WEBVTT 1 00:00:08.240 --> 00:00:14.599 You are listening to Redefining Energy. Your co hosts from Berlin Gerard Reed and 2 00:00:14.759 --> 00:00:21.079 from London Laurent Segalin today on Redefining Energy, we're going to talk about the 3 00:00:21.399 --> 00:00:27.480 crazy growth in particular in solar and batteries in Texas and California. Yeah, 4 00:00:27.559 --> 00:00:32.799 it's absolutely insane this year. So California as twenty four gig of solar, 5 00:00:33.159 --> 00:00:38.679 nine gigaworth of batteries, and Texas goes even faster they get thirty one gig 6 00:00:38.759 --> 00:00:42.600 of solar and then geworth of batteries. And listen, by the way, 7 00:00:42.600 --> 00:00:46.479 what's for me the most amazing is the fact that when the sun goes down 8 00:00:46.520 --> 00:00:50.000 at night for like two hour periods, what you're getting is battery being the 9 00:00:50.079 --> 00:00:53.679 major provider of power in California. Sure, the same will happen in Texas 10 00:00:53.679 --> 00:00:57.960 too, exactly. But first of all, from our partner DNA, Piper's 11 00:00:58.079 --> 00:01:03.159 leading energy transition practice some more deals and projects than any other law firm in 12 00:01:03.200 --> 00:01:07.239 the world. They advise clients across the entire value chain over a project's full 13 00:01:07.560 --> 00:01:12.480 life cycle globally, John, when it comes to the energy transition, you 14 00:01:12.519 --> 00:01:17.879 can make the following analogy. The public policies are the land. The financial 15 00:01:17.920 --> 00:01:23.439 markets are the rain, but the seeds are but are than entrepreneurs. That's 16 00:01:23.439 --> 00:01:26.200 great, Loron, and I agree with you, and that's why it's brilliant 17 00:01:26.200 --> 00:01:32.159 to actually have one of those entrepreneurs in and really, Shelton kimber CEO of 18 00:01:32.280 --> 00:01:34.200 Intersect Power, I mean, listen to one of the top developers in the 19 00:01:34.319 --> 00:01:38.280 US. Let's bring them on the show. Sheldon, welcome to the show. 20 00:01:38.599 --> 00:01:42.200 Thanks for having me. Well, Shandon, when we prepared our conversation, 21 00:01:42.480 --> 00:01:47.879 you said you would talk about Taylor Swift private jet, and I'm eager 22 00:01:47.959 --> 00:01:51.760 to know what you're going to talk about. But first probably let's talk about 23 00:01:52.000 --> 00:01:56.840 the last eight years because Intersect Power it's pretty phenomenally How did you do it? 24 00:01:57.359 --> 00:02:00.400 We've not yet handled Taylor's private jet, and we'll talk about that, 25 00:02:00.480 --> 00:02:02.519 but in terms of what we have done, it's been a pretty wild ride. 26 00:02:04.040 --> 00:02:08.120 Since about twenty sixteen when I founded the company and really twenty seventeen when 27 00:02:08.120 --> 00:02:13.840 we staffed up and got going. We've actually developed about four gigawatts of generation 28 00:02:14.000 --> 00:02:16.479 and two and a half gigwat ours batteries. We only owned two point two 29 00:02:16.479 --> 00:02:21.840 gigs of generation and the two and a half of batteries because the first sort 30 00:02:21.840 --> 00:02:23.680 of wave of projects, the first vintage as we call them, were sold 31 00:02:23.719 --> 00:02:29.360 off to SoftBank because Intersect at the time was only capitalized to be a build 32 00:02:29.400 --> 00:02:34.000 and flip developer. So we actually developed that first just shy at two gigs 33 00:02:34.000 --> 00:02:37.000 for soft Bank with about a team of twenty three people, and we did 34 00:02:37.039 --> 00:02:40.599 that in less than three years. So we really cranked on that portfolio and 35 00:02:40.639 --> 00:02:46.159 then started scaling the business to operate the next portfolio, which we're now running 36 00:02:46.280 --> 00:02:51.759 in California and Texas. When when we look at the secret to our success, 37 00:02:52.159 --> 00:02:55.240 it's really pretty simple. We came out of my last company, which 38 00:02:55.319 --> 00:03:00.240 is Recurrent Energy, pulled a good chunk of those folks out of the company, 39 00:03:00.360 --> 00:03:05.199 and ultimately we came away with an understanding of what was wrong with the 40 00:03:05.240 --> 00:03:08.639 power development business, and we tried to really articulate how we could do things 41 00:03:08.639 --> 00:03:14.439 differently. If you look at it, the power development business has effectively recruited 42 00:03:14.560 --> 00:03:19.520 a bunch of infrastructure finance folks like myself and ex utility execs, and we 43 00:03:19.680 --> 00:03:22.599 sort of put the fate of the world in that group's hands. Well, 44 00:03:22.639 --> 00:03:24.360 there's a lot of good things about that group a lot of good qualifications, 45 00:03:24.439 --> 00:03:29.599 but creativity and innovation is probably not high on the list. What we tried 46 00:03:29.599 --> 00:03:31.719 to do was figure out how we do things differently, and what we did 47 00:03:31.800 --> 00:03:37.199 was focus on efficiency, scalability and innovation. And so we can talk more 48 00:03:37.199 --> 00:03:40.560 about innovation maybe around Taylor's Jet, but the efficiency and scalability side of things 49 00:03:40.919 --> 00:03:45.080 were really kind of the secret to our success so far. We like to 50 00:03:45.080 --> 00:03:47.800 say we go to market with a small team, big projects and very few 51 00:03:47.840 --> 00:03:52.159 of them. Sheldon, can you dig into that, because I was laughing 52 00:03:52.199 --> 00:03:53.280 when I heard what you said there, which is, you know, the 53 00:03:53.280 --> 00:03:59.360 typical developers full of utility executives and finance people, what have you done differently? 54 00:04:00.400 --> 00:04:03.719 Creative and hardworking? And it's a combination of the staffing and the culture 55 00:04:03.840 --> 00:04:09.759 that we build. But again, really about go to market strategy that focuses 56 00:04:09.800 --> 00:04:14.240 on a small team relative to what we're doing, big projects and not very 57 00:04:14.280 --> 00:04:18.759 many of them. That focus of less projects and the focus on scalable projects. 58 00:04:19.240 --> 00:04:23.000 All of our projects are some of the largest in the country. That's 59 00:04:23.040 --> 00:04:28.040 really how we've delivered on the growth of intersect power. When you look at 60 00:04:28.079 --> 00:04:30.680 how a lot of other developers have done it. There is this concept of 61 00:04:30.800 --> 00:04:35.439 pipeline in our industry, which I think is a cancer. It's everything that 62 00:04:35.560 --> 00:04:42.360 is wrong with the industry, and it's rewarded by the capital markets. Todate, 63 00:04:42.360 --> 00:04:45.360 It's been rewarded by the private capital markets. You could see it in 64 00:04:45.399 --> 00:04:49.079 the frenzy of late twenty twenty one where companies were trading off of kind of 65 00:04:49.199 --> 00:04:55.360 like a multiply the number of slides of sunny land that we call pipeline by 66 00:04:55.720 --> 00:05:00.439 a certain sense, per wat get to multiple billions of dollars of valuation and 67 00:05:00.560 --> 00:05:05.319 some major strategic or financial will buy you for that. That reward of building 68 00:05:05.399 --> 00:05:12.279 pipeline has broken interconnection cues. It's clogged up land that is developable for developers 69 00:05:12.279 --> 00:05:15.160 who can actually execute, and so intersect doesn't do that. We've actually sort 70 00:05:15.160 --> 00:05:18.360 of outlawed the use of the word pipeline. Internally, we talk in terms 71 00:05:18.399 --> 00:05:24.199 of our business plan, and our business plan again is around clearly identified, 72 00:05:24.279 --> 00:05:28.680 focused strategy on the most scalable assets in the country, executed by an incredibly 73 00:05:28.720 --> 00:05:32.040 lean and efficient team. Sheldon I laughed again, because I'm a finance guy, 74 00:05:32.120 --> 00:05:34.920 right, and the finance guy I look at trying to measure stuff. 75 00:05:34.959 --> 00:05:39.759 I also do a lot of work with developers or whatever. The pipeline is 76 00:05:39.800 --> 00:05:42.879 actually quite important. And if actually looking what's going on in Europe, we're 77 00:05:42.879 --> 00:05:46.759 seen a whole pile of private equity guys going in and paying I would say, 78 00:05:46.839 --> 00:05:50.360 pretty enormous multiples for public companies that are taking private and it's all about 79 00:05:50.399 --> 00:05:54.240 pipeline. I don't know what to say. I think some of the most 80 00:05:54.279 --> 00:06:00.639 spectacular failures of capital stewardship of the last several years have been in our industry, 81 00:06:00.680 --> 00:06:06.399 and they're primarily based on the overvaluing of pipeline and the undervaluing of execution. 82 00:06:08.000 --> 00:06:11.360 So if you put pipeline in the hands of the right people, I 83 00:06:11.399 --> 00:06:14.279 think it can be very potent. I think you can have people who deliver 84 00:06:14.360 --> 00:06:19.279 on it. But right now there's no dearth of identified pieces of dirt that 85 00:06:19.360 --> 00:06:24.879 have gotten lease options on them, or interconnections that have been filed, at 86 00:06:24.959 --> 00:06:29.959 least in North America. What there is a dearth of is talented developers that 87 00:06:30.000 --> 00:06:33.519 have built gigawatts of assets in the course of the last couple of years, 88 00:06:34.040 --> 00:06:39.199 financed them, brought them to market, and have an actual strategy for putting 89 00:06:39.199 --> 00:06:43.920 them into long term operation, and there's a dearth of that expertise. There's 90 00:06:43.959 --> 00:06:47.360 a dearth of people who have put the time and capital into securing their supply 91 00:06:47.439 --> 00:06:53.560 chain. And there's also a dearth of just capital providers that are willing to 92 00:06:53.639 --> 00:06:59.040 back players in the space based primarily on their growth and not their sort of 93 00:06:59.079 --> 00:07:03.120 dividend potential. And so capital providers that have a growth mentality versus a dividend 94 00:07:03.160 --> 00:07:06.879 mentality also are a very short supply in the industry. So when you put 95 00:07:06.879 --> 00:07:10.639 those things together, I think those are the things that intersect tries to bring 96 00:07:11.000 --> 00:07:15.720 our backers. In terms of Climate Adaptive Infrastructure TPG, TPG's more of a 97 00:07:15.920 --> 00:07:19.800 rias climate has actually got a real growth orientation. Our supply chain strategy is 98 00:07:20.000 --> 00:07:25.279 hugely differentiated, and then our execution track record is what makes it different. 99 00:07:25.319 --> 00:07:28.160 So you want to value pipeline in our hands, go ahead, You want 100 00:07:28.160 --> 00:07:30.279 to value pipeline in the hands of half these other guys that have traded where 101 00:07:30.279 --> 00:07:34.319 you just sort of like bolted a couple of ex bankers and a few developers 102 00:07:34.360 --> 00:07:39.199 to large PowerPoint deck and then sold it for a billion dollars. That's what's 103 00:07:39.199 --> 00:07:42.680 wrong with the industry, not to get into a diatribe, but just one 104 00:07:42.680 --> 00:07:45.759 of the last thing, and that is it's not good for anybody because in 105 00:07:45.800 --> 00:07:49.360 North America you overshot the valuations and now you've got a lot of folks who 106 00:07:49.439 --> 00:07:53.519 feel burned. I talk to a lot of investors right now who are just 107 00:07:53.560 --> 00:07:58.319 not bullish the space because a lot of people torched billions. Sure, don 108 00:07:58.639 --> 00:08:03.639 I like your approach already focusing on a few projects. All your projects on 109 00:08:03.720 --> 00:08:07.519 California or Texas. So why because there's land? But I guess California and 110 00:08:07.560 --> 00:08:13.240 Texas are also pretty different. What makes them appealing to you and what are 111 00:08:13.279 --> 00:08:18.480 the difference between Texas and California. Texas and California are very different markets. 112 00:08:20.240 --> 00:08:24.560 We are focused on both of them because they have some similarities from a development 113 00:08:24.600 --> 00:08:28.800 perspective that are very attractive. First and foremost, they have a great deal 114 00:08:28.839 --> 00:08:33.240 of available land. That doesn't make it easy. By the way, California 115 00:08:33.279 --> 00:08:37.200 has a huge amount of permitting complexity, and Texas, while permits are not 116 00:08:37.279 --> 00:08:41.720 as complex, has an enormous amount of complexity around oil and gas rights on 117 00:08:41.759 --> 00:08:46.080 the land side. So by no means are they easy. Anybody can lease 118 00:08:46.120 --> 00:08:48.440 option at piece of dirt say in Texas, but actually getting it to clean 119 00:08:48.519 --> 00:08:54.240 title and buildable renewable asset is incredibly hard. All that said, though, 120 00:08:54.320 --> 00:08:58.720 they have available land at scale, so you can actually build scalable plants of 121 00:08:58.759 --> 00:09:03.080 the kind of intersects focused on. They are also deep liquid power markets, 122 00:09:03.080 --> 00:09:09.039 so there's liquidity and the wholesale markets to provide hedging and downside protection on the 123 00:09:09.159 --> 00:09:13.399 energy. The REX the RA over and above just kind of a regulated markets 124 00:09:13.639 --> 00:09:16.480 utility PPA. And then they are also both markets that have a great deal 125 00:09:16.480 --> 00:09:20.360 of demand and they're growing rapidly. They're doing that for very different reasons. 126 00:09:20.399 --> 00:09:24.240 Obviously, in California, there's a large compliance market for a noble power but 127 00:09:24.320 --> 00:09:30.440 California is also growing as a state and as it electrifies with the addition of 128 00:09:30.480 --> 00:09:33.360 electric vehicles, electric trucking, many of the mandates across the rest of it 129 00:09:33.360 --> 00:09:39.480 it's economy, there is tremendous demand growth that will come about across that state. 130 00:09:39.879 --> 00:09:43.639 And then Texas. Obviously, Texas is just a success story economically from 131 00:09:43.639 --> 00:09:48.639 an industrialization and industrial build out standpoint. Their economy is growing rapidly and the 132 00:09:48.759 --> 00:09:52.000 thirst for energy, including electric power, is huge. A lot of commonalities 133 00:09:52.039 --> 00:09:58.000 there the questions about the differences are more nuanced. The ability to play in 134 00:09:58.039 --> 00:10:05.159 both markets really demonstrates the depth of the understanding that intersect has because they are 135 00:10:05.200 --> 00:10:07.519 so different, and so the way we look at both markets is to try 136 00:10:07.559 --> 00:10:13.080 to draw similarities between them. I'll take apart batteries for a second. For 137 00:10:13.120 --> 00:10:16.039 instance, in Texas, you make your bread and butter on batteries. Battery 138 00:10:16.120 --> 00:10:20.120 is worth essentially the volatility the peak to trough, So you buy low, 139 00:10:20.200 --> 00:10:24.279 you sell high. That delta between the low and high in any given hour 140 00:10:24.720 --> 00:10:28.519 is what the battery is worth. And so you kind of do that every 141 00:10:28.559 --> 00:10:31.080 day, churning along trough to peak, trought to peak, trought to peak, 142 00:10:31.440 --> 00:10:35.720 and that gives you kind of your baseline return. But then Texas really 143 00:10:35.759 --> 00:10:41.120 rewards you because you're there to sort of ensure the market against some sort of 144 00:10:41.440 --> 00:10:46.000 serious demand spike. You get these huge rewards on two or three or four 145 00:10:46.159 --> 00:10:50.159 five big demand spikes that where prices go very very high, and there's almost 146 00:10:50.159 --> 00:10:54.159 no price gap. In Texas, it's thousands of dollars in Megawa hour. 147 00:10:54.639 --> 00:10:58.240 California does it very differently. The first component is very similar. You've got 148 00:10:58.480 --> 00:11:01.120 charge low, sell high, charge low, sell high, and you do 149 00:11:01.200 --> 00:11:03.480 that every day and every hour you can, and you make your baseline return. 150 00:11:05.240 --> 00:11:07.320 But California has a price cap on the market where they don't allow it 151 00:11:07.360 --> 00:11:13.200 to go high because policymakers and politicians don't want to have to deal with the 152 00:11:13.279 --> 00:11:16.799 sort of outcry around that kind of what is seen as I guess excess rent 153 00:11:18.000 --> 00:11:22.039 seeking. So instead they create this basically insurance product called capacity, or in 154 00:11:22.080 --> 00:11:26.720 California they call it resource adequacy, because no market is good without some sort 155 00:11:26.759 --> 00:11:31.960 of strange name, and so that insurance product essentially sort of takes the peaks 156 00:11:31.000 --> 00:11:35.159 and kind of peanut butter spreads them across the whole year, and that's what 157 00:11:35.279 --> 00:11:37.639 you're paid. Sheldon, can I ask you a little bit about the journey 158 00:11:37.679 --> 00:11:43.879 from being a developer to being an asset owner and a manager. There's assets, 159 00:11:43.279 --> 00:11:46.320 but how have you found that on what have been the sort of the 160 00:11:46.320 --> 00:11:50.480 biggest challenges you've seen as you've done national It's sort of the ultimate put your 161 00:11:50.519 --> 00:11:54.320 money where your mouth is, because as a developer, you spend a lot 162 00:11:54.320 --> 00:12:00.000 of your time if you're a build and flip developer, arguing with independent engineers 163 00:12:00.320 --> 00:12:03.960 and project buyers about what assumptions go in the model, and then ultimately there 164 00:12:05.000 --> 00:12:07.440 was an old game show in the United States where everybody went they played a 165 00:12:07.480 --> 00:12:11.720 game called Name That Tune. Where As a developer now you have deliver on 166 00:12:11.759 --> 00:12:16.639 the assumptions in the pro forma. So the transition, I'll be honest, 167 00:12:16.840 --> 00:12:20.440 has not been easy. You can see that in the number of people who 168 00:12:20.879 --> 00:12:24.440 in twenty twenty, twenty twenty one, every developer that had ever leased up 169 00:12:24.480 --> 00:12:30.519 some land, filed and interconnect and hooked a PPA was telling you that there 170 00:12:30.519 --> 00:12:33.080 were going to be an IPP How many of those people have actually made it 171 00:12:33.120 --> 00:12:37.519 there. The answer is not very many. By the way, the valley 172 00:12:37.559 --> 00:12:43.679 of death between developers and IPPs is wide and it is deep. The things 173 00:12:43.679 --> 00:12:46.840 that have helped intersect there are we have a number of people who have been 174 00:12:46.919 --> 00:12:52.200 operators before or worked for operators. We have staffed up with numerous folks from 175 00:12:52.399 --> 00:12:56.639 other companies who've got folks that have joined us, from Brookfield, from Cyprus, 176 00:12:56.840 --> 00:13:01.639 from gas Fire Generators. I worked at Calpine for many years with an 177 00:13:01.639 --> 00:13:09.799 operation's history there there's a familiarity around our team in operations. And then I'll 178 00:13:09.840 --> 00:13:13.720 be honest and say the Solar hasn't been tremendously hard. A lot of it's 179 00:13:13.759 --> 00:13:18.759 been made easier by the consistency of the equipment that we purchased for Solar's largest 180 00:13:18.759 --> 00:13:22.840 customer. We're one of the largest customers of Tesla. We have all the 181 00:13:22.879 --> 00:13:28.639 same transformers and medium voltage transformers, high voltage transformers. Everything is very consistent 182 00:13:28.679 --> 00:13:33.440 across our fleet, so that's made it much easier. The thing that has 183 00:13:33.480 --> 00:13:37.080 maybe been a little bit surprising is the operation of batteries. We're still kind 184 00:13:37.080 --> 00:13:41.360 of learning how they integrate with the systems. Some of the back and forth 185 00:13:41.399 --> 00:13:43.679 with like the ISOs about hey, why are you running your battery that way 186 00:13:43.960 --> 00:13:48.279 has been an interesting set of questions. There's been folks trying to understand why 187 00:13:48.320 --> 00:13:52.879 we act in certain ways with our battery assets, and that's just sort of 188 00:13:52.919 --> 00:13:54.919 an indication of how new they are on the grid. Certainly at the scales 189 00:13:54.960 --> 00:14:00.120 we're talking about kind of the single asset GEGG what our plus scale? You 190 00:14:00.120 --> 00:14:03.000 start talking about your supply chain, because for me what we are, it 191 00:14:03.080 --> 00:14:09.200 seems that there is a lot of especially Solar, difficulty to get Chinese spanels, 192 00:14:09.679 --> 00:14:13.320 import taxes, or a lot of questions, So how did you manage 193 00:14:13.360 --> 00:14:16.960 to structure your supply chain. Of course you talk about the slab batteries please. 194 00:14:16.679 --> 00:14:20.200 It's been a very, very intentional strategy right from the get go. 195 00:14:20.639 --> 00:14:26.240 We started out with the intention primarily around forced labor. So when we did 196 00:14:26.240 --> 00:14:30.519 our first contracts, even before the fleet that we're running now, the two 197 00:14:30.559 --> 00:14:33.639 point two gigawatts, when we were doing the just h two gigs we sold 198 00:14:33.639 --> 00:14:37.120 to soft Bank, we tried to get our arms around whether or not we 199 00:14:37.159 --> 00:14:41.440 wanted to buy Chinese modules, and at the time there were a whole bunch 200 00:14:41.480 --> 00:14:46.720 of folks sending me kind of the various human rights reports on Hinjiang and some 201 00:14:46.759 --> 00:14:50.639 of the forced labor issues there. We had a good relationship with First Solar, 202 00:14:50.039 --> 00:14:52.720 have a lot of respect for that team. We like their product a 203 00:14:52.720 --> 00:14:56.919 lot. There are a lot of advantages to that product in regions of the 204 00:14:56.919 --> 00:15:01.279 country that have hail, so there's a lot of technical advantage. And combining 205 00:15:01.279 --> 00:15:03.720 all of that with just our view that no matter how hard we tried on 206 00:15:03.759 --> 00:15:07.919 supply chain consultants and other things, we just weren't going to get comfortable that 207 00:15:07.960 --> 00:15:13.080 our modules weren't being made with Shinjong polly and labor. That really was kind 208 00:15:13.120 --> 00:15:16.559 of a values based judgment, and at the time we actually paid more for 209 00:15:16.639 --> 00:15:20.720 the product, but it made us a very large customer first holders, and 210 00:15:20.759 --> 00:15:24.720 we went on to buy more of it even before the Inflation Reduction Act and 211 00:15:24.720 --> 00:15:30.840 then the IRA came in and effectively was a bit of a windfall for the 212 00:15:30.879 --> 00:15:33.440 type of supply chain we were already running in terms of the things and we 213 00:15:33.519 --> 00:15:37.639 had decided to do based on our corporate values. The tariffs are a bit 214 00:15:37.679 --> 00:15:43.519 of another story across both modules and a whole bunch of other equipment. The 215 00:15:43.600 --> 00:15:48.559 United States is concerned k along three axes of policy. The first is defense 216 00:15:48.759 --> 00:15:54.840 and national security, the second is economic development labor industrial policy, and the 217 00:15:54.879 --> 00:15:58.360 third is forced labor. And what they're trying to solve for across all of 218 00:15:58.399 --> 00:16:04.320 those policy goals is very different, but it has one common impact, which 219 00:16:04.360 --> 00:16:10.960 is in almost every case going to result in less equipment coming from China, 220 00:16:11.080 --> 00:16:15.679 less dependency on China in many sectors of the US economy, but renewables, 221 00:16:17.000 --> 00:16:21.960 electric vehicles, battery storage is going to be one that is most impacted due 222 00:16:21.960 --> 00:16:26.480 to where most of those pieces of equipment are made. You've already seen UFLPA 223 00:16:26.799 --> 00:16:33.279 forced labor actions that have impacted through customs the industry with a lot of holds 224 00:16:33.279 --> 00:16:40.720 on modules. And then now you're seeing significant tariff activity with an established base 225 00:16:40.799 --> 00:16:45.960 of industry in the United States filing complaints against Chinese dumping and the government largely 226 00:16:47.000 --> 00:16:49.600 agree with that. And finally, people are going to fight, spend millions 227 00:16:49.639 --> 00:16:53.720 and millions and millions of dollars fighting customs, fighting tariffs, fighting the government, 228 00:16:53.799 --> 00:16:56.639 trying to do all this. But at the end of the day, 229 00:16:56.639 --> 00:17:00.639 you got to ask yourself some fundamental questions around is the United States government going 230 00:17:00.679 --> 00:17:04.599 to allow this stuff onto their grid from a national defense standpoint? And some 231 00:17:04.680 --> 00:17:10.319 of the more passive equipment maybe, but you start getting into batteries and electrical 232 00:17:10.359 --> 00:17:12.400 equipment that touches the grid or has the ability to bring down the grid, 233 00:17:12.720 --> 00:17:17.559 and you're going to very quickly find the answer is absolutely not. No matter 234 00:17:17.599 --> 00:17:19.799 what goes on in some of those other areas, I'm just not bullish that 235 00:17:19.799 --> 00:17:22.960 the United States government is going to get there on the national defense side of 236 00:17:23.160 --> 00:17:26.440 Chinese equipment. So, Sheldon, sorry, just one thing that we hear 237 00:17:26.440 --> 00:17:30.680 an awful lot of is that it's really difficult in terms of grid build out 238 00:17:30.720 --> 00:17:34.160 in the us, and in particular it's just a shortage of components like transformers 239 00:17:34.200 --> 00:17:37.160 and stuff like that. Can you comment a little bit about on that. 240 00:17:37.759 --> 00:17:40.599 Yes, the answer is yes, there's a shortage of all of that, 241 00:17:41.039 --> 00:17:44.240 and the cues are very long to get your hands on that. We have 242 00:17:44.319 --> 00:17:49.720 data centers and generators and utilities who all need that equipment effectively fighting over a 243 00:17:49.720 --> 00:17:53.359 fairly narrow pool of that equipment, and most of it is locked up for 244 00:17:53.720 --> 00:17:59.079 three, four five years forward. Luckily, at Intersect Power we realize that 245 00:17:59.240 --> 00:18:03.240 quite some time, and we have eighty plus transformers enough for all of our 246 00:18:03.279 --> 00:18:06.720 projects for the next five years. We've got one hundred and forty plus have 247 00:18:06.799 --> 00:18:10.319 eliged circuit breakers also enough for all of our projects going forward, and we've 248 00:18:10.319 --> 00:18:14.319 got some spares available there for data center customers. So we are not in 249 00:18:14.359 --> 00:18:18.519 that position, but the market absolutely is. Sheldon, I'd like to hear 250 00:18:18.680 --> 00:18:23.720 your comment on something that we recently saw in California, which is that before 251 00:18:23.720 --> 00:18:29.119 the sun comes up on after the sun goes down, the biggest generation is 252 00:18:29.160 --> 00:18:33.279 actually ends up being battery storage. So this whole called duck curve that we've 253 00:18:33.279 --> 00:18:36.039 been talking about for years, and you can actually say that the shoulders of 254 00:18:36.119 --> 00:18:40.319 the duck have not been broken by batteries. Just talk about that and explain 255 00:18:40.400 --> 00:18:42.720 that how that works and how you see it going forward. Actually, it's 256 00:18:42.759 --> 00:18:48.240 been a really interesting spring in California. We've had a bunch of first We 257 00:18:48.359 --> 00:18:53.640 had the first time, as you say, the battery storage was the marginal 258 00:18:53.680 --> 00:18:59.359 supply during the ramp periods, we're demand ramped. We've had a big first 259 00:18:59.559 --> 00:19:03.160 in term of the first time or at least the first time for a significant 260 00:19:03.240 --> 00:19:10.440 number of hours where the net load demand net of solar and renewables primarily solar 261 00:19:10.480 --> 00:19:15.640 in California went negative. So that means that there was more renewables online or 262 00:19:15.799 --> 00:19:18.759 then the total demand of the state for many hours during the middle of the 263 00:19:18.839 --> 00:19:22.160 day when the solar was really producing. It's had some really interesting effects on 264 00:19:22.200 --> 00:19:29.640 the marketplace. The predominance of batteries is fantastic right now. You're primarily seeing 265 00:19:29.680 --> 00:19:33.200 them kicking gas out of the mix where gas would have been on the margin 266 00:19:33.279 --> 00:19:37.319 during those periods. We have yet to see the sort of secondary some might 267 00:19:37.359 --> 00:19:41.680 call it the primary impact that we're looking for from batteries, which is to 268 00:19:41.759 --> 00:19:45.440 kind the LiPo suction of the belly of the duck. We need to kind 269 00:19:45.440 --> 00:19:48.599 of suck the gut in on the duck and begin to impact the shape of 270 00:19:48.920 --> 00:19:53.119 demand in California. Those batteries will then pick up the belly of the duck 271 00:19:53.200 --> 00:19:56.279 and dump it into the sort of head of the duck in the evening ramp. 272 00:19:56.720 --> 00:20:00.720 That has yet to sort of happen. If you look at the evidence 273 00:20:00.759 --> 00:20:03.519 from the spring, you see the whole curve moved down. So you've seen 274 00:20:03.519 --> 00:20:08.759 pretty depressed energy prices in California, and you haven't seen batteries built at a 275 00:20:08.920 --> 00:20:14.319 large enough scale yet that the shape is changing. The whole curve has moved 276 00:20:14.559 --> 00:20:18.839 sort of vertically down, but the belly of the duck hasn't gone up while 277 00:20:18.880 --> 00:20:21.759 the head is dropping. That has not begun to happen yet. So we 278 00:20:21.799 --> 00:20:26.880 need a lot more batteries in California to really get at the fundamentals of flattening 279 00:20:26.920 --> 00:20:30.640 the duck curve and putting us on a stable path toward semi firm renewables. 280 00:20:32.759 --> 00:20:34.440 Just on that. So, if I understand that what you're doing is by 281 00:20:34.440 --> 00:20:37.759 putting in batteries, ultimately you're competing with gas. So it's all about that. 282 00:20:37.880 --> 00:20:42.279 So it's all about can I buy power cheap enough and then sell it 283 00:20:42.359 --> 00:20:47.960 more expensive enough so that would still be under the marginal cost of gas? 284 00:20:48.079 --> 00:20:49.960 Is that the way I should look at it. Yes, that's what you're 285 00:20:51.000 --> 00:20:56.799 competing against is gas peakers or in some cases ccgts that are now operating as 286 00:20:56.839 --> 00:21:02.200 gas peakers because renewables ate their lunch and have reduced the capacity factors of those 287 00:21:02.200 --> 00:21:07.039 assets dramatically. So you're very much competing against those assets with batteries. Today 288 00:21:07.839 --> 00:21:11.240 shudd on, we got to talk about data centels because everybody's talking about data 289 00:21:11.279 --> 00:21:15.039 centels. Everybody has his own opinion, and we had the head of Good 290 00:21:15.119 --> 00:21:19.319 NLG was his own opinion, So I'm curious, what's your opinion on data 291 00:21:19.359 --> 00:21:25.680 centels. Well, what's interesting is the world has gotten pretty worked up about 292 00:21:25.720 --> 00:21:29.519 data centers since the advent of AI here in the last twelve months, but 293 00:21:29.680 --> 00:21:36.279 Intersect Power has been working effectively on the same problem for several years. We've 294 00:21:36.319 --> 00:21:38.680 talked in the past with you guys about hydrogen, and we won't get into 295 00:21:38.680 --> 00:21:42.799 that, but our hydrogen strategy was all about this sort of nexus of deep 296 00:21:42.799 --> 00:21:47.079 decarbonization, which I've written about in my blog and talked about a lot, 297 00:21:47.200 --> 00:21:49.240 which really just the realization of a couple of quick things, and that is 298 00:21:49.519 --> 00:21:52.839 one, there's so much renewable power at the wrong time and at the wrong 299 00:21:52.920 --> 00:21:56.799 place in many parts of the country. And two that the grid is broken 300 00:21:56.839 --> 00:22:00.640 and it will never be fixed. And people who are building bit businesses on 301 00:22:00.680 --> 00:22:03.920 the basis that the grid is somehow going to magically be fixed will never make 302 00:22:03.960 --> 00:22:06.720 the returns that they think they will. So when you put these two things 303 00:22:06.759 --> 00:22:11.240 together, you wind up with the realization that very large loads, in particular 304 00:22:11.359 --> 00:22:18.160 new large loads that require industrial scale electrification, will likely wind up locating next 305 00:22:18.200 --> 00:22:22.519 to or on the bus bar of large clean generators, and maybe going one 306 00:22:22.559 --> 00:22:27.319 step further, those will be large clean generators in parts of the country where 307 00:22:27.640 --> 00:22:32.759 the renewables put together, call it the wind and the sun at the same 308 00:22:32.839 --> 00:22:37.559 time, can generate green power at very high capacity factor at sixty seventy percent 309 00:22:37.599 --> 00:22:41.920 capacity factor, places like the Panhandle of Texas and so Intersect's been developing in 310 00:22:41.920 --> 00:22:45.440 those places for a very long time, and we have some very flexible assets, 311 00:22:45.720 --> 00:22:49.960 big behind the meter sites that can produce green power seventy percent of the 312 00:22:51.000 --> 00:22:53.240 time. Add batteries, they can go to eighty plus, you know, 313 00:22:53.279 --> 00:22:56.160 maybe add a little bit of on site gas to get you to the twenty 314 00:22:56.200 --> 00:23:00.839 four to seven, and you can get very very high renewal percentages with firm 315 00:23:00.920 --> 00:23:07.519 power without relying on the grid. And so it is actually pretty great value 316 00:23:07.559 --> 00:23:11.240 proposition for the AI data centers. And so I don't have any announcements here, 317 00:23:11.519 --> 00:23:15.119 but certainly there's a lot of interest in what we've been doing. The 318 00:23:15.119 --> 00:23:21.799 primary feedback, the primary obstacle that I think a lot of generators with renewables 319 00:23:21.799 --> 00:23:26.880 of the kind I've described are facing is data center folks are very committed to 320 00:23:26.440 --> 00:23:30.720 the existing locations they have, right, They have labor pools, they have 321 00:23:30.960 --> 00:23:33.640 certain things about fiber that they like, and the fiber networks. Although most 322 00:23:33.640 --> 00:23:37.720 of the places we're developing have plenty of fiber, we've made sure that from 323 00:23:37.759 --> 00:23:41.880 the get go it's a hesitancy, right. But the market is absolutely changing 324 00:23:41.079 --> 00:23:45.559 to more of what we'll call a power first siting philosophy when it comes to 325 00:23:45.720 --> 00:23:49.119 data centers. And as that happens, as we shift to a power first 326 00:23:49.240 --> 00:23:53.720 citing philosophy, you will find many, many more of those pieces of digital 327 00:23:53.720 --> 00:24:00.799 infrastructure being located near the high capacity factor low cost clean energy news. Intersect 328 00:24:00.839 --> 00:24:03.039 Power has a lot of that, So we're bullish on the data center trend 329 00:24:03.920 --> 00:24:11.200 shed down. We could talk for hours, and unfortunately this time we don't 330 00:24:11.240 --> 00:24:15.599 have time to talk about data sweet private jet and your e fuels. You 331 00:24:15.680 --> 00:24:19.319 gotta build for her. So that's for the next episode. But more journey 332 00:24:19.400 --> 00:24:23.359 speaking, can you share with us what intersect but was going to look like 333 00:24:23.480 --> 00:24:27.880 in three to five years. Intersect Power in three to five years is going 334 00:24:27.960 --> 00:24:32.000 to be a lot of the same of what you see today, just about 335 00:24:32.119 --> 00:24:37.000 three to four times bigger. We have a business plan right now that has 336 00:24:37.720 --> 00:24:41.279 projects that are in either late stage development. In the case of the first 337 00:24:41.279 --> 00:24:45.599 wave of projects, we have about three and a half billion dollars worth of 338 00:24:45.640 --> 00:24:49.039 assets that are in financing now that will be project financed by the end of 339 00:24:49.039 --> 00:24:52.359 the year, but they're pretty much shove already aside from the project financing, 340 00:24:52.720 --> 00:24:57.279 and the construction will start in January next year. That's enough to more than 341 00:24:57.359 --> 00:25:03.319 double the size of our company by EBITDA and then we will go from the 342 00:25:03.359 --> 00:25:07.200 two hundred million of you but that we have the day to more than triple 343 00:25:07.240 --> 00:25:11.279 that by the end of twenty seven and again, that's a group of projects 344 00:25:11.359 --> 00:25:14.440 that's similarly laid stage. A lot of them have permits, a lot of 345 00:25:14.480 --> 00:25:18.000 them have interconnection all the land, and as I've said, every single one 346 00:25:18.039 --> 00:25:22.359 of them has almost every single major component fully procured at a fixed price. 347 00:25:23.480 --> 00:25:29.079 In that regard, we have some incredibly reliable, stable growth that more than 348 00:25:29.119 --> 00:25:32.839 triples the size of the company by the end of twenty seven, and then 349 00:25:33.160 --> 00:25:37.000 a similar wave of growth that's a little earlier stage that takes it well beyond 350 00:25:37.000 --> 00:25:41.640 that to four x plus as we head into the latter part of the decade. 351 00:25:41.039 --> 00:25:45.440 And I think the key thing to highlight is while I have a lot 352 00:25:45.440 --> 00:25:48.960 of fun talking about Taylor swift Jet and e fuels and data centers and other 353 00:25:49.039 --> 00:25:53.640 things, the company is quietly putting together one of the largest grid, tide 354 00:25:53.680 --> 00:25:59.519 generation and storage portfolios in the country, and we're doing it faster than almost 355 00:25:59.519 --> 00:26:03.799 anybody else out there. So we can have a lot of fun talking about 356 00:26:03.839 --> 00:26:08.559 the intricacies of new technologies and the changeover in the entire industry to deep decarbonization 357 00:26:08.640 --> 00:26:14.039 of industrials, but at our core, we're building a monster in the power 358 00:26:14.039 --> 00:26:17.440 markets, and one that very few others have built. At this scale, 359 00:26:17.480 --> 00:26:21.680 at this pace, amazing. I listened, Sheldon. It's been great having 360 00:26:21.720 --> 00:26:25.039 you on the show, and I certainly wish you all the best going forward 361 00:26:25.359 --> 00:26:30.119 changing the energy landscape of the USA. Yeah. I thought you would come 362 00:26:30.200 --> 00:26:33.519 here and talk a lot about inspiration, but in fact you took a lot 363 00:26:33.559 --> 00:26:37.680 about perspiration and that's really what I enjoyed. Thank you, guys, thanks 364 00:26:37.680 --> 00:26:42.119 for having me. My question to you, Laron. I loved your analogy 365 00:26:42.279 --> 00:26:47.880 at the beginning, which you opened up the whole show up. But I 366 00:26:47.920 --> 00:26:49.880 suppose my question is, so we look at California and Texas because they just 367 00:26:49.880 --> 00:26:53.680 seem to be so different. Yes, on one hand, the markets are 368 00:26:53.799 --> 00:26:59.279 very different. On the other hand, it's all about Gientano. We had 369 00:26:59.440 --> 00:27:04.319 David skin Book on the show with Greig Jackson. Those guys, Sheldon Kimber, 370 00:27:04.559 --> 00:27:08.640 those guys are the diamonds. They are the engine of the energy transition. 371 00:27:10.200 --> 00:27:15.279 Not the consultants. Those people, they don't build pipelines, they build 372 00:27:15.440 --> 00:27:18.799 project No. Man, you criticize my feel very bad and over and I 373 00:27:18.839 --> 00:27:23.720 get up every day and consult people, but I'm actually not I agree with 374 00:27:23.759 --> 00:27:29.920 you. Listen, the energy to transition doesn't happen without the entrepreneurship. Yeah, 375 00:27:29.960 --> 00:27:33.640 and without those great guys and girls that are out there right. And 376 00:27:33.799 --> 00:27:38.640 as I was talking to Daniel Fabsar and the guys spend his time on the 377 00:27:38.720 --> 00:27:44.200 roof of people putting panels, and I say, Daniel was your secret and 378 00:27:44.240 --> 00:27:51.640 he says, stumph is stromph, which means the brutal, simple repetition is 379 00:27:51.680 --> 00:27:56.119 the key of success. Stumph is stromph. And Sheldon does the same. 380 00:27:56.640 --> 00:28:02.920 I was absolutely mesmerized. But the description of his supply chain use first solar, 381 00:28:03.440 --> 00:28:07.160 use TESTA batteries, and it's just repeat, repeat, repeat, keep 382 00:28:07.200 --> 00:28:14.039 it simpacility and scale fast right exactly exactly, Otherwise why would he have raised 383 00:28:14.319 --> 00:28:19.240 six billion in deeth aniquity in AHLs starting from zero? He put four gigel 384 00:28:19.240 --> 00:28:22.200 out of solar. I put two point five k what hour of batteries? 385 00:28:22.799 --> 00:28:26.359 It just is grin t It's phenomenal. So I love to do the show 386 00:28:26.440 --> 00:28:30.359 to get those type of entrepreneurs and the you know, give them a bit 387 00:28:30.400 --> 00:28:33.440 of exposure. Yeah, because actually what they do is they excited us, 388 00:28:33.519 --> 00:28:40.279 Laurent and hopefully they help motivate others around the world do the same thing. 389 00:28:40.759 --> 00:28:44.720 Absolutely, I only have one regret is. We didn't have time to speak 390 00:28:44.720 --> 00:28:51.920 about Taylor Swift and her private jet, but that's for another episode. We 391 00:28:52.079 --> 00:28:56.400 thank Sheldon for coming on the show with thank Jaellly Piper to support this episode 392 00:28:56.480 --> 00:29:06.799 and jar I took to you next week. Thank you for listening to Redefining 393 00:29:07.000 --> 00:29:11.640 Energy. Don't forget to rate the show and subscribe on Apple, Podcast, 394 00:29:11.119 --> 00:29:15.160 Spotify, or the platform of your choice.