A (5:06)

I know you're a founding member of an advocacy advocacy group in California. Distributed generation is. Are these the types of programs that you're working on or what, what are you guys focused on in particular?

B (5:19)

That's right. I think right now, you know, that new group, the new trade association there is going to be focused on what I just mentioned, the load modifier status, as well as lobbying and finding the right angle to Kind of go back to the legislature and say, hey, look, you know, what you intended with AB 2316 is not what the CPUC did. In fact, it did the opposite and we need to kind of fix this. And so there's some proceedings right now unrelated to renewables, specifically just at the state as a whole, where they go through reviewing state bills that were passed to see if they got implemented in the way that the legislature intended them to be. And it's clear that 2316 didn't get that shot. And so as a result of that, I think we may get some momentum there as well. So I think those are the two avenues that, that that new group of developers are going to be focused on,

A (6:13)

including ourselves in terms of trying to get buy in and cooperation from the utilities. So that's something that's mutually beneficial for the developers and for the utilities, both in California and elsewhere. What type of models do you think can work to increase penetration?

B (6:32)

Yeah, I mean, look, at the end of the day, the utility wants to maintain that relationship with their customer. So if the utility can stay involved in the transaction, I think the utility is going to be more inclined to make something happen. You can look to the regulated markets in the Southeast, specifically the Carolinas, both North Carolina and South Carolina. Duke for many years now has been doing effectively a green tariff. It's a sleeve where they may have a large corporation or a large data center user or consumer of energy that wants renewables. Duke will effectively help facilitate that between that customer and the developer and kind of sit in between that ppa. It's kind of referred to as a sleeve, if you will. And so I think that's another example of utilities saying, okay, our customers want renewable energy, let's figure out a way to get it to them. And they're stepping in and they're making something happen. And obviously that's more common in the deregulated markets like ERCOT or a PJM where you as a generator could just go direct with that consumer. But in the regulated markets of the Southeast, it's a little different and they're still stepping up to make something happen.

A (7:41)

So you mentioned one of the buzzwords of the day, data centers, community solar. To me, I look at as, you know, typically fairly small, you know, 5 megawatt, 8 megawatt, 2 megawatt, whatever, you know, type project. These data center projects now are enormous. So they're clearly creating demand for more energy and a lot of them prefer renewables. But how does the community solar developer, DD DG developer fully take Advantage of the growth in data center demand.

B (8:13)

Sure. So when I say, when I say kind of front of the meter DG developer, you know, in my head, and everybody has, has a different definition, you know, I'm thinking 1 to 20 megawatt size projects, kind of sub transmission, 46kV and below is kind of the interconnection voltage. And so you can get a little bit more scale than kind of 5 megawatts. But, but to your point, let's just say it is 5 megawatts a pop. You know, what the DG developer is offering that the utility scale developer cannot, is speed to market. Right. And so we could come online much quicker than a large 500 megawatt utility scale project. And so access to those kilowatt hours or access to that capacity under a shorter duration is a value when we're talking about the demand from data centers out there. And so you're starting to see more of that work its way into the conversation where okay, we'll do 25 megawatt projects as opposed to 100 megawatt project. I think that will con, that trend will continue over the next two to four years is there's a race to get as many kilowatt hours onto the grid as thousand.

A (9:22)

So since the last time you were on, which was a fairly long time ago, how has the market changed from your perspective in terms of getting deals done? We've got new tax code rules, we fiat. You got uncertainty around tariffs. Especially today as we're recording. What, what do you see for the outlook for this market over the next few years? You know, given how much changed since the last time you're on, I'm not going to ask you to go more than a couple years out.

B (9:50)

That's, that's fair, fair enough. Look, the last 12 months have been defined by a lot of ups and downs, by the, you know, cliche term the solar coaster that everybody too familiar with, having been in the industry for a while. What I would say is we sit here today with more certainty around our future now that the big beautiful bill is behind us, now that we know the rules of the road, obviously there's still ups and downs with tariffs and that's impacting some of our procurement decisions directly. But in the end of the day, what we have is this mega trend which we were just talking about. It's hard to kind of get away. It's hard to talk about renewables and energy without talking about data centers today. But the reality is demand from data centers, whether it's cloud compute or AI, which everybody talks about AI and hyperscalers now, but there was already a lot of demand from just cloud compute before the whole AI thing came to be. You know, the onshoring of manufacturing here in the United States, electric vehicle adoption, autonomous vehicles specifically proliferating, the electrification of everything in your home. You add all of that up and it's insatiable demand for kilowatt hours and for capacity onto the grid. And ultimately, While the last 12 months was very rocky from a regulatory and political framework perspective, that megatrend carried many firms through that tough patch. And we're now on the other side knowing what the rules of the road are. We may not like the rules of the road, but we know what they are. There's clarity and there's certainty. And as a developer who has an insatiable appetite for capital, because this is a capital, you know, it's a capital intense business. And so now that we have certainty and you know, the investors are open for business, you know, both corporate investors, tax equity investors, project lenders, we're seeing a large uptick in deal volume. It's an interesting spot in the market and I have an interesting vantage point in this DG community solar space. You know, my company to your point, has been around for about nine years now. I've been in the industry about 18 years. We've done a little over 300 megawatts across 58 projects. And we're continuing to grow and scale. And what we've seen is strong demand for high quality projects and high quality sponsors. So our existing suite of investors, both on the corporate side and the project side, have said to us, hey look, we're leaning in with the developers and sponsors that we believe in and we're not open for business with other people. And I think that's, that's not unique to just my firm. I think you talk to any tax equity or lender out there, they'll tell you the same thing. Conversely, not every developer out there in this mid market community solar space was well capitalized to begin with, nor was able to raise money to safe harbor their pipeline. And so you have kind of a tale of two developers right now. You have the mid to large scale developers that are well capitalized, that have safe harbored their future and have access to high quality product. And then you have maybe the smaller developer who maybe didn't safe harbor their product or maybe is not, you know, is not as well as established or does have the track record to attract, you know, capital from the existing suite of investors out there. And so here's an opportunity to. Actually there's a lot. We've seen a large uptick of M and a volume on the project acquisition side of our business. As a result of that, we've also seen valuations hold on the side of our business where we sell some assets. So just as a refresher for everyone, you know, when I started the company about nine years ago as an IPP first model, I wanted to own and operate everything that we developed or originated on our balance sheet long term. And we ran that way really for the first six years of the business. And then about three years ago, we saw an opportunity to sell assets at NTP at a premium relative to what we thought they were worth. And we leaned into that and now operate what I would call a hybrid or a flexible asset monetization strategy where about half of our throughput we finance and hold on our balance sheet long term and the other half we sell into the market at ntp. And so while we've been able to see that valuation hold for the assets we're selling into the market, we're seeing valuations maybe not hold for the smaller developers where they haven't safe harbored their future.

A (14:08)

What do you see in terms of prices? I mean Community Solar, you said generally been marked against retail rates. Where, where do you see prices for DG and prices generally? Because we've seen such upward pressure, it seems to me that at some point there's gotta be some give, give there, I think to try to moderate price increases.

B (14:30)

Look, I think price increases are not specific to the DG sector. I think if you had a utility scale developer on the podcast right now, they would tell you the same thing, that that pricing is up year over year. Right? Additional requirements to Safe harbor, additional requirements coming out of the IRA with prevailing wage, additional, you know, constraints with the labor markets and the EPC providers have all effectively. Oh, and sorry, the other, the other, you know, hot topic of the day is tariffs, right? So tariffs haven't helped either. And so what I would tell you is a big part of our business is community solar and then we have a fairly large business which is more utility offtake. Again, it's all front of the meter. DG 5 to 10 megawatt size projects, maybe 15 megawatt size projects. And what I would tell you is for the same project I was bidding to a utility maybe 12 to 18 months ago, PPA price is about 20% higher. And that's not because I'm trying to make more money as a developer that's just because I'm trying to hold my margin as a developer and that's just a complete pass through. In terms of tariffs, labor shortages, additional requirements, additional costs associated with safe harboring, all that fun stuff that, you know, you're all too familiar with. As a, as a project finance lawyer,

A (15:47)

do you see any regulatory changes on the horizon that could potentially help moderate that cost? Either through ease of interconnect, so you could have speed to market, or obviously there's the tariffs.

B (16:02)

Yeah, I mean, at the end of the day, this is an interesting industry where it's capital intensive, but there's a flood of capital entering it. There's a mega trend with insatiable demand. And ultimately the constraining variable is people. That's the constraining variable. It's not equipment, it's not capital, it's not know how. It's the capable hands to get you from point A to point B. And that's both on the developer and project finance side of the house. But that's more so out in the field with the wrench turners and the laborers and the EPC providers and the O and M providers. And again, like anything in the energy markets, it's regional. Right. So the dynamic in New York may be different than the dynamic in Illinois vs Texas vs California as it relates to kind of that people power element. But ultimately I think the constraining variable right now is people.

A (16:54)

How about in terms of markets, are there particular markets that you think are, have been or continue to be more hospitable for dt or do you think they're.

B (17:04)

Yeah, no, that's, that's a great question. So I'll lead with the positives. I think New York is kind of the gold standard as it relates to DG deployment with their veter, the value of distributed energy resources and their value stack. You know, it's something that everybody points to as like the gold standard. And it's a great program. And to see them kind of take it to the next level with DG storage is, is really, you know, where I think the market is going in general. We haven't talked much about storage, which I'd be happy to. It's kind of where I'm most bullish in the next kind of, to 10 years from, from the DG's, from a DG developer's perspective. So New York's been a great, great example. You know, Illinois also, they've, they've done a tremendous job with their program. They're now in the process of implementing a Storage program at the DG level. So that's another great example. You know, Maryland has a pretty robust program right now that's going through some changes. Historically, Minnesota had been pretty hospitable, although they've kind of made some changes over there that haven't made it as favorable. You know, the downside is, you know, you look to a state like Maine where they had effectively retroactive change to a program that currently a group of developers is fighting in court. You know, that's kind of not an ideal outcome. You know, Rhode island recently introduced some legislation to have a retroactive change to their program. And so there's definitely some threats on the horizon that are not very favorable. And it's too bad because, you know, you take Maine for example, you know, they're going to make it not very welcoming for anybody to develop energy projects, period, whether it's community, solar or utility scale. You know, to be in a business environment where they can do something retroactively doesn't really flies in the face of kind of corporate America, if you will.

A (18:51)

Well, let's, let's finish up this discussion on storage because that's definitely a hot topic. They got good treatment under the big beautiful bill. And also back to the data center question. People need, they want whatever 99.5% or whatever reliability and renewables can do that on its own. On their own. So what do you think the future holds for storage? And I'm assuming you're more focused on small scale storage or solar plus storage and these community sites as opposed to these, you know, 500 hour batteries type things.

B (19:29)

I'm extremely bullish on energy storage. We have a capacity problem here in the United States. Not as much a kilowatt hour problem. And so again, energy storage can play a role there. To your point, energy storage was more or less kind of untouched through the big beautiful bill. Obviously there's some FIAC provisions that we all are working through. But in terms of its Runway with the itc, that was, you know, left alone. That was intentional, right? I think, you know, both sides of the aisle kind of saw that there's really a need for energy storage here in the grid in the United States. I think if you look at markets that have high penetration of renewables, it's, it's a no brainer that, you know, a standalone energy storage market is there already or will be there soon. I think if you look to kind of couple solar plus storage, that again is still interesting under the Runway that we have, but kind of come 2029, 2030 it won't be as interesting as just doing standalone storage. Right, because you can get the tax credit on the storage, but you won't be able to on the solar. And so we're pretty bullish on it. We're bullish on it in our home state of California. We're bullish on it in New York, we're bullish on it in Illinois, and then there's a handful of other markets across the country where there's pretty robust kind of DG or, you know, call it that 5 to 20 megawatt capacity size battery opportunity out there.

A (20:47)

Is it tough to deploy given the FIAC rules, or there's enough equipment and the rules are manageable at this point?

B (20:55)

Well, you know, for us, we safe harbored most of our pipeline against FIAC, which means that we, you know, started construction in 2025. And so, you know, we don't have to start thinking about FIAC in a real meaningful way until 2030. We did safe harbor additional projects this year to give US Runway through 2030, and those will all be subject to FIA provisions. And our, you know, our thought is that the supply chain will be there as it relates for batteries, you know, come 2029, 2030. We're already seeing moves from some domestic manufacturers of batteries to make their batteries fiat compliant. And, you know, you're seeing that kind of from the large solar panel manufacturers as well. And so I think that's a trend that will continue and we'll be able to comply.

A (21:41)

All right, with that, I'll give you the last word and thanks for joining us again and sure, I'll see you soon.

B (21:48)

Thanks, Todd. Appreciate you having me. And I guess what I'd like to leave everybody with is I've never been as bullish about the future for renewables and storage as I am today. This Megatrend is a real thing. It's here to stay. And I know a lot of developers are busy at work doing what they can to deploy as much renewables over the next five years as possible. So let's keep up the good work and thanks again. Appreciate it.

A (22:14)

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

B (22:31)

Stay ahead of the current.