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Developing A Secure Nuclear Energy Strategy In Middle East: IP3 · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Bramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
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  Speaker 1: you and your money, whether you're at the grocery store
• 0:17
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• 0:20
  Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. You
• 0:27
  Speaker 1: often don't hear the word nuclear in tandem with the
• 0:31
  Speaker 1: idea of peace in the Middle East, and yet here
• 0:34
  Speaker 1: we are. We are joined by retired General Keith Alexander
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  Speaker 1: of the U S Army. He is a retired four
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  Speaker 1: star general who joins us. He's also the co founder
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  Speaker 1: and director of I P three Corporation, also chief executive
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  Speaker 1: and president of iron Net cyber Security, and he joins
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  Speaker 1: us here at the Bloomberg New Energy Summit. Thank you
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  Speaker 1: so much for being here. I want to start with
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  Speaker 1: this idea that an increase in nuclear development in the
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  Speaker 1: Middle East could somehow foster peace. A lot of people
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  Speaker 1: think of nuclear weapons is being very close to nuclear
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  Speaker 1: power plants. Explain how this, how this could be? Well,
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  Speaker 1: that's a great question, and thanks for that, because you
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  Speaker 1: see that the Middle East is getting nuclear power. They
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  Speaker 1: won't have oil and gas forever. They've got to make
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  Speaker 1: a transition for their economies. Several of us got together
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  Speaker 1: and said, how do we help do this in a
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  Speaker 1: way that ensures security, not only future energy for both
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  Speaker 1: of those Because at the end of the day, that
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  Speaker 1: security is something the United States is going to be
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  Speaker 1: involved in. It's a vital national interest to our country.
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  Speaker 1: So how do we work with the Middle East to
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  Speaker 1: get good nuclear power that works, that is secure, and
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  Speaker 1: that we know will not be used for weapons. So
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  Speaker 1: those are the key ingredients that we brought in the
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  Speaker 1: Middle East. There are allies. What goes on in the
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  Speaker 1: Middle East will effect the rest of the world. We
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  Speaker 1: can't back off on. And from my perspective, the United
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  Speaker 1: States has to be involved and how they build their
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  Speaker 1: nuclear plants, how they secure them, and how we work
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  Speaker 1: with them. The greatest concern is somebody builds it and
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  Speaker 1: walks away. This would be a disaster for the rest
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  Speaker 1: of the world. So we see this is a great opportunity.
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  Speaker 1: You could look at things like wind solar, but those
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  Speaker 1: come and go with the sun or with the wind,
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  Speaker 1: and so you need a durable energy base. I think
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  Speaker 1: for the future that's going to be nuclear for us.
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  Speaker 1: We see this as a great opportunity not only in
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  Speaker 1: the Middle East but globally because the rest of the
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  Speaker 1: world is going to have to do the same. So, now,
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  Speaker 1: how do we take that step to ensure you have secure,
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  Speaker 1: safe nuclear power? And we see the Middle East as
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  Speaker 1: the starting point. General Alexander uh you're one of the
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  Speaker 1: world's experts on cyber security. Not only have you head
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  Speaker 1: a distinguished you're in the military, but now to your retirement,
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  Speaker 1: uh in founding your company and the president of IronNet
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  Speaker 1: cyber Security. And I'm wondering would you offer to people
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  Speaker 1: listening to this about their own security online in the
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  Speaker 1: wake of We're going to have Mark Zuckerberg that we
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  Speaker 1: testify before Congress tomorrow and and on Wednesday. And this issue,
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  Speaker 1: while perhaps not financially as a huge as some may
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  Speaker 1: describe it to be, has certainly touched a nerve with
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  Speaker 1: people who can trust their information to a social media site.
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  Speaker 1: What what has been your experience and how what would
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  Speaker 1: you say to people that are concerned about this? Well,
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  Speaker 1: this is a tough question, and thanks for bringing it up,
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  Speaker 1: because I'm sure Mark Zuckerberg he's at the center right
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  Speaker 1: now of all that attention. The Wired magazine had a
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  Speaker 1: great picture of him uh and it highlights the issues
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  Speaker 1: that he and other companies that use data like that
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  Speaker 1: for marketing face. Having said that, I think what's required
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  Speaker 1: for our country first is to have a public discussion
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  Speaker 1: on what can and cannot be used, and how you
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  Speaker 1: can opt in and out and how you ensure your privacy. Now,
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  Speaker 1: there's two parts to what you brought out. One is
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  Speaker 1: what what can companies use for the good of their
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  Speaker 1: company update about you that they can resell like ads.
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  Speaker 1: The second part, what happens to our cybersecurity online and
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  Speaker 1: how do we protect that? So things like you're personally
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  Speaker 1: identifiable information, your credit card information that's wholly different from this,
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  Speaker 1: but that will touch this discussion on cybersecurity, privacy, civil liberties.
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  Speaker 1: I think our country is in a good place with
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  Speaker 1: the general population. That is, we want to use this
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  Speaker 1: data for good man time, but we don't want it
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  Speaker 1: to exploit us personally. And that's where people get into
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  Speaker 1: this discussion. What are you doing with my data that
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  Speaker 1: you didn't tell me about? So I think that transparency
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  Speaker 1: upfront will go a long ways, and my my personal
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  Speaker 1: opinion is Facebook, we're trying to do the right thing.
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  Speaker 1: I don't wish him any harm in that. I think
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  Speaker 1: he was actually trying to do the right thing. I
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  Speaker 1: think what they do with Facebook, my wife, my children,
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  Speaker 1: they use it. It's been a good thing and a
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  Speaker 1: good way for people to communicate and very helpful. I
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  Speaker 1: think now we have to help that game and explain
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  Speaker 1: where the data goes. I have I have two questions
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  Speaker 1: for you. First, are there currently any plans in development
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  Speaker 1: to create nuclear plans? And then at least that are
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  Speaker 1: not currently there. Um well, the Saudis have asked for
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  Speaker 1: bids from companies to actually build nuclear power plans. In
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  Speaker 1: their vision twenty thirty, they talked to building up to
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  Speaker 1: sixteen in Saudi Arabia. And if you look at the
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  Speaker 1: rest of the region, you have plants right now being
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  Speaker 1: built by Russia in Egypt and in Turkey, or at
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  Speaker 1: least the initial phases of it. You've got four plants
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  Speaker 1: right now being built by Korea in the United Arab Emmis.
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  Speaker 1: So it is going nuclear. So you have that already
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  Speaker 1: on the table. So in just thirty seconds, I'm wondering
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  Speaker 1: what you think of the cybersecurity of nuclear power plants
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  Speaker 1: both that have been created there as well as in
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  Speaker 1: the US. Are are we at risk there? It's absolutely
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  Speaker 1: vital that we get that straight. So one of the
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  Speaker 1: things that I P three has brought in is this
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  Speaker 1: concept of not just putting in nuclear power, but ensuring
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  Speaker 1: it's secured not only in cybersecurity, but in physical space
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  Speaker 1: as well. And for us that means working with our allies.
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  Speaker 1: I want to thank you very much for coming in
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  Speaker 1: and spending time with us here at the Bloomberg New
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  Speaker 1: Energy Finance Summit. Entire General Keith Alexander of the U. S. Army,
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  Speaker 1: co founder director of I P three Corporation, also the
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  Speaker 1: chief executive and the president of iron Net Cybersecurity, and
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  Speaker 1: of course, thank you, General for your service to our nation.
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  Speaker 1: Much affreciating Chris Ailman, who is giving us a round
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  Speaker 1: of high fives right now, chief Investment Officer of California
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  Speaker 1: State Teaches Retirement System, known for riding that bicycle to
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  Speaker 1: work and listening to us on his UH phones while
• 7:16
  Speaker 1: while he does so. We can't wait to speak with you.
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  Speaker 1: Thank you so much for being here. Uh. Chris almen
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  Speaker 1: overseas cow Starde, which is two thirty one at point
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  Speaker 1: six a billion dollar pension fund, the second biggest public
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  Speaker 1: US pension in the country. UM, I want to start
• 7:31
  Speaker 1: with attention between we're responsible investing and the vast move
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  Speaker 1: toward indexing. And this goes to sort of this profound
• 7:39
  Speaker 1: question of how do you pressure companies to behave well
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  Speaker 1: when you can't really sell their shares? And Facebook is
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  Speaker 1: a prime example of this. You yourself have deleted your
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  Speaker 1: Facebook account and yet your your pension is not selling
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  Speaker 1: uh their shares? How are you going to make them
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  Speaker 1: more responsible when it comes to data security? I think
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  Speaker 1: indexing and responsible investment or actually perfectly aligned because it's
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  Speaker 1: a long term investment. I would say to Mark Zuckerberg,
• 8:06
  Speaker 1: as long as they are public school teachers in the
• 8:08
  Speaker 1: state of California, we're going to own that stock. So
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  Speaker 1: we have a long term focus, much longer than than
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  Speaker 1: really even some of his employees do. So we want
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  Speaker 1: them to perform. We want companies to do well, not
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  Speaker 1: for the next quarter or even year, but for the
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  Speaker 1: next twenty and thirty years. Okay, But just to push back,
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  Speaker 1: if you're not going to sell your shares, how do
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  Speaker 1: you pressure them to do something that might work out
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  Speaker 1: for them? In three years time, but will cause a
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  Speaker 1: hit to their bottom line in the next year. That's
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  Speaker 1: where we talked to the board of directors and that's
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  Speaker 1: our only influences to get the Board of the directors
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  Speaker 1: to realize we don't really just we're having a longer
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  Speaker 1: horizon than even management does. And I've talked to CEO
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  Speaker 1: is it's so hard for them to get their head
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  Speaker 1: around that that we're going to be involved in their
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  Speaker 1: company longer than they will be there. So we have
• 8:56
  Speaker 1: a broader perspective. We want them to make decisions. We
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  Speaker 1: don't care about the next ninety one days earnings. What
• 9:03
  Speaker 1: we really care about is how they do over the
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  Speaker 1: next twenty and thirty years. So were the ideal long
• 9:08
  Speaker 1: term capital that that they really want? And they want
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  Speaker 1: patient capital. They're tired of people flying in and out
• 9:14
  Speaker 1: of their stock. They they themselves since they've they've invested
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  Speaker 1: their personal lives in their company. Think that they want
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  Speaker 1: investors who are invested for their lives with their company.
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  Speaker 1: Do they want patient capital that don't have any voting rights.
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  Speaker 1: I think management would absolutely love that, and I think
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  Speaker 1: that's just offensive. That is just absolutely right. Yes, it is.
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  Speaker 1: Unfortunately Silicon Valley. As I said before, they like that model,
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  Speaker 1: and we just that's got to stop. If you want
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  Speaker 1: use of other people's capital, you have to give them
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  Speaker 1: some rights. But to Pim's point, if you don't have
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  Speaker 1: the rights, you can't vote the board of directors kind
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  Speaker 1: of office. That is correct. Do you find that they're
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  Speaker 1: receptive because I know that you did send a letter
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  Speaker 1: to Facebook? Have they responded? They do care about what
• 10:02
  Speaker 1: people think because they have reputational damage, and those individuals
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  Speaker 1: care about their perception. I mean, there's a hospital in
• 10:09
  Speaker 1: San Francisco named Zuckerberg Hospital. He cares about his public image,
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  Speaker 1: so he wants to listen to people. Because at some point,
• 10:19
  Speaker 1: companies have got to realize that if they're going to
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  Speaker 1: use other people's capital, they're going to have some shareholder rights.
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  Speaker 1: They've got to have some ability to have a dialogue
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  Speaker 1: with that Uh, with that board of directors. Uh. That's
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  Speaker 1: been a tradition in America for over two hundred years
• 10:34
  Speaker 1: and it needs to stay in place. Well, is there
• 10:39
  Speaker 1: any way that you could actually put that to a
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  Speaker 1: legal test, Because unless you have a situation like a
• 10:47
  Speaker 1: breach of security, or unless you have poor performance of
• 10:51
  Speaker 1: a stock. You don't hear many investors say that almost
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  Speaker 1: on a moral basis. If you take my money, at
• 11:00
  Speaker 1: least want to vote in how my company operates. I
• 11:03
  Speaker 1: guess i'd argue we do. We don't do it in headlines,
• 11:06
  Speaker 1: we don't do it on radio. What we do it
• 11:08
  Speaker 1: isog to the Council of Institutional Investors, though, but we
• 11:12
  Speaker 1: do it in a constant dialogue with companies, which is
• 11:15
  Speaker 1: to the Chamber of Commerce, into the business roundtable. We
• 11:20
  Speaker 1: are the ones that elect the board of directors. We
• 11:23
  Speaker 1: want more independent border directors, not selected by management, people
• 11:27
  Speaker 1: who will think about the long term, about the health
• 11:29
  Speaker 1: of the company, about shareholders, about the employees, because that's
• 11:33
  Speaker 1: about the most important assets. So let's take Mark for
• 11:35
  Speaker 1: an example. Zuckerberg thinks he's got God's gift of wisdom
• 11:40
  Speaker 1: about what to do on social media. Kind of looks
• 11:43
  Speaker 1: like they're making some mistakes right in here. If an
• 11:46
  Speaker 1: individual runs the company like they're king, they're going to
• 11:49
  Speaker 1: make mistakes, and at some point the board of directors
• 11:52
  Speaker 1: are gonna have to step in and take that company
• 11:54
  Speaker 1: away from that people and bring in somebody else to
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  Speaker 1: advise them. Are you suggesting that Mark Zuckerberg could be
• 11:59
  Speaker 1: pushed out as the EO. No, because I uh no,
• 12:03
  Speaker 1: one can. No one has that power. All right, well,
• 12:06
  Speaker 1: let's see how he does this week. But you know
• 12:08
  Speaker 1: that will somebody in that company and the employees in
• 12:11
  Speaker 1: that company care. So since we are here at the
• 12:14
  Speaker 1: Future of Energy Global Summit, I now you care deeply
• 12:16
  Speaker 1: about the future of energy. I want to ask, has
• 12:20
  Speaker 1: there been a company that you own shares of that
• 12:23
  Speaker 1: you've actually made an impact in discussions with them to
• 12:27
  Speaker 1: act more responsibly. UM, tough question. Yes, we think we
• 12:32
  Speaker 1: can say there's a direct line between our engagement and
• 12:36
  Speaker 1: their activity. Can I show you a change in the
• 12:39
  Speaker 1: stock price? Can I show you a discrete change. No,
• 12:42
  Speaker 1: it's very hard to measure up because there's so many
• 12:45
  Speaker 1: different things that are driving the markets on a given day.
• 12:48
  Speaker 1: But we've gotten involved with companies to dialogue with them
• 12:51
  Speaker 1: about pesticide use, about their methane emissions. We've been one
• 12:57
  Speaker 1: of the nation's leaders of pension plans and getting people
• 12:59
  Speaker 1: to disclosed and then CEOs and boards are more aware
• 13:03
  Speaker 1: of what their methanes and they're paying attention to that
• 13:06
  Speaker 1: as a cost and realizing they need to change the
• 13:08
  Speaker 1: way they do their energy mix. Which company has been
• 13:11
  Speaker 1: most responsive to you on us? I can't give you
• 13:15
  Speaker 1: a specific name. I am apologized for that, but I
• 13:18
  Speaker 1: will talk to my staff and uh, I know my
• 13:20
  Speaker 1: corporate governance team has done a lot of work in
• 13:23
  Speaker 1: this area and can give you very specific names about
• 13:26
  Speaker 1: electric utilities that have stepped up. Thanks very much for
• 13:29
  Speaker 1: being with us. Please do He's gonna bring his bicycle
• 13:33
  Speaker 1: next time you met you, all right, Chris Silman. He
• 13:35
  Speaker 1: is the chief investment officer at Calster's helping to manage
• 13:39
  Speaker 1: the future pensions kind current pensions the public state employees
• 13:46
  Speaker 1: of the State of California. Much appreciated. We are broadcasting
• 13:49
  Speaker 1: from Bloomberg's Future of Energy Global Summit in New York
• 13:53
  Speaker 1: City at the Bloomberg New Energy Finance Summit. Here to
• 14:01
  Speaker 1: tell us a little bit more about the world of
• 14:03
  Speaker 1: energy as someone who knows a lot about it is
• 14:05
  Speaker 1: Thomas Fanning. He's the chairman, the president, and the chief
• 14:08
  Speaker 1: executive of Southern Company. Tom Fanning, thanks very much for
• 14:11
  Speaker 1: being here. Appreciated. Yeah, Pam, great being here again. It's
• 14:14
  Speaker 1: good to see you too. Like a topic that I'm
• 14:17
  Speaker 1: always interested in is give us an update on nuclear
• 14:20
  Speaker 1: power in the United States. We get to things like
• 14:23
  Speaker 1: shale and all that kind of great stuff, But let's
• 14:25
  Speaker 1: talk about electricity generation and the role that nuclear power plays.
• 14:29
  Speaker 1: So nuclear power in the United States portfolio currently represents
• 14:33
  Speaker 1: about the energy production h A lot of those plants,
• 14:37
  Speaker 1: particularly an organized markets so in the Northeast Midwest, are
• 14:41
  Speaker 1: at risk um because of the pricing structures there. As
• 14:46
  Speaker 1: Southern Company is located in the Southeast, largely integrated regulated markets,
• 14:51
  Speaker 1: I think we've got a better environment in which to
• 14:53
  Speaker 1: operate those plants. Further, Southern Company now remains the only
• 14:58
  Speaker 1: company in America's ill developing new nuclear So we're going
• 15:02
  Speaker 1: forward on that. You know, I want to talk about
• 15:05
  Speaker 1: how the results have been because I know you've been
• 15:07
  Speaker 1: working on a number of different plants and have faced
• 15:09
  Speaker 1: some challenges, and I'm just wondering, you know, which obstacles
• 15:13
  Speaker 1: are you most concerned about going forward and which are
• 15:17
  Speaker 1: you sort of looking at as as sort of challenges
• 15:20
  Speaker 1: you've overcome that sort of show why you're optimistic. Well, uh,
• 15:25
  Speaker 1: nuclear has enjoyed a tremendous amount of support from the
• 15:28
  Speaker 1: United States government. I think it's in a national security
• 15:32
  Speaker 1: interest that the United States remains involved in new nuclear development,
• 15:37
  Speaker 1: and so as we undertook this project way back, even
• 15:42
  Speaker 1: before I became chairman of Southern Company back in two
• 15:45
  Speaker 1: thousand eight and nine, we've been able to preserve those
• 15:49
  Speaker 1: kinds of incentives to carry to the benefit of our customers. Further, uh,
• 15:55
  Speaker 1: I think one of the big challenges we faced on
• 15:58
  Speaker 1: Plant Vogel has been the bankruptcy of Westinghouse. So they
• 16:02
  Speaker 1: wrote off about six billion dollars themselves, and as a
• 16:05
  Speaker 1: result of the commercial arrangement we have with Toshiba Westinghouses parent,
• 16:12
  Speaker 1: we were able to get three point seven billion dollars
• 16:15
  Speaker 1: of guarantees out of Toshiba. When you add up the
• 16:19
  Speaker 1: ability to have the tax benefits in place that all
• 16:22
  Speaker 1: accrue to the benefit of our customers, and the commercial
• 16:26
  Speaker 1: obligations that were undertaken by Toshiba, and also the costs
• 16:30
  Speaker 1: that were born by Westinghouse, we're still able to say,
• 16:34
  Speaker 1: and this gets under reported so much that the original
• 16:38
  Speaker 1: price estimate rate impact to our customers was and right now,
• 16:43
  Speaker 1: even with the schedule and the extra cost, we're gonna
• 16:46
  Speaker 1: bring Plant Vogel in and a below ten percent looking number.
• 16:51
  Speaker 1: In other words, that the amount that consumers need to
• 16:54
  Speaker 1: spend will only be ten percent more than what they
• 16:57
  Speaker 1: currently do, rather than as your initial estimates work. It's
• 17:00
  Speaker 1: right even with the schedule and cost changes. And that's
• 17:03
  Speaker 1: because Toshiba's paid for Westinghouse, took some write offs, and
• 17:06
  Speaker 1: then we have tax pant. But just to push back
• 17:07
  Speaker 1: a little bit, I mean, Toshiba didn't want to be
• 17:10
  Speaker 1: involved in this anymore, and I believe that you had
• 17:12
  Speaker 1: conversations with them to try to keep them involved. Why
• 17:16
  Speaker 1: didn't they want to be Now that it's not that
• 17:18
  Speaker 1: they didn't want to be involved. They bought Westinghouse and
• 17:21
  Speaker 1: Westinghouse as our primary contractor, and as a result, we
• 17:24
  Speaker 1: had some very wise people negotiate those arrangements. Toshiba never
• 17:29
  Speaker 1: really had an interest particularly other than Westinghouse. We had
• 17:34
  Speaker 1: the parent guarantee Westinghouses obligations. If we did not have
• 17:39
  Speaker 1: the parent guarantee, Westinghouse would have just declared bankruptcy and
• 17:42
  Speaker 1: we would have had a general creditors obligation at Bankruptcy Corp. Instead,
• 17:47
  Speaker 1: we had Toshiba sitting there owing US three point seven billion,
• 17:51
  Speaker 1: and we got it with the healthy United States government.
• 17:54
  Speaker 1: I'll add they've been terrific, Tom, You're also pushing aggressively
• 18:00
  Speaker 1: into solar power, you bet. And I'm wondering if if
• 18:03
  Speaker 1: people recognize or maybe you don't, if it's not fact
• 18:06
  Speaker 1: or to say but that nuclear power and solar power
• 18:11
  Speaker 1: can be beneficial not only in terms of the rate structure,
• 18:14
  Speaker 1: but also in terms of the environment. Oh, that's absolutely right. Look,
• 18:18
  Speaker 1: we're committing this year in a very formal way, and
• 18:20
  Speaker 1: I guess I've already made a little bit of news
• 18:21
  Speaker 1: at your conference today. I was going to kind of
• 18:23
  Speaker 1: do this at my annual meeting, and I'll do this
• 18:25
  Speaker 1: in a much more rigorous way there, UH to commit
• 18:29
  Speaker 1: to take Southern generation portfolio. We produce about as much
• 18:32
  Speaker 1: energy as the nation of Australia, a little bit less.
• 18:35
  Speaker 1: We're really big and to move that generation portfolio to
• 18:39
  Speaker 1: a low to no carbon future is a big deal.
• 18:42
  Speaker 1: To do that, we need nuclear. To do that, we
• 18:45
  Speaker 1: need a much bigger penetration of renewables. I've always been
• 18:48
  Speaker 1: much more of a fan of solar. Okay, the Southeast
• 18:51
  Speaker 1: really doesn't have much wind flows and and wind has
• 18:54
  Speaker 1: some other issues if you want to get into that.
• 18:57
  Speaker 1: But then we need technology innovation, We need storage capability.
• 19:02
  Speaker 1: We need innovation around dealing with the carbon anum because
• 19:05
  Speaker 1: I think there still will be and it likely will
• 19:07
  Speaker 1: come from gas. We'll still have carbon intensive fuels at play.
• 19:12
  Speaker 1: We just need to do something with the carbon. Tom.
• 19:15
  Speaker 1: I wish we had another hour with you. Unfortunately we
• 19:18
  Speaker 1: have run out of time. But we have to have
• 19:20
  Speaker 1: you back because it's wonderful to have Fanning at Chairman, president,
• 19:24
  Speaker 1: chief executive officer of Southern Company in Atlanta, Georgia, the
• 19:28
  Speaker 1: one executive who is willing and excited to spend billions
• 19:32
  Speaker 1: of dollars on nuclear and is aggressively at trying to
• 19:36
  Speaker 1: cut his carbon footprint. We are broadcasting from the Future
• 19:42
  Speaker 1: of Energy Summit by Bloomberg's New Energy Finance here at
• 19:46
  Speaker 1: the Grand Hyatt Hotel in Midtown Manhattan, and you know these.
• 19:49
  Speaker 1: Of course, one of the big topics here has to
• 19:51
  Speaker 1: do with solar energy and all of the solar panels
• 19:55
  Speaker 1: that are being installed on people's roofs around the country. Uh.
• 19:59
  Speaker 1: It turned out though that the actual growth in the
• 20:03
  Speaker 1: industry has slowed, and indeed, if you take a look
• 20:07
  Speaker 1: at the number of mega wats that was added last
• 20:10
  Speaker 1: year using these solar panels, it dropped by sixteen percent
• 20:16
  Speaker 1: compared to the year before. Now this is the first
• 20:18
  Speaker 1: decline that they've registered from the year two thousand. Yeah, well,
• 20:23
  Speaker 1: this is this is a fascinating also. Survey that was
• 20:26
  Speaker 1: put out earlier this year, sixty one percent of solar
• 20:29
  Speaker 1: project developers who were pulled so they were anticipating installations
• 20:33
  Speaker 1: to drop by more than twenty five percent this year,
• 20:36
  Speaker 1: in large part due to the higher cost incurred in
• 20:40
  Speaker 1: implementing some of those solar panels in the wake of
• 20:43
  Speaker 1: some of the tariffs. Indeed, and here tell us more
• 20:45
  Speaker 1: about it is Tom Warner. He is the president and
• 20:47
  Speaker 1: the chief executive of a sun Power. They're based in
• 20:50
  Speaker 1: San Jose. He joins us here at the Bloomberg New
• 20:53
  Speaker 1: Energy Finance Summit. Tom, thanks very much for being here.
• 20:56
  Speaker 1: Maybe you could just tell us about this decline in
• 20:59
  Speaker 1: the number of install also and the declining amount of
• 21:01
  Speaker 1: growth that we're seeing in the use of solar panels
• 21:04
  Speaker 1: on people's homes. What's what's the cause of this? UM Well,
• 21:09
  Speaker 1: it's still a very incentive driven industry. Um in the
• 21:14
  Speaker 1: policies very from state to state. What we're seeing is
• 21:17
  Speaker 1: in California, which has been the real driver of distributed generation.
• 21:23
  Speaker 1: We're seeing state policy or or the UH transition from
• 21:28
  Speaker 1: NEM net metering one point oh to net metering two
• 21:31
  Speaker 1: point oh. And so there's some transition challenges, but we're
• 21:35
  Speaker 1: seeing great things happen in new states like uh, Massachusetts.
• 21:40
  Speaker 1: So we have new states coming online that are growing fast.
• 21:43
  Speaker 1: But it's a transition that's happening in the biggest market. Well,
• 21:46
  Speaker 1: how much of a factor are the tariffs that President
• 21:49
  Speaker 1: Trump announced last year specifically on solar panels being made
• 21:54
  Speaker 1: here and making it more expensive. Well, that the tariffs
• 21:57
  Speaker 1: are super important. If you think about the cost of
• 21:59
  Speaker 1: a older system, call it one to three one dollar
• 22:03
  Speaker 1: for installed what and a utility scale too for commercial
• 22:07
  Speaker 1: and three for residential. If you add say twenty or
• 22:12
  Speaker 1: thirty cents, it's a big deal to a utility scale
• 22:15
  Speaker 1: power plant. We're seeing business push out and seeing developments
• 22:20
  Speaker 1: slow down considerably there less so in residential. So the
• 22:24
  Speaker 1: teriffs are super big deal. And you should probably know.
• 22:27
  Speaker 1: We're in the exclusion process. So we hope that uh, well,
• 22:32
  Speaker 1: I'll be in DC tomorrow. The comment period ends Monday,
• 22:36
  Speaker 1: and then there's four weeks, well four weeks. There's some
• 22:39
  Speaker 1: period of time after that that don't make decisions. I
• 22:44
  Speaker 1: it's very very hard to read. I think our position
• 22:46
  Speaker 1: is awesome. I mean we meet all of the criterias.
• 22:50
  Speaker 1: So on a logical basis, you think an American solar
• 22:52
  Speaker 1: company billion dollars of payroll over five years differentiating technology
• 22:58
  Speaker 1: customers want it. We think our odds are good, but
• 23:01
  Speaker 1: we don't know. The marketing efforts by the actual installing
• 23:05
  Speaker 1: companies have pushed this idea that you don't actually have
• 23:10
  Speaker 1: to pay for the solar panels, that you can just
• 23:13
  Speaker 1: lease them. You don't have to have any money down.
• 23:15
  Speaker 1: Does that model need to change in order to provide
• 23:18
  Speaker 1: you with the more consistent UH industry backdrop? Uh? So
• 23:25
  Speaker 1: the sun power allows customers to choose. They can buy
• 23:28
  Speaker 1: a system, they can waste it, they can get alone.
• 23:31
  Speaker 1: I think what the key here is the evolution of
• 23:34
  Speaker 1: financing that as it matures and the risk premium of
• 23:38
  Speaker 1: solar goes down, then solar becomes far more affordable. UH.
• 23:43
  Speaker 1: We're also seeing with the I t C phase down
• 23:45
  Speaker 1: over the next few years, a shift from lease to loan,
• 23:49
  Speaker 1: and I think more customers want to own the system
• 23:52
  Speaker 1: when when they're done pain at the monthly bill. So
• 23:55
  Speaker 1: one thing that sun Power has announced in light of
• 23:57
  Speaker 1: the tariffs has been the holding of a US plant. Yes,
• 24:01
  Speaker 1: and I'm wondering you said that it was a part
• 24:04
  Speaker 1: in response to the tariffs that President Trump announced. Does
• 24:08
  Speaker 1: it increase your cost of doing business to have a
• 24:11
  Speaker 1: plant in the US and if so, by how much? Um? So,
• 24:15
  Speaker 1: it would be fair to say that some power is
• 24:17
  Speaker 1: going to be in faction in the US because of
• 24:19
  Speaker 1: the tariffs. I I'd say more importantly because we get
• 24:22
  Speaker 1: it and we know where the administration wants to go.
• 24:25
  Speaker 1: And uh, we're such an important part of the American
• 24:28
  Speaker 1: solo industry it sort of makes sense for us to
• 24:30
  Speaker 1: be a leader. Yes, it adds costs, It's not easy.
• 24:33
  Speaker 1: There's a reason why we weren't making product in America. However,
• 24:38
  Speaker 1: we can make higher end product, uh more automated facilities,
• 24:43
  Speaker 1: things that fit this market, and of course logistics are better.
• 24:47
  Speaker 1: So we think we can engineer our way to a
• 24:49
  Speaker 1: solution that makes sense. If we've done so much work
• 24:52
  Speaker 1: on it that we're down to two sites and soon
• 24:55
  Speaker 1: to make a call. One thing I'm wondering about, do
• 24:57
  Speaker 1: you have enough people to hire skill people? Ah, That's
• 25:01
  Speaker 1: a great question because it's sort of a contradiction, right,
• 25:05
  Speaker 1: we want American manufacturing, yet we're super short on labor.
• 25:09
  Speaker 1: So that's a big part of our criteria. The two
• 25:12
  Speaker 1: sites we're looking at, we think so uh, but a trained,
• 25:16
  Speaker 1: skilled workforce is super important because in America they need
• 25:19
  Speaker 1: to be more productive because frankly, we pay more uh,
• 25:23
  Speaker 1: and so I think a lot of us are looking
• 25:25
  Speaker 1: for those same employees. So that's a big challenge. It's uh,
• 25:29
  Speaker 1: we'll talk more on that, we'll see how it goes.
• 25:31
  Speaker 1: And just quickly, what do you want to get out
• 25:33
  Speaker 1: of this New Energy summit that you're attending here in
• 25:36
  Speaker 1: New York. Well, I think this is a This New
• 25:39
  Speaker 1: Energy Summit is a great place to meet senior people
• 25:42
  Speaker 1: both in the supply chain. Already today met battery uh,
• 25:48
  Speaker 1: manufacturers uh, and then customers who have Tara lots of load,
• 25:53
  Speaker 1: and then financiers who are at the looper camp for
• 25:55
  Speaker 1: the whole system. Everybody's here, so the ecosystems here, So
• 25:59
  Speaker 1: this is where they action is to sort of get
• 26:01
  Speaker 1: a sense of how eighteen is going to shape up.
• 26:03
  Speaker 1: At nineteen, I just can feel the energy in the air,
• 26:06
  Speaker 1: so to speak Tom Warder, Thank you so much for
• 26:08
  Speaker 1: being here. Tom Warder, President, chief executive officer at sun Power,
• 26:12
  Speaker 1: which is based in San Jose. Uh here with us
• 26:15
  Speaker 1: at the Bloomberg New Energy Finance Summit. Thanks for listening
• 26:21
  Speaker 1: to the Bloomberg p m L podcast. You can subscribe
• 26:24
  Speaker 1: and listen to interviews at Apple Podcasts, SoundCloud, or whatever
• 26:27
  Speaker 1: podcast platform you prefer. I'm pim Fox. I'm on Twitter
• 26:31
  Speaker 1: at pim Fox. I'm on Twitter at Lisa Abramo wits one.
• 26:35
  Speaker 1: Before the podcast, you can always catch us worldwide on
• 26:38
  Speaker 1: Bloomberg Radio