Great to chat with Timothy Kim, CEO at ibV Energy Partners! ibV Energy Partners is leading the clean energy revolution through full-service development of utility-scale solar power plants! We discussed policies toward renewables, challenges in developing solar projects, solar moratorium, grid congestion and more!
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James
The unedited podcast transcript is below
James McWalter
Hello today we’re speaking with Timothy Kim founder and Ceo of Ibv Energy Partners welcome with the podcast Timothy.
Timothy Kim
Thank you Jamies! Thank you very much for inviting me to pleasure to be on.
James McWalter
So brilliant to start. Can you tell us a little bit about Ibv Energy Partners you.
Timothy Kim
Yeah, so we are a utility scale solar and storage development and primary investment company and what that really means is that we develop large scale power plants solar power plants. Usually it’s sighted on. Think our average is cited on little over a thousand acres of land these days. Um and we develop and operate them and sell the electricity to various customers from utilities to corporates such as Amazon to Google to power agencies and municipalities. Um. I started the company in June of 2017 with Robin size. Our co-founder who’s also our executive vp and head of development him and I had worked at a previous company in Florida. He was the head of development I was ahead of finance and m and a and we just clicked really well. Our battle rhythm synced and 2017 off we went and it’s been a journey since.
James McWalter
And I guess in 2017 where you were making that initial decision. How did you see the opportunity at that point why why did did it make sense to say okay, we’re going to Robin and I we’re going to get into it together. So.
Timothy Kim
Well if if I’m going to be honest with you. It actually did not make sense. Um, you know in 2017 right so that this was six months after the Trump administration came in and’m not trying to be political I’m just stating facts here and.
James McWalter
That right.
Timothy Kim
The administration and federal policies towards renewables was not Friendly. You know in in the same year. There were significant tariffs imposed specifically on solar panelddles which which make up about 40 to 50% of the the plant’s investment right. And then there were subsequent tariffs on major components that make up a solar power plant including you know the substructure the steel of the substructure as well as semiconductors. Ah you know and the inverters in many cases they were just outright bands actually.
Timothy Kim
So you know in 1 case huawei as many people if you could remember back then it was basically banned from the federal government as well as ah, hooking into any critical infrastructure telecommunications as well as energy. So um, but look you know. Oftentimes when things don’t make sense. You know the contrarian that I am I kind of look at the long term to ask does it make sense for the long term and energy has always made sense in the long term um the the advent the development of energy and especially you technology.
Timothy Kim
And so from that angle you know the story was very robust investors where half in half out you know there are a number of federal legislations that were that we’re about to expire but we found an excellent home with ibfo group which. Is the largest pure solar ipp independent power producer in the world having done some of the major firsts in the world when it comes to developing and operating solar power plants. So you know the challenge back then when when you’re starting. A company. You’re you know, ambitious and you want to get into those big leak tables is and the question I was always obsessed with is how do we go in in this very fluid environment. How do we go from the back of the line you know, just starting up. To the very front of the line without you know, taking these baby steps. But you know giant leaps and I think that’s what really ah occupied our minds in the first 3 to 4 years I would say until covid came along um and and these days. We now ah have yeah we fast forward. You know, five years later we have approximately eight Gigawatt of solar and storage assets in the queue where one of the largest developers of of solar in in in Nevada where the largest developer of solar in Kentucky.
Timothy Kim
And Louisiana and we’re working with a number of power customers. You know both both in in the renewables and the utility space and the oil and gas space. Um, and we we work with over. We were approximately fifty landowners now.
Timothy Kim
To to develop solar on over fifty Thousand acres across the United States so the story is strong the the and I think the fundamentals are strong looking back in 2017 ah, you know we came out of this this. Fiery arena into into something that looks a little bit more stable now. So.
James McWalter
Yeah, know it’s it’s absolutely fascinating. But yeah, the timing right? and you know being a bit too early is completely fine, right? because you know you kind of have to get through those couple of years and then if you hit that market inflection point which were clearlyty and now you get all that benefit of having laid the groundwork and in those kind of tougher years and you also have. I guess a kind of leaner mentality around certain things you know again I guess one of the kind of frameworks you know so we’re talking about utility scale these very large thousand acre plus ah you know projects and there’s a you know few other flavors of course of of development. We’ve seen a big rise with community solar which are typically in the.
Timothy Kim
Exactly.
James McWalter
20 to maybe one hundred or two hundred acre parcel or project size and then of course you have a commercial industrial that go below that let alone you know the kind of roof mountunted direction when you’re kind of weighing up. You know why did utility scale like appeal to your relative to maybe some of these other options.
Timothy Kim
Yeah I mean that’s ah, that’s a great question for us is optimization and efficiency and that’s it. It would be relatively easier to develop a community solar. Yeah I don’t want to say it’s easy at all I mean it’s not No. Fastsetter Development is easy but developing you know with the community as your power customers. Um on Land often. Ah, you know if if not granted to you then directed to you by the community is a lot easier than.
Timothy Kim
You know, developing on a one thousand acre farmland where you know many many folks decry the use of solar as as a as a conditional conditional use. Um, however, with that being said, you know when I started in this field in 2007 the cost of solar was somewhere around $4 a watt. Um, you know you fast forward from 2007 to 2015 and the cost of solar in 2015 was approximately dollar $25 thirty five watt to pre pandemicmic 2019 where it was about ¢85 a watt. Um, you can only achieve that type of efficiency through utility scale solar because just the sheer amount of power that you are placing you are citing in 1 area. The other part of this is optimization as I mentioned you know optimization going forward. Is going to play a large role in the autonomous side of of of solar deployment solar operations. Um, we believe that you know doing things at a bigger scale lends itself to more optimization practices. Then doing things at a much smaller scale where you are often. You know, kind of ah boxed in into your own design. So this is the reason why we went large.
James McWalter
Absolutely but then I guess the the tradeoff so enlarge and for the listener you know we’re talking I guess $100000000 plus projects in a kind of typical deployment for those who are less familiar with with with watts of of various types. But then in terms of the um so the absolutely it makes sense those efficiencies large scale generate generates these efficiencies and it absolutely drives the entire industry forward and gets us to you know a much healthier mix of electricity from renewables point of view. But I guess then what are some of the major challenges when you’re trying to develop a thousand acre plus project for.
Timothy Kim
Well the the there’s 2 challenges in developing projects these days. Um, there used to be 3 challenges. So let me let me just quickly go over those 3 and then tell you why it’s now to prior the 3 challenges was and in this order.
Timothy Kim
Securing power customer or we what we call an offtaker ah to buy your electricity right? Renewable energy is new utilities. Don’t really understand did not in the past you know you’re talking about mid 2000 s did not really understand it. It was not pervasive across the United States and corporates the rise of corporates as clean energy. Ah, procurers had not materialized until about 21018 so that’s one and that’s important because at the end of the day you could have a fantastic project. But if you don’t have revenues. Ah contracted revenue you know to to underpin it then you’re not going to get financing for it. So the project is is likely not to be built second the grid the grid is highly congested. This was not an issue so much in the past because back in two thousand and fifteen seventeen your big size projects were 50 to hundred megawatts I mean if you did a ah hundred Megawatts in two thousand and fifteen sixteen like I did you, you were kind of sitting at the upper echelons of solar development these days that’s kind of the lower end of utility scale to give you an idea our portfolio average size 175 Megawatts and we’re soon to be moving up to two hundred Megawatts or largest project being well over three hundred Megawatts so so you know again, efficiency and optimization going against the power curve reducing the the level like cost levelized cost of solar your electricity all plays a role in that the third is obviously.
Timothy Kim
When you go into a community and the vast majority I would probably say so we’re way above 90% of large scale solar farms. Do not sit in municipal land because there just isn’t you know enough land in the municipality or is so expensive. That it. It just does not make it worthwhile and in you know, largely it. It sits in unincorporated. Um, you know County land so you know where where a lot of people will reside as well. So obviously it has impact on a community and the community you know. Has been some where has been more than some there. There’s been a lot of debates about the use of prime Farmland and I’m proud to say that ivv enage partners we designed everything with dual use meaning that you know we we we add pollinators the sheeps could feed off the grass were feasible. We invite livestock on our site to to have that intune with nature type of aesthetics for our plants but those are the 3 the offtake portion the first one I talked to you about has gone away for the most part that is not as difficult as it once was.
Timothy Kim
So now it is about congestion and community. Um, do just give you an idea you know we’ve we’ve had a series of articles on this, you know our first article you know thanks to Matt has has been how solar development that developers can work with. Communities and could work with landowners and it doesn’t need to be 1 or the other you know, solar will never take over. Um you know? Yeah, even a significant amount of prime farmland and so I think there’s a lot of myths out there but part we we view part of our job as educating as well as informing the public of. Of of what those myths are and how we get around it and how we can work together.
James McWalter
Yeah, as people as listeners on the podcast knows you know I grew up on ah on a sheep farm and so you know agvoltaics and you know being able to have dual use of land I think is something that it’s It’s fantastic Here. You’re doing and a lot of so developers Historically it was kind of an afterthought and As. All the prime areas to build prime boat from a farmland as well as a solar point of view. Um, you know are are being kind of looked at and and landowners and farmers are being asked to kind of consider these different options I think having that dual use and enabling the farmer and the community that the farmers in to say ok we are still you know. Having that engagement with the land right? because is very powerful because you know farmers are very few people you know decide to become a farmer right? It’s It’s usually this kind of very very cultural and and familial um structure that you’re born into and and I think anything that so developers do to kind of you know. Meet the farmer Halfway I think is going to on nesh be a massive benefit to both parties.
Timothy Kim
Right? Exactly there’s 1 more thing to so be said about this though and you know in this country. We we do believe and I firmly personally believe in the rights of the landowner. You know we either. There’s long history about you know. Private use of land and what you can and cannot do as long as that doesn’t hurt. You know the the existing surrounding landowners. You should be able to do what you feel you you need to do with your land the land that you worked so hard and your family worked so hard to. Either put together or inherited and and farmed or tilt or whatnot. Um, you know the interesting part here is that the folks who are against solar development largely are not farmers.
Timothy Kim
It’s ah surprising to hear this because you would think they are but in fact, it is not them at all. They are actually highly encouraging for solar development use. Not only from a financial benefit right? I mean you got thirty five forty forty five years of lease revenue. But. From the point of view that they cobble together a lot of them have cobbled together this land over decade two decades 3 decades or even generations. Ah and they feel that they have worked hard enough. Their family has worked hard and now they want to reap some of the benefits of passive investments. So.
Timothy Kim
It’s a very interesting dynamic that’s taking place in many rural areas of of this country where farmers are actually proponents of solar development and the ones that are not have nothing really to do with their farm. They just don’t like the idea for you know. Xy and z you know.
James McWalter
And and you’re seeing this in the rise of solar moratoriums that are happening at the you know at the subdivision level where you might have a village and then some folks at the village you like oh you know let’s ban solar from our village and incorporate unincorporated surroundings for like the next two years and I think technically there is some voting going on. But ah, you know, local democracy often struggles to actually get everybody in in that locality to actually engage in it and rein the time of what’s going on and if something’s passed that says there’s this little moratorium moratorium and you’re not able to build for the next year and a half two years um you know the I guess the average time owner there is is a bit out of luck.
Timothy Kim
Yeah, the solar moratorium is is is very concerning and and and you know borderline scary because essentially what they are doing is there. There are some communities for example. We are developing a very large two hundred and seventy five Megawatt solar farm in the southern area of Nevada in this within the city of bolder city as a matter of fact, we actually lease the property from the city. That’s one of the very few projects where we actually lease it and where it’s actually in the the municipality. City of boer city generates a lot of money. Ah from the lease of their solar farms. You know they have a number of solar leases out in that area and they’ve structured a program where they’re very careful because they don’t want to expand they don’t want to expand you know? ah you know in population. But so but they have to cover their you know their their expenses with with with some sort of revenue and that revenue is solar. You know the the amount of benefits that solar tax benefits. It’s just hard benefits really that solar provides to county. Is is numerable I mean you’re talking about again generations of of you know tax impact and and you know to to buy new equipment for the schools provide scholarships by you. We equipment in for the fire and and and police department. We see this these are these are actually.
Timothy Kim
Hard benefits and so when there’s a moratorium often the county and the residents are saying that we don’t want these benefits and then they have to find a new source of revenue to cover costs. Everybody knows that infrastructure um is aging that school buildings are aging and we may very well be in a recession a long one next year and you know it is our hope that we work with you know we certainly strive to work with counties to ensure that they understand this. At the end of end of the day like you said James is there is there a choice you know if they propose a solar moratorium then I think they’re just shooting themselves in the foot for the long run.
James McWalter
Yeah I think one of the things that will I think will change because as people are becoming more familiar with the upsides of these projects I think attitudes will change because right now it’s like oh you know I’ve seen. Ah you know something on Tv there might be some solar panels that seems like a net good. But I don’t really know a ton about them I don’t know that those elements around that’s going to positively affect. You know the tax base within my community I think it’s just going to take a little while as these things kind of spread out as more people are exposed to them that because it’s very easy to say no right? It’s it’s often harder to say yes to things. And so seeing those kind of positive reasons you know having conversations like this you know I’m sure the day-to-day work that you and your team do um, reaching out and engaging the community and the landowners and then those landowners then you know I’m sure we’re talking to their neighbors and people are then starting to you know do the heavy you know day-to-day work. Of making ah you know making these things move in more positive direction. But I guess you know with all these considerations right? So you know where is the solar mertarium. You know where’s or less grid congestion. How do you work through all of that these type different types of information to say. Actually you know what. This community with these two thousand acres in this particular part of the country is actually a great place to build versus this other place. You know, ah 1 state away.
Timothy Kim
Yeah that’s another good question. First of all before I answer that let me just say that I don’t want to pin this ah you know. Solar developers. We have not ourselves done a very good job of informing the company informing the communities at large we’re now starting to do this but we should have done this long time. Our industry should have done this long time ago. We should have done. We should have made a push to decouple. Story of solar from the politics of solar or the politics of green energy or clean energy and so we have to we have to understand yeah as an industry we share a lot of that blame. Um, and yeah, if you go to to websites of a lot of solar development companies. They still don’t tell that story. They don’t explain. Why they’re doing what they’re doing and how they’re working with communities. You know we recently revamped our website and we added the first thing we wanted to do was add a community section and then a long faq section both under our project section as well as our community section 200 let landowners and communities and officials and you know people who are opposed to solar understand that listen, we may not agree on everything but we’re going to be very transparent of how we’re coming about this and why we’re doing this and what the benefits are to you so I would um.
Timothy Kim
I’m just going to give a a shameless plug for our website sure. So if you go to our website ivvenergy.com then you ah scroll through it take a look at it and we hope that the website is not just about Obstin but is about you know turning the tide on.
James McWalter
Sure and we we’ll include that in the show notes as well. Definitely those links. So.
Timothy Kim
Informing the public of you know, investments and development in in community initiatives particularly when it comes to solar. Um, the second part of this is to answer your question. Um, we we do? What’s called analytically driven development that’s kind of a fancy phrase right? But ah. You know anytime there a new industry pops up you you could traces all the way you know the oil and gas semiconductor any industry you know area aviation. There’s always this cowboy mentality right? The cowboy mentality is just go fast. Go hard and let’s figure out the rest later. Um. And that happened in our industry. You know when when you know when we when this industry first began in 2006 you know number of developers just went for land grab and they weren’t really thinking and it yeah know even happens today. Um, which which is really unfortunate. We. We don’t do that. We. We engage in annually driven development where we take a pause and say okay, you know we look at everything from the perspective of of an investor and we we answer the hard questions when we spend a lot of time. A lot of resources a lot of money on you know, modeling out. And researching and analyzing points of interconnection making sure that we feel ourselves comfortable that there’s enough capacity a certain substation that the solar farm could be built that there’s no moratorium we meet with County officials beforehand before we weave even touch a single piece of land.
Timothy Kim
Because I think the the industry has also suffered another blight and that is that of a solar cowboy. Yeah, the speculator that comes in Grabs Land makes big promises and doesn’t deliver and we’ve had to yeah it makes everybody’s job hard and we don’t want to do this. That’s not who we are. And I think we we we were at the forefront you know vanguard of where the energy has to where where the industry has to change and we’re certainly leading that charge.
James McWalter
So and speaking of that you know I come from a software background I’m actually working on some projects in this very space right now where would you like to see more innovation you know where could you know? smart folks coming in maybe with more of a software and data background be building. To service you better solve some of your problems get more projects developed and.
Timothy Kim
Well these days you know and there’s I think it was last week you know I never I almost never want to drop the name Elon muskkin anything because he’s so caught but at same time controversial but also so inspirational you know I mean.
James McWalter
I sure.
Timothy Kim
But but he did come up with ah you know, kind of this funny I don’t know if he was joking or not but he he said that you know either tesla or somebody should develop software for developers to engage in more predictive and precise predictive analysis of. Of of grid congestion and the costs associated to plug in the solar power plant to the grid. That’s a number one I would say even more than you know the not in my backyard type of folks congestion is actually the number 1 issue plaguing the industry right now the inability to predict. Your network upgrades. So let’s say that you have a power plant. You already spent $3000000 developing studies. You know engineering you know permitting all that stuff communities great with you. everything looks fine everything looks clean you go through this 4 or 5 sometimes 6 year interconnection study cycle. Where you just have to put more money and more money and more money for every study that you want to advance to and then all of a sudden you put $10000000 at the end and the last study comes back and says that your project is now uneconomical. You just drop $10000000 and do you think that those types of companies are going to come back from that you know. Um, so we need a lot more engagement with the transmission organizations the independent system operators and folks who have the insight but are not willing to open source their information.
Timothy Kim
The betterment of the industry and I hopefully software could plug a lot of that holes in in in bringing that information out from those transmission organizations and utilities into open source and then allowing you know developers such as ours a platform to subscribe to that. Information that would be interesting.
James McWalter
And yet yeah, it’s very interesting because ah, a lot of the space like the incentives are just all not fully aligned in a way that would make these things easier and as easy as they should be right. And so you often have the utility or the grid operator or the operator of the transmission and the Iso. Whatever it may be um, yeah, they’re incentivized to ah you know freerability right? So various types and maybe a couple other incentives that are built into their their model. Whatever it may be. And then you have individual developers like yourselves who are trying to figure out look you know we know we’re going to be building a lot of renewables just tell us where to build right? like at the end of the day if you could just direct us and say hey 10 developers who are bidding into a particular market It’s definitely going to make sense to be along this. You know one hundred mile piece of transmission and then. You know you still have to do the studies and you know so to make make sure that things actually make sense. But at least give some kind of top level direction and I think there are definitely some kind of national initiatives I’ve been reading about I’m researching that I think will help at some of this at the margin. But I do think that ah, until there is just a You know, a very very strong, bidirectional communication between developers and developer trade groups and those who are managing the for mission congestion capacity like yeah I think some yeah I don’t know think ah the the cold war nears to end to a certain extent so that we can eventually get that data revealed and.
James McWalter
Then you know then software people can build on top of that data.
Timothy Kim
yeah yeah I think software has played a very outsized role in our company. You know I was looking at our fiscal year twenty three budget just today and yeah, we’re adding on 4 more software platforms. And these are not cheap by the way right? So um, you know the the question you know as Ceo always has to ask is um where if I have that extra dollar where do I spend it on and it’s more and more coming back on the software piece because just.
James McWalter
Threat.
Timothy Kim
As as this industry matures and becomes far more sophisticated. It’s mimicking that of the oil and gas industry which is already complex right? Um, and you know if if once it goes starts going really starts ramping up that that that. Analytical chain There’s not enough people not enough folks to to keep up with the the fast moving information and its impacts to to your portfolio both from opportunity and risk perspective. So. This is very the software is going to be very very important and I see a lot of ah consolidation in the industry that’s going to take place in the next two or three years that’s my prediction at least.
James McWalter
And yeah, absolutely and I’m also somewhat in this space myself my own company and you know there’s a lot of companies in our size range in the kind of dozen or so people and I agree I think there will be ah quite a few quite a number fewer of us in a couple of years because
James McWalter
Um, there’s a lot of I think duplication and then once you string along some of these functionalities. Um I think then you start to have you know, really powerful software right? Like what is the sales force of development. Um I think that’s that’s a question or the yearp system of development I Think that’s this question that more and more people are going to start asking. But.
Timothy Kim
Yeah, yeah.
James McWalter
It’s a pretty complicated piece of software to your point and I think that is going to take a while to emerge. But when it does emerge I think it probably will be a combination of some of these smaller orgs and I guess one of the you know so we talked about the kind of digital transformation of the space and the other I think big piece that we touched on earlier briefly. But I think I would love to get in your thoughts on is the inflation reduction act. Um, I’ve made this joke before but ah I call it ira because being irish and from Ireland you know calling it the ira for the next decade is is is a bridge too far for me. Um, so I guess you know Ira I think it came out of the blue all of a sudden There was a lot of false stans around you know a climate bill coming out of the current congress.
James McWalter
And finally passed and I think it was a net probably more promising and than I think a lot of people were expecting. Um, how do you think it’s going to I guess directly affect you guys over the next 2 to 3 years right.
Timothy Kim
Well I think the biggest effect here is that it provides confidence to investors. Um, you know, solar developers. We’re optimistic and we have to be by nature right? So the moon where the sun is always up the the glasses always have full regardless what happens. But investors are are of course a different breed sometimes um before the ira there were a number of debates legislation potential legislation that kind of came in and out. Of of both administrations that we’re going to promise everything from the stars to nothing at all, right Um, and I think that made it very difficult for investors to understand how do I plan capital allocation for the next x amount of years and that’s important because the the. The the lifecycle of a development of just a single project right? Just 1 project. Let’s take a hundred megat project anywhere in the United States is approximately four going on to 5 years now. That’s how long it takes for you to conceiv from the time you conceive the project to the time that you you you know, build it. So you need to have this long path of confidence that from the time that you sign up, you know your your option agreements and your lease agreements your land agreements your power agreements and and putting the first million dollars at the door and development capital.
Timothy Kim
To time you bill it. There’s actually going to be yeah, supported legislation and there was not a that before so with with the inflation reduction act. Um, you know more than anything it. It says to investors you know.
Timothy Kim
America is a safe place of investing. It’s a long-term place for your investments. It’s a stable place and we have a renewed interest in seeing clean energy become a dominant form of the energy mix up until at least 2032 or whatever you know? Um, so. You know that that is how I look at it and anytime that you speak to a Ceo you know they’re always worried about their shareholder expectations right? to understand. Okay, well you know there’s only a you know finite amount of capital both in the world and apply to our company. You know where is the best way to use it and when should I use it and the when now is being answered by the the propellant of the ira you’re seeing a number of new projects and initiatives go into the queue and targeting you know, even the manufacturing side. Ah, the bill which you know aims to bring you know panel manufacturing back home back to the United States so of course overall is a good thing. You know. But yeah, if you’re remembering the billback better act the climate change provision of that was something like one point three trillion
Timothy Kim
So the ira is not 370000000000 I mean not just only but it is three seventy billion so it’s it’s one fourth sort of give or take of of what we were trying to achieve we’ll make do we’ll be fine but that also tells me that there’s a lot more to go. And that we could do a lot better as well.
James McWalter
Um, and I think even with that and I fully agree. Um, yeah I think we’re because of that gap between the 1.3 and what? what just shy of 400 that yeah that that came in I think what’s we’re going to be very reliant on is you know.
Timothy Kim
Three seventy yeah
James McWalter
The cost curves for solar and then also some of the operational and digitization elements making things more efficient to bring them the cost to make the deployment and then be very dependent on things like state and local initiatives who are you know making various commitments as well as the corporate commitments of various types another piece that ah. I’ve been kind of chatting to a few folks about is the labor side and talent side. How do you think about? you know the talent mix available to develop the types of projects you work on right? You’re continuing to ramp up develop evermore. Um, you have you know, traditional blue colllar jobs that are you know are deploying the actual assets themselves. We’ve talked about the Analytics. We talked about financing Developers. You know they’re going literally around in trucks to try to get things done. Um. How do you think about how difficult it is Do. We have the right kind of talent mix. Um are there gaps that we should have you know either policy or smart entrepreneurs should be looking at filling those gaps and.
Timothy Kim
Yeah I mean 2 things on this first. Let’s just go back to the Ira it compels developers to use apprentices during the construction phase as well as the operational phase which is very smart because you know you you want you want a catalyst. To build long-term talent in this in this area. That’s first of all the second you know as a subset to that through the ira discussion prevailing wage shops are also going to be a large. Very large part of solar construction moving forward prior to that you know the yeah prevailing wage union jobs were only used when you know it had to be so you’re talking about California type Projects New England you know states where there was no right to work provision. But now you’re talking about high payying wage jobss all throughout the United States specifically tied to deployment of solar and wind and and green hydro and everything else that the that that was kind of snuck under stuck under the Ira Bill so those 2 apprenticeships and prevailing wage are going to drive a lot of interest and movement of human capital towards this industry I firmly believe that um the second part of it is more I would say the white collar jobs. Um.
Timothy Kim
The interesting thing is that we’re now starting to see a number of folks I don’t know whether it’s due the Ira or or is just kind of a bound to happen but a number of folks coming from other into the industries mainly oil and gas and coal. Coming to into the renewable energy industry and bringing their talents and all their experience and sophisticated skills with them. So I think the question of will we have enough talent is really not for renewable energy Industry. It’s really for the oil and gas industry because.
Timothy Kim
These days if you’re a energy major. You know, bachelor’s master’s pc, whatever you are and you you, you’re kind of looking around and you’re saying to yourself where do I want to make my mark in the world. You know. I don’t know I mean oil and gas I don’t get really I don’t really see that see many people going flocking towards that you know the next the generation of folks are graduating. So I think in the five to 10 years. Oil and gas is going to have a talent problem if thunder if they’re not already having 1 right now.
James McWalter
Yeah, absolutely I was actually talking to a canadian oil and gas company who’s actually made quite a ton of money recently with the using. Um you know, getting stuff out of the tar sounds in in Southern Canada and then wait $100 barrel recently and their immediate. Ah, kind of internal initiative is how do we deploy this $4000000000 into renewables because this is like a 1 ne-time like spent like like increase in our net revenue and to try to grow this kind of tiny fledgling renewables group that they have on the side of the business. Um, because that’s where all the upside is and that’s honestly as you said 1 of the ways they can. You know retain talent and and drag talent by saying like oh we actually also have this this piece um said makes a to of sense. Also let’s looking at your your own background and I saw that you spent number of years in the Navy um, how does that kind of influence how you you build and lead a company. So.
Timothy Kim
Yeah, you know I’ve gotten this question a lot and I still haven’t and maybe we’re better from worse. But I don’t have an elevator pitch answer to that I think it’s affected me greatly. This is first.
James McWalter
So.
Timothy Kim
So yeah I would probably say has been the main driver of the way that I manage the company and the visions the thoughts that I have and how I bring that and materialize that to execution stage. Um, maybe one of these days I’ll figure it out with ah with a good psychologist.
Timothy Kim
How exactly you know it’s impacted me but I think it’s impacted me in in very soft ways that have accumulated into very you know hard approaches and to executable approaches into my personality look I mean anybody who’s served in the military or served with folks. You know the military is a very can do attitude right? It actually and I still I’m still involved in a lot of national security and and military initiatives and I was reading one. Um journal in the naval law. Publication call proceedings where that Cando attitude is actually starting to become poisonous because nobody’s actually speaking truth to power anymore. They’re just saying yes, yes, yes, we can do it and if won’t find out. You cannot um.
Timothy Kim
But I think that’s one of the things 1 of the aspects main aspects that has affected me that there is no such thing as a no there’s no such thing as you can’t get that done and then you kind of flank that with with different skills set like project management leadership organizational et cetera etc. Um. And then you come up with kind of this talent ecosystem which I think is very ripe for leaning of organization such as the one we are in today. Um I will say that in the early stages as I spoke about 2017 18 nineteen when this industry was going through some very difficult times. Um, you know that to me I think was an interesting moment. Interesting 3 years and even during covid because I also think that another think that the military brings is adaptability the ability to just. Really think about analytically think about something and adapt to it right? So it had been a lot easy probably to for me to have a bunch of nervous breakdowns. You know we’re just starting. We’re just getting on. But I think being you know, having been in many situations.
James McWalter
Sure I.
Timothy Kim
Where I had to adapt to very quick and volatile change year over year over year in the service led me to pretty much chill out and calm down and think about what was really important and think about the long game. Rather than having knee trick reactions all the time.
James McWalter
Yeah, absolutely and I echo that you know it’s it’s Gris decision- making you know a lot of the qualities. These are exactly what people who found companies. Um, you know show in spades. Um, but timothy. This’s been absolutely brilliant. Really enjoyed the conversation. Before we break off is there anything I should have asked you about but did not.
Timothy Kim
Know Um, a couple of things. Maybe you know we we are hiring Again. You know we we hire very very selectively but we are hiring in a number of areas from analytics to development. Into Investments. So if folks are interested. Please take a look at our and look at our website feel free to apply to those roles and you know I always want to end these podcasts on a very optimistic note because again we are optimistic by.
Timothy Kim
Nature. So I think what I want to also leave folks with is that we are on a very good track. We are on. We have hit the reset button with the inflation reduction act and the industry has lifted all barriers to achieving the. The the most high schools that we have set for ourselves and so if you’re not part of this industry and you’re interested. You know set your Google’s news news alert and you know follow follow the industry follow law or a company and I think you will be pleasantingly surprised and you know maybe it’s not too much to say hopefully. But. Will restore your trust in humanity as to yeah in the in this age where people are you know you know passing on a lot of misinformation that there’s this very bright spot with renewable energy professionals plowing through plowing ahead. And ensuring that we have the right generation mix the right resiliency you know the the clean energy for future generations to come.
James McWalter
I A about are they? um yeah, it’s the people doing the work. Those are the ones that both have their own optimism and then drive optimism and in the rest of us. Um, thank you so much. It’s been brilliant.
Timothy Kim
Thank you, thank you very much James.
Title: Utility Scale Solar Development – E115
Great to chat with Timothy Kim, CEO at ibV Energy Partners! ibV Energy Partners is leading the clean energy revolution through full-service development of utility-scale solar power plants! We discussed policies toward renewables, challenges in developing solar projects, solar moratorium, grid congestion and more!
https://carbotnic.com/ibvpartners
Download Podcast Here: https://plinkhq.com/i/1518148418
Remember, If you want to support the podcast please rate and review 5 stars on Apple, Thanks so much!
James
The unedited podcast transcript is below
James McWalter
Hello today we’re speaking with Timothy Kim founder and Ceo of Ibv Energy Partners welcome with the podcast Timothy.
Timothy Kim
Thank you Jamies! Thank you very much for inviting me to pleasure to be on.
James McWalter
So brilliant to start. Can you tell us a little bit about Ibv Energy Partners you.
Timothy Kim
Yeah, so we are a utility scale solar and storage development and primary investment company and what that really means is that we develop large scale power plants solar power plants. Usually it’s sighted on. Think our average is cited on little over a thousand acres of land these days. Um and we develop and operate them and sell the electricity to various customers from utilities to corporates such as Amazon to Google to power agencies and municipalities. Um. I started the company in June of 2017 with Robin size. Our co-founder who’s also our executive vp and head of development him and I had worked at a previous company in Florida. He was the head of development I was ahead of finance and m and a and we just clicked really well. Our battle rhythm synced and 2017 off we went and it’s been a journey since.
James McWalter
And I guess in 2017 where you were making that initial decision. How did you see the opportunity at that point why why did did it make sense to say okay, we’re going to Robin and I we’re going to get into it together. So.
Timothy Kim
Well if if I’m going to be honest with you. It actually did not make sense. Um, you know in 2017 right so that this was six months after the Trump administration came in and’m not trying to be political I’m just stating facts here and.
James McWalter
That right.
Timothy Kim
The administration and federal policies towards renewables was not Friendly. You know in in the same year. There were significant tariffs imposed specifically on solar panelddles which which make up about 40 to 50% of the the plant’s investment right. And then there were subsequent tariffs on major components that make up a solar power plant including you know the substructure the steel of the substructure as well as semiconductors. Ah you know and the inverters in many cases they were just outright bands actually.
Timothy Kim
So you know in 1 case huawei as many people if you could remember back then it was basically banned from the federal government as well as ah, hooking into any critical infrastructure telecommunications as well as energy. So um, but look you know. Oftentimes when things don’t make sense. You know the contrarian that I am I kind of look at the long term to ask does it make sense for the long term and energy has always made sense in the long term um the the advent the development of energy and especially you technology.
Timothy Kim
And so from that angle you know the story was very robust investors where half in half out you know there are a number of federal legislations that were that we’re about to expire but we found an excellent home with ibfo group which. Is the largest pure solar ipp independent power producer in the world having done some of the major firsts in the world when it comes to developing and operating solar power plants. So you know the challenge back then when when you’re starting. A company. You’re you know, ambitious and you want to get into those big leak tables is and the question I was always obsessed with is how do we go in in this very fluid environment. How do we go from the back of the line you know, just starting up. To the very front of the line without you know, taking these baby steps. But you know giant leaps and I think that’s what really ah occupied our minds in the first 3 to 4 years I would say until covid came along um and and these days. We now ah have yeah we fast forward. You know, five years later we have approximately eight Gigawatt of solar and storage assets in the queue where one of the largest developers of of solar in in in Nevada where the largest developer of solar in Kentucky.
Timothy Kim
And Louisiana and we’re working with a number of power customers. You know both both in in the renewables and the utility space and the oil and gas space. Um, and we we work with over. We were approximately fifty landowners now.
Timothy Kim
To to develop solar on over fifty Thousand acres across the United States so the story is strong the the and I think the fundamentals are strong looking back in 2017 ah, you know we came out of this this. Fiery arena into into something that looks a little bit more stable now. So.
James McWalter
Yeah, know it’s it’s absolutely fascinating. But yeah, the timing right? and you know being a bit too early is completely fine, right? because you know you kind of have to get through those couple of years and then if you hit that market inflection point which were clearlyty and now you get all that benefit of having laid the groundwork and in those kind of tougher years and you also have. I guess a kind of leaner mentality around certain things you know again I guess one of the kind of frameworks you know so we’re talking about utility scale these very large thousand acre plus ah you know projects and there’s a you know few other flavors of course of of development. We’ve seen a big rise with community solar which are typically in the.
Timothy Kim
Exactly.
James McWalter
20 to maybe one hundred or two hundred acre parcel or project size and then of course you have a commercial industrial that go below that let alone you know the kind of roof mountunted direction when you’re kind of weighing up. You know why did utility scale like appeal to your relative to maybe some of these other options.
Timothy Kim
Yeah I mean that’s ah, that’s a great question for us is optimization and efficiency and that’s it. It would be relatively easier to develop a community solar. Yeah I don’t want to say it’s easy at all I mean it’s not No. Fastsetter Development is easy but developing you know with the community as your power customers. Um on Land often. Ah, you know if if not granted to you then directed to you by the community is a lot easier than.
Timothy Kim
You know, developing on a one thousand acre farmland where you know many many folks decry the use of solar as as a as a conditional conditional use. Um, however, with that being said, you know when I started in this field in 2007 the cost of solar was somewhere around $4 a watt. Um, you know you fast forward from 2007 to 2015 and the cost of solar in 2015 was approximately dollar $25 thirty five watt to pre pandemicmic 2019 where it was about ¢85 a watt. Um, you can only achieve that type of efficiency through utility scale solar because just the sheer amount of power that you are placing you are citing in 1 area. The other part of this is optimization as I mentioned you know optimization going forward. Is going to play a large role in the autonomous side of of of solar deployment solar operations. Um, we believe that you know doing things at a bigger scale lends itself to more optimization practices. Then doing things at a much smaller scale where you are often. You know, kind of ah boxed in into your own design. So this is the reason why we went large.
James McWalter
Absolutely but then I guess the the tradeoff so enlarge and for the listener you know we’re talking I guess $100000000 plus projects in a kind of typical deployment for those who are less familiar with with with watts of of various types. But then in terms of the um so the absolutely it makes sense those efficiencies large scale generate generates these efficiencies and it absolutely drives the entire industry forward and gets us to you know a much healthier mix of electricity from renewables point of view. But I guess then what are some of the major challenges when you’re trying to develop a thousand acre plus project for.
Timothy Kim
Well the the there’s 2 challenges in developing projects these days. Um, there used to be 3 challenges. So let me let me just quickly go over those 3 and then tell you why it’s now to prior the 3 challenges was and in this order.
Timothy Kim
Securing power customer or we what we call an offtaker ah to buy your electricity right? Renewable energy is new utilities. Don’t really understand did not in the past you know you’re talking about mid 2000 s did not really understand it. It was not pervasive across the United States and corporates the rise of corporates as clean energy. Ah, procurers had not materialized until about 21018 so that’s one and that’s important because at the end of the day you could have a fantastic project. But if you don’t have revenues. Ah contracted revenue you know to to underpin it then you’re not going to get financing for it. So the project is is likely not to be built second the grid the grid is highly congested. This was not an issue so much in the past because back in two thousand and fifteen seventeen your big size projects were 50 to hundred megawatts I mean if you did a ah hundred Megawatts in two thousand and fifteen sixteen like I did you, you were kind of sitting at the upper echelons of solar development these days that’s kind of the lower end of utility scale to give you an idea our portfolio average size 175 Megawatts and we’re soon to be moving up to two hundred Megawatts or largest project being well over three hundred Megawatts so so you know again, efficiency and optimization going against the power curve reducing the the level like cost levelized cost of solar your electricity all plays a role in that the third is obviously.
Timothy Kim
When you go into a community and the vast majority I would probably say so we’re way above 90% of large scale solar farms. Do not sit in municipal land because there just isn’t you know enough land in the municipality or is so expensive. That it. It just does not make it worthwhile and in you know, largely it. It sits in unincorporated. Um, you know County land so you know where where a lot of people will reside as well. So obviously it has impact on a community and the community you know. Has been some where has been more than some there. There’s been a lot of debates about the use of prime Farmland and I’m proud to say that ivv enage partners we designed everything with dual use meaning that you know we we we add pollinators the sheeps could feed off the grass were feasible. We invite livestock on our site to to have that intune with nature type of aesthetics for our plants but those are the 3 the offtake portion the first one I talked to you about has gone away for the most part that is not as difficult as it once was.
Timothy Kim
So now it is about congestion and community. Um, do just give you an idea you know we’ve we’ve had a series of articles on this, you know our first article you know thanks to Matt has has been how solar development that developers can work with. Communities and could work with landowners and it doesn’t need to be 1 or the other you know, solar will never take over. Um you know? Yeah, even a significant amount of prime farmland and so I think there’s a lot of myths out there but part we we view part of our job as educating as well as informing the public of. Of of what those myths are and how we get around it and how we can work together.
James McWalter
Yeah, as people as listeners on the podcast knows you know I grew up on ah on a sheep farm and so you know agvoltaics and you know being able to have dual use of land I think is something that it’s It’s fantastic Here. You’re doing and a lot of so developers Historically it was kind of an afterthought and As. All the prime areas to build prime boat from a farmland as well as a solar point of view. Um, you know are are being kind of looked at and and landowners and farmers are being asked to kind of consider these different options I think having that dual use and enabling the farmer and the community that the farmers in to say ok we are still you know. Having that engagement with the land right? because is very powerful because you know farmers are very few people you know decide to become a farmer right? It’s It’s usually this kind of very very cultural and and familial um structure that you’re born into and and I think anything that so developers do to kind of you know. Meet the farmer Halfway I think is going to on nesh be a massive benefit to both parties.
Timothy Kim
Right? Exactly there’s 1 more thing to so be said about this though and you know in this country. We we do believe and I firmly personally believe in the rights of the landowner. You know we either. There’s long history about you know. Private use of land and what you can and cannot do as long as that doesn’t hurt. You know the the existing surrounding landowners. You should be able to do what you feel you you need to do with your land the land that you worked so hard and your family worked so hard to. Either put together or inherited and and farmed or tilt or whatnot. Um, you know the interesting part here is that the folks who are against solar development largely are not farmers.
Timothy Kim
It’s ah surprising to hear this because you would think they are but in fact, it is not them at all. They are actually highly encouraging for solar development use. Not only from a financial benefit right? I mean you got thirty five forty forty five years of lease revenue. But. From the point of view that they cobble together a lot of them have cobbled together this land over decade two decades 3 decades or even generations. Ah and they feel that they have worked hard enough. Their family has worked hard and now they want to reap some of the benefits of passive investments. So.
Timothy Kim
It’s a very interesting dynamic that’s taking place in many rural areas of of this country where farmers are actually proponents of solar development and the ones that are not have nothing really to do with their farm. They just don’t like the idea for you know. Xy and z you know.
James McWalter
And and you’re seeing this in the rise of solar moratoriums that are happening at the you know at the subdivision level where you might have a village and then some folks at the village you like oh you know let’s ban solar from our village and incorporate unincorporated surroundings for like the next two years and I think technically there is some voting going on. But ah, you know, local democracy often struggles to actually get everybody in in that locality to actually engage in it and rein the time of what’s going on and if something’s passed that says there’s this little moratorium moratorium and you’re not able to build for the next year and a half two years um you know the I guess the average time owner there is is a bit out of luck.
Timothy Kim
Yeah, the solar moratorium is is is very concerning and and and you know borderline scary because essentially what they are doing is there. There are some communities for example. We are developing a very large two hundred and seventy five Megawatt solar farm in the southern area of Nevada in this within the city of bolder city as a matter of fact, we actually lease the property from the city. That’s one of the very few projects where we actually lease it and where it’s actually in the the municipality. City of boer city generates a lot of money. Ah from the lease of their solar farms. You know they have a number of solar leases out in that area and they’ve structured a program where they’re very careful because they don’t want to expand they don’t want to expand you know? ah you know in population. But so but they have to cover their you know their their expenses with with with some sort of revenue and that revenue is solar. You know the the amount of benefits that solar tax benefits. It’s just hard benefits really that solar provides to county. Is is numerable I mean you’re talking about again generations of of you know tax impact and and you know to to buy new equipment for the schools provide scholarships by you. We equipment in for the fire and and and police department. We see this these are these are actually.
Timothy Kim
Hard benefits and so when there’s a moratorium often the county and the residents are saying that we don’t want these benefits and then they have to find a new source of revenue to cover costs. Everybody knows that infrastructure um is aging that school buildings are aging and we may very well be in a recession a long one next year and you know it is our hope that we work with you know we certainly strive to work with counties to ensure that they understand this. At the end of end of the day like you said James is there is there a choice you know if they propose a solar moratorium then I think they’re just shooting themselves in the foot for the long run.
James McWalter
Yeah I think one of the things that will I think will change because as people are becoming more familiar with the upsides of these projects I think attitudes will change because right now it’s like oh you know I’ve seen. Ah you know something on Tv there might be some solar panels that seems like a net good. But I don’t really know a ton about them I don’t know that those elements around that’s going to positively affect. You know the tax base within my community I think it’s just going to take a little while as these things kind of spread out as more people are exposed to them that because it’s very easy to say no right? It’s it’s often harder to say yes to things. And so seeing those kind of positive reasons you know having conversations like this you know I’m sure the day-to-day work that you and your team do um, reaching out and engaging the community and the landowners and then those landowners then you know I’m sure we’re talking to their neighbors and people are then starting to you know do the heavy you know day-to-day work. Of making ah you know making these things move in more positive direction. But I guess you know with all these considerations right? So you know where is the solar mertarium. You know where’s or less grid congestion. How do you work through all of that these type different types of information to say. Actually you know what. This community with these two thousand acres in this particular part of the country is actually a great place to build versus this other place. You know, ah 1 state away.
Timothy Kim
Yeah that’s another good question. First of all before I answer that let me just say that I don’t want to pin this ah you know. Solar developers. We have not ourselves done a very good job of informing the company informing the communities at large we’re now starting to do this but we should have done this long time. Our industry should have done this long time ago. We should have done. We should have made a push to decouple. Story of solar from the politics of solar or the politics of green energy or clean energy and so we have to we have to understand yeah as an industry we share a lot of that blame. Um, and yeah, if you go to to websites of a lot of solar development companies. They still don’t tell that story. They don’t explain. Why they’re doing what they’re doing and how they’re working with communities. You know we recently revamped our website and we added the first thing we wanted to do was add a community section and then a long faq section both under our project section as well as our community section 200 let landowners and communities and officials and you know people who are opposed to solar understand that listen, we may not agree on everything but we’re going to be very transparent of how we’re coming about this and why we’re doing this and what the benefits are to you so I would um.
Timothy Kim
I’m just going to give a a shameless plug for our website sure. So if you go to our website ivvenergy.com then you ah scroll through it take a look at it and we hope that the website is not just about Obstin but is about you know turning the tide on.
James McWalter
Sure and we we’ll include that in the show notes as well. Definitely those links. So.
Timothy Kim
Informing the public of you know, investments and development in in community initiatives particularly when it comes to solar. Um, the second part of this is to answer your question. Um, we we do? What’s called analytically driven development that’s kind of a fancy phrase right? But ah. You know anytime there a new industry pops up you you could traces all the way you know the oil and gas semiconductor any industry you know area aviation. There’s always this cowboy mentality right? The cowboy mentality is just go fast. Go hard and let’s figure out the rest later. Um. And that happened in our industry. You know when when you know when we when this industry first began in 2006 you know number of developers just went for land grab and they weren’t really thinking and it yeah know even happens today. Um, which which is really unfortunate. We. We don’t do that. We. We engage in annually driven development where we take a pause and say okay, you know we look at everything from the perspective of of an investor and we we answer the hard questions when we spend a lot of time. A lot of resources a lot of money on you know, modeling out. And researching and analyzing points of interconnection making sure that we feel ourselves comfortable that there’s enough capacity a certain substation that the solar farm could be built that there’s no moratorium we meet with County officials beforehand before we weave even touch a single piece of land.
Timothy Kim
Because I think the the industry has also suffered another blight and that is that of a solar cowboy. Yeah, the speculator that comes in Grabs Land makes big promises and doesn’t deliver and we’ve had to yeah it makes everybody’s job hard and we don’t want to do this. That’s not who we are. And I think we we we were at the forefront you know vanguard of where the energy has to where where the industry has to change and we’re certainly leading that charge.
James McWalter
So and speaking of that you know I come from a software background I’m actually working on some projects in this very space right now where would you like to see more innovation you know where could you know? smart folks coming in maybe with more of a software and data background be building. To service you better solve some of your problems get more projects developed and.
Timothy Kim
Well these days you know and there’s I think it was last week you know I never I almost never want to drop the name Elon muskkin anything because he’s so caught but at same time controversial but also so inspirational you know I mean.
James McWalter
I sure.
Timothy Kim
But but he did come up with ah you know, kind of this funny I don’t know if he was joking or not but he he said that you know either tesla or somebody should develop software for developers to engage in more predictive and precise predictive analysis of. Of of grid congestion and the costs associated to plug in the solar power plant to the grid. That’s a number one I would say even more than you know the not in my backyard type of folks congestion is actually the number 1 issue plaguing the industry right now the inability to predict. Your network upgrades. So let’s say that you have a power plant. You already spent $3000000 developing studies. You know engineering you know permitting all that stuff communities great with you. everything looks fine everything looks clean you go through this 4 or 5 sometimes 6 year interconnection study cycle. Where you just have to put more money and more money and more money for every study that you want to advance to and then all of a sudden you put $10000000 at the end and the last study comes back and says that your project is now uneconomical. You just drop $10000000 and do you think that those types of companies are going to come back from that you know. Um, so we need a lot more engagement with the transmission organizations the independent system operators and folks who have the insight but are not willing to open source their information.
Timothy Kim
The betterment of the industry and I hopefully software could plug a lot of that holes in in in bringing that information out from those transmission organizations and utilities into open source and then allowing you know developers such as ours a platform to subscribe to that. Information that would be interesting.
James McWalter
And yet yeah, it’s very interesting because ah, a lot of the space like the incentives are just all not fully aligned in a way that would make these things easier and as easy as they should be right. And so you often have the utility or the grid operator or the operator of the transmission and the Iso. Whatever it may be um, yeah, they’re incentivized to ah you know freerability right? So various types and maybe a couple other incentives that are built into their their model. Whatever it may be. And then you have individual developers like yourselves who are trying to figure out look you know we know we’re going to be building a lot of renewables just tell us where to build right? like at the end of the day if you could just direct us and say hey 10 developers who are bidding into a particular market It’s definitely going to make sense to be along this. You know one hundred mile piece of transmission and then. You know you still have to do the studies and you know so to make make sure that things actually make sense. But at least give some kind of top level direction and I think there are definitely some kind of national initiatives I’ve been reading about I’m researching that I think will help at some of this at the margin. But I do think that ah, until there is just a You know, a very very strong, bidirectional communication between developers and developer trade groups and those who are managing the for mission congestion capacity like yeah I think some yeah I don’t know think ah the the cold war nears to end to a certain extent so that we can eventually get that data revealed and.
James McWalter
Then you know then software people can build on top of that data.
Timothy Kim
yeah yeah I think software has played a very outsized role in our company. You know I was looking at our fiscal year twenty three budget just today and yeah, we’re adding on 4 more software platforms. And these are not cheap by the way right? So um, you know the the question you know as Ceo always has to ask is um where if I have that extra dollar where do I spend it on and it’s more and more coming back on the software piece because just.
James McWalter
Threat.
Timothy Kim
As as this industry matures and becomes far more sophisticated. It’s mimicking that of the oil and gas industry which is already complex right? Um, and you know if if once it goes starts going really starts ramping up that that that. Analytical chain There’s not enough people not enough folks to to keep up with the the fast moving information and its impacts to to your portfolio both from opportunity and risk perspective. So. This is very the software is going to be very very important and I see a lot of ah consolidation in the industry that’s going to take place in the next two or three years that’s my prediction at least.
James McWalter
And yeah, absolutely and I’m also somewhat in this space myself my own company and you know there’s a lot of companies in our size range in the kind of dozen or so people and I agree I think there will be ah quite a few quite a number fewer of us in a couple of years because
James McWalter
Um, there’s a lot of I think duplication and then once you string along some of these functionalities. Um I think then you start to have you know, really powerful software right? Like what is the sales force of development. Um I think that’s that’s a question or the yearp system of development I Think that’s this question that more and more people are going to start asking. But.
Timothy Kim
Yeah, yeah.
James McWalter
It’s a pretty complicated piece of software to your point and I think that is going to take a while to emerge. But when it does emerge I think it probably will be a combination of some of these smaller orgs and I guess one of the you know so we talked about the kind of digital transformation of the space and the other I think big piece that we touched on earlier briefly. But I think I would love to get in your thoughts on is the inflation reduction act. Um, I’ve made this joke before but ah I call it ira because being irish and from Ireland you know calling it the ira for the next decade is is is a bridge too far for me. Um, so I guess you know Ira I think it came out of the blue all of a sudden There was a lot of false stans around you know a climate bill coming out of the current congress.
James McWalter
And finally passed and I think it was a net probably more promising and than I think a lot of people were expecting. Um, how do you think it’s going to I guess directly affect you guys over the next 2 to 3 years right.
Timothy Kim
Well I think the biggest effect here is that it provides confidence to investors. Um, you know, solar developers. We’re optimistic and we have to be by nature right? So the moon where the sun is always up the the glasses always have full regardless what happens. But investors are are of course a different breed sometimes um before the ira there were a number of debates legislation potential legislation that kind of came in and out. Of of both administrations that we’re going to promise everything from the stars to nothing at all, right Um, and I think that made it very difficult for investors to understand how do I plan capital allocation for the next x amount of years and that’s important because the the. The the lifecycle of a development of just a single project right? Just 1 project. Let’s take a hundred megat project anywhere in the United States is approximately four going on to 5 years now. That’s how long it takes for you to conceiv from the time you conceive the project to the time that you you you know, build it. So you need to have this long path of confidence that from the time that you sign up, you know your your option agreements and your lease agreements your land agreements your power agreements and and putting the first million dollars at the door and development capital.
Timothy Kim
To time you bill it. There’s actually going to be yeah, supported legislation and there was not a that before so with with the inflation reduction act. Um, you know more than anything it. It says to investors you know.
Timothy Kim
America is a safe place of investing. It’s a long-term place for your investments. It’s a stable place and we have a renewed interest in seeing clean energy become a dominant form of the energy mix up until at least 2032 or whatever you know? Um, so. You know that that is how I look at it and anytime that you speak to a Ceo you know they’re always worried about their shareholder expectations right? to understand. Okay, well you know there’s only a you know finite amount of capital both in the world and apply to our company. You know where is the best way to use it and when should I use it and the when now is being answered by the the propellant of the ira you’re seeing a number of new projects and initiatives go into the queue and targeting you know, even the manufacturing side. Ah, the bill which you know aims to bring you know panel manufacturing back home back to the United States so of course overall is a good thing. You know. But yeah, if you’re remembering the billback better act the climate change provision of that was something like one point three trillion
Timothy Kim
So the ira is not 370000000000 I mean not just only but it is three seventy billion so it’s it’s one fourth sort of give or take of of what we were trying to achieve we’ll make do we’ll be fine but that also tells me that there’s a lot more to go. And that we could do a lot better as well.
James McWalter
Um, and I think even with that and I fully agree. Um, yeah I think we’re because of that gap between the 1.3 and what? what just shy of 400 that yeah that that came in I think what’s we’re going to be very reliant on is you know.
Timothy Kim
Three seventy yeah
James McWalter
The cost curves for solar and then also some of the operational and digitization elements making things more efficient to bring them the cost to make the deployment and then be very dependent on things like state and local initiatives who are you know making various commitments as well as the corporate commitments of various types another piece that ah. I’ve been kind of chatting to a few folks about is the labor side and talent side. How do you think about? you know the talent mix available to develop the types of projects you work on right? You’re continuing to ramp up develop evermore. Um, you have you know, traditional blue colllar jobs that are you know are deploying the actual assets themselves. We’ve talked about the Analytics. We talked about financing Developers. You know they’re going literally around in trucks to try to get things done. Um. How do you think about how difficult it is Do. We have the right kind of talent mix. Um are there gaps that we should have you know either policy or smart entrepreneurs should be looking at filling those gaps and.
Timothy Kim
Yeah I mean 2 things on this first. Let’s just go back to the Ira it compels developers to use apprentices during the construction phase as well as the operational phase which is very smart because you know you you want you want a catalyst. To build long-term talent in this in this area. That’s first of all the second you know as a subset to that through the ira discussion prevailing wage shops are also going to be a large. Very large part of solar construction moving forward prior to that you know the yeah prevailing wage union jobs were only used when you know it had to be so you’re talking about California type Projects New England you know states where there was no right to work provision. But now you’re talking about high payying wage jobss all throughout the United States specifically tied to deployment of solar and wind and and green hydro and everything else that the that that was kind of snuck under stuck under the Ira Bill so those 2 apprenticeships and prevailing wage are going to drive a lot of interest and movement of human capital towards this industry I firmly believe that um the second part of it is more I would say the white collar jobs. Um.
Timothy Kim
The interesting thing is that we’re now starting to see a number of folks I don’t know whether it’s due the Ira or or is just kind of a bound to happen but a number of folks coming from other into the industries mainly oil and gas and coal. Coming to into the renewable energy industry and bringing their talents and all their experience and sophisticated skills with them. So I think the question of will we have enough talent is really not for renewable energy Industry. It’s really for the oil and gas industry because.
Timothy Kim
These days if you’re a energy major. You know, bachelor’s master’s pc, whatever you are and you you, you’re kind of looking around and you’re saying to yourself where do I want to make my mark in the world. You know. I don’t know I mean oil and gas I don’t get really I don’t really see that see many people going flocking towards that you know the next the generation of folks are graduating. So I think in the five to 10 years. Oil and gas is going to have a talent problem if thunder if they’re not already having 1 right now.
James McWalter
Yeah, absolutely I was actually talking to a canadian oil and gas company who’s actually made quite a ton of money recently with the using. Um you know, getting stuff out of the tar sounds in in Southern Canada and then wait $100 barrel recently and their immediate. Ah, kind of internal initiative is how do we deploy this $4000000000 into renewables because this is like a 1 ne-time like spent like like increase in our net revenue and to try to grow this kind of tiny fledgling renewables group that they have on the side of the business. Um, because that’s where all the upside is and that’s honestly as you said 1 of the ways they can. You know retain talent and and drag talent by saying like oh we actually also have this this piece um said makes a to of sense. Also let’s looking at your your own background and I saw that you spent number of years in the Navy um, how does that kind of influence how you you build and lead a company. So.
Timothy Kim
Yeah, you know I’ve gotten this question a lot and I still haven’t and maybe we’re better from worse. But I don’t have an elevator pitch answer to that I think it’s affected me greatly. This is first.
James McWalter
So.
Timothy Kim
So yeah I would probably say has been the main driver of the way that I manage the company and the visions the thoughts that I have and how I bring that and materialize that to execution stage. Um, maybe one of these days I’ll figure it out with ah with a good psychologist.
Timothy Kim
How exactly you know it’s impacted me but I think it’s impacted me in in very soft ways that have accumulated into very you know hard approaches and to executable approaches into my personality look I mean anybody who’s served in the military or served with folks. You know the military is a very can do attitude right? It actually and I still I’m still involved in a lot of national security and and military initiatives and I was reading one. Um journal in the naval law. Publication call proceedings where that Cando attitude is actually starting to become poisonous because nobody’s actually speaking truth to power anymore. They’re just saying yes, yes, yes, we can do it and if won’t find out. You cannot um.
Timothy Kim
But I think that’s one of the things 1 of the aspects main aspects that has affected me that there is no such thing as a no there’s no such thing as you can’t get that done and then you kind of flank that with with different skills set like project management leadership organizational et cetera etc. Um. And then you come up with kind of this talent ecosystem which I think is very ripe for leaning of organization such as the one we are in today. Um I will say that in the early stages as I spoke about 2017 18 nineteen when this industry was going through some very difficult times. Um, you know that to me I think was an interesting moment. Interesting 3 years and even during covid because I also think that another think that the military brings is adaptability the ability to just. Really think about analytically think about something and adapt to it right? So it had been a lot easy probably to for me to have a bunch of nervous breakdowns. You know we’re just starting. We’re just getting on. But I think being you know, having been in many situations.
James McWalter
Sure I.
Timothy Kim
Where I had to adapt to very quick and volatile change year over year over year in the service led me to pretty much chill out and calm down and think about what was really important and think about the long game. Rather than having knee trick reactions all the time.
James McWalter
Yeah, absolutely and I echo that you know it’s it’s Gris decision- making you know a lot of the qualities. These are exactly what people who found companies. Um, you know show in spades. Um, but timothy. This’s been absolutely brilliant. Really enjoyed the conversation. Before we break off is there anything I should have asked you about but did not.
Timothy Kim
Know Um, a couple of things. Maybe you know we we are hiring Again. You know we we hire very very selectively but we are hiring in a number of areas from analytics to development. Into Investments. So if folks are interested. Please take a look at our and look at our website feel free to apply to those roles and you know I always want to end these podcasts on a very optimistic note because again we are optimistic by.
Timothy Kim
Nature. So I think what I want to also leave folks with is that we are on a very good track. We are on. We have hit the reset button with the inflation reduction act and the industry has lifted all barriers to achieving the. The the most high schools that we have set for ourselves and so if you’re not part of this industry and you’re interested. You know set your Google’s news news alert and you know follow follow the industry follow law or a company and I think you will be pleasantingly surprised and you know maybe it’s not too much to say hopefully. But. Will restore your trust in humanity as to yeah in the in this age where people are you know you know passing on a lot of misinformation that there’s this very bright spot with renewable energy professionals plowing through plowing ahead. And ensuring that we have the right generation mix the right resiliency you know the the clean energy for future generations to come.
James McWalter
I A about are they? um yeah, it’s the people doing the work. Those are the ones that both have their own optimism and then drive optimism and in the rest of us. Um, thank you so much. It’s been brilliant.
Timothy Kim
Thank you, thank you very much James.