Latest / Energy Empire / Forget Solar Stocks. The Best Solar Returns Are Overseas.

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Forget Solar Stocks. The Best Solar Returns Are Overseas. · Energy Empire

0:00
We have this debate going on in our business.
0:02
We started off and all of our stories were about the impact
0:04
and how cool this could be if we gang tackle these problems.
0:07
You know, that was the mission. And then we said, you know what,
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We don't quack like a duck. For these wealth investors, the
0:12
family offices and the registered investment advisors,
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we have to look a little bit more like the products they're
0:18
used to seeing. We feel like we've gone too far
0:20
there. And I'm getting a lot of
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communications from our clients saying like, don't shy away from
0:24
the impact that you're having, like that's it's OK to talk
0:27
about those things. And sometimes I feel like I
0:29
don't want anybody to think that I'm any less fit as a fiduciary
0:33
because our projects have impact and I'm not taking wild risks
0:38
with your money. People's money is important to
0:40
them. But damn it, we do have a huge
0:42
impact too. Hello, my name is Jigger Shaw
0:49
and I'm a clean energy entrepreneur.
0:51
And I'm Jamie Nolan, a clean energy communications executive.
0:55
And this is energy umpire. Hi, Jigger.
0:57
How's it going? Hello, Jamie.
1:00
Oh my goodness, is this like we had to do a double header today?
1:04
We're. Doing a double header.
1:05
We're wearing the same outfits. YouTube audience, sorry about
1:07
that. It's one of those things where I
1:11
just feel like there's so much going on in the world today that
1:15
it's hard to keep up and there's just so much good content.
1:18
So I'm really happy, you know, that Mike was able to come on
1:22
and explain Energia and, and I just think it's like right now,
1:27
like there's a lot of US focus and what he's doing around the
1:30
world is super important. There is so much going on and
1:35
it's a really exciting and frankly just fascinating time to
1:39
be working in the energy sector with the supply disruptions.
1:42
And from the closure of the Strait of Hormuz and the
1:45
International Energy Agency coming out and saying that the
1:49
early signs are showing the very clear indications that the
1:53
supply disruptions are driving the accelerated adoption of
1:57
electrification solutions. So like China is exporting more
2:01
solar PV to Southeast Asia and Africa, EV sales in Asia,
2:06
specific EV sales in Latin America and Europe, heat pump
2:09
sales in Europe. I mean, none of these indicators
2:12
are you're not, you know, you're not hearing necessarily those
2:15
numbers in the US, which I think could be a result of, I mean,
2:19
we're a little bit isolated from some of the impacts.
2:21
There's also political considerations.
2:23
But internationally, absolutely, we are seeing the accelerated
2:28
adoption of renewables and electrification solutions.
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And so I'm really excited to speak to Mike about what he's
2:36
seen in his company as a result of that.
2:39
Yeah, I was looking at the data from Ember and others.
2:42
In March alone, Nigeria was up 500% in terms of solar panel
2:47
imports. And so it's crazy town how many
2:52
people are putting this in. We are now in full rationing,
2:55
like JP Morgan said that we're going to hit tank bottoms by the
2:59
middle of July, which means that basically once you hit like 6.8
3:04
billion barrels of oil in the existing system, you're at the
3:08
lowest possible amount because you can't put 0 oil in the
3:13
pipelines. Otherwise like stuff starts to
3:15
break down. You can't let go below a certain
3:17
amount. Same with the tank, like you
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can't like have 0 oil in the tank.
3:22
They have to have a little bit in there at all times.
3:25
And so we're now actively rationing, like Estonia, South
3:28
Africa, other places are just actively rationing and saying
3:31
you can only have this much gasoline, this much diesel, this
3:35
much jet fuel. It's bonkers.
3:38
Like how this is happening around the world and I think
3:40
most Americans don't even know about it.
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Right, let's get right into it. Energy Empire is powered by
3:51
octopus energy. I hear it at every conference.
3:55
We need more generation, more transmission.
3:58
You're saying we don't? We do, but we're ignoring
4:02
something faster. Sitting in people's homes and EV
4:05
is basically a 60 kWh battery idle most of the day across the
4:11
US. That's gigawatts we're not
4:13
using. Utilities have pitched demand
4:16
response for 20 years and it still hasn't scaled.
4:20
Why is this time different? Because we're not asking
4:23
customers to change behavior, we're automating it.
4:26
The grid treats customers like demand that actually distributed
4:30
infrastructure. Connect those assets and you can
4:32
shift load overnight at scale. So the constraint isn't
4:36
technology, it's. Coordination the solutions
4:40
already deployed, we just need to use it.
4:43
Thanks, Natasha. That was Natasha Crowe, vice
4:47
president of marketing and comms for Octopus North America.
4:51
If that's the version of the Grid you want, check them out.
4:55
The link is in the show notes. Mike, so good to have you on.
5:04
Hey Jigger, thanks for having me.
5:06
It's been a long time in the making, buddy.
5:08
Well, it has been we, we've known each other a long time.
5:11
I, you know, I have always been so impressed by your career, but
5:15
also just like your passion and like sort of persistence, right?
5:20
Like I think, oh, stop. But I'm, I'm going to blush.
5:23
Is this gideo? Yeah.
5:26
Well, like, I mean, when I first met you, you were doing green
5:29
Skies and so you were, you know, putting solar on Walmart and
5:32
Target rooftops and all that stuff.
5:34
Then you sold it. And then you were like, huh,
5:37
what do I do? And I think you like traveled
5:38
the world with your family and I.
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Tell you the first time I actually heard the name Jigger
5:43
shot it was in the green skies days.
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And I don't think I ever told you this story, but real, real
5:48
quickly. You remember the first time you
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heard of Jiggershaw? I gotta hear.
5:52
That absolutely, absolutely. I was negotiating a deal with
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Walmart for the Puerto Rico stores and you know, we had
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already done a number of Walmarts there, and so had Sun
6:01
Edison, so had Solar City, so had Sun Power.
6:04
So it was kind of like the battlefield for CNI Solar at
6:08
that time, which was effectively the battlefield for all of solar
6:11
'cause that's where the industry was at in those times.
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And I got the Walmart guy calling me up and saying, look,
6:16
someone's going a penny cheaper. You know, do you wanna, do you
6:19
wanna call it quits or do you wanna match it?
6:21
I said, I, I'll go, I'll go a penny cheaper than him.
6:24
All right, good. I got the deal, guys.
6:26
High fives. We just got the, the, the, the
6:28
Puerto Rican Walmart stores. Phone rings again.
6:30
It's Walmart again. Listen, he, he went a little
6:33
cheaper. Would you would you knock
6:35
another penny off? I'm right at the edge of you
6:38
know what, what works here? Like, OK, I'll go 1 penny
6:40
cheaper. Yay.
6:41
High fives. We just got the the Puerto Rico
6:44
Walmart projects. Phone rings again.
6:45
I'm like, all right, who is this guy?
6:47
They said, well, it's it's Jigger Shaw or son Edison.
6:49
He's he's trying to get these deals.
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I said, all right, eventually I said let him have them.
6:54
And you, you guys got those stories?
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I yielded. Yeah.
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True story. I mean, that's Walmart for you.
7:02
Those guys, those are sharks. That's right.
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That's how they get their prices low.
7:07
I give them props. Everyday low prices, you know,
7:13
care of the solar and energy industry.
7:15
Well, like look, you went around the world, you started like
7:18
figuring out that it's not just solar happening here, it's
7:21
happening everywhere and you decided to fix this product.
7:25
I'm fascinated by this because as somebody who's been in the
7:29
solar industry a long time, I've never owned solar stocks, right?
7:33
Like I just never really figured out why would I own a solar
7:38
module manufacturer stock or a solar inverter company stock or
7:42
this stock or that stock. Like my whole thing is I've
7:44
owned solar systems for years, right?
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Like the solar system on the church down the street, the
7:50
solar system on the private school down the street or
7:52
whatever. But I'm also like an active
7:54
investor, right? Because I work in the solar
7:56
industry, etcetera, etcetera. So the IRS stuff works.
7:59
And so when you came along and you were like, well, you know,
8:04
like there's no way to really own a piece of a bunch of solar
8:08
projects and, you know, easily get in and out of the
8:12
transaction. I'm going to create my own
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platform. I was like, damn, that's really
8:17
cool, right? So like, so like, how did you
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get to, you know, creating this platform?
8:24
And you know, how did you decide this was something you wanted to
8:27
do? Well, honestly, Energia was an
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evolutionary process jigger. It started off where one day at
8:34
Greenskies I had all this capabilities, engineering
8:37
hundreds of megawatts of projects that we owned, my
8:40
partners and I, And then with one stroke of the pen, I didn't
8:44
have any capabilities. I didn't have any solar
8:46
projects, but I did have some capital and I felt kind of naked
8:50
without my company around me and these assets that I loved.
8:54
And I knew the first thing I had to do was figure out what am I
8:57
going to do with this capital? I, I have to invest it in.
8:59
And as a story goes, I actually, I hired a bank to buy stocks for
9:05
me. You know, they come to your
9:06
house, they, they're going to buy your portfolio.
9:08
Do you want like the medium risk portfolio or the higher risk
9:11
portfolio or the lower risk portfolio?
9:12
And it's like the you can cap out at like a 4% return as their
9:16
projections sound like I don't want any of this.
9:19
So I decided to follow my instincts and get back into
9:22
solar, investing in asset class that I know and looking for
9:27
projects that I would want to own.
9:29
At the same time, my buddy Chris Sattler had sold his company
9:32
called North American Power. He was kind of in the same
9:34
situation. So we partnered up to make some
9:37
investments and we started buying some solar projects and
9:40
we said where are the most lucrative solar projects going
9:43
to be? And we assumed that they would
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be in Brazil at the time. There's a a confluence of
9:48
circumstance that made Brazil an obvious hotspot.
9:50
We went down there and we started investing our own
9:52
capital. And then we quickly realized
9:55
that it's easier to find great solar investments than it is to
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fund them out of your back pocket.
9:59
And we had out kicked our own coverage.
10:01
So we called in friends and family.
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And then friends and family evolved into how do we expand
10:06
this so more investors could invest alongside Chris and I.
10:09
And it became sort of an asset class by accident out of the
10:13
pursuit to put our own capital to work in this asset class that
10:18
we love and know so much. Yeah, no, I remember those days
10:21
because I think I called you, I think maybe 2019 and you were
10:26
already feeling like you are exposed.
10:28
I think, I think your wife even got on the phone was like, yeah,
10:31
he's exposed. Like let's figure this out.
10:34
And and you know, like, and I think we like we jumped in and
10:38
we invested. And part of I think the
10:40
challenge with this space is that, you know, there are big
10:44
players, right, like the IFC, Brookfield, other folks who are
10:48
who are interested in the space, but they really don't kick in
10:51
until you have $200 million worth of assets.
10:54
And so each one of these projects was like 345 million
10:58
bucks. And you know, like, like even
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for somebody with a fat wallet like you, like, you know, like,
11:04
you know, breaks you. You can only buy so many of
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them, you know? And then you're like, now what?
11:08
Right. And so like, you're in this
11:10
weird situation where you know, you can buy really good quality
11:15
assets, you can put money to work, but you can't, like, you
11:19
can't get to $200 million, right?
11:22
And so like, so you, you decided that this was a problem you were
11:26
going to tackle, right? Is that how it worked?
11:28
Yeah. I mean, there was no easy way
11:30
for me to invest back into solar energy projects at the yields
11:34
that I know solar energy projects should be producing.
11:38
The nearest thing we have in the marketplace was sort of the
11:41
yield Co, but the yield Co is not what we're doing.
11:44
There's a bunch of problems with yield codes. 1 is that the price
11:48
is traded on an exchange, so it gets detached from the NAV of
11:53
the underlying assets. So you may be buying those
11:55
projects, a proportional share, those projects at a good price
11:58
or a lousy price, but you really have to be an expert to
12:01
determine if the price is a good one or not.
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Well, I mean, just to interpret that for people like I think
12:05
you're absolutely right that like the way the Yield Co works
12:07
is that if too many people buy the stock, then the stock price
12:11
goes up and the yield goes down, right.
12:13
So if people have over purchased the stock, then the yield is now
12:18
a 3% dividend yield. And if the stock tanks right and
12:23
craters, well now the yield is like 8%, right.
12:27
And so it depends on what price you get in on the stock.
12:30
Whereas if you own a project, then you're at the net asset
12:34
value, you you buy in at the price that it took to build the
12:38
project and so you get the full return.
12:41
So there's nobody on energy at dot com that has a lousy
12:45
experience. They get the NAB divided by
12:48
outstanding shares. That's the share price.
12:50
And that's what the share price should be to equalize investors
12:53
because they all own the same basket of underlying solar
12:57
energy projects. Why would they have different
12:58
outcomes? So we took our securities off
13:02
the exchange. We only sell them through
13:03
energy.com. Yeah, I mean, it's so brilliant,
13:06
right? Because basically, like if I
13:09
give you a dollar, I get the return on that dollar, but if I
13:12
sell, I just get the dollar back.
13:14
Like the dollar doesn't go up or down, the dollar stays.
13:17
The dollar I'm I'm but I'm getting like the yield on that
13:20
dollar based on how the solar systems perform.
13:23
I think of it, I mean the dollar will depreciate, right, because
13:26
solar assets appreciate over time.
13:28
But I look at it as like you're getting a, a ticket under the
13:31
dividends bus. And as long as you're on the
13:33
bus, you're harvesting those dividends.
13:35
And if you want to get off the bus, you sell your ticket to the
13:37
next guy. He comes on, you get off, now
13:39
he's on the dividends bus and he's enjoying that cash flow off
13:42
that. And that's exactly how it really
13:44
works. I like that.
13:45
I like that analogy. So just to make this a little
13:48
bit more easy to understand first, I mean, obviously Mike,
13:52
you're a very sophisticated investor, Of course, Jigger is
13:55
as well. So I want to just boil this down
13:58
for like a more everyday listener, if you will, maybe
14:02
someone who who isn't familiar with some of the stuff we're
14:04
talking about. Meaning not your brother.
14:07
Not my brother who works on Wall Street, not my brother.
14:09
So Mike, if I want, if I want exposure to AI, can I can buy
14:13
stock and NVIDIA. If I want exposure to the real
14:15
estate market, I can buy into a real estate investment trust or
14:19
a REIT. But if there's a solar farm
14:21
being built outside my town or thousands across the world at
14:25
any given time, I can't really own a piece of that.
14:28
So why has energy infrastructure historically been closed off to
14:32
just an ordinary like 4 O1 Ki trade?
14:38
You know, in my free time for fun type of investors.
14:41
You know, what we're doing has been tried before.
14:44
So we didn't come up with the idea of taking solar energy
14:49
projects, converting them into securities and selling
14:51
participating shares in those projects.
14:54
That's kind of been around, but it hasn't worked.
14:57
And there's a couple of reasons why I think I know why it didn't
15:00
work in the past. I don't know for sure, but #1 is
15:03
that the policy that allows us to create these securities is
15:06
the JOBS Act, which is fairly recent policy, Obama
15:09
administration stuff. So it wasn't until recently that
15:12
we could create securities and sell them broadly to any
15:15
individual who wanted to buy them.
15:18
You know, if you think about Mosaic, one of the kind of
15:20
famous predecessors of Energia. They can build a player and Dan
15:25
Rosen. They were before the JOBS Act,
15:28
so they had to figure out some other way.
15:30
I don't know how they did it, but so the JOBS Act was
15:32
critical. And then also, I think a lot of
15:34
other attempts I've seen at this have been people who had like
15:38
the concept and the IT of it all, maybe like sort of a dorm
15:41
room startups. But what really you need in
15:44
order to do what we do is the solar expertise.
15:47
You need to really know the asset class and know how to
15:49
avoid risks. And it's a very difficult asset
15:53
class for the uninitiated. So I'm glad we have a whole, you
15:57
know, company under our belt before we even started offering
16:00
these services to individual investors.
16:02
But that's probably another part.
16:04
There's a couple of companies I see out there right now in fact
16:07
doing something similar to energy, but maybe I don't
16:10
believe have the solar energy experience to really guide
16:14
investors capital in this asset class.
16:16
And it's more than solar energy experience, right?
16:18
Because if you're going to buy projects in Brazil or South
16:22
Africa or India or places you also have like currency risk,
16:27
you have asset management responsibilities, right?
16:29
If something goes wrong, someone's got to get, get called
16:32
and be like, hey, my system's down, go fix it, right?
16:36
And so like, how do you deal with all of that?
16:38
What you're really describing is grit.
16:41
You really have to be made a steal to do what we're doing,
16:44
and it is hard because there's so many challenges.
16:46
I just got off a call right before this podcast with my
16:48
asset management team, and we're just spent two hours going from
16:52
one catastrophe after the next. And that's normal for us.
16:56
That's pretty standard operating procedures.
16:58
I'm not worried about it, but that's what we do for a living
17:01
is we we fix problems. And I've got a team around me
17:05
who has a great tool set for solving those problems and they
17:09
have the grit to get after it. And I think that those things
17:13
are all necessary to execute the way we've executed the last five
17:17
years. So a lot of your projects are in
17:20
emerging markets. You mentioned Brazil.
17:22
And so I think when most average investors here emerging markets,
17:26
they're of course thinking political risk, corruption and
17:29
stability. But the returns that you are
17:32
able to produce at Energy are actually telling a vastly
17:34
different story than that. Brazil around 14%, South Africa
17:38
near 10% and then much lower in the US But why are our instincts
17:44
around these emerging markets so wrong?
17:46
What would you collect there? If you look back like how have
17:50
people actually gained exposure to emerging markets, Most
17:53
commonly it's been through like either their public stock
17:58
exchanges. You know, you can go on the
17:59
Gilberg public Stock Exchange. You know, many countries in
18:02
emerging markets have their own exchanges and those exchanges
18:04
have been pretty lousy performance.
18:07
There are periods where they're they work well, but mostly it
18:11
has underperformed. So I don't think a lot of people
18:14
have had direct access to investment opportunities the way
18:17
that they can at Energyia. And then I think that also the
18:20
world is broad and complex and Americans are famously, and
18:24
rightfully so, like they don't really understand these markets
18:29
as well as maybe they should. We view as Americans, other
18:33
countries to be bizarre, dangerous places.
18:36
And while that's true, we're all so bizarre and dangerous, and we
18:41
also under appreciate the vastness of these economies.
18:45
And Brazil is a massive economy. There's extraordinary wealth
18:48
there. There are sophisticated, highly
18:50
educated people conducting good business there.
18:53
And that's what we're looking for when going to these markets
18:56
is the cream of the crop. And when you get into the right
18:59
pockets, you know, these bubbles within these emerging markets,
19:03
they don't feel a lot like emerging markets.
19:05
They feel like sophisticated places to do business where you
19:08
have to be aware of things like foreign exchange because that
19:11
brings you exposure to the entire market.
19:13
You know, not I can't bubble myself out of the foreign
19:16
exchange risk. But look at the foreign exchange
19:18
situation right now over the last five years.
19:20
The dollar just keeps on pounding, getting pounded rather
19:25
by foreign currencies, and that's been a huge advantage to
19:28
my clients who are benefiting from owning real or Rand or
19:32
pesos or whatever the case may be.
19:34
So it's the I the beholder, and looking at the facts.
19:36
And the facts tell a different story than the initial way
19:39
Americans might view emerging market exposure.
19:42
So take us through the experience of an investor on the
19:46
platform, right? So they've got $1000, they want
19:49
to invest it. They go to energy.com and they
19:52
register and set up a profile and do they immediately get a
19:57
basket of all of these countries?
19:59
Can they invest in one country? You know how does How does this
20:03
work? So we basket it like if you if
20:07
we had a skew in SKU, like it would be an individual
20:11
investment thesis. So I have a thesis around
20:14
community solar in Brazil. I have a thesis around private
20:17
credit in Colombian solar. I have a thesis around energy
20:21
plus storage in South Africa. Each one of those is a product.
20:24
The way we look at it and the way to use the the platform the
20:28
best is to get a mixture of those products, which we call
20:32
the energy a core. You want to get diversified?
20:35
Yeah, sure. Today's Brazil's a 14 and
20:37
Africa's A10. But you know it's a long term
20:40
investments that we want you to compound this for 20 years.
20:43
So in order to protect yourself from changes in those rates that
20:46
we're getting today, we want you to diversify and most of our
20:50
customers do. But some customers, you know,
20:52
maybe you're from Brazil and you just really want the Brazil
20:55
product because it reminds you at home, all right, you can just
20:57
buy Brazil. Or maybe, you know, you're risk
21:00
taker and you just want that 14 and can't get it out of your
21:02
mind, Then you just go for Brazil.
21:04
But you can also choose to blend it together.
21:07
It's really up to their discretion.
21:09
So here's the math. I think that should make people
21:11
realize this isn't just democratization for its own
21:14
sake, right you? If you have a normal $500
21:17
million infrastructure fund, there's no chance that they're
21:20
going to do a $5,000,000 solar project in South Africa.
21:22
It's too small. Due diligence costs eat the
21:25
return. But if 5000 people put $1000
21:29
each, they can fund that exact project, right?
21:32
So. So what's the structural reason
21:35
why you can do this and a $500 million infrastructure fund
21:39
can't? I think that as check sizing at
21:43
check writing ability increases, you need to start looking for
21:47
larger assets. If you don't start from where we
21:50
started from. Remember I'm a CNI solar guy
21:53
through and through and I've been doing those portfolios of
21:56
Walmart's like we were talking about earlier.
21:58
You kind of trained me how to treat many bespoke projects as a
22:04
large institutional type of investment.
22:06
So we cluster things really well where we have a lot of software
22:10
assistance on our due diligence. We push a lot of the the
22:15
laborious parts of due diligence back on the developer like you
22:18
tell me you know how the interconnection is working
22:20
rather than us figuring it out. And when you've told me to my
22:23
satisfaction then we'll read it. So that's all software enabled
22:27
due diligence efficiencies. So we try to gain those little
22:31
efficiencies wherever we can, so we can stay in that middle
22:34
market segment because we think that's where the largest yield
22:37
opportunities are. These are the abandoned
22:39
segments. Institutional capital can't and
22:41
won't find these opportunities, which leaves very few competing
22:45
investors, and that's where our money gets the best return.
22:49
I'm hearing a lot of trial and error that you clearly have like
22:52
a very strong overall thesis about how your product will work
22:58
and where the sweet spots are in terms of your projects.
23:02
But the platform didn't take off overnight.
23:04
So walk us a little bit through the early years.
23:06
What wasn't working? What assumptions did you make at
23:09
the beginning that turned out to be wrong?
23:11
And how? Like, at what point did you
23:13
really start to make some traction?
23:16
Yeah, I don't view it that we were wrong or that it wasn't
23:19
working at all. I actually felt that it was
23:22
absolutely going to take grueling years of scaling
23:25
slowly, inch by inch before we got a critical mass underneath
23:29
us. And that's exactly what
23:30
happened. And I felt that we had to
23:32
prepare for the long road ahead when we started at Energia and
23:37
the way that we got through those earlier stages, while
23:40
we're ramping up, every day another investor comes in.
23:43
Every day hundreds of new investors come in.
23:44
It's really exciting now, like, but to get here was a process
23:49
where there wasn't enough money to manage to pay fees to us that
23:53
would keep the lights on. So we had to do like side
23:56
missions and we would do these quests.
23:59
And for example, Jigger came in and he did an investment with
24:03
us. We did a deal with Brookfield,
24:05
we did a deal with BTG Pactua, we did a deal with a listed
24:09
trust in the UK. And these are just more or less
24:11
side hustles because we're capable of doing institutional
24:16
Capital Management. We use that as a bridge to get
24:19
to the point where we could live exclusively on our retail
24:23
investment products. And we're there now.
24:25
We've cut the umbilical cord about two years ago.
24:29
I don't think you'll see Energia giving tailored investment
24:32
products to large institutions ever again.
24:35
Everybody comes in through the front door now because we have
24:38
enough assets under management to keep the company profitable
24:42
in perpetuity. And what you really want to do
24:45
is service our base of clients and give them the best user
24:50
experience and most transparency we can and and now we get to do
24:53
that. So help me understand, you know
24:56
who the typical investor is today and where it started,
25:01
right? Like so you know, was it a
25:03
climate investor, an impact investor?
25:05
Was it a grandmother that wanted a higher yield on their fixed
25:10
amount of savings? Like you know what is the ideal
25:12
profile? Well, it's, it's pretty funny.
25:14
It kind of like, looks like me. It's, you know, they're like a
25:17
46 year old, slightly overweight balding guy with a couple of
25:21
kids. But our, you know, our average
25:28
investor is in their 40s. It leans slightly towards males.
25:32
They're probably from one of the coasts or Texas, lot of
25:34
investors in Texas and they're educated.
25:38
They want, they understand that energy infrastructure is a
25:42
rational asset class that has different characteristics and
25:46
complementary characteristics to their stocks and bonds.
25:49
And when you get it, you get it. And when you get it, you're
25:52
going to be a client with ours for a long time.
25:54
We have something like a 98% retention rate.
25:57
So very rarely does a customer sell their stock, even though
26:01
anybody can click a sell button at any anytime they want.
26:04
And people stick around because these guys are interested in the
26:08
power of compounding yield. You know, for me, I use the
26:11
platform as a father to prepare for my, my kids college tuition
26:16
down the road. And I want to start putting
26:18
capital to work that's going to compound.
26:20
So, and I have 20 years. My, my youngest is 4 years old.
26:23
I got plenty of time to snowball something for his college
26:27
education. And I think I don't know what
26:28
purposes my clients use their money for, but I would imagine
26:32
it's long term planning. So I imagine that this asset
26:36
class is not correlated to the stock market here in the United
26:40
States. So this is, you know, I would
26:42
imagine like a separate asset class somewhere else to put your
26:45
money kind of like I have some money in like in art, for
26:48
example. That's right.
26:49
I we view it as very complementary to a stock.
26:52
I mean, I wouldn't bet against America and American businesses.
26:56
So. And if you look over the last
26:57
five years, the S&P 500 has smoked Energia while we've done
27:02
a very respectable 12% yield. The S&P 500's done better, but
27:07
it will always be like that. And there are times when the
27:10
stock market can't sustain an overheating phase, whereas our
27:14
assets don't really have that. Our assets sell power, they're
27:18
steel in the ground. So we look at them as real
27:20
assets. Our contracts are inflation
27:23
adjusted almost always and that's a huge benefit and that
27:27
has nothing to do, no presidential tweets or other
27:30
market condition or hurricane. You know that those things don't
27:35
change my customers obligation to buy power from me and the
27:40
price of which I charge them. So I like the lack of
27:43
correlation and I think our customers do.
27:45
And I'm not proposing everybody goes 100% solar the way like I
27:50
am. I think that people probably
27:52
should sleeve some of their investment strategy into a real
27:55
asset class that's inflation adjusted and connected to power
27:58
rates like Energia. So it belongs in your portfolio
28:02
and to what degree is really up to your planning strategy.
28:05
And most people view this as real assets, right?
28:08
So it's similar to like investing in real estate or
28:10
other real assets, right? So they're not supposed to beat
28:12
the S&P. They're supposed to be a
28:14
diversification play, you know, like, I guess it's it's also
28:18
probably pretty good in a Mad Max situation, right?
28:20
I mean, if we get to the end of the world, who are going to need
28:23
that solar power off, you know, those, those.
28:26
And so I think, you know, those are real assets that I want to
28:29
hold. Yeah, and I have.
28:31
What I'm debating right now is energy prices are going to go up
28:35
steeply. Generally, they go up a little
28:37
bit faster than the consumer price index inflation.
28:41
If you look over the last 20 years, energy's a little bit
28:43
faster inflation than a basket of general goods.
28:46
I think that's about to sky rocket and and you're going to
28:49
see energy out in flakes, CPI by leaps and bounds.
28:54
And for that reason, this instinct of ours to always have
28:58
your energy price permanently hedged through a power purchase
29:02
agreement over 20 years, that's losing its advantages because
29:06
maybe I don't want to be so nailed down to today's energy
29:10
prices with an escalator. Maybe I want to take some
29:13
exposure to markets and see where energy goes.
29:16
So we're trying to find ways to responsibly hedge that a little
29:20
bit and take some projects that are open to market exposure and
29:24
then nail some others down with credible contracts.
29:27
But that's the key to really making money in this space is
29:30
acknowledging where we're at in energy as a globe.
29:33
And so you must get all sorts of crazy questions that come in
29:37
from the investors that, you know, want to invest any like
29:40
really interesting questions come in from retail investors.
29:45
I mean, my client base has an obsession over batteries.
29:48
So I get asked the battery question a real lot.
29:51
And I've been pushing back against batteries since I
29:54
started in this industry 20 years ago when everybody said
29:56
batteries were coming right around the corner 20 years ago.
29:59
It's the bacon of the grid, Mike.
30:01
The bacon of the grid. Mike, I'm just warning you
30:04
before you get started here. Well, maybe I should keep my
30:07
opinion to myself, but. Never.
30:09
We'll see. We'll see.
30:10
But I think batteries, the market tells you when batteries
30:14
are needed and it tells you that through the delta between peak
30:17
pricing and off peak pricing. And when that delta gets big
30:21
enough to amortize the cost of a battery, call me up.
30:23
I'd be happy to invest in a battery with you, but I don't
30:26
know too many markets that have that condition right now and
30:29
batteries aren't amortizing. The more common way people sell
30:31
batteries is as battery backup, you know, to reduce
30:35
intermittency or access to energy.
30:37
So South Africa, we, I have a ton of batteries in my South
30:39
Africa portfolio. Makes sense the grid was off 6
30:42
hours a day, but that's a completely different use case to
30:45
the one people actually imagine. The fervor over batteries is
30:48
actually over shifting entire grid, you know, energy over
30:53
time. Well that it hasn't really taken
30:56
off anywhere to any sustainable degree yet.
31:00
So that's a question I'm always kind of defending myself
31:02
against. Why I'm not, you know,
31:03
gangbusters and big batteries right now.
31:05
It's because the the price hasn't signaled that I should
31:08
be. So in the US right now, the
31:10
whole conversation is about gigawatts.
31:12
How do we power data centers? How do we keep the lights on for
31:15
AI, electrification, etcetera, etcetera.
31:18
And of course, that's a real problem.
31:20
But in a lot of the world, people don't have reliable
31:23
electricity at all. You mentioned that.
31:26
So pick one, energy, a project who's getting power today that
31:30
wasn't maybe three to five years ago?
31:32
And what does that mean for them and for their lives?
31:36
So our projects range from like one kilowatt on a pedestal with
31:40
a battery all the way to 75 megawatts in South Africa
31:44
feeding the National Grid called S com.
31:49
So we have a huge range of use cases for the types of solar
31:52
that we do. But to give you like one
31:54
example, I'll give you 1, where energy is desperately needed in
31:58
our Columbia portfolio, which has recently launched.
32:00
It's really gaining steam. People really like the product,
32:03
and that is mostly a debt vehicle.
32:06
There's some tax reasons why instead of buying solar energy
32:10
projects in Columbia, we lend money to projects instead.
32:15
And projects are collateral. Yeah, I love solar projects as
32:19
collateral because I know exactly what to do if I need to
32:21
step in there and take control. But it's more tax efficient for
32:26
me to lend them money. And in this case, you have about
32:29
250,000 households in Colombia that don't have access to
32:33
electricity. These are in states like
32:35
Laguajita and kind of remote parts of Colombia.
32:38
And there's a program where the government has promised to pay
32:40
me an amortizing rate if I install a small solar plus
32:45
battery system for those households.
32:47
And we've done, you know, not us, our development partner,
32:50
they're called Helios, a wonderful company.
32:53
They've done 20,000 of them so far.
32:56
So it's really impactful. And and what these people do
32:59
with electricity is fascinating. But you know, we can have a
33:03
whole podcast just on these use cases of off grid solar, but
33:07
that's just one example. And we're not, you know, here
33:09
just for the impact. The impact is inherent from
33:12
doing great business deals with energy.
33:15
Yeah. No, I mean, I think there's
33:16
close to 700 million people in the world that don't have access
33:19
to basic electricity. And I think what you're doing, I
33:22
mean, folks like Sun King, others, I mean, truly inspiring.
33:27
And, you know, I think solar is the fastest way that we're
33:29
getting those 700 million people the basic energy.
33:34
I mean, there was no plan to bring a transmission line out
33:36
there, I can tell you that. And you just have to drive it
33:39
out there and some solar panels in a truck.
33:40
That's how you get power out to those locations.
33:42
And it works and it works really well.
33:45
They pump water. They make more handicrafts.
33:48
They, they, they buy electrical devices.
33:51
It's really exciting to see what happens when communities get
33:53
connected to the grid because, man, they're going to fall so
33:56
far behind so fast in this modern world that we have.
34:00
They got to have electricity. We just did a school project in
34:02
Kenya. This is a school. 700 kids go to
34:04
the school, 400 of them sleep on the floor of the school because
34:08
they walk so far to get to the classroom.
34:10
They had no electricity. You know, how are you supposed
34:12
to participate in the modern economy?
34:14
And it's possible that a kid from this area of Kenya could
34:17
get an IT job. Why not?
34:19
You got fingers. You can code.
34:20
You can participate on the Internet in any profession,
34:23
unless you've never seen a computer before or know how to
34:26
use the Internet. And these are bright kids who
34:28
work hard and want to learn. So giving access to electricity
34:31
is AI. Think it's a pretty important
34:33
thing. So just to finish up, I want to
34:36
understand where your business is now.
34:39
So you've got about $500 million worth of assets under management
34:43
now, which is a huge number of assets.
34:46
I mean, it's truly impressive. Congratulations on that.
34:49
Thanks, Jagger. A lot of people deem it really
34:51
small because they're thinking about the trillion dollar
34:54
industry and the trillion dollar energy problem.
34:56
But like we're really proud. That's a lot of projects.
34:58
You're right and and we're just starting.
35:01
And how many investors is that? On our platform with about
35:04
19,000 people who have accounts, but not all of them have
35:08
invested. So it's it's probably about 80%
35:11
of that are investors. That's awesome.
35:14
That's awesome. And and when you think about
35:16
where you're headed from here, right, you're adding like what
35:21
approximately every quarter to the.
35:24
Right now we do about 5,000,000 bucks a month.
35:27
Wow. Yep.
35:28
That's a lot. That's not bad.
35:30
It's, you know, because you can, if you lever that, do the math,
35:33
it's $75 million of equity. You could, oh, I mean, it's
35:37
amazing. And you know, one, one of the
35:39
thing I was going to ask you about is, you know, you've got
35:42
this massive dislocation with the Straits of Hormuz.
35:44
A lot of these countries that you're working in are using
35:47
diesel, right? And the solar is coming in to
35:50
offset diesel. How have you thought about your
35:53
business, you know, in this time of like, just huge disruption
35:58
where people's lives are just being turned upside down with
36:01
rationing, frankly. This goes back to this argument.
36:04
I think in the United States right now, there's this concern
36:08
that solar's best days in the past, and it's just so wrong.
36:13
And then I tell people that 80% of all new power generation
36:17
worldwide for the past five years has been solar.
36:20
And they're like, really? I didn't.
36:21
I didn't know that. Yeah, it's all solar.
36:23
When we talk about energy, we're talking about solar energy and
36:27
nothing other than that. And that's not really.
36:31
Batteries in there. Well, it's not a generation
36:34
asset, but yes. Man, man, you were playing hard
36:38
to get. I like it, Yeah.
36:40
No, I've been I've been told this battery thing for long
36:42
enough, but the we'll, we'll see where we're going to need
36:46
batteries undoubtedly in huge quantities and I invite it all.
36:51
But we're talking about solar is the number one most important
36:55
technology in our world right now and it is necessary for AI
36:59
to matter. So you could argue that solar is
37:02
more important than AI and it I can't imagine not being able to
37:07
do a solar project in every single country in the world.
37:09
If you said, Mike, I want a solar project in Uzbekistan, I
37:13
could pencil it because it's just works everywhere now.
37:16
It's such an exciting time for our industry, despite, you know,
37:19
the noise and sort of the anti solar sentiment that may be
37:22
around our our marketplace. It's it's not affecting what's
37:25
going in the ground. That's when I think about the
37:27
Straits of Hormuz. It's just another point that
37:31
makes me more right that solar's best days are in front of it and
37:35
there's so much work to be done. So we're right where we want to
37:37
be. Now, well said.
37:39
And then in terms of talking to the 19,000 customers and getting
37:44
them to, you know, get their uncles and cousins and others to
37:47
like invest, etcetera, like what works?
37:50
Like what is like, you know, because you've tried all sorts
37:53
of messages I'm sure over the last like 5 years, like what
37:56
works to convince people to invest.
37:59
OK so first thing that doesn't work.
38:01
I could tell you that like we did NPR podcasts and we played
38:05
advertisements for like 3 months.
38:08
One out of every nine NPR podcasts played our
38:12
advertisement and we got 00 investors from it.
38:17
I was like wow, I everybody would have thought that would
38:20
have been wildly successful. Then we did like, you know,
38:23
Climate week in Central Park concerts with 35,000 fans all
38:27
seeing our video 0 did not have it didn't work, it didn't work.
38:32
So you don't know what's, you know, different companies have
38:34
different success in different places and, and for energy, you
38:38
know, what's really worked best is like consistent dividends of
38:41
a group of die hard early adopters.
38:44
Word of there's apparently word of mouth in a lot of this stuff.
38:48
And yeah, we're doing a, we bend over backwards on transparency
38:52
and webinars and reporting and it's organic growth.
38:56
And I kept on saying, you know, we're one minute away from the
39:00
right text or the right tweet from blowing energy sky high.
39:04
And I'm convinced that that's actually not how we get there.
39:08
We get there from the daily grind, you know, 1 foot in front
39:11
of the other and watching this thing snowball as it is.
39:14
And that's good enough. And it's really exciting to just
39:17
watch that because that's actually pretty dependable that
39:19
it's going to grow 57% of years. That's ample.
39:24
Yeah, I mean, you were on the Volts podcast.
39:27
I mean, Dave Roberts is a communist.
39:29
How many people like, you know, like joined Energy after that?
39:32
That it was a wildly successful podcast because that audience
39:36
understands my those messages. In years make money.
39:40
I'm telling you like they call themselves socialist, they want
39:44
to tax us all, but I mean they want to make money they want to
39:47
make money on solar power. I love Dave, he's so nice.
39:49
I'm doing. Good.
39:50
They want to make, they want to make money doing good.
39:52
And that's, that's what I love, love about what you're doing,
39:55
Mike, is that you're making a real difference for people.
39:57
And I just think about those kids that can, you know, read in
40:01
the evening and like do their homework and study and have,
40:04
will have access to so many more opportunities in their lives
40:07
because of the work that you're doing.
40:08
And I think it's it's really powerful.
40:11
Thanks so much Jamie. Like we have this debate going
40:13
on in our business. We started off we call one point
40:16
O and all of our stories were about the impact and how cool
40:18
this could be if we gang tackle these problems.
40:21
You know, that was the mission. And then we fed said, you know
40:23
what, we don't quack like a duck for these wealth investors, the
40:26
family offices and the registered investment advisors,
40:29
we have to look a little bit more like the products they're
40:32
used to seeing. So we call 2 point O and we kind
40:34
of put, you know, went out and bought a suit and kind of
40:37
figured out how to put together our marketing materials and
40:40
things that correspond to normal products.
40:43
And then we feel like we've gone too far there.
40:45
And I'm getting a lot of communications from our clients
40:47
saying like, don't shy away from the impact that you're having,
40:50
like that's it's OK to talk about those things.
40:52
And sometimes I feel like I don't want anybody to think that
40:55
I'm any less fit financially as a fiduciary because our projects
41:01
have impact and I'm not taking wild risks with your money.
41:06
People's money is important to them.
41:08
And so I don't want to give that impression, but damn it that we
41:10
do have a huge impact too. Absolutely.
41:13
And that's why it's important to talk about all the benefits,
41:15
because you don't know what benefit will resonate the most
41:18
with a given prospect, right? So.
41:21
For for some audiences, they do want to hear about like for
41:23
women, right? You know, you said that, that
41:25
people in their 40s slightly more men, but like for, for
41:29
female investors, I imagine that impact work that could be really
41:32
important. I know for me that's that's
41:34
powerful and motivating for me as well as that risk management
41:38
and diversifying outside of like my standard like 401K, IRA
41:42
etcetera, etcetera. Yeah.
41:44
I mean, it's why basically everybody in the solar energy
41:47
industry is in the solar energy industry.
41:49
You know, we, we had, we had an interest in doing something
41:51
about a problem and it's that impact story resonated with us,
41:55
right, so. I mean, I'm trying.
41:57
To find that balance. What I've heard is the right
41:59
uniform is a golf shirt. You know, you go to the golf
42:04
course, you're like, hey, let's go play around.
42:07
You know, now you've got him like trapped for three hours and
42:11
you're like, all right, let's do it.
42:12
Although I don't think the the private equity vest pretty early
42:15
on. I did.
42:17
I I always had that Silicon Valley vest.
42:19
That was my look. For a long time and then he was
42:21
doing sweaters for a while and now we've moved to the button
42:23
down. So he's on just like he's just
42:26
wrapping the just like a lot of Plaid button down season.
42:30
I mean, I got a lot of women around me trying to make me look
42:34
better, so. He's a uniform dresser he likes.
42:37
He likes a copy paste. It works really well for him.
42:40
It's just if you open up his closet, it's just a row of
42:42
yellow and blue striped Plaid shirts.
42:45
Exactly, exactly. Well, Mike, it was such a
42:49
pleasure to have you on. It has been so good to see what
42:53
you've built here and how much good you're doing in the world,
42:56
especially at this important moment in time when, frankly, I
42:59
think there's a lot of projects that need the love that you're
43:03
providing that frankly a lot of folks I think have just not
43:07
taken a second look at. And I'm really glad that you're
43:09
there to take a second look at them.
43:11
Thanks buddy, happy to do it. Thanks for having me.
43:18
Energy Empire is supported by S2G Investments.
43:22
If you haven't checked out their podcast, I highly recommend it.
43:26
They have a great recent episode on the long term effects of the
43:29
Iran war and the blockade of the Strait of Hormuz.
43:33
In the episode, Sanjeev Krishna and Franco Sullivan and Bala
43:37
Nagarajan make a compelling case that this disruption could be
43:41
the most powerful accelerant for renewable energy in a
43:44
generation. And in future episodes they'll
43:47
be exploring how those forces are reshaping our food systems
43:51
and ocean intelligence. Sound interesting?
43:54
Go find the S2G podcast and start with the global energy.
43:58
Order has changed, now what? Wow, that was a lot of ground
44:07
that we cover with Mike. I know, I mean, we keep having
44:10
these guests on that make me be like, oh, I need to write this
44:13
down. And then afterwards I need to go
44:15
look this up. I mean, I again, another guest
44:19
that's got me fully convinced that I need to go take action to
44:23
go, I'm going to go set up an account on energia.com and look
44:28
into diversifying in this way. Like I mentioned on the episode,
44:31
I have some money in the art market and I'm always looking
44:34
for like interesting diversification options.
44:37
So I know that Mike said that his average customer is a male
44:41
in in their 40s, but I hope more women, You know, I encourage
44:46
women to become very active managers of their financial
44:49
futures and their portfolios. But this seems like a really
44:52
tangible way to diversify your portfolio, earn really solid
44:57
returns and also make an impact. I mean, I was very moved by the
45:02
stories of some of the projects that he's helped to build.
45:05
Yeah, it's going to have to be want to come for you, want to
45:07
come for your daughter. You're going to have to like,
45:09
forget a way to like, you know, get it to 5050.
45:12
I was also fascinated by the fact that he's using the JOBS
45:16
Act that would passenger Obama. I remember when it passed and it
45:20
was like all about how people could, like, do venture capital
45:25
right at smaller dollar numbers and all this other stuff.
45:27
And I was like, is this really ever going to work?
45:30
And then I forgot about it. And then like Mike obviously,
45:33
like picked it up out of the ashes.
45:35
They created this extraordinary platform like using that.
45:38
That's amazing. I was really not expecting that
45:41
Obama shout out, but that's great to hear that that product
45:44
works and that, you know, it's, it's created like a powerful new
45:48
opportunity for people, average people to invest in markets like
45:52
this. The other thing that Mike said
45:54
that I was really struck by is that he said that the
45:58
ethnocentrism that is such a common feature in America really
46:03
holds back some investors because they perceive that these
46:07
emerging markets are are too high risk and that he's just not
46:12
finding that to be true. And it's really encouraging
46:14
people to take a harder look. I thought that was a really good
46:17
point. Oh, he's absolutely right.
46:19
I mean, when you think about just how valuable these solar
46:22
projects are in these countries because they're competing
46:25
against diesel, right, that you can make much higher returns.
46:29
And just because the returns are high doesn't mean the risks are
46:32
high. Like, I mean, I invested in
46:33
Brazil with Mike back in 2019. We developed a whole bunch of
46:37
projects and then we sold all those projects to Brookfield and
46:40
Brookfield is as hard nose as they come.
46:42
So like in general, they look at all the risks and bounce them
46:45
carefully, right? So I think that, you know, a lot
46:48
of this is people believing that emerging markets are risky
46:52
because they're emerging markets.
46:53
And the other thing I found fascinating was he was using
46:56
using advanced AI tools to help him with some of the diligence
47:00
to be able to do some of these smaller projects, which I'd
47:02
love. Yeah, absolutely.
47:04
I think that's a that's a great efficiency for a company like
47:07
this, particularly that is operating in so many very
47:11
diverse markets that are maybe sometimes unfamiliar.
47:14
Yeah. So, I mean, I think right now,
47:16
particularly given the disruption from the Strait of
47:18
Hormuz, the supply disruption and all of this new data that we
47:22
have that shows that electrification really is the
47:25
solution that so many of these countries are embracing very,
47:28
very quickly, I don't think that these trends will reverse.
47:32
And so investors, like US investors can, can get a piece
47:37
of this action and also like help to do good and electrify
47:41
schools in Africa. And I mean, it's, it's really
47:44
powerful. It's a win, win, win.
47:45
And I'm really excited that they're they're getting so much
47:48
traction and having so much success with this platform
47:51
after, as he mentioned, kind of others have failed.
47:55
Well, if you're inspired to invest in energy, like join me
47:59
on the comment section with the YouTube channel.
48:02
I think it's going to be fun to see all the comments we have on
48:05
the YouTube channel and like talk to people about, you know,
48:08
how this strikes them because I do think this is an inspiring
48:11
story. And as you suggest, it's so
48:13
mixed and complicated because some people view it as crazy
48:16
risky, some view it as so impactful, and some view it as
48:20
both. And, you know, I, I just think
48:22
it's going to be fascinating to watch how, how his platform
48:25
grows. Absolutely.
48:27
And also I just want to say we'll drop a link in the show
48:30
notes if you want to go sign up for an account on the platform
48:34
and get involved. And as Jagger mentioned, the
48:37
minimum investment is only 100 bucks, which is such a great way
48:42
to just dip your toe in and and learn about the tool and see
48:45
what it's all about. So I'm doing that.
48:47
I'm doing that after we after we sign off.
48:49
Me too. All right.
48:51
Well, Next up we've got the Ask Jigger segment sponsored by
48:55
Octopus Energy. Super excited to be doing it and
48:59
hope you enjoy. Welcome to Ask Jigger, a weekly
49:06
segment on Energy Empire where Jigger answers your energy
49:09
questions. If you want to submit a
49:11
question, the link is in the show notes.
49:13
All right, let's get into it. Our first question is from Bobby
49:18
Lewis. Bobby says solar plus batteries
49:21
make up an increasingly large share of new capacity.
49:24
Is this a wave that domestic solar panel recycling can ride?
49:28
Is crystalline silicon recycling a solved problem with companies
49:32
already creating a domestic supply of recycled aluminum,
49:36
silicon and silver? Or is the window still open for
49:39
new startups? Well, gosh, thanks for that.
49:42
Great question. The window is always open for
49:46
new, awesome startups. And so even when you've got
49:50
established players, it's always open.
49:52
But we absolutely saw a lot of startups come online in the last
49:57
few years to recycle solar panels.
50:00
And several of them got big grants from the Biden
50:03
administration. And, you know, the domestic
50:06
solar recycling didn't show up, right?
50:08
So they were built because a lot of the 14% efficiency solar
50:11
farms, we're going to get re powered with 23% efficiency
50:15
solar panels. But people haven't started doing
50:18
that yet. So the solar recycling
50:20
facilities are ready to go. And people are still trying to
50:23
figure out whether they should replace all their old solar
50:25
panels with new solar panels. And so we'll see where it goes,
50:30
but it is going to happen. The economics of replacing all
50:33
those super old solar panels with the latest and greatest
50:36
technology are just too amazing to pass up.
50:39
And so I think you'll see a lot of recycling happening in the
50:42
next few years. OK.
50:44
Our next question is from Virtuio, just Virtuio, one word
50:48
name here in New Mexico. Blackstone has proposed
50:51
acquiring Public Service Company of New Mexico, our largest
50:54
investor owned utility. Some ratepayers worry that
50:57
private equity ownership would prioritize financial returns
51:00
over public benefit. Others argue the utility needs
51:04
significant new capital to modernize the grid and meet
51:07
growing demand. 1/3 proposal would have New Mexico's
51:11
sovereign wealth fund acquire a large minority stake, giving the
51:15
public more influence over utility strategy and opening the
51:18
door to reforms such as performance based regulation,
51:22
incentive structures tied to outcomes, and greater use of
51:25
distributed energy resources. If you were advising New Mexico,
51:30
this feels like this is like your beauty pageant question
51:35
Jigger. If you were advising New Mexico,
51:38
which approach would you favor? Well, I mean, let me try not to
51:43
step in it. You know, look, I think that
51:45
when you think about an electric utility, the main reason why an
51:49
electric utility has a monopoly is to be able to raise the money
51:52
it needs to be able to provide all the upgrades required to
51:55
meet economic growth. Public Service of New Mexico is
51:59
a tiny company. And so when you think about all
52:01
the data centers that are going into New Mexico and all of the
52:05
renewable energy opportunities that they can unlock from
52:08
geothermal to nuclear to solar and wind and battery storage,
52:13
they just need a lot more money. And the public markets are not
52:16
willing to give them a lot more money because of the way it's
52:20
structured. And so the reason why Blackstone
52:22
and BlackRock and JP Morgan's infrastructure fund and others
52:26
are trying to get into this business is not because they're
52:29
bad. They're just as private sector
52:31
as private sector owners of stock in a publicly traded, you
52:36
know, utility company. It's the same owners.
52:39
It's just that that structure allows you to put a lot more
52:41
money into the utility in a much more straightforward fashion.
52:45
So if you look at Elite in Minnesota, they were just sold
52:48
to private equity. That private equity firm has put
52:51
in more money $500 million into Elite in this past 12 months
52:56
then that company has raised in the last 10 years.
53:00
And so that is what is required from these new partners.
53:04
So I think when you think about the third proposal which is New
53:09
Mexico sovereign wealth fund acquiring a large minority
53:12
stake, you can do that that's similar to like NYPA for
53:15
instance in New York or other very large public policy state
53:21
owned entities. But then you know that debt is
53:24
basically the state of New York stat, right.
53:27
And so the question is like, if you do that, do you want the
53:31
state of New Mexico to have to put up all the debt to fund all
53:34
of these upgrades? And if you do, great.
53:37
But I don't think I'm for one over the other.
53:40
What I'm for is that we are in a place right now where New Mexico
53:44
has a crap load, I mean, technical term of geothermal
53:47
potential. And we need to unlock that
53:49
potential. And so whoever can bring all
53:53
that money to to New Mexico to figure out how to unlock that
53:57
potential is going to be my best friend.
53:59
Love it. That's a very exciting way to
54:02
look at it, the geothermal potential.
54:04
OK. Our next question comes from
54:06
Nicholas Birkhead. And Nicholas says, when I
54:08
learned that there's still about 190 gigawatts of coal online in
54:12
the US, it really moved my opinion on natural gas.
54:15
Would you support building 190 gigawatts of new gas to replace
54:19
today's coal fleet? If not, what number would you
54:23
support? Well, I think when you think
54:25
about our coal fleet, the vast majority of our coal fleet was
54:29
built before 1985, right? And so it's old.
54:34
And so even though the secretary of Energy is, has written all
54:39
these what they call 2O2C letters that are forcing coal
54:43
plants to stay open, even though the utility companies want to
54:46
shut them down because they're just too expensive to run,
54:49
those, you know, 2O2C letters are actually costing ratepayers
54:53
money. When you look at what's going to
54:55
happen over the next 10 years, the vast majority of those coal
54:58
plants are going to retire because they're just too damn
55:00
expensive to run, right? It's not emissions, it's not
55:03
climate. It's just they're like 70 to $95
55:07
a MW hour to run. And when you saw that the Trump
55:10
administration tried to force Arizona Public Service to keep
55:13
their coal plants open, Arizona Public Services, like we're
55:17
accelerating the decommissioning of these coal plants.
55:19
We're not going to do that. So I think a lot of these are
55:22
going to go out of Commission just because they're old.
55:25
In terms of natural gas, remember we have 600 gigawatts
55:29
of operating natural gas in this country, about 100 gigawatts of
55:33
that is old. It was built pre 1995.
55:37
And so it uses about 30% more gas to produce the same MW hour
55:43
as a modern turbine does. And so when you take all of the
55:46
gas turbines that the data center companies have announced
55:49
that they're buying for their growth, that's like maybe 50
55:53
gigawatts worth of new gas. And most of that is behind the
55:57
meter that's going to run maybe 100 hours a year, 200 hours a
56:00
year. Like we're on track to having
56:03
less total amount of gas production in this country in
56:07
2035 then we have today, right? And so I feel like this is a
56:12
trick question, right? Our coal plants are retiring and
56:17
our natural gas fleet is getting old.
56:19
And so it's retiring and we're replacing it mostly with solar,
56:22
wind and battery storage. And hopefully geothermal and
56:25
nuclear come online fast. But, you know, like most of the
56:29
gas plants that are coming online right now are not
56:31
designed to run 24 by 7. They're designed to run as
56:35
peaker plants when the grid needs them for, you know, a few
56:38
100 hours a year. I'm relieved by that answer, so
56:41
thank you for that. OK, our final question comes
56:44
from Reddit from the user Zigzag.
56:47
How likely is it the geothermal becomes a significant source of
56:51
electricity production in the Western US?
56:54
And why does development of that resource seem so slow?
56:57
This is a great question and one that is really confusing in
57:02
terms of how power plants are developed.
57:06
So one of the reasons that Fervo is a publicly traded company and
57:10
is doing so well is that the US Department of Energy funded
57:13
something called Forge. And Forge is a research and
57:16
development site in Utah that, you know, basically took a lot
57:20
of the best practices from the fracking industry and showed
57:24
that it could be used for geothermal.
57:27
And when you think about what happened during that time period
57:31
is that the Department of Energy basically developed hundreds of
57:35
millions of dollars worth of data from what's happening in
57:40
the subsurface of Utah. And Fervo was smart enough to to
57:44
sign up all of those sites in Utah.
57:46
And so they've got a lock on that, that, you know, state if
57:50
you were to unlock New Mexico, then someone who would have to
57:54
spend $200 million of speculative money to do drilling
57:59
across the state of New Mexico to create that data set.
58:02
And then you have to spend another $3 billion to build out
58:06
all of the geothermal projects, right?
58:08
And so a lot of people are having pause around whether they
58:12
want to put up that $200 million to unlock the $3 billion.
58:16
In the case of Utah, it was mostly the Department of Energy
58:19
that put that money up. And so one of the things that
58:22
you can imagine might happen in a future Congress is that we
58:26
actually allocate another $200 million from the US Department
58:29
of Energy for New Mexico, for Arizona, for Nevada to unlock
58:34
those states, right? And there's that new Mountain
58:37
West geothermal initiative that our friends at Constructive are
58:39
running in the western States and was I think it was kicked
58:42
off by Governor Spencer Cox from Utah.
58:45
And so, so that's what makes geothermal slow, is a lot of
58:49
people are really hesitant to put up that $200 million to
58:53
really unlock all the data around what's happening in the
58:56
subsurface. And so until we get that
58:59
unlocked either through private sector capital or through the US
59:03
Department of Energy, which is my preference, you're going to
59:06
see folks move super slowly. That makes so much sense.
59:10
So I'm just going to tack on my own question here.
59:13
Do you think there's any chance that we see a mobilization of
59:16
that funding from DOE under the Trump administration?
59:19
Or will we have to wait for a future administration with
59:23
potentially slightly more sane energy policy before we see
59:27
something like that? I think it's quite possible.
59:29
I mean, the Trump administration basically has carved back a lot
59:34
of funding for other priorities, right?
59:36
That was awarded in the Biden administration.
59:38
So they're sitting on a bunch of cash.
59:40
And my sense is if they went to Capitol Hill and asked for
59:43
permission, which they seem to have a hard time doing.
59:45
But if they did that, the, you know, U.S.
59:48
House of Representatives to the Senate would say, oh, we don't
59:51
have to allocate new capital. We just need you to be able to
59:54
reschedule some of this capital that you're that you have
59:56
sitting around for this purpose that they would say, yeah, go
59:59
for it. This is great, right?
1:00:00
And so. Part of my frustration with the
1:00:02
Trump administration is that I think that some of the things
1:00:06
that they're doing are interesting, but I feel like the
1:00:09
follow through from the press release just isn't happening in
1:00:13
the way that like unlocks private sector capital.
1:00:16
And so I I hope that their follow through gets better.
1:00:20
Great. Thanks, Jigger.
1:00:21
Thank you and thank you to our friends at Octopus Energy for
1:00:25
sponsoring this segment. It really is very important that
1:00:29
we're getting big name supporters like Octopus Energy.
1:00:32
So thank you very much. Thanks everyone for listening.
1:00:35
As usual, you can find us on Apple podcast, Spotify, and of
1:00:39
course on YouTube where I think we're getting our most new
1:00:42
listeners so and I guess watchers.
1:00:46
So thanks everybody for joining us and thank you so much to our
1:00:48
sponsors AS2G as well as Octopus Energy really can't do the great
1:00:54
quality work here without you.