A (4:34)

So how does someone like you think about the demand? You see, these obviously depends. Which, whose forecast do you want to rely on, knowing that they're all just forecasts. But there's incredible potential demand from data centers. And on top of that, there's just replacement of older assets. And depending what policies are on the state level and also on the federal level, you know how much retirement we'll have of some of the CO2 emitters. How does somebody in your position decide what, what the future is going to look like there and to how, how do you think this is affecting your ability to get PPAs? And do you want PPAs?

B (5:17)

So I would say a couple of things. I mean, I will be the first to acknowledge that we as an industry, as a renewable industry, are not going to be able to satisfy all of the demand that's out there right now being driven by digital infrastructure. And so it's really going to take a combination of, I think, delay of retirement, in some instances, more natural gas delay, or maybe, you know, recommissioning of some decommissioned nukes, that, that may be in the mix. But this demand phenomenon I think is unlike anything we've ever seen in terms of it's not being driven. I mean, you've always had markets. I mean, in, in general, the last couple of decades, power demand has not increased very much. And while you've always had instances where certain markets, perhaps industrial markets like Texas, a larger demand growth than other areas, overall power demand in the United States was pretty tepid on a national basis. That's really changed. And it's not just gradual increase in power usage across the nation. Right. It's being driven by concentrated large loads in particular. Areas and that's something that, that we're not accustomed to and which I believe, for instance, the RTOs are having a very hard time dealing with as they look at their planning and their models. It's not increased power demand, it's huge concentrated needs for power in particular areas. I would venture to say that the regulatory processes that they use aren't really built to accommodate what we're seeing now.

A (7:27)

Do you see any hope on the horizon for any kind of reform that would lead to reduction in bottlenecks or just make the process easier to meet the demand?

B (7:38)

Look, I think in places like PJM and even at the federal level with ferc, there is a lot of discussion around, you know, bringing your own load to, to the table, right? So now we, we do not believe that that should be mandated, but we do think that it's one of the avenues to alleviate the need. And so if you do have areas where, for instance, you have the ability to build wind, solar storage or natural gas, one of the ways to accommodate what we're seeing is to use behind the meter generation to bridge the gap between now and when the grid is ready to accept the power. In an ideal world, you know, if you look at the hyperscalers in the data centers, they want grid backup. And so the best way to do that is to build generation in front of the meter and give them the basic ability to interconnect to the grid and have grid backup even though they build generation on site. But that's not going to be possible in every situation because the grid won't be able to accept those huge pockets of generation that these gigawatt size data centers require right now.

A (9:08)

Renewables, ipp. How does it work though for behind the meter? Because you can't easily offer a 247 solution with the kind of whatever they want, 99 and a half percent or whatever reliability that they're looking for. That's. Is renewables part of that mix or is renewables going to be in front of the meter and they'll have to find some other solution behind the meter and you're just helping to firm up the power for them so they have access to the grid?

B (9:34)

I'd like to start that answer by saying that most of these folks still want renewables, right? So you know, the, if you look at the hyperscalers, if you look at the, you know, aws, Google Meta, they all have, you know, zero carbon commitments at some point in the future. And so they're still very focused and to the extent that we can Build renewables either in front of the meter or behind the meter. They want it. The problem today is that up until recent events, what they were doing primarily was matching their load. So they would have a, in the case of aws, a distribution center or, you know, a smaller data center in a particular area, and they would procure renewables or potentially wrecks to offset their usage. And that system worked fairly well. Though we would sell. If there was a data center in pjm, we would enter into a virtual PPA with them, you know, send that power into the grid, and they would, they would purchase, you know, that power, and it was offsetting their usage. It was renewable energy. The problem today is that the quantities are too high. We can't do that. And so if we're behind the meter and if we're looking at satisfying the requirements of a data center behind the meter, it's going to be a combination of renewables and probably natural gas and batteries storage. And so we are looking, you know, we're looking at most of our sites which have been in development for many years, but maybe in areas that are conducive to data center development, we're looking at the availability of gas. It's one of the tools that we never used to look at. But today, when we're developing a site, that's great. Is there gas nearby that we can also bring onto the site and supplement the renewable energy with either reciprocating engines, gas turbines, and that sort of thing. And I think that's going to be a trend that is going to be pursued by ourselves and most of our competitors.

A (11:53)

How do you see then, just talking about different technologies, how do you see the battery energy storage deals fitting into that mix? Because some of the way to firm up response time is batteries instead of gas. If gas is not available. Or maybe your counterparty doesn't want gas.

B (12:11)

Exactly. I mean, I think it is. Batteries are going to play an increasingly large role in. In these applications. We're seeing that already.

A (12:20)

So on the sites that you are developing, are you largely looking to do solar or wind plus battery storage?

B (12:27)

Yes, I would say that every solar development that we are working on, we are, as we make our interconnection requests, these projects are a couple of years away from being built. We are providing that we have the ability to add storage because we think it's going to be. It's going to be a part of almost every project going forward. Why.

A (12:50)

Why not for wind as well?

B (12:53)

I think the same. We've just begun some greenfield wind developments, but I think we'll be looking at. We don't have any. Most of our project. Our wind projects are all in front of the meter, though. It's a bit different. But I think to the extent that we do start to develop for behind the meter, it would be the same analysis. We would, we would look at batteries in connection with the wind as well. No reason not to.

A (13:24)

What do you think of the, let's say, over the next three years or so, what's the future have in store for wind development?

B (13:33)

Look, we're big proponents of wind.

A (13:35)

I know. That's why I'm asking you.

B (13:38)

We're hoping to build, build another new wind farm in Pennsylvania. We hope to start construction this year, have it COD next year. We have greenfield developments in wind. Not traditionally, we've avoided federal land. So, you know, we, we, we, we don't really require BLM or major federal approvals for our projects. There are some areas, namely FAA and Army Corps permits that tend to be required in our projects, and we've seen the agencies issue them. So despite a lot of the rhetoric that you hear, I think there is, I'm hoping that common sense is prevailing. To the extent that we have developments which are in the queue and ready to go, they won't be held up by, you know, the inability of the SAA or the Army Corps to, to deny a permit for an otherwise sound project that should be built and on the grid and operating.

A (14:42)

What's your view of the relative opportunity to develop solar versus wind over the next three years?

B (14:48)

Solar is easier to develop, but wind, you know, wind has more scale in most cases. So one of the areas that we focused on is repowering of older wind farms. And that is, in my view, one of the quickest ways to get additional wind onto the, onto the grid. Because, you know, what we're doing in most instances is very little to no civil disturbance of the site. We're just increasing the blade size, changing out the equipment, and you're generally limited to whatever the interconnection capacity was. But instead, instead of having it vintage, you know, 1999 or 2003 wind farm that had a 29% capacity factor, we now have, you know, in the same footprint, a new wind farm of the 40% or 45% capacity factor. So it's a pretty efficient and expeditious way to get more wind onto the system these days.

A (15:57)

What do you think? I know it depends on where we're talking about, but just in general, or if you want to talk about specific markets that's fine. Do you think prices will have to increase significantly given the demand that you were talking about earlier and the inability of the market, at least in the short term, to meet that demand fully? Seems like there needs to be some kind of market readjust.

B (16:21)

It's already happening though. We've seen prices increase in the wholesale power prices increase in the neighborhood of, I would say 30 to 35% over the last 12 to 18 months. Now that's being driven by a variety of factors. You know, the tariffs aren't helping. That's causing, you know, that's causing the price of our equipment to go up quite substantially. Even though we buy a, you know, we buy domestic wind turbines for instance, manufactured in the U.S. oftentimes the blade, the blades are coming from. We, we've sort of gotten out of the business of building wind turbine blades in the United States. There are just other countries in a global supply chain and do that more efficiently. And so that market has shifted to India and to other places where it made sense to do that absent the tariffs though, you know, the tariffs have added cost to our, to our equipment. The other huge driving factors are grid interconnection costs and you know, data centers are taking a lot of heat for that. But in my view, we've so underinvested in the grid for so many years that again, what I talked about a while ago, we were able to sort of get by with in a moderately increasing power situation that stresses on the grid perhaps weren't so apparent. But now with again these large loads coming into play, it's really exacerbated the weaknesses of the grid and the ability of the grid to accept that much power in specific areas. And so the models which the RTOs are using are just, I don't think they're accurate. Again, I don't think they were built to handle this type of load growth. And I think they also don't adequately consider the benefits of on site generation that, you know, we're looking at with most data centers. So I think it's going to take a while for the system to work itself out. But those factors are contributing to increased costs. The other thing are just grid improvements from natural disasters. If you look over the last several years, a huge amount of capital has gone in, not even to expand the grid, but to bury the lines in the west coast because of fires. Maine has had issues with, you know, natural disasters. So it's basically, you know, a perfect storm of all of these factors coming together and they're all having an impact on on our power prices and I'm talking about the wholesale price of power, you know, for, for consumers and, and, and you know, the retail market. You then have the fact that natural gas prices have increased substantially over the last 12 or 14 months. And as you know, gas is on the margin in most markets, so that dictates the power prices.

A (20:09)

So you named a bunch of concerns, constraints. What do you think are whatever the 1, 2, 3, 4, whatever it is. You want to list biggest challenges that you think that renewals developers face today. And especially since you've been doing this a while, all the way back to when people were doing gas fired and even coal deals. What do you think is different about the challenges we face today from the challenges we faced, you know, 15 years ago?

B (20:39)

Yeah, I would say that the grid is more problematic. I would put the grid and getting your, the ability to evacuate your power into the system is probably as difficult as it's ever been. Even though it's always been a challenge. I would say that supply chain is also a problem. I think it's a problem for ourselves. I also think it's a problem for cash generators in terms of long lead times, large components, breakers, switches, transformers, their lead times are depending upon who you talk to. 100 weeks, 150 weeks out. So that's having an impact. I also think that you know, the lack of sort of the same, a different side of the same problem, but the lack of enough capacity in the US just has a supply demand impact. And so costs are going up because you know, the, the suppliers can charge more. And so it's balancing, you know, the grid supply chain and the economics that those imply makes our, our, our, our work more difficult. Right. It's causing power prices to increase, it's delaying, delaying our projects. We, we used to get interconnection studies back. It was never fast. But now what we're seeing are delay after delay after delay in the processes that we were involved in to get our projects interconnected. So the time is money and delay prices never go down, they just go up. And so those are all pretty significant challenges that we're facing. I mean I would put, and it's funny because one would think that it's kind of an anti renewable sentiment in Washington. People would think is that your biggest concern? And quite frankly it isn't. I mean it's making our lives more difficult. We've got things like FIAC and you know, grandfathering that your lawyer spent a lot of the time charges a lot of money to figure out. But there are ways to get, you know, we can figure all of that out, really. The, the renewal sentiment is probably fourth on my list anyway of problems confronting us. And the reason for that is demand. Again, you know where we started this conversation. I much rather have a sector that's demand driven than one that's driven by regulatory support. And luckily, I mean, we're very lucky that these two coalesced because if we didn't have demand and we had this anti renewable sentiment, we'd be in bad shape. But the fact that there's such a huge demand for power, it's just blunting any of the impact that we're seeing on the regulatory side.

A (23:51)

All right, well, let's conclude on a much happier note and take it back to where we started. You just raised you're 400 million some odd dollars I guess, depends on your credit, I should say. It sounded like some part of it's in the form of LC's. Now that you've got access to this additional capital, how does it change what you can do over the next, let's say couple years? And what do you plan to do over the next couple years?

B (24:15)

Yeah, so what I should say is we've spent it already, theoretically. You know, we have, we have a, we, we have a huge pipeline. We, I think we're attempting to build 12 projects next year, which for a company our size is a lot. And you know, we see no let up in the demand for the projects that we have in the development pipeline. So I think we're probably looking at an upsize to that facility as soon as that's available. We have to meet a certain number of conditions. A number of our projects have to go into construction and you know, get project financing which will then free up capacity under the facility. But that's the trajectory. It's going to allow us to build probably our next gigawatt or 1.2 gigs. And as we then bring in project debt, financing for those projects will recycle the capacity under that facility for projects which are coming on. So it's a good position to be in. We're pretty happy with the results of that. And it, you know, it's, it's been a really good development for the company.

A (25:34)

All right, well, congrats on closing the facility and thanks for your time today.

B (25:38)

Thank you, Todd.

A (25:42)

You can find us online at www.project.com finance law or send us an email at currentsordonrosefulbright.com Please rate, review and subscribe on Apple Podcasts, Spotify or your preferred podcast app. Our show today was produced by Emily Rogers.

B (25:58)

Stay ahead of the currents.