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- [00:03]
Latitude Media Host
Latitude Media covering the new frontiers of the energy transition.
- [00:07]
Shayel Khan
I'm Shayel Khan. I lead the early stage Venture strategy at Energy Impact Partners. Welcome to Catalyst. Well, I've spent enough time on this podcast talking about EPCs or engineering, procurement and construction firms for those not in the know. Anyway, it's time to talk to an epc. Solve Energy is one of the biggest, particularly in the construction of solar and storage projects. Depending on your metrics, Solve is usually either the biggest or the second biggest in the US Anyway. They're big and they build a lot of big projects. They also went public earlier this year in a very successful IPO and somehow managed to snag the ticker MWH or Megawatt Hour, which I very much appreciate. Anyway, George Hirschman, solve's CEO has a really fantastic window into a bunch of things I'm interested in, ranging from things state of the market to the labor shortage to the extent that it exists, to the impact of AI and robotics on construction. So here's George.
- [01:10]
Alfred Johnson
When utilities need flexible capacity they can count on, they turn to Energy Hub. Energy Hub works with more than 170 utilities coordinating over 2.5 million devices, 2 to manage 3.4 gigawatts of flexibility. Built for the moments when utilities can't afford uncertainty, Energy Hub builds and operates virtual power plants that utilities actually stake their grid planning on coordinating EVs, batteries, thermostats and more through a single platform built for utility scale, predictive, verifiable and designed to perform when it counts. Learn more@energyhub.com trillions of dollars are flowing into clean and critical infrastructure. But those investments aren't driven by technology alone. They're shaped by markets, by policy, by capital, and by the institutions that connect them. I'm Alfred Johnson, CEO of Crux and host of a brand new podcast, Critical Capital. Each episode I talk with people deploying capital, shaping policy and building the clean economy. Tune in as we unpack how progress is actually made. Listen to Critical Capital on Spotify, Apple or wherever you get your podcasts.
- [02:15]
Latitude Media Host
Catalyst is supported by Fishtank pr, an award winning PR firm focused on climate and energy tech, renewables and sustainability. Fishing is known for generating prominent and effective media coverage for the brands they work with. If you want a PR partner that's thoughtful, shoots straight and gets results, you'll like Fishtank PR. To learn more about Fishtank's approach, visit fishtankpr.com that's F I-S-C-H fishtankpr.com
- [02:44]
Shayel Khan
George welcome.
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George Hirschman
Well thanks for having us. Or me, Shale. Appreciate it.
- [02:48]
Shayel Khan
Excited to chat with you about the state of EPC in power and solar and storage in particular. And I'll maybe ask you to start by giving me your state of the market. Like where are we at today?
- [03:02]
George Hirschman
Well, actually, you know, we're really excited about the market. Right. We're seeing huge opportunities across, you know, all of our services. Whether that's our EPC business, our O and M business, our HV business. I mean, the, you know, our demand is real and we're seeing growth in every market across the country. So having been in this market for 18 plus years and seeing that demand is growing so fast and the need for our product and solar and storage has never been higher. So I'm pretty excited about it.
- [03:43]
Shayel Khan
All right, so boom times for solar and storage and all the associated services that you guys provide. Along with that, you mentioned you've been in the market for 18 years. I'm actually interested to hear is this a cyclical business? You think of construction in the context of housing and things like that as being very cyclical and you go through periods of boom and bust and then. And the construction business kind of follows along suit with that. How have you seen over the 18 years, like how has this market evolved? Is it similar boom and bust periods or is it more, I don't know, odd than that?
- [04:17]
George Hirschman
Yeah, I think it's a little bit different. I mean, I spent my first two thirds of my career in commercial construction, so I saw that cycle kind of every seven years. We don't really see that the same. Right. And renewables has grown consistently since we started the business in 2008. And we started in small commercial and then that moved into utility. And I laugh now when I think about a utility project was like 10 or 15 megawatts.
- [04:50]
Shayel Khan
Yeah, yeah.
- [04:51]
George Hirschman
And but we've just, you know, seen a very consistent growth period while we've seen, I think, you know, small dips in the market in 17 and 18, there was a little bit of a development hangover from the original what, you know, the ITC cliff we thought was there coming in 16, but since then it's been kind of a slow March. If you look over a 24 month period, and I like to measure much more than kind of year to year. But if you look over any kind of 24 month period, there's been a gradual growth, but now we're seeing significant growth because of demand. And I think that's important. Right. Is when you think about how we all built our business, we Built it in an energy market that was fairly flat. A lot of that was replacement of aging assets, but not real load growth. And now we're seeing significant load growth that the only way to meet it is with solar and storage. Right. When you think about what is the fastest to deploy and lowest cost of energy, it really puts you back at solar and storage. And so I think that's what we're really seeing consistently. And so there's not the same kind of bust, kind of boom and bust periods. I think what we've tried to do with our business a bit is look at how do we smooth out some of the transactional nature of EPC business. And that's why our kind of life cycle approach, thinking about the EPC business and the O and M business coupled together and providing those services for projects over an entire 35 year plus life cycle. And so while we might see some softening in EPC at different moments in time, we've got this reoccurring revenue base that we, you know, we manage over 20 gigawatts of projects across the country. So we have this large kind of recurring revenue base that smooths out our business maybe different than other ENC companies and EPCs in the, in the country.
- [07:20]
Shayel Khan
I, I have always wondered how you manage that. I, I imagine in an ideal world. So you have a bunch of. Let's just focus on the EPC side for a second. I appreciate that you have the O and M business which is recurring and more consistent, but if you just look at the EPC side, you've got a bunch of full time employees and then you also work with, I'm sure, a million contractors and subcontractors on any given project. But you've got some fixed cost base. And that fixed cost base, I think you could map it to a maximum number of megawatts that you could be constructing at any given time, I assume. And it could flex up and down because you could add more or less contractors. But you know, these projects have gotten so big now. You know, you guys are probably, I don't know what you're building right now, but I'm guessing you're probably building multiple projects that are multiple hundreds of megawatts, maybe some projects that are approaching a gigawatt or more. And so they're these big lumpy projects that last a certain amount of time, some number of months from the beginning of construction to, to cod. Are you basically in a constant game of trying to put the puzzle pieces together such that you have a flat number of megawatts in construction over time. Like, is it like a Tetris game like that, or does it look something different from that?
- [08:39]
George Hirschman
Well, it's actually changes over time. As we're starting to see these projects get larger, we're actually getting operational leverage. Because, you think about it, if we were building 20 projects a year, say, and all those 20 projects were 20 megawatt projects, I'd still need a team to manage each one of those projects. Now, those projects are averaging over 300 megawatts and up to a gigawatt in scale. So I don't need 10 teams to manage a gigawatt project versus 100 megawatt project. Right. So I actually get leverage in the system. And so, you know, a project team and maybe with some additional management resources can do a project, you know, that's 3 or 400 megawatts versus that same project team that would do something, you know, traditionally a few years ago at a much smaller scale. So the megawatts are growing, but the people that are managing them are not growing. So there's a lot of leverage in the business as you start to look at these projects at scale. So if we had 20 teams building 20 gigawatts, I mean, 20 gigawatt projects, we could talk about a 20 gigawatt run rate, right? I mean, yes, I would have to add more skilled labor resources, more field labor resources, but those are largely trainable skills and people that I can recruit. So I think that's why we're seeing the business just continue to grow over time and be able to take on the billions of dollars in. In, you know, revenue that we're starting to see from, you know, yes, we're growing. I mean, we have 2,600 employees. So we started this business with, you know, with one or two. And so now, yes, the business has to grow with scale, but it doesn't have to grow 100%, even though the, you know, we're doing that much more revenue. And so I think that's the difference that we're starting to see.
- [11:06]
Shayel Khan
You mentioned something there that I think cuts a little bit against conventional wisdom right now, which is you said, look, you know, if we. If we had to expand, do 20 gigawatt Runway, we would. We'd need more skilled laborers. But that's something we can train. You know, I think we hear a lot about a labor shortage and not specific just to solar and storage construction, for example. But now with this rising data center construction boom, you know, that we hear it there as well, and a lot of those people have the scheme same skill sets that need to be trained electricians and so on. How much of a constraint do you see the, the labor pool as if you did need to go to 20 gigawatt run rate, like how hard would it be to, to recruit enough skilled laborers?
- [11:48]
George Hirschman
Well, I, I think you have to think about our business a little bit different than a, you know, building a data center and the electricians and the skill set necessary for a data center. If you think about a Solar project, probably 85 to 90% of that is really labor and mechanical labor. We're putting posts in the ground, we're bolting together racking systems and we're installing modules. And then 10 to 15% of that is really skilled electricians that are doing terminations and splicing and you know, the, the kind of highly technical skill that you need to do those type of activities where in a data center that's happening, you know, every square inch of a project, you're doing, you're, you're doing those kind of terminations and electrical work. So while we have highly skilled resources in our hv, you know, higher voltage groups and doing substation work and where the, you know, that actual, you know, highly skilled resource is needed, a lot of what we're doing is bringing in local resources and training them to do the mechanical install portion. Now, you know, that that's not to say that we're not looking at optimization. So we're looking at every robotic system that's out there, we're doing testing on every one of our sites, has some form of automation or robotics that we're trying to implement. Because we're looking at how do we optimize crews because labor is expensive. And so even if we could get it, we want to reduce it or optimize it so that we can deliver at the lowest cost and continue to look at ways to minimize the cost and drive up the efficiencies of our projects. Because I think the questions we get asked more is not about how can you build a project of this scale, but how do you build a project of this scale faster?
- [14:17]
Shayel Khan
I was going to say it seems like the speed. Actually when it comes to automation, you get the benefit of a lower labor pool. If you're constrained, you get the benefit of it maybe being cheaper. But right now it feels like the killer app for automation is speed. And I'm curious how you think about that in terms of what is the length of time that it normally takes you with a fully manual labor world to build a 300 megawatt project or whatever size you want. And then how much might you be able to speed that up as you look at these automation solutions?
- [14:51]
George Hirschman
Well, you know, not every project is the same. So it's really hard to, you know, come up with a, you know, 300 megawatts takes you 12 months, full stop. Right. In certain areas you could do it in 12 months. Certain areas you're going to do it in 16 months. Right. Because it's harder to build in the northeast than it's hard than in West Texas. So, you know, we're trying to find out how do we just cut, you know, 15% or 10% out of a total build, Right. So we're looking at more of how do we build in that type of efficiency? And look, if, you know, I always tell people, if I could, if I could transplant a built site, like pull it off the shelf and put it on the ground, I'd be sold out. Right. So our customers just want to say, how much faster can you build them? And so that's what we're looking at. I think in certain regions we're going to gain 20% efficiency in some areas just because of weather and conditions and the buildable time that you have in. In certain regions, it's just going to take longer to build. Right. And so I think it's for our teams, and we have a team fully dedicated on how do we build it more lean with more innovation and technology within the process. Because I think we look at our business much more akin to manufacturing then we look at it as construction. You think about we're trying to do the same activity a million times, and how do we do that? Just slightly more efficient. That's going to be through some part of human resources and some part of automation and robotics. And those two are going to have to work together to optimize and continue to drive out time to market.
- [17:08]
Alfred Johnson
Virtual power plants are becoming a reliable way for utilities to manage capacity. But enrolling devices is just the start. What really matters is confidence. Knowing those resources will perform when dispatched and being able to prove it. From the control room to the living room, Energy Hub's platform handles the full picture from near real time forecasting, locational dispatch, and the kind of rigorous verification that holds up when regulators, grid operators, or leadership ask did it deliver? Easy enrollment creates momentum. Proven performance builds trust. That's why more than 170 utilities rely on Energy Hub to manage over 2.5 million devices delivering 3.4 gigawatts of flexible capacity. See what that looks like? And@energyhub.com we're living through a profound economic shift and energy sits at the center
- [17:56]
Shayel Khan
of all of it.
- [17:57]
Alfred Johnson
Trillions of dollars are flowing into power plants, transmission lines, battery factories, data centers. But the future of energy isn't shaped by technology alone. It's shaped by markets, by policy, by capital, and by the institutions that connect them. I'm Alfred Johnson, CEO of Crux, the capital platform for the clean economy. Join me for my brand new show, Critical Capital, as I talk with people deploying capital, shaping policy and building projects. Together, we unpack how risk is priced, how incentives are structured, and how progress is actually made. Listen to Critical Capital on Spotify, Apple, or wherever you get your podcasts.
- [18:35]
Latitude Media Host
Are you tired of overpaying for big name PR firms but not really knowing what they're delivering? Is your comms team wasting time reviewing lengthy messaging briefs and decks instead of engaging journalists or producing content? Are you wondering why your competitors are getting press and you aren't? Phishtank PR is an award winning climate and energy tech, renewables and sustainability focused PR firm dedicated to elevating the work of both early stage and established companies. Whether you need to position yourself as a thought leader in between project announcements or translate complex ideas and technologies into tangible, compelling stories that resonate with the media, Fishtank can help. Check out fishtankpr.com, that's F I S C CH fishtankpr.com
- [19:19]
Shayel Khan
I'm curious what you would say the rate limiter on your growth is right now. Like if I told you you need to, I mean, we talked about getting to 20 gigawatts, but let's just say, you know, as a, as a theoretical exercise, I said solve needs to be at a 50 gigawatt a year run rate as fast as possible. What would be the hardest thing to scale up?
- [19:39]
George Hirschman
I think logistics, right? I think that when you think about these projects and, and the scale of them, it really becomes a logistics officer type of business, right? When you think about, you know, they always said, you know, logistics officers won wars, right? And because just moving the amount of equipment that we have to move and the amount of, you know, trucks. So you, when you, when you think about these projects that are, you know, how do you build? And a question get asked of me, how do you 2 gigawatts in a year on a single site, when you think about these massive data centers and I said, tell me how I'm going to move that many trucks, how I'm going to, you know, assuming I can get all the People, Right. Because I'll, we'll attract people. We'll attract, we'll get, you know, how am I going to continue to supply that many people putting that amount of work in place? Right. The amount of trucks that we have to move becomes the gating activity, not the amount of people. Right. Because you know, how are you going to park people, how are you going to bust them in, how are you going to, I mean, it's all becomes a logistics game, more than, you know, a construction activity. Once I get them to this location, I can put posts in the ground, I can bolt stuff together. It's just a matter of doing all those things at the scale that we're talking about. Look, the great thing about our business is we have been mission focused on this since the beginning. We have specialized in solar for two decades and storage came in the last five years. And we've been focusing on how to do this more. Efficiently with everything that we do. And I think that is unique in when you think about, there's a lot of businesses out there that are diversified and they're thinking about how do I build interstate transmission line and how do I build a pipeline and how do I build all these other things. And our business has always been about how do we build a utility scale solar project and how do we build it the most efficient possible. And I think that's why we're seeing a lot of these small gains that are necessary to meet the kind of business that we're in today. And I think that when, when we start to see these projects grow, I think that we're going to, you know, we're going to have a lot of opportunity to see these pieces of technology start to realize. Right. I mean, I think we're not, you know, I mean on a one for one basis, you know, I can still use human capital and labor to produce faster than robotics that are out there in the market. But could I use robotics on a third shift or could I use, you know, could I do these things that really optimize speed? I think that's really what we're going to see.
- [23:11]
Shayel Khan
You mentioned the logistics orchestration. What I've seen that has always struck me at these big sites is the degree to which there's this orchestration of equipment delivery as well and the timing of all the equipment delivery. And you see these, these situations where a project is chugging along but it gets gummed up because this lay down yard doesn't have the torque tubes delivered at the right time or whatever it might be. How much We've seen these kind of crazy swings in supply chains over the past few years, broadly as a result of tariffs and all sorts of things. How much has that affected your ability to appropriately resource and predict timing of individual construction sites? Is it really, is it a well oiled machine or is every site kind of like a tiny bit of chaos that has to get abstracted away at the site level?
- [24:02]
George Hirschman
Well, I think the biggest impacts we've had to our business over the years has been supply chain disruption. Right? I mean, we all lived through 22 and 23 when we saw massive disruption in the panel market and solar panels were stuck offshore, they were stuck at the border. We had projects that were built with racking systems and no panels. And that disruption is massive to our business because no manufacturer can build their product without supply chain. And so you're right, making sure that we are, our crews are adequately resourced because without the product there, it's one is detrimental to the schedule, but it's a huge amount of cost because we have resource. You know, we have people that are not as efficient as they, because they're waiting for product or, or we're, you know, demobilizing and remobilizing. And it's expensive because you lose people, you have to retrain them, do things. So that's why I said logistics is one of the biggest challenges and one of the biggest opportunities. If we can keep the machine fed, we can build at high rates and speed. But if we don't have, if we don't have a piece of material or a torque tube or something that we need at a certain time, then the whole system gets slowed down. And that means we're catching up through the rest of the project because we have to keep these cycles and process moving. And so, you know, we have expended a lot of resources and a lot of time in developing great relationships with our vendor partners and recognizing what we need for, you know, to keep the supply chain moving. We're able to invest early on long lead time, activities and items so that we make sure that product is delivered, you know, ahead of schedule. Because there is no just in time delivery on these projects. If you do just in time delivery like that was the whole mantra of my commercial life when I was building commercial construction is that you were on small constrained sites and you would deliver just in time because you couldn't move material around and you needed it there when you needed the day before you needed to install it. If we do that on these projects, we're late because the momentum is Going so fast that we need to deliver early and make sure that where we're delivering it is in the general work location so that we're not double handling and having a lot of expense. But I would rather deliver on site and double handle versus the concern about not having material when I needed it. So that's really what we're, what we're doing a lot of these days is spending a lot of time on thinking about what can we buy, what type of, you know, early, what type of strategic procurement can we do so that we have, you know, if we use 80% of the same cable on every project, then just buy, you know, just buy out months, if not a year ahead. And so we make sure that at least the non specialty items are there long before we need them. And then we're only buying the 20% of cable that is very unique to a specific job. And so I mean those are things that we're thinking about all the time as we scale the business. And we have a lot more resources today in procurement, in pre construction and things that get us set up for success versus a prototype construction project where a project team is dedicated to all of the, you know, all the pre construction and all the procurement. We have centralized pre construction, we have centralized procurement. We are looking at our whole fleet of projects that we're building and you know, moving equipment and resources around as if it was all one cohesive project.
- [29:11]
Shayel Khan
This is I guess a good segue to another thing I was curious about, which is we've talked about robotics and that's one instantiation of AI, of the new AI wave. But I'm curious what other areas, if any, in your business you see either real movement as a result of AI or potential. So I could imagine system design, I could imagine logistics and supply chain. Like what are the places where you, you see AI penetrating your business apart from robotics?
- [29:41]
George Hirschman
Yeah, no, I think that's the interesting part of our business. And I talk to a lot of people and I seem to always get the question, how is AI affecting your business? And we're actually on both sides of it, right? AI is driving our business, the reason why and AI. And then we are using the same technology that's driving our business to try to optimize our business. So we're looking at everything from what is the best plant optimization? Like how do you lay out the logistics plan for a project? So if you can imagine doing simulation models on just plant layout, where do you park people to get them to the work site the most efficient? Because I've challenged our teams to think about how do we make every person on the site 15% more productive, right? Or find 15 minutes of more productivity out of every person. Because if you think about projects that are measured in square miles, where you park them, where you park employees, and how you bus them because everybody checks in so you're on the clock, you get into some sort of transportation, you go out to your work site, you know, and then, and then, you know, 20 minutes before the end of your shift, you get back on that bus and come back. Like, how do we figure out how to shorten those periods of time where we're, you know, people are working in their eight hour day, but they're not actually productive because of just internal logistics moving people around, where is their break area, where the, how close are the restrooms to their work area? I mean, all those things we're looking at and using AI to run those type of simulations so that we don't have to build it and then determine that we would have done it differently. We can run, we can put plans in, we can put in mobilization plans and, and do a lot of simulation around how best to move equipment. What happens if you, you know, what if you park them in the north corner versus the south corner, how close is their work area? What if you do two lay down areas and not one lay down area? How many moves will that eliminate in or minimize during the course of a project? And all of those can be done through simulations now where we used to have to kind of measure them in real time. And so I think that's, that's where a lot of our technology team is focusing. Because we collect so much data on a given day of, of production. How do we optimize it?
- [32:43]
Shayel Khan
Do you find that for things like that you have to custom build your own tool to do that kind of a simulation? Obviously you have proprietary data that you want to leverage, but is it, you know, can you, can you use CLAUDE code or whatever to go build something like that? Or are you guys building your own like bespoke vertical applications?
- [33:03]
George Hirschman
No, I mean, I think they're a little bit of both. Right. We have a, we have a purpose built internal platform that collects all of our performance data. So we built a program we started about 12 years ago now and built a program called Sunscreen that collects all of our project data so it gets collected in real time. We can take that data and we can run it through more conventional CLAUDE platforms and other things that our team is using to, to be able to extract the data. And really tell us what we're seeing, just run these simulations. But it's a bit of a mix, right? We use some commercially available tools and some of the stuff that we do internally, and this is where having an internal software dev team has been really helpful. We have because of Sunscreen and because of our Vitals platform, which is an internal platform that we built to manage plants. We collect so much data and we can run it through those platforms and then we can run AI kind of overlays on top of them. I think that has allowed us to be a real kind of a technology leader in this space.
- [34:34]
Shayel Khan
All right, George, I'm going to let you go. Thank you so much for your time. Super interesting.
- [34:38]
George Hirschman
I appreciate it. We'll talk to you soon. Thank you.
- [34:43]
Shayel Khan
George Hirschman is the CEO of Solve Energy. This show is a production of Latitude Media. You can head over to latitudemedia.com for links to today's topics. This episode is produced by Max Savage Levinson. Mixing in theme song by Sean Marquand. Stephen Lacy is our executive editor. I'm Shayl Khan and this is Catalyst.