Latest / Energy Empire / Bonus Episode: Dan Shugar on Reshoring Solar Manufacturing (recorded at UNC Clean Tech Summit)

Transcript

Bonus Episode: Dan Shugar on Reshoring Solar Manufacturing (recorded at UNC Clean Tech Summit) · Energy Empire

0:00
Hey, it's Jigger Shaw. Welcome to Energy Empire.
0:03
This is the third and final special episode from the UNC
0:08
Clean Tech Summit produced in partnership with Suncast.
0:11
Today, I'm talking with Dan Sugar.
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Dan Co founded Power Light back in 1996 and sold it to Sun Power
0:19
for $332 million. Then he founded Next Tracker,
0:24
now branded Next Power, which is shipped more than 90 gigawatts
0:29
of solar trackers globally. He has been at the center of
0:32
every major wave of the solar industry for nearly 30 years.
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Dan Sugar also is an avid player of the guitar and has his own
0:41
band, which plays regularly at many solar events.
0:45
Here's our amazing conversation. I'm Nico Johnson, your host at
0:55
Suncast. But today we're doing a special
0:57
collaboration episode for Energy Empire Jiggers new podcast with
1:02
our friend Jamie Nolan. Dan is the protagonist of the
1:07
conversation today. And Dan, I wanted to start,
1:10
first of all, welcoming you back to North Carolina.
1:13
Thank you for all the many ways you've contributed to the growth
1:16
of clean energy in my home state, but in our industry.
1:20
And I wonder as the from the place where you sit as one of
1:23
the most well known and important infrastructure
1:27
companies building the current energy sector, what's holding us
1:31
back right now? OK.
1:33
Well, thanks, Nico, and really appreciate what you've done with
1:36
Suncast the leadership and congratulations Jigger for your
1:40
new podcast Energy Empire. Really looking forward to this
1:44
conversation. It's great to be here in North
1:47
Carolina at the UNC Cleantech event, which is a fantastic
1:54
event. What's holding us back?
1:56
Well, I would argue we're, we are up and to the right as an
2:03
industry and how are going very, very strong despite a lot of
2:09
noise to the contrary. If you look for example in the
2:12
United States last year, 83% of the new power generation
2:17
capacity was solar and storage. It is working us as a company as
2:22
a yardstick About 3 years ago and one month ago, we went
2:26
public and at that moment, our backlog at Next Power was 2.1
2:30
billion. Today it's well over 5 billion.
2:33
So I would say we're not being held back in terms of like
2:36
getting because in part we've won on economics where solar is
2:42
the lowest cost way to generate power pretty much everywhere on
2:45
Earth. And now that we have storage
2:47
that's very affordable and at four to six hours now as
2:52
storage, it can work pretty much everywhere as firm power terms
2:56
of getting to the next level. Where do we go from here?
2:59
How do we? I think we're really limited
3:02
mostly by our imagination and our talent.
3:05
And so we're trying to bring the best and the brightest into our
3:09
industries and really evangelize our message.
3:13
We need to transition our thinking from being alternative
3:17
energy to we are the mainstream energy.
3:19
We need to start acting that way, investing more in public
3:23
education, public policy, getting evangelizing our message
3:27
out there, not only at home but abroad.
3:29
We're in 45 countries around the world.
3:32
So I would say we're doing great, we can do better and we
3:37
are part of the solution for affordable, reliable energy and
3:43
play nicely with other power generation technologies.
3:47
Now in terms of getting the best and the brightest to join our
3:50
industry, I mean, you and I were best and the brightest at some
3:53
point in our career and I started at Astropower in 1995.
3:57
You started at PG&E and have been working on solar since
4:01
1980s. You know, how do you get the
4:03
best and the brightest to choose our sector?
4:06
And like, what was your journey? How did you decide that this was
4:10
going to be your path? Right, I'll answer that.
4:12
But again, I'm going to do a quick a quick tangent, which is
4:18
there was a golden moment Jigger, you founded Sun Edison.
4:21
We were at power light at that point.
4:23
What we were both focused on was the right thing, which was drive
4:28
down the levelized cost of energy, which then allows
4:31
project owners to have the highest unlevered project rate
4:36
to return, right. And so I think keeping true to
4:42
that and you carried that thought through all the way
4:45
through the awesome investments you were making in your tenure
4:50
at the Department of Energy. And thanks again for your
4:52
incredible service there. So for me, I think staying true
4:58
to a vision which is solar, renewables works for all and
5:06
we're going to deliver no compromise, high reliability
5:10
energy that wins it all the above merits, those are the
5:15
things that attract the best and the brightest.
5:18
So we've been able to I think deliver on that last year.
5:25
Next power, Sorry, this sounds a little promotional, but I think
5:28
it's helpful in answering your message.
5:29
We were the top performing renewable stock, but also beyond
5:34
renewables in all mid market cap companies, we're in the top ten,
5:38
right? And so folks are like, wow, this
5:40
is not just good for the planet, but this is a really smart
5:45
business and that's driven by satisfying customer needs, which
5:51
are people need power that's reliable, that's available.
5:55
And so we've been able to now in order to deliver a fulsome
6:02
solution, we've brought in, for example, robotics where we have
6:05
inspection robotics that are doing vision, predictive
6:08
analytics, digital all in IT. So to support that business, we
6:13
brought in a bunch of, you know, fantastic machine learning teams
6:18
and and things like that. So if you look at the scope to
6:21
deliver take our products and services to the next level, we
6:25
need the best and the brightest and our team is the most
6:29
important thing in order to innovate, execute and deliver
6:35
those kinds of products and services for our customers.
6:38
So I think we need to stay true to our vision, our mission
6:42
mission, articulate that, but deliver exemplary operational
6:47
performance where folks see this as a real industry.
6:50
That's a first order thing. Does that make sense?
6:55
It does, but I still think you dodged.
6:57
I want to know all of the like uncles who told you that you
7:01
were wasting your life by going into solar power or working for
7:05
the electric utility. There have been a lot of
7:07
naysayers along the way. Right.
7:09
But those naysayers are also telling the best and brightest
7:12
not to join like your firm, right?
7:15
I mean, the real question is like, what did you say to
7:18
convince them that like, you were still invited to
7:21
Thanksgiving dinner? That's funny.
7:23
I did this whole video series called Dinner with Dan.
7:27
Yeah, because I'd had this, I was at a wedding and some guy
7:30
was like renewable power and he, it was like, although, well,
7:34
that's not reliable. The panels are all made in China
7:36
and you know, why don't we do nuclear and and those types of
7:40
objections. But I think what we need to do
7:43
is really have, it's about communications.
7:48
That's the number one place we as an industry have
7:51
underperformed very consistently.
7:54
And so I've, we've leaned in not just at Next Power, but in our
7:58
industry associations. I serve on the American Clean
8:00
Power Board. You know, we've taken the comms
8:03
budget up from a few 100,000 to I believe north of $10 million a
8:07
year to really evangelize those messages.
8:10
One of the things we did was this manufacture clean energy
8:15
manufacturing jobs tours that we've done.
8:18
We've done 9 public factory openings and there it's very
8:23
popular and it really helps transcend the unfortunate
8:28
politicalization that's happened with some of these energy tax.
8:32
Everyone loves the fact that, you know, we took a former
8:36
Bethlehem Steel facility in Pittsburgh and converted that
8:39
into a modern manufacturing facility that's shipping
8:45
hundreds of trucks a week of finished goods and rinse,
8:47
repeat. We're doing that with
8:48
electronics in California where we've got a bunch of, we're
8:53
making advanced frames for solar panel using US steel in the
8:57
United States. So I think for me, the
9:00
manufacturing story has been really important to cut through,
9:05
evangelize the message, make it a message that everyone signs up
9:11
for, but also really hitting now the affordability that we're
9:15
delivering the lowest cost power.
9:17
So it's a ground game. We need to again grow up as an
9:23
industry. While not alternative, we're
9:25
mainstream. Let's start investing.
9:28
Dominant 3% feels like a dominant position last year.
9:33
That's a great word. I, I, you know, but we, I think
9:38
earn what we are basically have created, which is basically
9:45
through a lot of hard work, this tech works, the project returns
9:51
are happening. We're supporting, you know,
9:54
hundreds of projects across United States and the world.
9:57
And so I think by really being very factual and concrete about
10:01
that, the that's what's attracting talent and and
10:06
supporting our industry. One of the things then that I've
10:09
been most impressed by watching the last 20 years of your growth
10:14
from Power light through to next Power is the continuity of the
10:19
team. I think that it's interesting in
10:22
an industry that's as fast growing as ours has been it it's
10:26
I don't think it's so common to see that level of fidelity to
10:31
the same or to a core team. I mean there's like 8 Co
10:35
founders I think to next power, maybe 9.
10:39
How does that unified experience not only accelerate growth and
10:45
value for shareholders, but serve as a beacon for folks that
10:49
are looking at the industry? Like how do you think about that
10:51
internally as a management team? Yeah.
10:54
Thanks for saying it. I mean, it sounds like, you
10:57
know, apple pie, but the culture really is the most important
11:01
thing, Drucker said. Culture eats strategy for
11:05
breakfast everyday and people can read through, they can
11:09
really see that. So what do I mean by that?
11:12
Like what are some of the things of culture?
11:14
So one of the things we say at almost every all hands meeting
11:16
is we encourage people to like do the right thing for the
11:21
customer, do the right thing for your business, take risk.
11:25
If you make a mistake, that's OK, the company has your back.
11:29
We can make a mid course correction.
11:30
Yeah, but what we don't want it. What's unacceptable is analysis
11:36
paralysis, being afraid to make decisions.
11:41
And what we do is when we bring people in company, we don't give
11:45
them a rule book, you know, as thick as an encyclopedia and say
11:49
here's all the stuff you have to follow company.
11:50
We brought it down to one thing. We say please make every
11:54
decision at the company like it's your own money, your own
11:58
company. 99% of the time, that'll be the right thing to
12:02
do. So having those types of that
12:06
type of culture, also a strategy that people can articulate.
12:10
If you walk into 8090% of the companies around the world and
12:15
you ask somebody to walk down the hall, what's company
12:17
strategy? Most time people will say, I
12:21
don't know, I'll tell you what, but if you walk into an X power,
12:24
you ask someone what's company strategy?
12:26
They'll say it's iced tea. Well, what does iced tea stand
12:29
for? It stands for innovation,
12:31
customers execution and team innovation that delivers value
12:38
that customers understand, credible customer focus to make
12:42
sure whatever their needs are met, relentless folks on
12:46
execution with everyone we touch and building the best team.
12:49
And so being able to have a clear strategy that's
12:53
transparently articulated a culture that allows people room
12:57
to grow in their career. You know an example, our chief
13:00
operating officer at Next Power started three companies ago as a
13:09
clerk in the project construction department.
13:13
A few years later when it became time in 2004 to build the
13:17
world's first ten MW system, which was in Germany, we looked
13:21
around and said who's the most qualified person and was Marco
13:24
Miller. So he did that and he has a
13:26
senior project manager and he's elevated.
13:28
So if people work hard, they're diligent, and they deliver the
13:33
results you need to provide upward mobility within the
13:36
company. In an industry that has had so
13:38
many up and down cycles, it's often difficult to provide the
13:42
kind of upward mobility and growth that that that talent
13:48
desires. And so they end up eventually
13:51
moving away to others. Like I think one of the things
13:53
that we've struggled with as an industry is being able to gather
13:56
enough capital around the idea and enough commercial success,
14:01
which you're fantastic at, to be able to create something that
14:05
feels like it's a balloon lifting everyone off the ground.
14:08
How do we address that in at the time?
14:10
Like it seems like right now there are some headwinds, but we
14:13
have a lot of tailwinds as an industry.
14:15
So how do we address the capital requirements to make sure folks
14:18
have a job in 2-3 years? Well, I think this goes back to
14:22
what Dan was saying before. I think that part of this is a
14:25
narrative challenge. When you look at the employment
14:28
in the solar industry since the tariffs that was put on by
14:31
President Obama in 2012 and then 2015 and all the other things
14:35
has been up and to the right. We've consistently hired more
14:38
people every single year to meet the needs of millions of homes
14:42
that decide to go solar. Hundreds of thousands of
14:45
commercial and industrial facilities have to go solar,
14:48
utility scale solar. Now we're adding batteries to
14:50
all of those projects. People are busy.
14:53
People are really, really busy. I'd look I there are going to be
14:56
companies who fail to execute and they're going to go out of
14:58
business. And those folks, unfortunately,
15:00
are going to lose their jobs, but they are absorbed by the
15:02
rest of the companies who make good decisions and, you know,
15:05
still need that talent to go to the next level.
15:07
I think our biggest challenge right now really is a narrative
15:11
challenge. Like we are in a situation where
15:14
we are in the middle of one of the largest energy crises we've
15:17
had since the 1973 oil embargo. In 1973, we didn't have the
15:23
solutions that we have today to be able to get through this
15:26
energy crisis. Today, we not only have the
15:28
solution, we have billion dollar companies that are providing
15:31
those solutions at scale. And we can meet this moment,
15:34
right? And so that means that the
15:36
narrative has to change. People have to understand that.
15:39
Like putting in a backup diesel generator, right, is a cost
15:43
center. Putting in a backup battery can
15:45
become a profit Center for you and your family while protecting
15:49
your family. These are narrative challenges
15:51
and it leads to us not growing as fast as we absolutely could,
15:55
even though, as Dan suggests, we are still going up and to the
15:58
right. So, Dan, let's go back to COVID,
16:01
right? In COVID, you had a presidential
16:04
election. The president that came in at
16:06
the time was all about onshoring and reshoring, right, which
16:10
President Trump had been, you know, and starting in 2016.
16:14
And I think the solar industry was slow, frankly, to get in
16:17
that message. I think they sort of took until
16:20
2024-2025 before they were like, oh, I guess people are serious.
16:23
We're going to have to onshore and reshore.
16:24
You were never slow. Like you went out this, you
16:27
know, like head on right in the middle of COVID figuring out
16:30
exactly how you're going to onshore and reshore this
16:33
capacity. What exactly is it that like
16:36
triggered in your mind early to understand that this was a
16:40
lasting trend, one that you had to take seriously, one that you
16:42
had to attack? Yeah, I appreciate that.
16:45
Sometimes there are those moments you don't have perfect
16:50
information, but you need to do sort of pattern recognition and
16:54
make a decision and go forward. And so for me, at the very early
16:59
part of COVID, there was a global meltdown in the logistics
17:04
industry. And so prior to that, you could
17:07
move a container pretty much from point A to point B anywhere
17:10
in the world from any port for about $2500 to $3000.
17:15
We saw logistics triple in 1/4 and 1/2.
17:19
Warren Buffett came out and said all My Portfolio companies were
17:24
caught completely off guard by that.
17:27
And we also saw a steel double in that period.
17:31
What for our company at the time, we were largely protected
17:36
on the steel side through our business practices.
17:39
But the the logistics was a huge hit.
17:41
We absorbed over $100 million a cost honoring every single
17:45
contract we had with customers. We absorbed those costs over 2
17:49
years. But I just I took a step back
17:51
and I said time out at this phase of my career, there's no
17:55
way on a go forward we're going to be subjected to those kinds
18:01
of uncertainties for delivering materially reliably to a
18:06
schedule to a customer site based on a COVID mandated shut
18:11
down in a faraway port or congestion at the Port of Long
18:14
Beach or strikes or or all the other things that were
18:18
happening. So we just made a decision based
18:20
on fundamentals of delivering material reliably to customers
18:25
onshore. In creating this narrative
18:27
around not just the narrative, but the the concrete facts on
18:31
the ground, we stood up like over 35 factories across the
18:34
United States. And so and it matters, right,
18:38
people notice that you've done that and I think it's actually
18:41
LED you to get more market share and you know, and more
18:44
enthusiasm for your customers. Like I appreciate some of those
18:47
sort of like. I will, but let me finish.
18:49
So back on like that decision. I'm a I'm a student of.
18:54
I don't want to like agonize about the, but I try to learn
18:57
from what was our decision process at the time.
19:00
And it was really driven by satisfying customer need.
19:04
And So what everybody else was looking at or many people were
19:07
looking at, they're like, hey, wait till we get through Chinese
19:10
New Year's. The things will decongest and or
19:13
wait till this happens or wait till that happens.
19:15
We're going to, I'm like, no, we're moving forward on a
19:18
massive build out. And I thought at the moment I'm
19:21
like, we're going to build out 10 gigs of capacity.
19:24
So we started doing that. I thought that was a lot.
19:27
And then I was like, took it frankly was harder to do in the
19:31
US than we thought it could. It was going to be.
19:35
So we said, OK, we're going to 25.
19:38
Then we said we're going bigger than that.
19:40
And so we made, we pulled that trigger.
19:43
That ended up being a defining moment in the history of the
19:46
company. It was the right thing to do.
19:48
And so, so then it engendered we were able to radically simplify
19:57
the whole logistics part of our business and give customers, oh,
20:02
buildable megawatts by block in a predetermined sequence where
20:06
they had visibility on the all the materials and hit
20:09
unbelievably high on time delivery where when we do QB Rs
20:12
with EP CS, we ask, have we slowed you?
20:15
You down on any project over the last few years, have you been
20:19
waiting with people in the field for any material they look
20:21
around and the answer's no. We we've been delivering it
20:25
engendered a lot of and we're able to reduce lead times.
20:28
A side benefit we hadn't really even thought of was the how much
20:32
cleaner the US steel is, right? And so this electric arc furnace
20:35
steel uses a fraction of the energy that a blast furnace does
20:41
as a fraction of the carbon content.
20:42
So we're able to use, you know, really do that and build
20:46
incredible relationships with three of the top mills in the
20:50
country with new core steel dynamics and US steel.
20:54
So I think it we did the right thing.
20:57
It was really predicated on satisfying customer demand and
21:02
customer satisfaction. It then engendered a lot of
21:04
confidence, respect, but we're able to completely reengineer
21:08
our supply chain operation, save a lot of costs, deliver on time
21:13
and bring a whole range of new benefits to the table.
21:17
Dan, it's been amazing to see how as Next Power executes gets
21:25
bigger, it brings more of a focus to the industry.
21:28
A lot of folks like to joke that you're the industry rock star.
21:33
You're actually are a literal. Rock star It's with.
21:36
Groupies and everything. With groupies and everything,
21:39
we're, we're standing around in the hallway, Jigger and people
21:41
were walking up going you're the, you're the guitar guy.
21:43
No, he's known as the guitar guy as much as the CEO of Next
21:46
Power. I guess I have a couple of
21:49
things that I wanted to pull threads on because you mentioned
21:52
what ACP is doing. Jigger mentioned that the
21:54
narrative is really the most important thing.
21:55
My question was going to be what, what's the most important
21:57
thing to get right over the next five years?
21:58
I think it is the narrative, but why don't we see a, more CE OS
22:03
like you on CNN and how do we get them there?
22:06
And then, B, why don't we see more companies and CE OS leading
22:12
with their checkbook to create the kind of political power that
22:15
we need? What's that going to look like
22:17
over the next five years? Yeah, well, I think, you know,
22:20
giving a shout out to some of our brethren and and sister
22:24
companies in the space. I mean, amazing leadership from
22:28
David Carroll at Ng, from Sandia at, at EDPR, you know, next year
22:36
has really stood up and, and done great work with John
22:39
Ketchum and, and what Silicon Ranch is on regionally in the
22:45
Tennessee Valley area. Leeward has done in, in their
22:50
realm, Desiree. And so all these companies,
22:53
we've seen some really great leadership folks stepping up to
22:59
really tell our, our story about delivering reliable power that
23:07
can happen quickly, affordably and, and create a lot of
23:11
employment. So we are seeing increased
23:15
engagement and leadership with folks getting out there and
23:17
doing it. And I think we, but I really
23:21
want to encourage anyone that's a participant in this industry
23:25
to really lean in on this and be confident about telling the
23:31
story of what you're doing with your products and services.
23:34
And we really want to see the everyone be successful in this.
23:41
The the enemy is not the renewable energy company down
23:46
the street that might be a competitor.
23:48
The enemy is really old ways of thinking and us not really
23:56
because we are the we're not alternative energy as we've been
23:59
discussing. We're mainstream energy and we
24:01
need to start acting like that. What does that look like though,
24:04
Dan? I mean, like, just to finish up
24:06
here, I think when you look at the state that we're in right
24:09
now in North Carolina, we have over 7000 megawatts of operating
24:14
token farms in the state, most of which are have a power
24:18
purchase agreement with progress, which is now part of
24:20
Duke or Duke, right. And you know, like they have
24:24
just issued a 15% rate increase to do things the old way.
24:28
The new way would be to take Amazon up on their offer to
24:32
build batteries at all of these, these, these sites and build
24:35
capacity that way, right. At some point.
24:38
I, I guess what I'm trying to understand is there's narrative
24:42
and then there's the fight, right?
24:43
This is a Public Service Commission.
24:45
It's an actual, you know, docket at, you know, the Public Service
24:48
Commission, the vertically integrated utility says, you
24:51
know, I want to do it the old way.
24:53
You're saying we're 90% cheaper if you do it the new way, right?
24:57
The data center companies are like, we'd rather do it the new
25:00
way because we don't want to get blamed for a 15% rate increase,
25:04
you know, like, but as that fight progresses, right?
25:06
You've got a governor who may not be a PhD in electricity
25:09
regulation, right? Like how?
25:11
How do we as an industry help to get those better outcomes?
25:15
Right. Well, I think I, I really think
25:19
a number of the folks you mentioned are trying to lean in.
25:24
Governor Josh Stein will be here today.
25:26
I have the pleasure of introducing him and they has
25:29
been a champion for a clean power for a decade going back to
25:33
his work as Attorney general. He's participating in this
25:36
conference with a with an address and these investor owned
25:41
utilities. We're trying to lean in to make
25:44
it a win win for all the participants.
25:46
We've been serving the data centers with the corporate off
25:49
takes has been it's not a new thing.
25:51
It's probably one of the dominant drivers of demand and
25:56
let's make it a win for these utilities.
25:58
I think what we're really focused on also is the
26:03
engineering around interconnection, making sure the
26:07
inverters keep, you know, stay with the grid and keep
26:11
supporting it. I think there's so much
26:13
opportunity with with our technology is a much better way
26:19
to generate power and control the grid than a rotating
26:21
machine. We're just, we've engaged with
26:25
an X power, we've engaged with Nerx zip to basically we're
26:28
working on an engineering bit level to essentially show wow,
26:32
the flexibility of these inverters for ancillary
26:35
services, Walter support ride through frequency regulation to
26:39
be able to do those things and pair with batteries.
26:41
There's a tremendous opportunity.
26:44
We again, we're mainstream energy now with solar and
26:49
storage. Let's start doubling down our
26:52
investments with all the stakeholders you mentioned and
26:55
really be a solution that also they can win with their current
26:58
business models. They want to keep the lights on
27:01
and I don't blame them. I used to work at a utility.
27:03
So I, I really think we're part of the solution and we're going
27:07
to do our best at Next Power. We're building some additional
27:10
labs. We're working collaboratively
27:13
with those stakeholders to really continue to innovate, to
27:17
find solutions that are frankly lower cost, higher reliability,
27:22
but create more economy, faster to market and Oh yes, better for
27:26
the environment than those legacy ways of generating power.
27:30
What's that, Dan? Jigger, thanks for all your
27:32
amazing work and Congrats on Energy Empire podcast.
27:36
And Nico, always a pleasure to work with you.
27:39
Thanks, Dan. Thanks, Jigger.
27:40
Give it up. That was Dan Sugar, and that
27:50
wraps up our series from the UNC Clean Tech Summit.
27:55
If you enjoyed these conversations and you want more,
27:58
including our episodes with John Shoka from the conservative
28:02
Energy Network and investor Ahmad Shatila, go to Suncast.
28:07
Find Nico Johnson wherever you get your podcasts.
28:10
Thank you so much for listening to Energy Empire.