Latest / Clean Power Hour / Mike Hall, Anza Renewables - Effective $/Watt for Optimizing PV Procurement | EP161

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Mike Hall, Anza Renewables - Effective $/Watt for Optimizing PV Procurement | EP161 · Clean Power Hour

• 0:50
  Mike Hall: We looked at the PV industry, we started with PV and now we're also doing storage.
• 0:53
  Mike Hall: And we're like, Okay, this is poised to be a $300 billion global industry, which it is.
• 0:59
  Mike Hall: But the way procurement is done is it's like it's back in the dark ages, or at least like back in the 80s. Right? Like, I think early 80s. My parents, they wanted to buy a plane ticket from San Diego to New York, what they do, they got on the phone, and they called each airline one at a time how to pencil and paper, ask them, What flights Do you have? How much do they cost, which ones are direct windshields, or indirect, and they went through that list. And eventually they'd be like, Alright, I need to buy something. By the time they went back to buy that airline ticket may or may not be there. And that's how procurements being done today. There are 40 companies on the Bloomberg tier one list for solar modules, and transactions and information is being exchanged through phone calls and emails. And it's incredibly inefficient. So what Anza does is it's it's not like Kayak does not a consumer product. But it's that type of experience where you can come in to the platform, you can see over 90% of the US supply, and compare the products based on price. But also we have technology that allows you to compare the products on total value,
• 1:59
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• 2:19
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• 2:26
  Tim Montague: We're here at RE plus, with a new friend, my call the CEO of Anza. I will say formerly known as prego, but they're separate companies.
• 2:34
  Tim Montague: Yeah, so we're gonna get to know Mike a little bit, get a little bit of your backstory, you became quite well known in the Solar World as the owner operator of Borrego a large EPC.
• 2:46
  Tim Montague: And in the end, I would love to give our listeners a little background on the company because you have a long history.
• 2:54
  Tim Montague: And but things have changed dramatically in the recent past.
• 2:59
  Tim Montague: So we're also going to get into that. So for our listeners, Mike, tell us a little bit about yourself and how you got into clean energy. And then we'll got dive into your story at Borrego and now Anza
• 3:15
  Mike Hall: Yeah, happy to yeah, thanks for having me. So I started in solar in 2002 When my brother I and another co founder named Chris Anderson started Borrego solar. So back then us solar industry was one megawatt per year in annual install. So we're over 30 gigawatts now.
• 3:32
  Mike Hall: Yeah, my first, we're here at already plus my first solar conference, it wasn't called already. Plus, back then. It was about 250 people was the conference size.
• 3:43
  Tim Montague: The Clean Power Hour is brought to you by Denowatts. If you're a solar PV asset manager or performance engineer, you need better data and better business intelligence. With Dina wants digital twin benchmarking technology you get more accurate, efficient, and faster performance measurement results.
• 3:59
  Tim Montague: The fourth generation Deno recently completed a technical review by DNV. You can download the report at Denowatts.com.
• 4:06
  Tim Montague: That's D E N O W A T T S.com.
• 4:13
  Tim Montague: Now back to the show.
• 4:15
  Tim Montague: You heard that right. one megawatt a year the market 20 years ago, right? Yeah, tiny market. That's right. And now of course, we're still at the bottom of the S curve. But we're starting to go vertical we're going to do maybe 30 gigawatts year in the United States. And in some places, they're doing many more. China's doing, I think, over 100 gigawatts, which is insane. But so things have changed.
• 4:42
  Mike Hall: Things have changed a lot. Yeah. The conference, this conference we're at as 20,000 plus people. Yeah, when we when I went to my first one is more like 250 300. So it's been a lot of fun to be on this industry rollercoaster ride, but it's a roller coaster. That's just, you know, kept going up into the right, yeah.
• 5:00
  Tim Montague: 2002 though, how on earth did you decide to get into the solar industry?
• 5:06
  Mike Hall: Yeah, it's a funny story. So I'm a chemical engineer by training. And I worked for two years in the semiconductor industry, and lost my job during the downturn. And meanwhile, my brother who had actually just graduated from college, he's my family. We're all entrepreneurs. He had written this business plan for a class in college to do back then it was actually commercial solar PPAs because the county the state of California was just starting to create incentives to encourage people to do grid connected solar. There was no grid connected solar until it just started to pop up back in 2002. And so I had this time, my brother had soft started this company by doing like my dad's house and my uncle's house and a cousin's house tonight. Have kilowatts at a time. And I just got hooked. And so we launched this business as a garage business. We got $40,000 for my parents, and that was the Borrego origin story. And then over 20 years, we really did almost everything there is to do and downstream solar and storage. We did build an EPC, as you said, but we also were one of the early developers in what became the community, slower market. We built a very successful development business, which we sold last year, your time at these changes we sold that we spun off and sold that.
• 6:18
  Mike Hall: That's New Leaf. That's now New Leaf energy. Yeah, we've energy came out of Borrego an outbreak of development business, right.
• 6:26
  Mike Hall: And then this new business Anza, which we launched and just spun out in May, that now I'm working on full time and really excited about Yeah, yeah.
• 6:36
  Tim Montague: Yeah, that's a so you were a resi solar installer, then you grew into commercial?
• 6:41
  Tim Montague: That's right. That's right. Then you became a developer. And so you then you, then you had a kind of you were vertically integrated for a little while right development and exactly right. That's exactly right.
• 6:55
  Tim Montague: Then you spun off the EPC. We didn't spin
• 6:58
  Mike Hall: off the boilers, just a division. Yeah, we what we did, and this is this gets into, you know, the management leadership history of that company. But in 2020, we, we had this transformation that we called the gigawatt revolution, which was, we wanted to be out that gigawatt impact and everything we're doing. And so one of the things that we did to enable that was we split this kind of big, vertically integrated business into three different business lines, each with their own business leader, each with their own team, each with their own profit and loss statement, each with their own sets of goals. And so that created like a mini conglomerate, which had positives and negatives to it, if I'm being real, but one of the positives it did allow the development business to really grow and flourish. And I think that's, that's really why nuleaf is so successful today. It also allowed us to do creative things like launch this as a business, which is really about bringing data and technology to procurement. And so yeah, things things change a lot in 2020, when we kind of disaggregated the company, and said, You know what we're actually doing, we're not just one business. We are a greenfield developer. We are an EPC. And then I don't want to forget to talk about oh, NM, we Borrego has an operation and maintenance business is 10 years old, that is still thriving, and growing, servicing, both utility scale and large DG projects.
• 8:23
  Mike Hall: They service over 1000 systems and operate a little over one app gigawatt of plants.
• 8:28
  Tim Montague: And so now there's really well there's three companies still there's Anza, which we're going to talk more about, there's Borrego or Briggle nm, because the EPC side of radio is now scaling down
• 8:41
  Mike Hall: there yet they're not taking any new contracts. We're just finishing the contracts we have. But though the O nm company is going to continue yo nm company to continue its growing, they're taking new contracts signing new customers are scaling. They're investing in their own technology. They're doing a lot of exciting things.
• 8:54
  Mike Hall: Yeah.
• 8:56
  Tim Montague: And then there's new leaf. And do you have a role in all three companies still? Or what is your role? Yeah, it's
• 9:02
  Mike Hall: an interesting question. So I am the CEO of Anza. So that is my day job and my more than full time job, and then I am still a board member of vertigo, and still give advice and meet with the CEO of vertigo, and the gentleman, Miquel Bachman, who runs no nm business, I have no formal role with nuleaf, other than they're very good friends. And I talk to them often. But I have no formal role. So yeah, I mean, I'm, that's kind of a lay of the land for me. But I'm spending my days being about Anza, and how we can revolutionize procurement for the storage industry.
• 9:37
  Tim Montague: And that seems like a big shift to me. But let's set the table a little bit with Anza. Are you taking on the green text and Bay walls of the world? What exactly what
• 9:49
  Mike Hall: we're doing now. So what Anza is, is it's it's a platform to allow large scale buyers of solar and storage to increase their project profits by optimizing procurement. And so we're not a distributor, we're not a middleman. We've done some brokerage, but we're actually moving out of brokerage. Really what we are is we are a provider of data technology and services to help buyers get to better procurement outcomes. Like I think a metaphor is kind of the easiest way to think about what we do.
• 10:19
  Mike Hall: So we looked at this was back in 2020 2021, we were thinking about Anza. We looked at the PV industry, started PV now we're also doing storage and we're like, Okay, this is poised to be a $300 billion global industry, which it is, but the way procurement is done is it's it's like it's back in the dark ages, or at least like back in the 80s. Right, like I think early 80s. My parents they wanted to buy a plane ticket from San Diego to New York, where they do they got on the phone and they called each airline one at a time had a pencil Paper, asked them what flights you have, how much do they cost, which ones are direct, which ones are a direct, and they went through that list. And eventually they'd be like, Alright, I need to buy something, by the time they went back to buy that airline ticket may or may not be there. And that's how procurements being done today, there are 40 companies on the Bloomberg tier one list for solar modules, and transactions and information is being exchanged through phone calls and emails. And it's incredibly inefficient. And so what ends it does is it's, it's not like Kayak, because it's not a consumer product. But it's that type of experience where you can come in to the platform, you can see over 90% of the US supply, and compare the products based on price. But also we have technology that allows you to compare the products on total value. So we have this metric called effective dollar per watt, that allows buyers to compare the products not just based on how much they cost, but also how much energy they produce and the value of that energy. And also differences in installation costs because we come from being an EPC. So we can give you as a buyer like, Okay, this module is of a larger form factor, there are fewer pieces. So it's gonna be materially cheaper to install, this module sits on the next track or differently, it's cheaper to install. And sometimes on these big projects, there's millions of dollars in installation cost difference is that the procurement people doing hard work to run these processes, they can't see that.
• 12:13
  Mike Hall: And so we enable them to see that so that they can ultimately make optimal decisions and increase project profits.
• 12:19
  Tim Montague: So you're you're making the buying process much more sophisticated. It sounds like exactly, and that's exactly what we're doing. And so it's a software as a service platform that you subscribe to.
• 12:31
  Mike Hall: They Yeah, so typically, right now customers are working with us where they effectively subscribe or engage with us on a per project basis.
• 12:37
  Mike Hall: We're also we're also willing to talk about, you know, whole corporate wide engagements. But generally, yeah, customer will be in the early stages of their procurement, we'll show them what we can do, they'll get really interested understand that we can save them, depending on scale hundreds of 1000s, or millions, or for utility scale, sometimes it's 10s of millions, they'll contract with us. And we'll use our tech data and technology. But also people were 35 people working full time on procurement to optimize that process.
• 13:08
  Tim Montague: And then are you at all integrating information from companies like clean energy associates or assignable techs.
• 13:15
  Mike Hall: So we're not the platform itself doesn't integrate. But it's very often that our customers do work with companies like ca or STS or P Val and will facilitate that.
• 13:27
  Mike Hall: But we are not competing with those companies. We are not an in factory QA QC service provider, we don't have a lab like Pete l does. So those companies are really important.
• 13:40
  Mike Hall: And we will we have like best practices that will encourage our customers to put into their contracts, and potentially scopes the services to us from those companies. But that's that's not really our domain, what we're trying to do is aggregate all the data around who has what products available at what price? And what are all the technical, non technical and commercial data about those products, counterparties and contracts, so that the customer can make the most informed decision.
• 14:09
  Tim Montague: But so how are you acquiring that data?
• 14:11
  Mike Hall: So we work with the suppliers. So we have over 30 template contracts available and over 30, suppliers representing 90% of the US source supply that are working with us. And so we try and get data from them on at least twice a month basis. And the technology actually enables them to self update, and then allows us to see what's what's up to date and what's out of date. And then we have a big team that's aggregating that data. I mean, that's what we're trying to do. We think it doesn't make there's 300 IPPs.
• 14:40
  Mike Hall: By module that scale in the US.
• 15:36
  Mike Hall: It doesn't make sense for every one of them to aggregate data from 30 Plus suppliers. So we're like, let's do that for the whole industry. So there's some people power but we also use technology. And we do rely on the suppliers cooperation. But in exchange for that we give a lot of value to suppliers.
• 15:49
  Mike Hall: Because through the supplier side of the app, they get like market intelligence, they can see hey, where they can't see anybody else's price.
• 15:56
  Mike Hall: Everything's confidential, but they can see hey, where do I stack up? Why am I winning or losing? How does my product compare to others based on efficiency? How am I How does my warranty terms compared to others? How do my payment terms compared to others, they can't see exactly how they line up against any individual but in aggregate, they can understand both technically and commercially, where do they line up in the market and the suppliers need that data and it's really hard for them to get
• 16:22
  Tim Montague: The Clean Power Hour is brought to you by CPS it.
• 16:26
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• 17:01
  Tim Montague: So how did you think of this idea? What what what was the the aha moment?
• 17:08
  Mike Hall: Well, yeah, it came.
• 17:08
  Mike Hall: We started thinking about this back in 2020, when we were actually doing some strategic work on our EPC business. And what we realized was that the market had totally changed. So when we started doing commercial EPC, work IPPs bought their modules from the EPCs. Right, it was a turnkey contract that included modules racking inverters and all the services.
• 17:29
  Mike Hall: But that market had flipped. And by 2020, the IPPs are already mostly starting to buy their own modules. So that was interesting to us. Because we had actually at breakout had an IPP, we were also developer, and what. And what we realized was that an IPP is a different buyer. And an IPP doesn't just care about lowest price, but they actually want best value, they want the most NPV or IRR. And so we realized that what was formerly nuleaf, we had developed these algorithms and technology to be able to evaluate large number of modules based on Lifetime NPV.
• 18:04
  Mike Hall: And so we're like, oh, we have these algorithms. There's a market demand. Let's put these things together. And that became the basis for answer using
• 18:13
  Tim Montague: some acronyms I'm not familiar with. So well, yeah, sure. It's break that down.
• 18:17
  Mike Hall: Yeah, sure. Yeah. So net present value is a way of measuring
• 18:22
  Tim Montague: locale. With that.
• 18:22
  Tim Montague: Yeah. Yeah. But but there was a couple other ones there. I'm not sure. So
• 18:29
  Mike Hall: I talked fast. Yeah.
• 18:29
  Mike Hall: Yeah. So IRR, internal rate of returns, measurement of.
• 18:36
  Tim Montague: And so you're actually you're actually providing those statistics, what we do product by product basis,
• 18:44
  Mike Hall: we do but we focus not on giving them an absolute number, what we can show them is for 30 Different plus products, what are the differences are expected differences and net present value or internal rate of return? So that's what we do.
• 18:59
  Mike Hall: But we baked that all into our number, which is we call it effective dollar per watt. And we're trying to get the industry to say like, you know, what, dollar per watt is not the most meaningful number, because it doesn't take into account differences in performance. It doesn't take into account differences in installation costs. So effective dollar per watt is our way of like, let's put everything into one number.
• 19:20
  Mike Hall: And we can show you when you consider everything and you look at the lifetime value this product. How do these products differ?
• 19:27
  Tim Montague: Yeah, yeah. And what is what what are your early customers saying? What is their experience? And can you talk about what is the cost of the platform?
• 19:41
  Mike Hall: Yeah, share it. So we got great early traction. So we have over 60 customers who have already bought with assistance from Anza, engaging us for their procurement, and 2022. We assisted on over a gigawatt of procurement, we expect to do over two gigawatts this year.
• 19:56
  Mike Hall: We've also launched our storage app. So early results have been great. Are we charged we do charge a small dollar per watt fee on the procurement engagements for Digi projects.
• 20:11
  Mike Hall: It's, it's low like It's like probably one to two cents and for when he got up into utility sale gets into the tenths of a cent. So we're we're trying to make sure that our our fee is not a an obstacle because we generate a multiple value on the fee.
• 20:31
  Tim Montague: So it's modules and storage right now,
• 20:34
  Mike Hall: modules and storage.
• 20:34
  Mike Hall: And on the storage side, we're mostly focused on the DC block architecture. So DC block vers AC block, so basically blocks a fully integrated product like what you buy from fluence or its cilia or Tesla, and then DC block, meaning we're helping customers buy a product from the module, the battery module makers, and then helping them do integration with a inverter and a, an energy management system, the software that wraps the whole thing together. Yeah, yeah.
• 21:08
  Tim Montague: So that's even quite a bit more complicated,
• 21:11
  Mike Hall: more complicated. And for storage, we provide more of we call it like in we can provide like integration light services, we're helping them bring those systems together, helping them develop and execute their commissioning plans. So we have customers, though, who just want to help us help them navigate to the best DC block purchase and we'll do that. And then we have other customers who say they need more support. And so we'll help them actually through the project. execution, we're not an EPC. We're not We're not acting as a professional engineer. But our team has done over 55 storage projects, we took the whole storage we bought as part of when we bought Anza. From Vega, we bought the whole storage team that had done all vertigo storage projects. So we have a tremendous amount of storage experience
• 21:59
  Tim Montague: in what is the demo of a typical customer? Like how bid? How many megawatts of projects are they doing in order to kind of really benefit from your services.
• 22:11
  Mike Hall: So our average deal size is 10 megawatts, our biggest deal is 400 megawatts.
• 22:15
  Mike Hall: So that's the range. We've done projects down to one megawatt, you know, obviously, that that you're maybe going to do a little less analysis that a megawatt and then you do it for 100. But customers benefit from the full range. And we even have EPCs, who work with us who maybe are less concerned about, you know, lifetime value, but do want to understand, hey, what are all the product options available? And maybe they're not able to get the direct attention from the sales forces from the vendors. And also understand, hey, what are the differences in installation costs? And I'm likely to see, so but most of our customers are IPPS, who are either in the utility scale market or that middle market community, solar large DG market? That's kind of our sweet spot. You said IPPs? Sorry.
• 23:08
  Mike Hall: Independent Power Producers.
• 23:11
  Mike Hall: Yeah, yeah. Okay. Yeah. Right.
• 23:11
  Mike Hall: Yeah. Yeah, we haven't worked a lot with regulated utilities yet, but we're open to it. We just haven't done much yet.
• 23:18
  Mike Hall: Yeah,
• 23:20
  Tim Montague: very cool. Well, is there anything else that our listeners should know that they may not know?
• 23:25
  Mike Hall: Yeah, I mean, I'll just encourage people, if you're at all interested, you can go to anzarenewables.com. And the platform is actually free to register for and play with. And you can put projects in there.
• 23:34
  Mike Hall: And you get a lot of data intelligence for free. So I encourage you to do that. And, yeah, I mean, it was a great discussion. Yeah. Thanks for your questions.
• 23:44
  Tim Montague: Awesome. Yeah.
• 23:44
  Tim Montague: Well, thank you Mike Hall with Anza.
• 23:47
  Tim Montague: The Clean Power Hour is brought to you by Denowatts. If you're a solar PV asset manager or performance engineer, you need better data and better business intelligence. With Denowatts digital twin benchmarking technology, you get more accurate, efficient, and faster performance measurement results.
• 24:05
  Tim Montague: The fourth generation Deno recently completed a technical review by DNV, you can download the report a Denowatts.com.
• 24:13
  Tim Montague: That's D E N O W A T T S.com.
• 24:13
  Tim Montague: Now back to the show.
• 24:19
  Tim Montague: I want to remind our listeners that they can find all of our content at cleanpowerhour.com Give us a rating and a review on Apple and Spotify. Tell your friends about the show. Reach out to me on LinkedIn, I love hearing from my listeners. And please, let's grow solar storage. I'm Tim Montague. Take care.
• 24:38
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• 24:52
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• 25:50
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