A (3:36)

So, Tyler, I guess that makes you one of the good people that he found what has been, from a legal perspective, kind of the most surprising to you after leaving a law firm and going in house.

C (3:47)

Yeah. Thanks, Todd. And thanks again for having us on the podcast. I've been a listener for, for many years and, you know, I think you started this podcast not long after I started practicing law. So I've heard all, almost every episode, probably. So great to be here. What is the most challenging and surprising thing about being a Sunracer on the legal front? It is the sheer volume, speed, and the amount of complex deal flow that's coming across our desks on a daily basis. We're a company right now of less than 30 people, and in the last 18 months have negotiated, drafted, and finalized transactions with values in excess of a billion dollars. And so for a team that small, you know, it's been, it's just, you know, breakneck pace.

A (4:36)

So, David, from talking to you previously and some of the stuff you just said as we opened the podcast. I know, and maybe it comes from your military background. Maybe it's just part of, you know, how you always were. Collaboration team is something that you emphasize over and over and over again. And how do you feel that that mentality has influenced the way that you've gone about developing projects and bringing all the right parties to the table beyond Sunrace or not just you got your team, but it takes areas of expertise and basically you need to align the interests of a bunch of other people around the table to make one of these projects go forward.

B (5:19)

So, you know, one team, one fight. So one of the things we did when we first started Sunracer is establish an accelerant program. And what that's done is we basically the first thing we did was we want to be able to, you know, developers to be able to come to us and be a one stop shop. And what we did, we created that relationship with at the beginning, Constellation, coming from Constellation, helping us with our procurement. We worked with Mastec as our EPC and then obviously having an O and M provider like Baywa. All of those partnerships are valuable to us for a developer that comes in and goes certainty of execution. And so one of the things we did was with Samsung when we brought them in, we made it, you know, development Service Agreement for 3 GW and 15 projects in ERCOT that they saw that relationships and those partnerships and it's one team and as we grow, all of us grow and that's, that's, that's spun over to our Canadian Solar is our, you know, our first gigawatt of modules are with Canadian Solar. We're using them for our storage for our best as well. And so we've been working together closely and that one team, one fight. That strong partnerships Accelera program became most evident as we navigated since July with the big beautiful bill. How together with our projects, with everything going on, we were all working together to navigate as we move forward. And so team mentality, we're all here for the same mission. And that like you said, that's kind of how I, you know, treat the team, you know, being inclusive, we're all one, one team. And by doing that makes the partnership stronger and it gets the results that you want.

A (6:47)

Speaking of the big beautiful Bill, I guess I'll ask this to both of you, but I'll start with you, Dave.

B (6:52)

Yeah.

A (6:53)

How has the environment changed just generally since the Trump administration's come into office and in particular after July 4th in terms of what type of pipeline you're looking at, what type of M and A opportunities you're looking for and just really how you needed to, if you needed to at all recalibrate your business?

B (7:12)

Well, I think everyone, you know, not knowing the first days of that, you know, every day was, you know, changing and reacting. And one of the things that we did early on, which is very key to our pipeline, is that we secured back in 23 transformers for our existing pipeline. That's our 15 projects that were in ERCOT. We had, we have four projects in Arkansas and by securing those transformers then allowed us as we were navigating what's going to be impacted. We came out of the other side by our pipeline staying intact with minimal impact. For us that's been very helpful. And so you ask the question, what are we doing? We're actually executing our current pipeline. We actually went out and grandfathered additional transformers for growth. We are looking for, you know, MNA with copper technologies. Obviously we're looking for PV projects in the future 28, 29, 30 to leverage those grandfathered transformers in addition to building our current pipeline that we have. We're still looking, we're looking Obviously we're focused initially right now over the US but spp, miso, pjm, now we like to focus on those areas since obviously we have a big presence in ERCOT and some in my. So we like to expand on that. So PV technology expansion. I believe the M and A will be very active over the next, you know, 12 to 14 months. There's great projects out there, great developers and our core competency and our and our strategies is to partner with those pre NTP developers and bring them in into our partnership as we, as we grow.

A (8:45)

Tyler, same question for you. I guess more from a legal bent though.

C (8:50)

One of the things David's right, if we look back, hindsight's 20 20, right. We think oh wow. We ordered main power transformers and began construction on the whole portfolio basically end of 2023 and because of that have largely been unaffected by recent federal policy shifts for our current portfolio. So that was my first mission when I started. David said go out and negotiate these supply contracts for transformers because this pipeline is real and we going to go and build it. But it also gets to, you know, a broader theme with Sunracer and that is we're putting money where our mouth is. We're executing. When we say we're going to do something, we're doing it. These are not bragawatts. We've assembled a team of experts from all of our best competitors who know exactly how to do this. So my job has been to cut red tape, get the law out of our way and get these megawatts, get steel in the ground, get megawatts on the grid as fast as possible. And so two and a half years ago all of these projects were an idea. They were something on a drawing board. And now we're coming up on commercial operation on our first 450megawatts of PV at best. And not a lot of tiny ipps do that in two and A half years and we're going to retain ownership and operate them.

A (10:14)

David, in terms of capital and capital allocation, it sounds like you spent a significant amount of capital safe harboring equipment so that you could be well positioned to ride out storms in the market, which now puts you in a very good position because the storms were bigger than people thought. What do you, why choose the IPP model over kind of a develop and flip model? Does it have to do with the type of capital that you've raised? Does it have to do with the your mentality? I mean, why not, why, why not try to monetize these assets more quickly?

B (10:50)

I think a couple of things. You know, in every year, 18 months, any industry, you got to look at what's going on and you pivot. You know, initially when you start out there, we, we were looking at taking projects NTP and we realized that the market is obviously wanting de risk those projects as much as possible. So having, you know, having epc, having O and M, having the offtake secured a, that's more valuable. But at the same time it was, you know, de risking. So when you go out there for project financing to go build these projects when you're going out there. And the good part about one of our partners was hbs, right? We initially came to them and said, you know, we, we just closed it. We closed initially a 200 million a year ago. 200 million develop a capital facility. They saw our team, they saw where we're taking it and we said we're going to take these operations. That gave them confidence that, you know, our team can do that and obviously we're showing that we can. But the pivot I think initially was well, let's, let's take these ntp. The market out there, as you probably know then was kind of shifting and we were able, based on our backing and our investors at Cradle Capital, that we took those to cod, which we are now. And the next four projects we have under construction, we're taking those. So we're looking at about 1.2 gigawatts of operational assets by making that move. And when we made that move, we were all in. And so that was. We made that call about a year ago, May, almost 18 months ago.

A (12:15)

So one, one thing that strikes me in listening to you is the way I think of it is there's different return thresholds that investors are looking for. One is the higher risk pre NTP type assets and maybe want you to flip them. There's investors who want you to take it through to an IPP and then there's investors who probably are, have the least tolerance for risk, probably give you the cheapest capital they want the operating assets and hopefully especially for solar, it's viewed as almost bond like you seem to be able to I guess cherry pick to get the best risk adjusted return based on the way you see the opportunities. To me, how do you manage the investor's expectations in order to be able to be opportunistic the way you're talking?

B (13:07)

Well, the great news about our investors, especially at Cradle Capital, they have done this before. They know the industry, they've been around a very long time. I've been side by side with them for a long time. So it's not only our team that's experienced, but our investors are experienced in the industry. And so when we got this we, we wanted to take this out, you know, for long term. Like we looked at this initially and said we're going to go build this are ideally is getting 5 to 6 gigawatts of operation slash pipeline when we first started this. And so we've kept that vision. We know the industry, we know it's up and down, left and right. This is not the first time that you have the big beautiful bill come out and everyone reacts. But having that team of experience, having investors that have been around a long time that seen that you keep a steady hand and you keep moving forward and we've been able to do that with our investors, with our capital but it's all about at the end of the day are we executing and that's the difference.

A (14:05)

So Tyler, from a legal side, had this required you to set up more complicated capital structures in terms of preferred equity, MEZDA type things in order to try to match things perfectly or has it not been that challenging?

C (14:22)

Well, I don't want to give away too much of the secret sauce but. But yes, absolutely incredibly challenging. But David is right. The key to our success and what's putting Sunracer on the path to becoming a competitor with some of the most successful ipps out there is that we have the right investors who understand our business and understand what we're doing. They're actively involved, we have the right governance and oversight and that's incredibly important. We've seen a lot of turmoil in the market recently, some big IPPs, you know, struggling to execute, to remain liquid. And in times of policy uncertainty, it becomes painfully obvious which business models are not built for the long term. We have intentionally chosen a very different path and that path is to remain lean, to build outside Partnerships, like David explained with the accelerant program and to your point about capital, you have to start with some equity. And our investors have been patient, to your point, and willing to come along with us for the ride and understand where we're headed. And then we're augmenting that with development capital using traditional project financing, bringing in tax equity investors and when we get to having commercial operations, then unlocking yet another level of lower cost of capital with traditional corporate finance, LC facilities, surety backed letters of credit and some other more creative financial instruments.

A (15:53)

So David, where do you see the biggest opportunities, let's say over the next 12 to 24 months in the market? As Tyler said, there has been some turmoil. It hasn't been that widespread and hopefully won't get widespread, but there's been a little bit. There's also been tremendous growth, but there's also now a lot more competition, it seems like from non renewables, you know, as the market shifted and there's, there's, it's not just a renewables game anymore. What, what do you see out there in terms of, from your perspective? Where, where do you think good place at least for somebody positioned like you to be deploying your efforts?

B (16:30)

Like I said, I think there's, there's some great developers out there that had these philosophy of develop and flip at ntp. They don't want to be an ipp. They're out there with good projects, valuable projects. That, that is opportunity. And we are talking to many of them now and we want that, that's our ideal. And so those projects again married up are, you know, at least a gigawatt of grandfather transformers. We want to be able to bring those to market with them. And they know that had that certificate. So that's, that's an opportunity that we see Again. The problem I'm seeing for others though, like other industries is supply chain, right? You have transformers, that's one thing. You know, other competitors like turbines. I mean I've been a gas turbine business as well with Constellations, so I know they buy a lot of gas turbines and of course you know what they're doing over with gil, with merging with Calpine, but they're gonna, there's a lot of turbines. There's supply chain to anything, right? To equipment. Last time I checked, solar doesn't need those turbines. And so I think that's something that, you know it's gonna take time, but we need electrons all across the country to the grid. We're well positioned in erca. We want to grow with developers Outside there, we know we can get something to market in the next two, three, four, five years. Some of these gas turbines and other projects are going to take longer, and so we need that now. So the opportunity for renewables is now between, you know, and it's not going away. And it's just about finding the right projects which are out there and wanting to see them go all the way to operations. And so that's what we're looking for. That's the opportunity for us.

A (18:00)

Where do you see demand going? Where mean you. You've been focused on archive. We could focus just on archive, if that's really your primary focus.

B (18:07)

But no, no, our focus is us, though. Our focus is us.

A (18:12)

All right, so, so the you, you. You hear about all of these almost fanciful numbers that are getting thrown around for AI development. You know, this guy's developing a $15 billion project, this guy's got a $50 billion project. You know, these are just almost unfathomable amounts of energy that are required to satisfy those things. One, how. How do you plan for that and figure. How does that figure into your plans and then how much of that is what we call the rubles industry? And Tyler said, you know, Bragawatts, that people are just announcing a $50 billion project. And how do you guys get comfortable that, yes, at this node, all of a sudden there's going to be 5,000 megawatts of new demand and prices look good here. So this would be a good place for us to stick a 250 megawatt solar project.

B (19:01)

So a couple of things we do there. Obviously we have a great transmission analytics team that are looking at, you know, across the country. One of things we are obviously looking at is, you know, partners in the data centers. We have sites we currently have that we're evaluating with that we could actually bring in land that we have that could marry up to our existing projects. And what we're doing, like any other project, if we're going out there looking for, you know, developers have projects. Oh, by the way, do they have access to land? Can they expand with a data center partner? And so like any other developer with data centers or even with, you know, in our, in our business, you know, do you have site control or do you just make. Did you make a phone call to the neighbor? And you think you have the land and therefore you have a project? That's why us partnering with developers in those regions that know their area, the conversation is, yes, is that a bat? Is that a pv? And Bess, is that Is that just a pv? Is it standalone best? What we've done is analyze and we focus about 16 states around the US where we've done that. Those analytics say this is good for PV and best BV or standalone best. So we have a target, a strategy and part of that is does that make sense not only with that megawatts for, for, you know, for renewable energy, but how can that marry it with data centers? And the funny thing is data centers have their locations they want. Then you have solar companies that look at their location. Marrying those up the same location is something that, that we're working towards as well to partner, to provide not only energy but also provide support for the AI.

A (20:28)

So Tyler, maybe you can expand on that a little bit and talk about how from a contractual side you guys have brought kind of your expertise together. Maybe give either a case study or a hypothetical case that if you don't want to be too specific but might be good to just put more specifics around what David's saying.

C (20:47)

We've had several press releases where we've announced major offtake agreements, some of our preferred partners on our first projects. We'll have more press releases coming in the next few weeks and months where the big trend we're seeing across the US is probably the same trend everybody's seeing. We're seeing power prices go up notwithstanding the federal policy, trade and tariff changes. PV technology get better and more efficient with every production run, which means the cost per watt continues to go down and we're simply faster to deploy to market to meet the growing need for electricity generation. And we believe that with further and further penetration of intermittents like renewables in the market and on the grid, there'll be an increasing demand for energy storage, which is where our best portfolio comes in.

A (21:39)

Let's kind of end this discussion on, look ahead here and kind of what developments? I'll ask each of you to answer this. What do you see in terms of policy changes, in terms of market dynamics, changes that you think will occur over the short term to address some of the concerns you guys just raised? Increasing power prices, incredible potential demand side requirements. Are you guys expecting there to be big changes? Farc, do you think that in policy, do you think there's going to be a bunch of new transmission, do you think there's going to be a lot of self generation? Where do you see the market going in order to meet this very for the power business, such a capital intensive business, a very rapidly changing marketplace? Maybe David, I'll let you start there and finish up with Tyler, no problem.

B (22:31)

You know, I think, I think I was. Before you hit that up there, I was going to say I was going to let Tyler go first on this one because I've been hogging going first. So I think I'm going to ping it to Tyler first on this one.

C (22:42)

Well, I would say we're planning for the worst and hoping for the best. And our business plans are not dependent upon federal policy, obviously. Tax credits. Federal tax credits are crucial to supporting America's energy transition. We just go back to the fundamentals. We're simply building cheaper, better power plants than have been done traditionally. We're doing it faster with less red tape, they're more reliable and they're not subject to big commodity price swings. And so do we see more transmission like on the horizon? Hopefully. But no, we're not banking on it and we're not banking on FERC saving the day either. I think if you take a step back, you look at the Texas power grid, ERCOT five years ago, you compare that to the generation makeup today, and the market is telling the story. Solar and batteries have made just a fundamental shift in such a short period of time. And it's happening right before our very eyes. We're going to continue going down that path because that's, like I said, that's where the market is leading us.

B (23:49)

I think to add on to Tyler, I think something just came out this week about what 30% of power in Texas is in renewables sustaining power. That came out. But I think, you know, to answer the question about transmission, I think every state is realizing they're looking inward. I know in Maryland, where we're headquartered here in Annapolis, I know Maryland's looking at transmission lines. I know New Jersey, I think the state by state, even in Texas, I think with everyone growing, bringing in manufacturing, bringing in the AI, you got to do it holistically and not bring, bring the product to the state and then worry about the transmission. It's got to be holistic view going. We want to bring in this to our state. We want to, this is the powers that we need it. This is the generation, the timing of that and making sure that we, we have the transmission to support that. Because if we build all the power plants we want and we have congestion, that's not going to solve the problem. And so I think it's got to be a holistic look, state by state and with developers and IPPs like us working with them saying we can be part of your solution. If you want to bring in those, bring in, you know, like I said, manufacturing or wherever you want to bring that state. Let's work together. Until then, there's, there's going to be this bumpy road because, you know, as everyone else, there's a lot of developers out there with projects. Miso was a perfect example. A lot of projects fell out out of the last run there. It's going to happen everywhere. I think they need, people need confidence on who's out there that's going to really develop and make these projects so they can count on that energy to make that plan as they bring in that, you know, the manufacturing, the AI to their states and then marrying up with the transmission. It has to happen or, you know, we're just going to be, you know, rebuilding plants and, you know, and created congestion.

A (25:36)

All right, well, let's hope we debottleneck things on more than one front. And Tyler, thanks for being a longtime listener. Take care, guys.

B (25:44)

Thank you very much. Next round is.

A (25:49)

You can find us online at www.projectfinance.law or send us an email at currentsortonrosefullbright.com Please rate, review and subscribe on Apple Podcasts, Spotify or your preferred podcast app. Our show today was produced by Emily Rogers. Stay ahead of the current Sam.