actually get the data forrisk management, variance
analysis, as well as, you know,CRM and ERP systems in order to
(09:22):
really make sure that the datais, you know, consistent across
all of the software productsthat our customers use.
Tim Montague (09:31):
So let's, let's just break down what's going on
in solar and battery storagefinance, deployment, asset
management. What is the state ofthe state in the US, and where
(09:51):
do we need to get better inorder to get the energy
transition done faster? That'sreally it's no there's no
question. I. Taraj, if theenergy transition is going to
happen, it is happening. It isgoing to happen. It's just a
question of how quickly, right.
Tooraj Arvajeh (10:08):
That's right.
That's right. I think if youlook at project life cycle,
right, the starting point isreally, how do you achieve, if
you think about scalability inthis you know, in this space
like, Okay, how do we make thisfaster and larger scale? The the
key point that we have toaddress first is what we call
(10:33):
project development. That is thestudy, right? And and so in the
D, R, S space, if you look atbehind the meter assets, mostly
for residential or commercialbuildings, is generally done by
contractors, energy engineers,facility managers. These are the
folks that are pretty much atthe forefront of identifying the
(10:56):
right opportunities for the realestate asset and, and, I think,
you know, the you know, thefirst you know, point of attack,
you know, you know attack isreally looking at how to equip
these, these professionals atthe real estate level to really
(11:16):
become, you know, projectdevelopers like, almost act as
ESCOs, right? And really, youknow, become part of these, what
we call energy servicescompanies. Like, how do you
develop these bankable projects?
So that is the first, the storyof the ER, and if you actually
(11:37):
look at the evolution of it, andthis is why the role of these
professionals is very importantis that initially VR it starts
as almost like a retail, youknow, green premium product,
like, if you look at Teslas asEVs, green premium product that
(11:57):
people just loved it and boughtIt Nest thermostat was actually
before that, right before Teslawas like a, you know, very good
looking nicely designedthermostat that people love. But
then later on, it actuallybecame part of virtual power
plants, right? And so initiallyit starts as a as a retail
product that people pay for, butthen when you tap that market,
(12:21):
then it becomes what we callreal estate investment. This is
where, essentially, you'relooking at the finance heavy
asset focused more model thatthe product is not sold as a
green premium, but as a greendiscount. Now you're looking at
energy savings or improved no onfor real estate assets now,
(12:43):
financing these assets really ismuch closer to real estate
investments, as opposed to,like, larger scale energy
projects. So pace is a goodexample of that. Pace is pretty
much like a real estate, youknow, a structured finance and
and so when you have this stagebefore you get to the energy
(13:04):
infrastructure, which is wherethe yours become, you know,
virtual power plants, or they,you know, defer, you know,
transmission and distributioninvestments, you really need to
build the pipeline of theseprojects at the real estate
level. And I think the firstpoint of, you know, attack is
really to enable these energymanagers contractors to become
(13:29):
seasoned ESCOs and, you know,project developers. And so
that's one of the tools that wehave on our platform, which
basically looks at all kinds ofrisks associated with real
estate investments, like, whatare the environmental title,
credit risks. It provides toolshow to price these projects as a
(13:51):
service, if you want to do it asan ESA or PPA, how to price it
properly. And that makes the youknow, the contract is a lot more
you know, intelligent andinformed in terms of how to
identify the right opportunitiesthat could become investment
opportunities.
Tim Montague (14:06):
The Clean Power Hour is brought to you by CPS
America, maker of NorthAmerica's number one three phase
string inverter with over eightgigawatts shipped in the US. The
CPS product lineup includesstring inverters ranging from 25
kW to 350 kW, their flagshipinverter, the CPS, 350 KW is
(14:27):
designed to work with solarplants ranging from two
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plants now offering solutionsfor commercial utility ESS and
Balance of System Requirements,go to chintpowersystems.com or
(14:49):
call 855-584-7168, to find outmore. Yeah. I mean, as. I'm
famous for saying, you know, 90%of rooftop solar projects die on
the vine. This is in thecommercial world because of
things like roof condition. Theroof is too old to solarize, but
(15:14):
perhaps too young for the ownerto go, Oh, I'm gonna put
$500,000 into putting a new roofon my building that could last
for 10 more years.
Tooraj Arvajeh (15:23):
That's right.
Tim Montague (15:25):
And, but, but, but it's very, it's very kind of
niche and specific to thefacility. And so, yeah, I'm just
curious. Like this seems I'mjust, I'm just being completely
transparent here, what, whatyou're doing at Perl Street,
(15:46):
seems to me to be veryambitious, and I am not afraid
of ambition. But is, is it likewhere the rubber meets the road,
like with King energy? Is that,is that a place where you are
getting lots of traction, or isit that you're getting a little
bit of traction in a lot ofdifferent places?
Tooraj Arvajeh (16:10):
So right now, are we are getting a lot, a lot
of traction in various specificmarkets of the R especially with
third party owners and assetmanagers, okay? Because when you
are a third party owner, right?
As opposed to, like a realestate company that owns bunch
of rooftop solar, when you ownbunch of rooftop solar, those
(16:31):
are not revenue generatingassets for you, really. They're,
you know, the assets that youknow maybe create some savings,
but they are not a revenuegenerating assets. But when you
move to the third partyownership structure now, you are
talking about assets that aresupposed to perform at certain
level, and you also haveinstitutional investors behind
(16:52):
you that are counting on, youknow, reliable information about
these assets and and so we'regetting a lot of traction in
that space of third partyownership of the your assets,
because there is mandate andthere is velocity to deploy
capital at larger scale, butalso perform much better than,
(17:14):
let's say, utility scaleprojects, because with these
assets, you generally haveshorter lead time. So you
develop, you know, rooftop solarwithin like 12 months, versus
put a larger scale utility mighttake like three to five years,
right? And so there's shorterlead time. There is
diversification of, you know,assets, because now you're
(17:37):
building a portfolio, and thatcreates a lot of financial
benefits. So the returnsexpectations would be, your
assets actually higher. And sothat's why technology becomes
very useful, as opposed to,like, just, you know, having a
lot of overheads and acomplexity in operation. Yeah,
Tim Montague (17:58):
yeah. So when you're I'm curious, like, how do
you, how do you propose thevalue proposition, if I'm an
IPP, you know, using some morestandard, you know, old school
(18:22):
approach of of spreadsheets andand Dropbox to, you know, doing
my business, so to speak, beforeversus after. And, yeah, so how
do you, how do you, how do youframe that value proposition?
Tooraj Arvajeh (18:44):
So the value proposition for, you know, the,
you know, the ER or solarrooftop company, a comes into
three things. One is a scalelike you want to get into
gigawatts of assets undermanagement, because that's how
you can attract much better, youknow, cost of capital from large
(19:08):
institutional investors. Sonumber one value proposition is
a scale. Number two is, well,you don't want to scale at all
cost. You need to have returns.
So number two is return, right?
Return is eventually whatmatters the most. You want to,
you want to generate good IRR onthese projects, right? 15% 20%
(19:30):
IRR. This is, you know, whatmakes it attractive for the your
assets, and the third isessentially a standardization
and unification. So what we wantto do, we want to make it very
easy as possible for an investoror a lender to look at, let's
say, hundreds of 500 KW solarrooftop projects, as they would,
(19:51):
you know, for like a 150megawatt largest skeletivity
project, right? So those are thethree things that we offer to
our COVID. Customers as as valueprops, yeah,
Tim Montague (20:03):
and this comes at a cost, of course, right? I
assume this is like asubscription model. And if I'm
a, if I'm a, a small scale IPP,with an ambitions to become a
medium scale IPP, what is, whatis the, what is the buy in, or
(20:27):
the length of contract, so tospeak, that I'm making to
onboard Perl Street. And howlong does that take? Like, what
is that onboarding process?
Tooraj Arvajeh (20:37):
Yeah, onboarding for us generally takes about a
month to three months, dependingon how, I guess, complicated the
existing, you know, dataarchitecture is, and so our
solution, you know, in terms ofthe return on investment for our
customers, is about reducing thelabor cost for both project
(21:00):
development and assetmanagement. And let's say, if
you're looking at, you know, a50, you know person, solar, you
know developer, generally, youknow, on average, I would say at
that size, they spend about a $5million for project developments
per year, and about a milliondollars for just Asset
(21:21):
Management and servicing. And sowe can pretty much reduce those
cost by, you know, 1 million, 1million and a half annually. And
so even with a subscription feethat we charge, let's say, 100k
150k year, we still improve thenet margin of the operation by
(21:42):
about 18% that the cost. Thekind of customers that
appreciates our return oninvestments are the high growth
customers, because they see lotsof growth without actually, you
know, adding a lot of overheads,and that improves the net margin
significantly.
Tim Montague (22:00):
Well, what else?
What else should our listenersknow about Perl Street and how
you see the world? I'm curiouslike, how big is the opportunity
that you are chasing? And whatelse should we know? Yeah,
Tooraj Arvajeh (22:17):
I think you know. DR is, as you mentioned in
the evolution is going through avery interesting, you know,
stage, which is now it'sbecoming part of what you know
from a real estate investment isnow becoming part of energy
infrastructure, another part ofthe critical infrastructure,
(22:40):
right? So they provide resilientsolutions such as backup power.
They also, you know, address thegrowing need for local energy
infrastructure without much youknow, missions and you know
policy sort of impacts. And sothe interesting phase that we
(23:04):
are right now seeing is that theours or distributed energy
resources are getting aggregatedinto virtual power plants to
meet peak demands. They alsoprovide very cost effective
hedging strategies for energyretailers, right? If you look
at, for instance, Texas Air cutenergy prices are very volatile.
(23:24):
And so, you know, for energyretailers, dr, is actually a
hedging mechanisms. And we seesimilar examples of that in
Australia, which is very similarto, you know, Texas from an
electricity market perspective.
So now you have this evolutionof the ER that, okay, this is a
very valuable criticalinfrastructure that can attract
a lot of, you know, privateequity funds, real estate funds,
(23:49):
that that can get really goodreturns. So the the the
opportunity here for folks is toreally take advantage of this
and really looking at buildinglarge portfolios and and, you
know, as we mentioned, there isthe there is optionality
involved. And this is, this iswhat the investors are looking
(24:10):
for when they come, when theycompare, let's say, utility
scale projects to a smallerscale Dr assets. Is that when
you have high interest rate orwhen you have growth
uncertainty, optionality isvaluable, and there is a price
premium, and so you know if, ifyou're looking at like Dr
(24:31):
assets, an investor is willingto pay twice the amount. That's
$1 per watt compared to utilityscale. If there is optionality
for incremental investments,because you're dealing with high
interest rates or you're dealingwith some uncertainty around
growth or demand, and you know,they generate the same sort of
NPVs, if you look at, you know,these two types of investment
(24:53):
strategies, even though there'sa premium to pay for the ER, so
these are the things that theseare. The opportunities that
investors are seeing, andinvestors are pretty much coming
to Pell street, looking for, youknow, portfolios to invest in or
to acquire. And if we work withdevelopers and contractors and
installers and enable them toactually aggregate these
(25:14):
projects, they can and, youknow, very good amount of income
by by origination of theseprojects,
Tim Montague (25:24):
everybody wants to save money, that's the only
guarantee in life. Really. Checkout all of our content at
cleanpowerhour.com Please giveus a rating and a review on
Apple or Spotify. Follow us onYouTube, reach out to me on
LinkedIn. I love hearing from mylisteners, and look forward to
(25:45):
seeing you at one of the energyshows coming up. You know, so
many great energy shows aroundthe country. I'll be going to
inner solar in February. Andwith that, taraj, how can our
listeners find you?
Tooraj Arvajeh (25:59):
Yes, they can find me at perlstreet.com, P, E,
R, L street.com and there's alink to my calendar. They can
book your time with me, and myemail is to ranch at perl
Street. Com,
Tim Montague (26:13):
fantastic. Well, with that, I'll say, let's grow
solar and storage. I'm TimMontague. The Clean Power Hour
is brought to you by CPSAmerica, maker of North
America's number one three phasestring inverter with over eight
gigawatts shipped in the US. TheCPS product lineup includes
string inverters ranging from 25kW to 350 kW, their flagship
(26:37):
inverter, the CPS 350 KW isdesigned to work with solar
plants ranging from twomegawatts to two gigawatts. CPS
is the world's most bankableinverter brand, and is America's
number one choice for solarplants, now offering solutions
for commercial utility ESS andbalance of system requirements
(26:59):
go to chintpowersystems.com orcall 855-584-7168, to find out
more, you.
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