Why Industrial Real Estate is the KEY to Unlocking a Cleaner Future

Episode Transcript
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Tim Montague (00:01):
Tim, welcome to the Clean Power Hour live. I'm
Tim Montague, your co host.
Today is October 24 and I'mjoined today by none other than
the commercial solar guys. Useyour usual bringing you the
greatest and latest solar, windand battery News. Welcome to the
show, John.

John Weaver (00:19):
Hello. Tim. Hello.
Tim, like my cool shirt, fullbridge rectifier.

I have no idea what that is. It's

it's an important thing in the YouTube electrocute
yourself. Have you heard ofelectro boom, an insane person
who sets himself on fireoccasionally on YouTube, and
he's really entertaining.

Well, I have a new goal in life, to set myself on
fire on YouTube that that soundsawesome.

Bridge rectifier, that's, that's, that's, that's
the accent. And we're also herewith Dr. Wes herch Hirsch, who's
cool and knows a whole bunch ofstuff.

We have a special guest. Welcome. Wes Hersh of
Prologis. Yeah, Prologis, excuseme,

Wes Hersche (01:04):
yeah. Thanks, John.

And it's Dr Wes Hirsch, who my favorite part of
his career is that he worked, isit Arizona State University?

That's right, yeah, there, and worked there for
quite a while. Very

cool. And the cool thing is that, like, the PhD and
work and everything is, like, indepth, hardcore soar, that's
maybe the most advanced solaruniversity in the United States.
I mean, it makes sense downthere in Arizona, yeah. But it's
like, all the cool stuff, seemnot all the cool stuff, a whole
bunch of the cool

stuff, okay, but, but all of our listeners are not
you, John. So for our listeners,we need, Wes to explain, yes,
what are you doing and why areyou on the show?

Yeah, sure, yeah.
So I'm director of enterprisesustainability at Prologis. Been
here about a year now, so startat the beginning of the year.
What I do is, so we have, we canget into sort of how the company
set up and under our chiefEnergy and Sustainability
Officer. But we have a lot ofkey accounts who are our largest
accounts, for our real estateside of our business, right,

(02:09):
which is the core of thebusiness. And then we have
several verticals, essentiallyin on site, solar on site,
battery storage, EV charginginfrastructure, micro grids. We
also have a data centerbusiness, and we do some
parameter storage. We do a lotof stuff, but if you think about
a lot of the larger customers,so I'll name a few that are in
our 10k and over public that ourcustomers. So like Amazon or

(02:31):
Walmart or Maersk, they have alot of different things that
they're looking at with thisright that might be interesting
in terms of those verticals andsustainability. And so I manage
those sort of transversely atthe account level, and then we
have a lot of different teams,both on the sales, development,
execution side, for each one ofthose things, I mentioned that
they didn't go very deep in howwe deliver. But so that's me to

(02:54):
pull back a bit for what thecompany does, more generally is
we have 1.3 billion square feetof real estate across 20
countries. So we're the largestlogistics real estate company in
the world. We're so we're quitebig, if you think about the way
our chief Energy andSustainability Officer puts
this, Susan attack Amar, is, howdo you further optimize those

(03:17):
assets? Right? Because that's1.3 billion square feet of
rooftop space. That's adjacentparking lots. That's
opportunity, right? If you'rethinking about it from a sort of
enterprise sustainability orenergy services or energy
solutions point of view. So withthat, that's all the teams that
she has underneath her and herorganization are thinking about,
hey, our customers need this,and it sort of fits with we're

(03:40):
not, sort of, I think itdirectly fits with Hamid, our
CEO, who's going to step down,actually become chair, and then
that's going to happenimminently. That's been publicly
announced, but he had this fromthe beginning with the company,
where, with logistics realestate companies, typically
they're triple net leases. Soyou say, hey, you know, pay the
rent on time. Kind of don't beatup the building, lock up when

(04:02):
you leave, kind of thing. But hehad an insight. Was like, Well,
wait a minute, what are thosecompanies doing in the in can we
help them? So we have otherbusiness lines that are outside
of sustainability, like we havea group called essentials that
sells things like racking forwarehouses or LED lighting or
forklifts or move in, move outservices, and then we're kind of
an extension of that, right? Orwe're fitting that same theme

(04:23):
where you say, hey, customerswant reliable, clean on site
energy. Customers areelectrifying their fleets and
need to be able to charge wherethey're doing trans loading for
for class eight vehicles all theway down to employee vehicles.
Customers need resilience. Theyneed backup. They need battery,
energy storage, the micro grids.
So that's sort of the the why,of like, why those things are

(04:46):
set up. And again, my role is, Ihave some of those key accounts
where we're managing becausewe've got a lot of stuff in
flight, or a lot of stuff thatthere's interest. And then I'll
try to sort of air trafficcontrol, I guess, across those
different

Yeah, and to set.
Table a little more, you know.
So first, Prologis is thelargest industrial real estate
developer in the world. And youknow, You quickly learn in the
CNI solar industry that thirdparty owned real estate is is a
challenging vertical to developsolar on, because the the tenant
isn't necessarily incentivizedto invest in the building.

(05:21):
They're leasing the space, butPrologis also you become, you
become aware of Prologis in thespace, because you are busy
solarizing your facilitiesaround the country like no other
real estate company. And that'skind of how I know of Prologis.
What about you, John.

I know of it because Wes, I know the name as
a high level because it's just abrand name in the world. What I
now know is that, you know,I've, you have a billion square
feet, 1.3 Yeah, point three,yeah. But you know, does that
billion? Is that like rooftopspace, or is that like multiple
floors of space. Because

I just, yeah, that's, that's, uh, the floor
surface area, but mostly stuffis single story. So yeah, that's
pretty close.

Sure, billion square feet of usable space, 20
watts per square foot. That's 20billion watts. That's 20
gigawatts. Is that positive? AmI doing my math right? 20
billion Watts is 20 gigawatts.
And if it's 20 gigawatts, whichjust doesn't sound right, now,

(06:33):
it can't be right. Whatever itis, it's a massive volume like
the United States could poweritself with, like, four? Was it
four terawatts of solar? I mean,huge capacity of capacity, of of
generation. Man, it's justmassive roofs.

We're trying to get the first gigawatt. So you got
to start there. We're close.
Yeah, we're still trackingtowards that. When we set that
goal several years ago, was abit of a stretch goal. Was
pretty ambitious, but I think wegot a good shot at it. I mean,
we'll, I have full confidencewe'll never get there. The idea
would be to get there by the endof this year or early into next
year. So yeah. So yeah, to yourpoint, yes. Huge, huge upside

(07:17):
opportunity. Want to get thefirst gigawatt done across the
different projects that we'vedone, and I think, but you're
nailing it on like theopportunity space is still huge,
right? That's a little tricky,as I think you two know really
well, because you're also superdeep in the space. We started
with just our own properties,and then the tenants that are in

(07:39):
there, because they're the offtakers, right? And so they need
to be able to agree to that andset a price, etc. We do have,
what we call out, a platformwhich will look at real estate
that's not owned by us, andthere we typically like to
prefer the first sort of placeto go is where the customer that
we already have, they own theirown real estate. So that can be

(08:01):
good, because it's still onlytwo parties. But then we've
looked at third party as well,so and so. Then maybe it's even
beyond that 1 billion ishrooftop space. Because again,
you can just think about, youhave all this when you start
putting on your sort ofopportunity hat, right? And
you're thinking less about,like, yes, there's a carbon

(08:21):
challenge. We're tackling that.
But you say, hey, there's just,there's just an opportunity to
start generating, like, whereyou're consuming, and then you
could use that for other uses,if you said other parts of the
electrification, which is sortof that handshake on the EV
side, or other side

transportation, wait for you. Yeah, I'm waiting
for you to start talking aboutthe big trucks, because these
are the biggest vehicles with234, 100 shipping lanes going
out of them. I used to loadLowe's trucks when I was in
college. So I just used to walkdown the shipping dock and just
this massive thing, you couldn'tsee the other end, and they had
weather effects inside of thebuilding. And just trying to

(08:57):
comprehend the opportunity, Iwas trying to, you know, you got
the first one? Okay, great. 20gigawatts, but how much
transportation opportunity? Howmany trucks go in and out? Yeah,
it's just, it sounds likelayers, and that's even before
you get to the energy storage.
Yeah,

I'll tell you two things that we've announced
somewhat recently. One, reallyrecently, but I think it hits at
this so that that that team aresort of a mobility team that's
building out all that ABinfrastructure. We did one that
was really interesting wascalled the dinker site, D, E and
K, E, R, that's the name of thestreet it's on. It's in
Torrance, California. Companycalled performance team, which

(09:36):
is a subsidiary of Maersk, isthe customer for that. That's
for their

that's the big, giant shipping company. Yeah,
yeah.

And so Port of Long Beach and Port of LA are the two
biggest ports, number one andnumber two, and number one, I
guess, in all of the Americas,North and South America. So
there's by container volume.
There's just a huge amount. Sowe set that up with them on
their drayage runs. It's. Sobecause we know those are fixed
runs, are still class eight, sosemi trucks electric, obviously,
but you don't have thesechallenges where it's like,

(10:07):
well, what if I want to go 1000miles non stop, and I'm not even
going to stop to go the restroomor whatever, uphill in the cold
or whatever, right? You mighthave more challenges with that.
And so we'll start with, youknow, most of the runs aren't
actually these sort of crazylong haul runs, and there's a
lot of opportunity for stuffthat is known, and shorter,
relatively shorter distances,maybe it's 100 miles or so. So

(10:28):
you start by electrifying there.
So that was one, but what wasunique about that, or what is
unique about that side, isthat's a micro grid as well. And
so there's, there's backupstorage. It's 18 megawatt hours
of backup storage. You could donine megawatts, peak three
megawatts on average. And youcould charge 96 trucks
concurrently. And then they youcan run hundreds through, right?

(10:50):
Because they're sort of swappingin and out. So that's one and
then that's what we call ourdepot product. So that's like
within the fence of some realestate asset that's being leased
from us. We also have a newmodel that we're rolling out,
and this is sort of a we'relooking we'd partner and do
other stuff as well. That's ahub model where it's like, in
theory, you could pull your ownpersonal Tesla in there and

(11:12):
charge it if you want. But youset up these hubs, typically for
commercial vehicles or busses,or doesn't have to be just Class
A it could be box trucks, so ina couple different classes in
between, and saying, Okay, yougot a public hub. You can come
in and you can charge. And toyour point, John, the the real
thing you have to unlock there.
This is why partners are soimportant for that is every
company will have, they callthem lanes, but a shipping

(11:35):
route, right? Like I know I needto run from here to here every
day, four days a week, you know,every every week, or whatever.
And they have so many past ortruck miles that go on that
lane. If you can get thecharging infrastructure across
those lanes where it'ssufficient, where it's like,
okay, now you can convert thatlane to EV. You need the OEMs.
You need a lot of other stuff,right? But we only build out the

(11:56):
EV charging infrastructure, sothat's sort of our play there.
So as others build charginginfrastructure as well, in a
way, we're all sort of helpingeach other, because now it opens
up more lanes that puts moredemand on the OEMs to build more
electric trucks. And then youstart to see this. And we're, I
think, you know, I know you guysare both familiar with the sort
of S curve model of adoption,etc. I think with solar, we're,

(12:19):
you know, we're eking up on thatcurve. But with EV
electrification, on thecommercial side, we're way at
the beginning, right? But yousee, sort of, we've seen this
playbook before. We see positivesigns in that direction. So,
yeah, we're still building. Andon the depot side, like, yeah,
there's a lot we could do. Wealso have workplace chargers as
well, so for employees that theywant to come and charge their

(12:40):
electric vehicle. So, yeah, thevariety of stuff. But again, it
all comes back to for us, likewe do all this for a couple of
reasons. One, because ourcustomers need it, right?

You want, you want to get better rent. That's
really what it comes down to.
You guys. You guys are realestate leasing company. You want
to hire Lois. What is that? IsNo, not Lois. What does it
represent? Yeah. Now there's avery specific term in the real
estate world, the amount ofmoney that a property makes,
noi, yes, noi is the match,yeah.

And also additional revenue, right? Top line
revenue. And then in the youknow, let's not forget the
sustainability benefit, right?
Like, why we probably all got inthis business to begin with. So
you say, oh, okay, great. Thosesustainability impacts that you
can have as you start todecarbonize, like, across all
these different components ofthe business is is useful. And
if I could be a sustainabilitygeek for for just a couple

(13:37):
seconds, what's interestingabout Prologis is that if you
look at our you know you havescope one, two and three
admissions for the viewers thatdon't geek out with this stuff.
Scope one is anything you burnin something you own. So if you
burn methane, if you're in fuel,fuel, whatever that is. Scope
two is electricity, essentially,like the emissions associated
with electricity. Scope three isthe entire rest of your value

(13:58):
chain, so upstream anddownstream. If you look at us as
a company, over 99% of ourmissions are scope three. So
because we don't own fleets, youknow, we don't own a lot of
operating equipment that's allowned by our customers. So now
you see our biggest footprint isthat scope three of that, 70% of
it is the power consumed in ourbuildings by our tenants. So
then if you look even and say,we have a net zero target by

(14:19):
2040 we're a signatory of theclimate pledge, which is
something that Amazon cofounded. So we're part of that.
I think there's 600 signatoriesto that now. But if you look at
like, our path todecarbonization again, like it
goes through the route of, howdo we help these customers that
are in our buildings decarbonizeas well? So you sort of this,
see this like sort of triplebenefit, I guess, right, in

(14:41):
terms of what we're trying todo,

there's lot going on there.

Yeah, there's a lot. It's fun. I don't get
bored.

I wonder. I wonder, Wes, you know, in the
solar industry, we're veryfamiliar with this phenomenon
that it is a regional industrythe North. East, parts of the
southeast, Texas, California,parts of the Midwest, really.
Illinois right now are kind ofhot spots. But when it comes to

(15:11):
this, I think the tripartite forme is EV charging
infrastructure, batteries andsolar. When it comes to your
portfolio and your prioritiespaint us a little picture of
where you are activelydeveloping that tripartite of
projects.

Yeah, that's a well, that'd be take a lot to
unpack. So the simple answerthat, but it's not a very good
1/5 notes, yeah, it's everywherewhere there's opportunity,
right? So if you take each oneof those individually, so you
say solar, like, you've alreadyidentified where the hot spots
are, because those are placeslike, what

about all three combined? That's what we're
Yeah, we want the hottest spots.

I mean, yeah. I mean, the obvious answer, I
think, is California, just to bereally blunt, because there's a
lot of different incentives,both on the the EV side and the
LCFS comes into play. You havetypically higher electricity
costs than other parts of thecountry,

regulatory solar incentives, correct?

No, yeah, this is on the LCFS, but you have higher
electricity prices, so sometimesyour can look more economically
favorable, yeah, so I mean, sothe regulatory environment does
matter a lot. The incentiveshave matter a lot. Especially, I
think more so on theelectrification side, on the EV
side, because, again, we'renewer in that S curve. A lot of
times. On the solar side, I seethis more as like, there are

(16:34):
those markets where they'realready bankable, or they can
already see, like, enjoy sometype of cost reduction benefit
for the customer. And so they'revery interested in moving
forward. But moving forward withthat. Some states and areas,
sort of, it depends, right? It'sa little more of an edge case,
like maybe, maybe not. And thenon the micro grid side,
everywhere, really, right?
Because that's more determinedby what your your sort of, your

(16:54):
operational nodes that are like,must be running right at all
times where you're looking andsaying, like, we've had some
customers put it, I won't quotedollar figures, but they're
like, hey, look, if thisbuilding shut down, we're
processing so much freight orgoods or services through there.
You know, the millions ofdollars that would cost or

(17:15):
whatever, even by the day or thehour or whatnot, is so
detrimental. Like this. Thisfacility has to run all the
time, even if the grid goesdown, even if whatever, like,
it's so essential theirbusiness.

And you guys use the term vole, there, by any
chance? Vol value of lossrevenue, there's a term out.

No, yeah. I think it's called vole. Okay. I need
to look that up. Yeah.

So regarding micro grid stuff, do you guys do any
sort of vehicle to grid with anyof these massive batteries yet
that are in these big oldtrucks?

No, do they have that's No, yeah, bring that to
the team so we can look at that.
So far as I know, no, I'm suresomeone's been looking at

it, but I assume demand, charge management and
backup, because you have thisflow of trucks that if you use
them, just little, tiny bits,not really going to slow down
their charging. Maybe it will,but, but, you know that's big.
Those are big units. You knowyou how to manage those and use
them in the holistic manner withyour system. You have your
solar, you have your storage,you have your EV backup. Now how

(18:19):
do you make use of that megawatthours of EV batteries that are
rolling around. So it's justanother equation to your another
variable in your equation.

No, you put it right the micro grid side of
things. It's super interestingbecause, yeah, you start
thinking about, like, the way Ithink about it as like a set of
variables and an optimizationstack. So, and you can even get
to almost philosophical letterlevels around like, are you
essentially grid tied and thenyou have that micro grid system

(18:49):
as your backup, or are yourunning more off of that system?
And then the grid is yourbackup, right? And then you get
to think about like, if I have atime of use utility tariff,
like, does that come into afactor where I'm sort of doing
that and time arbitrage? Am Ioptimizing for carbon? Am I
optimizing for times of use andoperations? That gets to be a
really interesting sim Gensystem engineering problem. Yes,

(19:13):
you're

optimizing for them all, less every one of your job.
Yeah,

and it's always a little bit bespoke, at least,
right now, right? Like, Iimagine that that as an industry
will start to normalize overtime, as we start to understand,
like, how to sort of achieve allthese different optimization
problems we're trying to solvefor but it's a little, I think,
a little more complicated thanthan EVs or solar, which is

(19:37):
already complicated to be, to beclear, right? But, yeah, but
it's a fun space, right? We'reall we all get to figure that
out together, which I think iscool, so interesting.

So I got a question that's slightly outside of
Prologis. I don't know if Tim isgoing to let me he might have
other key questions, though,because he also wants to focus
on the stuff for CNI peoplelike, how should developers?
Come to you that have buildingsnearby you. How should
contractors become a propervendor? I know, becoming a
vendor with a group likePrologis is probably a lot of
insurance payment bonds and alot of documentation, so in

(20:11):
history. But still, even that,just being able to fill out
paperwork, you guys are probablylooking for certain standards
that are really high, like smallshops probably just like, have a
great day. It's nice to know youmaybe you can be a sub, but you
know that type of stuff matters,and it's hard to even it's
intimidating, because you thinkthe amount of work to even
become an approved vendor, inand of itself may still not mean

(20:35):
you have any work, and you're alittle shop with two office
people. I'm thinking aboutmyself clearly. You know how to
work with groups, and we'veworked with a couple with a
couple of large asset ownersacross the US, and you know, you
do? You negotiate a contract forthree months, and then it's
like, yeah, maybe we'll have aproject. Yeah?

So typically, for those questions, I'll turn those
over to our execution team,because they work with a number
of VPCs, and that's a greatteam. They have quite a few
people. Well, we have both adevelopment team and then an
execution team, and they workthrough those processes and
vetting those vendors, etc. So,and yeah, we do have really high

(21:12):
quality standards in terms ofdeliberate execution there. So,
but yeah, I mean, never hurt. Sowe'll talk after the show.

I wasn't explicitly sales pitching me. I was just
talking to a broader people, thepeople that listen to us across
the nation that now know thatyou got a billion square feet.
Wes, they all know they're gonnaquote. So my question that's
outside of Prologis, is, what isthe coolest piece of research

(21:40):
thing that you've had to thinkabout, either via your research,
getting your PhDs in the work,because I know some of your cool
research, or in your workafterwards that you're allowed
to, like, talk about with anNDA. You've worked for a bunch
of cool people after school andbefore Prologis, like I know.
You've worked for Amazondirectly. You've worked for

(22:01):
Boston Consulting. You'veprobably been asked some really
cool questions, but include yourresearch too. Sure does just the
coolest question that you'veever thought about solar
related, solar and storage.

Let me answer the second part of that. Yeah, I
have had a, I think, a funcareer history, at least. So
yeah, to your point, did a PhDat Arizona State University,
worked there as a researchdirector with director, was at
Boston Consulting Group, andthen was at AWS and Amazon for a
number of years before cominginto the role and now Prologis.
There's a good book, I can'tremember his last name. It's

(22:33):
called range, that talks a bitabout this, about sort of some
of the advantages of they'relooking at, like kids in sports
and other things about, do youspecialize really early, right?
Like, if you know your kids isgoing to play tennis, do you
just put them in 24/7 tennislessons from the time they're
five years old? And they weremaking an argument, I think
about Roger Federer and a coupleother people, about playing a

(22:55):
variety of sports and sort ofseeing different things in
different aspects of it. Thatgives you some range. And then
when you go to tackle someproblem you're in, it often
gives you sort of a differentframing, or different frames to
be able to look at something atso I think, if anything, the for
my career history, and sort ofthe stuff I've done to me,
that's the number one benefit,just because I've seen this from

(23:16):
a couple different angles, rightfrom an advisory side, from a
research side from a operationalside with Amazon and provide
just now, and, you know, eitheron the customer side or on the
sales side. So that's beeninteresting. I don't have
anything nuggets of wisdom fromthat, other than, like, I think
it helps, like, when, when youcome in and you're just trying
to, sort of, like, figure outhow we could solve these, most

(23:38):
of the stuff that I think youall tackle, and that we tackle
some a little morestraightforward than others, but
there's always sort ofidiosyncrasies and complications
and things that you're trying tothink through and work through.
And so I think that backgroundhelps a lot on the research
side. Something that I'm stilltrying to work my way through is
this report that came out. Iactually posted about it on
LinkedIn. This report came outfrom ember. EMB, er, yeah, yep,

(24:02):
think tank that I think they'reout of the UK on the electro
state and sort of what's goingon there. I watched the, the
sort of YouTube announcementthey did is one hour, hour and a
half video with that guy's nameis done something. Apologies. I
have to think of the name. I'llpost it in the as a comment in
YouTube whenever this videocomes out. But he had an amazing

(24:24):
breakdown, even for the halfhour that he was going over that
they called out a couple thingsthat I've been hearing from
other sources, and I'm assumingthey're the ones that came up
with this. So as an examplethat's related to solar, if you
look at the amount of panelsthat are modules that China's
putting out right now thatinfrastructure like to get to
that level where they're at nowwas about a $50 billion

(24:46):
investment, which sounds like alot of money, but on a national
scale, that's nothing like that.
We just to maintain the existingoil and gas industry in the US
is about 400 billion for areference point, right annual.
You look and say, like a $50billion investment, very
concerted, obviously, and sortof top down from that
government, but got them to thepoint where they can now

(25:07):
manufacture probably a terawattevery other year. It looks like,
once they hit full capacity,maybe more.

Well, they're beyond a terawatt. They're
actually pulling back. They'reat like, 1.2 1.3 terawatts.
They're running 50, 60% capacityfactor

right now. So I didn't know that, but that's,
it's wild, right? So then youcan say, Okay, well, that's not
that big of investment. So interms of, like, you know, what
gives me hope there, I think,like, Okay, well, in terms of,
you know, industrial policy, orNational Industrial Policy, I
think there's a lot of othercountries that certainly can
invest $50 billion or more inorder to build out that
infrastructure. Thatinfrastructure. There's probably

(25:44):
some specifics around like,where you do that at, but that
gives great hope. And then youstart looking at like, and we'll
use them as an example. The casethat Ember was trying to make
was that they're trying toemerge, to become the first
electro state. And they use thisnew term that keeps getting
thrown around on electro tech,as opposed to, like, a Petro
state or whatever. I thinkthat's super interesting, right?

(26:06):
Like, in terms of thatdevelopment, and some of the
stuff that we just talked about,I think, is the handshake,
because people look at that, andthey look at the panel and they
say, Okay, well, you know, youcan sell it for so much per
watt, but you start looking atthe generation and get off of
that, and then you startlooking, as you electrify your
economy, particularly aroundtransportation, couple other
areas. And you're like, if youstop looking at primary energy

(26:30):
inputs, which is typicallymeasured in thermal BTUs, or
something that's more on thecombustion side, and you just
look at the the energy serviceoutput, like, to make this
vehicle move one kilometer.
Like, what did it take? Right?
And you have so much moreefficiency in the chain on the
electricity side, right? So nowand you say, oh, and we can
produce that electricity so muchcheaper with a relatively small

(26:53):
investment, you know, globallyspeaking. So anyway, that that
whole research I foundfascinating, I haven't got the
reports quite long and dense, soI haven't worked my way through
it entirely yet, but I've beentrying to work through it
because I found that to bereally fascinating, and also,
again, sort of hopeful thinking,you know, it's good for China
that they did it. I don't livein China, so I'm more interested

(27:14):
in the country where I live, orother places that would be
making similar investments, andthen thinking about like, how
they can have that, thatoperational reach and
efficiency. So that's exciting.

That's neat. I like those Ember reports. They're
cool. They have cool websitethat just looks neat and shiny.

My takeaway, yeah, my takeaway from that Ember
report was that we couldcompletely solar and battery.
Eyes many facilities with afairly modest amount of rooftop
solar, this is more thinking inthe resi space, but you know,
like, put a five KW solar arrayand a 30 kilowatt hour battery

(27:57):
and boom, you're done. Now,obviously this gets harder as
you scale up. And, you know,industrial facilities that are
running 24/7 is a wholedifferent animal. But, but Wes,
you know, back to this, thisquestion of priorities. I'm very
curious how, what is the lensthat Prologis? Surely you have

(28:18):
some kind of a filter thatyou're running opportunities
through, because you have somany opportunities

and a billion, a billion,

a billion opportunities. But how do you
filter and, and, okay, there'sthis goal of noi, which, which
looms large, and I'm going to,I'm going to hopefully show us a
bar chart I'm working on herewith perplexity, but of how
Prologis ranks in the scheme ofthings compared to other big

(28:49):
corporate buyers, because agigawatt is a is a big number.
Oh, sorry, a terawatt, right?
You're approach No, are youapproaching

it? Not a terawatt?
Yeah,

you're approaching a gigawatt, and there's, there's
a handful of corporate buyersthat are exceeding that. I think
Amazon is the largest now

off site, Amazon's, yeah, 30 gigawatts. I think,
yeah, oh, 30 for their off sitePPA portfolio, they'd have to
look but, yeah, I think it's,it's quite a lot. I know it's
more than 20. So, okay,

yeah, I just have a, I have a statewide bar chart.
And you know, these are, we'retalking about, some of the usual
suspects here, Texas,California, Illinois, Iowa, New
York, North Carolina, NewJersey. Is there a state that
you're actively involved inthat's not on that list? For

(29:45):
example,

I'd have to think about that, I mean, so I take a
pretty wide filter approach,right? Because there's a couple
different factors. So one, you'dhave to think about sort of
where you're going. Topotentially get a break even and
or cost savings on the systemitself, versus whatever the
electric utility price is. Thenthere's if your customer has an

(30:10):
internal cost of carbon. So inthinking about the carbon
savings you're getting, is thata nice to have? Do they actually
factor that in? Does it matter?
That also tells you a lot aboutlike, if that customer has sort
of a willingness to do thispurely from a financial reason
or a sustainability reason orsome kind of combo, etc. And
then on top of that, like youhave, you have other

(30:31):
considerations for us on ourside, in terms of, like, what's
the remaining lease term forthat particular site? So part
of, part of our what's notreally our secret sauce, I
guess, but part of, one of thethings we do is we always set up
those PPA contracts to becoterminous with the lease. So
that's a big one in terms ofgiving that that customer, in
terms of what they sign up for,that off take agreement peace of

(30:53):
mind, because they're most oftheir real estate decisions,
unfortunately, like, are notdriven on their sustainability
or solar, right? Like they haveoperational concerns about why
they need to be in some spaceand why they might need to move,
or maybe they need to expand,etc, so they're thinking through
that. So that's part of what wehave to take into the mix. But,
but those, those filters, end upbecoming a somewhat more complex

(31:14):
combination of filters, so, butthose are some of the big ones,
and then from there, like, westart to work with customers to
say, okay, hey, here's what wethink in terms of you. They may
have more than one lease withus, so we'll look at those and
see, like, what makes sense.
And, yeah, go from there. Sowithout getting specific, but
yeah,

it really seems you're a lot of the equation is
driven by the occupant.

Oh, yeah. I mean, they're the off taker, right?
So, yeah, yeah. Because, again,that comes back to, we don't
really consume power, right,other than our offices or
whatnot. So, and then, thenalso, too, like a big one is the
what the occupant is doinginside that building, right? But
take Amazon as example, becausethey're a known customer, like
they have a lot of times peopletalk about Amazon fulfillment

(32:01):
centers, but they actually havea couple different dozen
building types, right? Some ofthem are don't have. They're not
quite as full. They could belike a cross dock or an
interchange facility, ordifferent facility types that
they have. Some of them are theones that you typically see,
like the fulfillment centersyou'd see on TV that are full of
robots, and, you know, they'rerunning off of AI, like, there's

(32:22):
a lot of stuff going on, sothey're going to have much
higher loads. So that can also,you know, you're thinking about
that with your system sizing,etc. Like, it gets pretty
complicated, as I imagine, youtwo can appreciate it.

So, so my question is, what should we be asking? I
think of you as thesupercomputer, and I'm just a
lowly solar professional here inthe in the weeds, trying to help
EPCs get a grip on large CNIsolar and batteries. What are
the trends? What do they need toknow? What do they need to be

(32:55):
leaning into? And I guess, whereis the puck going? Because, as a
large real estate developer,Prologis, sorry, I'm gonna say
it wrong. I've just been sayingit wrong for so many years. Now,
my brain can't recompute that.
But Prologis is, you know,thinking far into the future
also, what should we be asking?

Oh, man. I mean, I would say

a combined system.
What I heard is that we need tocome to you with a package of
solutions that integrateeverything that's looking at
that building, look at thetrucks, look at the batteries,
look at the electricity, look atthe demand charge, look at a
facility. Be conscious of theuse, be conscious of the state
laws. We need to be more thanjust some dudes throwing up some
modules and an inverter. We gotto take into account your demand

(33:45):
charge. We got to know what yourreal bill is. We got to be
conscious of your real estaterealities. There's layers there.
I

think, yeah, I'd agree that definitely some of
those layers. There's also,again, I don't work as much on
the execution side, but I thinkthat's probably where the EPC
conversation would live. I knowfor this parts of that that I
see, or that I'm closer to,there's a lot of considerations,
even on the install and makingsure you're not disrupting
operations like we coordinate,obviously, with the tenant on

(34:14):
that, and that's sort of workedout. But EPCs that we can work
with that sort of understandthat, because, again, the the
value, oftentimes, of what'sgoing on in that building, you
know, can exceed the costsavings pretty quickly of solar
that you would get, even on avery favorable system, right? So
taking those precautions, makingsure, you know, we don't have

(34:36):
thermal events, we don't haveroof punctures, etc, which we
have a track record on that,preserving that. It's really,
really important to us. And thento your point, John, yeah, I
think it's a bit more holisticin terms of the different
things. Now, some of that, like,again, we do internally already,
that's part of what ourdevelopment execution teams are
running. But yeah, it's alwaysgood to have partners that we're

(34:57):
working with that are cognizantof those

things well into John's. Note like I'm familiar
with a platform called alexity,E, L, E, X, i, t, y, out of
Oregon, which is a buildingmanagement controls platform.
It'll control the chargers, theEV chargers, the HVAC, the
lighting, the solar andbatteries, and do that in an

(35:21):
intelligent way to reduce thecharge the energy charges,
right? They're attacking demandcharges or capacity charges,
depending on the market. Yep.
And have is Prologis. Prologisgetting into this space of
building management.

So we have a, one thing I didn't mention, and I
think about it, is we also havea ventures team. So Prologis
ventures, they do two things,and this is going to be a
roundabout answer to yourquestion. In one sense, they
operate as a traditional venturecapital firm, and but their
investment thesis are thingsthat would be helpful to

(35:58):
prolagis or to our customers, sothat could be physical things in
the warehouse, that could bethese building management
systems, the variety of things.
And then within that, there's acouple different sort of
pillars. I guess sustainabilityis one of those where they're
looking at, like, hey, a lot ofour customers have
sustainability goals related tosort of energy, carbon, etc. So
they'll go and look for thoseinvestment opportunities for

(36:20):
companies. And I'm trying tothink offhand. I don't have
their full sort of list of Portcodes right now, but they look a
lot at that on the tech side,especially on the startup tech
side, to where they can mightbetter make those investments.
They also help us incubate stuffif we're going to bring
something in house. So we'restarting up, say something new
than the ventures team thatoftentimes will come from there,

(36:42):
but I think, like that's more intheir wheelhouse, where they'll
start to look at some of thattech and then think about, is
that suitable for us? Is itsuitable for our customers? A
lot of times, on the I don'tknow, because I don't know the
specifics on this, thatparticular company, a lot of
times, a lot of that tech, thatwhat I see, ends up being more
useful for our customers thanfor us necessarily, because,
again, they're, they have allthe operations within the

(37:04):
building a lot of times on atriple net lease, especially
they might be looking for thosetools. So that's great, like, if
they use those and utilizethose, then great. It typically
can, then, I think, drive orhighlight the value of the
verticals we have in terms of EVcharging infrastructure, solar,
battery storage, etc, becausethey say, Ah, okay, cool. I have

(37:24):
a clear idea of what the benefitwill this will be now. Now our
teams also help with that,obviously, particularly on our
on our account management teams,but yeah, if those other players
are in the space and they'resort of trying to get them
efficiency gains and thenlooking for other ways that they
can help. Then, what is theexpression takes a village, I
guess, to do that. So yeah,we're happy to work with

(37:45):
partners.

You have any plans to utilize what might be empty
roof space based on on sitedemand, I assume you probably
only need a half or a quarter ofyour roofs, in a massive number
of your cases to offset on siteelectricity, and so, like, say,
in Tim's world, in my world,Massachusetts, if you offset

(38:11):
your electricity, so if yourroof, yeah, the second half of
your roof, you can sell 100% ofthat and and this isn't to
offset pro Logis. Now I don'tknow what your company's name is
anymore. Yeah, it is. It'soffset Prologis, but it's, it's
to add noi, and maybe you justlease a roof, or maybe you own
it as an asset on theirventures. You have Prologis

(38:32):
energy resources, and that's awhole separate arm where you
just have power plants, straightup, power plants leasing roof
space.

We have launched, especially in the last year, so
quite a few community solarprojects. I think that's the
same thing, yeah, yeah. Becauseyou look and say, like, yeah,
the loads not high enough insidethat building to sort of soak up
all of that generation that youcould get. And we're like, well,
you're up there already. Why notmake better use of that roof?
And a lot of times thoseprograms then can be available

(39:03):
to the community. So those aregood. Those are popular,
particularly in Illinois andcouple other places where you
can do those. So yeah, we'vehave to go look, I don't have, I
should have brought stats ready.
And for that. I don't rememberhow many of those we've done,
but I know we've done quite afew. We had a, we call them flip
the switch event. So we'll dosort of a public event for some
of the like, if we'recommissioning a new solar site,
or, in this case, we did acommunity solar one earlier this

(39:26):
year in Chicago, actually,Chicago area. I should say I
wasn't at that one, but yeah,it's, it's another part of our,
our business. Because again, ifyou I'm going to keep doing
this, like, if you pull back, Ikeep coming back to what our
what Susan said, our chiefEnergy and Sustainability
Officer, she said, Look, I haveall of this space that I can
optimize to play with,essentially Right. Like, and

(39:49):
figure out, like, how do we getmore out of this? She came up
with a thesis around power as aplatform, and saying, like, in
the swim. Which, I think thatflips in the minds of the
consumers, the partners that wework with, is not so much
thinking about like, Well, hey,like, we're not going to be able
to do something in thisparticular state or whatever,
because it's really hard anddifficult or whatnot. It's like,

(40:11):
that's fine. Look at all theopportunity that you do have
just start there and say, like,where is it that I have
underutilized or under optimizedspace that I could be getting
electrons, I could be gettingcharging, I could be getting all
whatever that service is, right?
And now that sort of flips theswitch in the mind of, you're
not like how to say this. You'renot looking for like, how to

(40:35):
have a perfect solution for allproblems worldwide. You're
pulling from that subset andsaying, Hey, I don't know how
we're going to get to that last10% but I do know the first 10%
is looking pretty clear in termsof what the value proposition of
that is. And then you roll out,start doing that right, and then
you get to the next 10% etc. So,but yeah, there's a ton of
opportunity. So that's why, too.
When you look at like, Wow,geez, you guys got a lot of

(40:57):
different verticals and stuffyou're doing across community
solar, from the meter, behindthe meter, storage, etc, solar,
you'd be charging micro grids.
It's like, right? Because onceyou put on that opportunity
mindset, you're like, yeah,there's a lot of different areas
where we could be getting moreout of this, this asset. So, so

if we fast forward to 2030, and bring you back on
the show, do you think thisconversation would be
significantly different

by 2030 Well, is

there hydrogen? Are there blooms? Are there?
Probably, I'm hoping

we're at two gigawatts by then. So I'll say
that, yeah, I don't know. It'sinteresting. Like, I think, like
a lot of the fundamentaltechnologies that we all use and
utilize, there'll be innovation,for sure, but, but I don't, I'm
kind of in the, like, nobreakthroughs needed camp, I

(41:51):
guess, right, like that. I don'tknow that. Maybe there'll be
small medium nuclear reactors.
There might be some other stuffthat sort of comes on and
incremental, great, like, ifthat stop by 2030 though, maybe,
maybe we'll have one or two,right? Yeah, you might, you
might, well. And there's, like,other stuff that doesn't really
touch us as much, but it'sreally cool. So, like, the, I
don't know if you guys

can't build a nuclear reactor in five years.
Can't do it. You guys

see the the news on Rondo the energy, yes, right? So
that came online, right? Wedon't really play in that space
too much because

we, oh, yeah, I love that. I love the heat
battery.

Yeah, you could, but you could play in the space
with Tim, Tim Latimer andgeothermal. What's his group?

Yeah, but he's, I can't remember what his

group is right now, but Tim Latimer, he was the he
was the big, first advancedgeothermal group pumping out
electricity. He's meetingcritical so you could surround
some of your Wichita things,because you got tons of land
space out there with these 510,megawatt geothermal

is that? Is that shallow or deep? Geo? John, do
you know that's like four to

15,000 feet? So we're, I think that means deep,

I don't know, but you have 10,000 is Jeep, yeah,
yeah,

geothermal, for sure. And then the other one
that I've been kind offascinated with lately is geo
sourced, or geothermal heat pumpas well. Verbo energy. Verbo,
I've talked to bedrock energy aswell. Their tech is really cool.
So we've been looking at that.
There's a couple differentright, where you're like, hey,
look again. Just how manydifferent ways can you optimize
this? And if you have highheating and cooling loads, and

(43:31):
you're like, how do we solvethat? It's like, well, the Earth
is usually cooler or hotter thanwhat you're building is. And,
well, interesting. That's athermal exchange opportunity.
There's some, some sort oftechnical components to that
around drilling and whatnot.
But, yeah, like, it's, it'sinteresting, right? It's
fascinating. So I don't know. Sothat's what I was saying. By
2030 maybe we'll be doing moreof all of those, and then,

(43:55):
ideally, we'd be at twogigawatts of solar by then.
That's a goal we have, or atleast to keep pushing on that, I
don't know. I'd hope we're we'recontinuing to do the things that
we're already doing. So it's notthat far away, right?

Well, it's four years away. Glad to hear you
mentioned bedrock. We hadJocelyn Lai, the co founder of
bedrock on the show. Check outepisode 260, 260,

and great, that team's great. So, yeah, I think

we're gonna see a lot more Geo, but it doesn't.
It's not, it's not easy to beatsolar and batteries.

That's, yeah, well, that's, that's the other stuff
that some of the Ember researchis pointing out. I mean, I did
research on this too, when I wasat ASU. It's, it's really hard
to beat the energy source thatgives you 100,000 times more
energy than what you need on anygiven day. Yeah, like, that's
quite abundant. So there's,there's complications, obviously

(44:56):
you have to convert that energy,right? But, yeah, I'm very.
Bullish on that, that fact ofphysics in the universe. So

we're going to wrap up the show here in a few
minutes. But when you know we'regoing through a contraction
thanks to what's going on at thefederal level, right? The
industry is going through acontraction. Does do? How do you
see that changing the landscapein the next couple of years?
Yeah.

So I think again, like when we look at what we do,
like, we're only focused on, howdo we address directly, the
consumption, electricityconsumption at the site, right?
So we're all on site. We're allrooftop. I think, like in my
mind, there will always be aplace for that, because it's

(45:45):
more of a like a prosumer model,right? Where you're looking and
saying, Hey, look, I haveelectric load. I could get that
load addressed cost effectivelyfrom the, you know, the most
abundant resource in theuniverse. I think it's always
going to be compelling, right?
It'll be hard to make a casethat that won't be compelling.
So yeah, like, I saw differentregulatory changes that

(46:06):
certainly will affect us, andsort of we're thinking through
what that looks like. But again,on fundamentals, I'm still
pretty bullish. And also,there's other ways that we're
addressing on site, energygeneration, right? So we talked
about geothermal, we talkedabout Denker, which is a linear
generator, non combustivemethane, so that can help fill
in, I think some gaps indifferent places. There's a lot

(46:28):
of different ways. Again, if youstart thinking of that power as
a platform, I don't think that'sgoing to change. So, yeah, I
think we'll deal withregulations as they come. But
fundamentals, I think, are still

very strong there.
The the effluent from noncombustive methane is that still
CO two effluent?

I don't know. I have to. I'm not a chemist. I do
know on that particular site,especially in for mainspring,
which is the technology partnerwe use there. There's no socks
and NOx, which is a big one. Soif you start looking at co 2e
especially because those havemuch higher greenhouse gas
warming potential, yeah, thatmakes a big difference in terms
of what it does to the overallco 2e equation. The other big

(47:15):
thing with that particulartechnology I probably should
mention is they're actually fuelagnostic. So you could do
ammonia. You could do hydrogenas well. So those today, if
performance team wanted to go inand switch that out and say,
Actually, we're going to switchall those to hydrogen, and we
have a sort of hydrogen fuelsource supply that we want to
bring in, like they could, itwouldn't the effect operations.
They could switch those over. Soall the stuff that we're doing,

(47:37):
we caught our on demandsolutions. Like we always pick a
fuel agnostic technology choicefor that reason, because we're
like, okay, we don't want tolock in. So like, this works now
in a lot of cases, it ends uphaving a lower overall co 2e
mission profile than the grid,depending on what it is for that
particular grid, where they'reat. But we also say like, Hey,
you might want to fullydecarbonize this in the future.

(47:59):
So you have to have a technologychoice that can flex to that for
you, I don't know about the theeffluent, though. I'll look into
that. I I'm not as strong.

I'm glad I could stump the supercomputer.

Yes, thank you.
Thank you, doctor.

All right, well, I want to thank Wesley Hirsch,
sustainability executive, youare the director of enterprise
sustainability at Prologis andformerly of Amazon. We didn't
talk enough probably aboutAmazon, but we're going to have
you back on the show. Wesley,next time, yep, check out all of
our content at clean powerhour.com. Please tell a friend

(48:36):
about the show. That's probablythe best thing you can do for
your life, period and John, Iwant to thank our co host, John
Weaver, John, how can ourlisteners find you

commercial solar guy. Com is number one.
LinkedIn. I'm there way toooften. You can read about me on
PV magazine USA, and I'm on bluesky. I like to share pictures
there of construction and allkinds of stuff.

Can I share one thing? Sorry, please know what I
didn't get to say, yes. So true,though I've been a longtime
listener, first time like guest.
So yes to what Tim said and whatJohn said, everyone should be
watching the show. It's good.
I'm subscribed on YouTube. I gotthe little notifications on
LinkedIn. You can also find meon LinkedIn as well. I'm on
there way too often, as Johnsaid. So yeah,

all of us. All of us, awesome. Tim, where can we
find you?

Tim, yeah, in my home studio here in Champaign,
Illinois. But I'm active onLinkedIn. That's pretty much the
only place I'm super active. AndI am going to Tennessee next
week, though. I'll be inNashville. I'll be at re plus
Midwest in Chicago in December.
So I would love to meet youlive, if you would come to
Nashville or Chicago, and thenit's on to re plus Boston, I

(49:46):
think in what is that February?
Oh, no, inner solar. Maybe inSan Diego. So many good
conferences coming up. Butalright, well, that's a wrap
with the Clean Power Hour live.
I want to thank you all forlistening. And see you in a
week. We're going to do a showin a week because we had to skip
last week. So anyway, we'll seeyou next week. Thank you.

Thanks everyone.
Thanks guys. You.

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