My name is Mike Rietbrock. I am the Director of Research at BNP Paribas. It is my pleasure to welcome you all to our second annual Power Up conference. Hopefully, you guys are having a good day. Thank you for making the time. I know that everybody is busy. I know that it is probably the worst week of the year to try to get around New York City, so we are very appreciative that you are here. Let any of us know if we can do anything to make your time more efficient. I would also just like to quickly thank Moses and his team, as well as our corporate access team, who do a great job of putting this together. It is a lot of work, and it always goes off. With that, I will introduce the panelists for our solar Chief Executive Officer panel.
First, our MVP down, well, sort of in the middle is Dan Shugar, who is here for the second year in a row and played an important role in putting this panel together. We are also joined by David Zwillinger from DESRI, Yuri, and then, finally, George Hershman from SOLV Energy. With that, I will turn it over to Moses. I think Moses will lead a discussion for 40 or 45 minutes, and then we will turn it over to questions from the group. Thank you again.
Perfect. Thank you, Mike, and it is a powerhouse of a panel. Very excited to have you all here. I think one thing I want to almost, excuse me here, to get started, if I summed up the solar space right now, at least from the perspective of some of the investors, and I have had some of them even approach me about this today, this morning, the first thing they want to know, is this a net tailwind time or net headwind time? Are we in a good solar market or a bad solar market? If you follow all the data out there, if you pull up all the projects, what was safe harbored, what is projected out a few years, usually you could just take one McKinsey and add 10GW, 15 GW into the out years. That is our secret sauce, actually.
Yeah.
If you look at other things, we had the Section 232 come out a little over a month ago. It has created a lot of confusion. What will this mean for inflation on solar? What will it mean for access to solar panels? Followed suit by the Trump executive order, which is accelerating the timeframe of pushing out some of the Chinese product. I do not want to monologue on that, but if I set the backdrop of AI power, load growth, solar is the cheapest, the pipeline looks like it is great, against a bunch of these headwinds in the way.
How do you put this all together? Would you send, as a sort of clarifying message to everyone here to start, projects are still continuing along and we are making it through these stumbling blocks, and maybe solar comes out stronger, or do we have to rethink our numbers and our models? So, maybe if we could start, let's just go through sequentially here. What are your thoughts? Sorry
Yeah
Please provide a little bit of background of your business too.
Sure.
Good job.
I think you are going to hear different perspectives because you have different groups in the supply chain of delivering power here. I think it will be a good perspective of where we sit, and maybe the fact that there is what you hear and what you actually see. SOLV Energy is an EPC and O&M. We provide the construction services and the operations and maintenance for solar and storage plants. From our perspective, we take it from the development assets that David and Yuri work through and their teams to develop projects. They come to us then to build and operate them, and maintain them through their life. What we are seeing is that our projects in our backlog, we have reported our backlog as about $8.5 billion.
We're seeing that that backlog that is really a 24- 30 month slice in time for building and deploying projects is strong. We're seeing those projects are continuing to move forward. Product is secured for them. We've had long conversations with all of our customers. The demand is still there. Those projects are moving forward. From an execution standpoint, while there are clearly challenges around the executive orders and how do we have to pivot maybe an inverter manufacturer on a project that's in design, those kind of things are happening. I'm not going to say it's all rosy. But we have procurement teams that are working through it. Dan Shugar will talk about his supply of inverters into the market and things that are coming to help address some of these challenges. But in the near term, we're seeing that execution certainty is a requirement.
Our business is continuing to grow. We're seeing continuous incoming on a daily basis of more demand that is continuing to fill the backlog that we're putting in place every day. I think from where we sit today, the
The near term, 24, 30 month outlook is really strong.
Yeah. I've been doing this for 18 years, and on stages like this where we sort of self-flagellate about whether the industry's succeeding or not. Every year we succeed. I have a basic belief in the capability and ability of the leaders in this industry to succeed. We've done it through a lot, and it's not always easy. I think the biggest changes that I see. By the way, my name's Yuri Horwitz. I run a company called Sol Systems. We're a clean energy IPP based out of Washington, D.C. Most of our projects are in the Midwest. We've got some exposure to Texas and SPP as well. We're in the middle of constructing about 800 megawatts of projects right now. We've got about 3 GW in our pipeline and we operate over a gigawatt of projects.
We started doing some very different things and have migrated into the IPP space, and have positioned the company to do clean energy infrastructure as well as sustainable infrastructure writ large. So, a few things. Number one is we are at a political moment where there is significant opposition within this administration to what we do, and concern, and I think we have to acknowledge that. That is a time in the moment. We are also at a point where data centers and manufacturing in the U.S. will drive an increase in demand, overall electricity demand, from anywhere from 12%-19%, depending on which report you read and who you believe.
I would posit that the first one is a time and a point in time, and the second is a fundamental alteration of our economy, and I would bet on the second long term, not the first. Certainly the question is who's going to meet that? I'm not going to advocate or argue that it's going to be 100% solar, but I think it's pretty hard to avoid the fact that solar is going to be a huge part of that demand. Or, sorry, meeting that demand, that generation. It has been. It will be. I bet the long game as I have been building this company for 18 years, and I see that on the ground in our projects.
Yes, Section 232 tariffs aren't fun to navigate for our company or for really any other company in this industry, but we have, and we will, and I think others will as well. It's about innovation, and fundamentally solar and storage and the clean energy industry is about innovation. It's what we've done over and over and over again, and we're in the middle of building up a supply chain to meet the overwhelming needs of the U.S. We don't do that. Increasingly Dan Shugar does that, and others do it really well and we rely on our partners to do that. I think that's a metamorphosis we're all going through.
If I were going to bet on what would be the long-term driver for solar and clean energy in general, BESS, I'd rather have it based in demand, raw demand from data centers and industrial needs than on companies making clean energy commitments. Even if I agree with the commitments and I'm aligned with them, and I think that's where we're at. We're increasingly driven by the requirements in the U.S. for massive energy build to drive reshoring of manufacturing, data center expansion, and industrialization. So I'm not suggesting for a moment we don't feel the pain when a tariff arrives. We feel the pain, everyone feels the pain, but I'm pretty confident we'll overcome it and I'm betting on others doing the same.
Great. Moses, thanks for the invitation to come back. I really want to thank George, Yuri, and David for being here. They are all my customers. This is really a who's who of top leaders in the industry. We are going to have Q&A later, so feel free to ask away. First up, where do we stand? I will just speak to Nextpower. I founded Nextpower 14 years ago. We have last quarter reported record backlog. We also had record revenue. Our backlog we reported at $5.5 billion. Additionally, for our legacy businesses, additionally, we did some acquisitions. Since we were here last year, we acquired an inverter company. We are scaling that in the U.S. We can speak about that later.
We acquired a battery company. If we add our battery backlog, that is another over $300 million of backlog as we look forward. The fundamentals are we need energy, we need power. Solar provides energies, battery provides power, and firm power. No one would have imagined, at least I did not, three years ago, that a battery can do something a rotating machine cannot and can really help a grid or a weak grid support a very highly intermittent load, like a data center with a learning model application. We are seeing really exciting things happening. We are in the middle of fulfilling right now with our battery business, a 1.3GW application for a learning center. That is awesome.
The more storage that is added, the better the environment for solar, because we had a lot of solar. We were starting to see saturation in the largest markets in Texas and California, some negative pricing. But those markets have 15 GW of operating battery systems now. That is a lot. You have seen excess solar being stored, but then those batteries can do other things, provide tremendous value to help those systems come online. We are seeing also a significant build-out in the domestic manufacturing chain. We, at Nextpower, stood up 35 factories in the U.S. with our partners.
We do not own factories generally, but most of those are bespoke to us. We were the first to achieve 100% domestic content to U.S. Department of the Treasury standards in the U.S. We are shipping every week 1,000 trucks, plus or minus, of finished goods. That is tremendous amount of material.
Seeing tremendous support for this manufacturing in the U.S. We have seen that not only in trackers, we are doing it in some of the other business we have acquired, the electrical balance system. Inverters, we have announced a double-digit gigawatt inverter manufacturing facility that we are standing up that will be operational next summer. We have seen it beyond our scope also in the solar panel area with a number of factories that were originally, many of them, actually built by Chinese companies, but then they had to FEOC, Foreign Entity of Concern, and they sold. For example, T1 Energy, another public company, bought a beautiful factory from Trina Solar. I was physically there. Best factory I have ever seen. It is cranking out solar panels, they are sold out right now, and expanding. They are going upstream.
We are seeing Tesla announce a major crystalline manufacturing investment to make ingots and wafers and cells in the U.S. Our company has many supply chain people in Asia. We have seen them order equipment. The pricing environment now supports continued expansion. For the intermediate term, as George mentioned, his backlog is secure. We have announced our backlog. The current demand environment is strong, remains strong for the need for power. Longer term, we see a build-out of additional supply chain. We think that supply chain in the U.S. really engenders policy support.
Not only for solar, but also power electronics, batteries, transformers, and things like that. There are headwinds for sure, but our backlog since we went public a little under four years ago, our backlog at that moment was $2.1 billion. Today, it is over $5.5 billion + $300 million for batteries. That is a way to bookmark it.
We just announced record backlog last quarter.
Moses, thanks for having me. My name is David Zwillinger. I have been doing renewables for 20 years. We worked at D.E. Shaw, that is where I co-founded this business, and we spun out of D.E. Shaw early 2025. We have got about 10 GW operating or in construction. George is a huge partner of ours, as is Dan, and we have been doing business with them for a very long time. Moses, I am going to try to be a little different than the rest of them, just to keep people engaged here and not to fall asleep. The market is good, just to give some data points. Before 2024, we had built one project north of 300MW . This year we expect to do four. Last year the same, and the size and scale are increasing.
I would say in our business, obviously you see the other companies that are public, their business, actually, business is pretty good. When I walked in today, Moses said, "The average person in this room thinks the renewable industry is going away." I sort of laughed. Why is there such a negative sentiment over there and a positive sentiment over here? I will say a couple things. One, you way overweight the federal government. You way overweight them, positively or negatively. In 20 years, I put zero correlation with who is in the office. Dems in the office, I have had terrible years. Democrats in the office, I have had amazing years, and vice versa. I think people way overstate the importance of the federal government. This federal government is trying to make itself more important. I do not want to minimize.
I see the same thing you guys do. I think it's UFLPA, WRO, we can't get modules from China. We're somewhere between five and 100 times worse than what we're going through today in terms of 232. That's number one. Number two, the industry certainly is benefiting the people of scale. There were years we could sign a power purchase agreement and post $1 million, then we'd call George up and have to give him $1 million. Today, when we sign a contract, often we're posting $50 million. We've already put $25 million into our interconnect. Dan wants $10 million, then George wants $25 million. That's one. By the way, the businesses required more scale. You hear a lot of voices of some of the smaller names who are struggling. Companies have gone bankrupt. There's been consolidation.
But those parties have not been able to scale up in an industry that requires more scale to be successful. But the bigger players that you see in the space, I think they're generally saying things are going better, often because the same point of interconnect, we're now selling solar and storage. We're selling two for the price of one. We're doing all the development work for one asset, we're getting two. Last, everyone talks about this, it's all about how much demand there is. If we're in a market and there's a lot of demand and not a lot of supply, you get more price. You get more price, you protect against interest rates, you protect against supply chain. It's true the cost to the customer has gone up. Way cheaper than your alternatives.
But the reason you're hearing this is you're hearing about affordability, you're hearing the federal side, you're hearing every data center hyperscaler talk about behind the meter. Guys, 12 months ago, no one ever said the word behind the meter. Never was said. Go and look at the 2022 Q in MISO. Look at the 2023 Q in MISO. Look at the 2025 Q in MISO. It's all renewables. All renewables. When you think about, wait a minute, where is the market going? If you need power, the answer is renewables. Now, gas will be part of the solution for sure, and it is needed, but I think what everyone is hearing is sort of like spot today everyone's talking about those things, and that's true, and that'll be super important in 2030 and 2031, and it's areas we're focused on.
But as you talk about building today, it's solar, it's storage, it's a little bit of wind, and it's a little bit of gas.
That was a great way to transition to this next. It is sort of a follow-up question to this. Not specific to Section 232, but just the arc of where we have been, which is a lot of things that, David, you just touched on at the end. $20 a megawatt hour was a PPA price when it was seemingly even more commoditized, but still a smaller industry in 2020. It becomes a developer's market with premium suppliers and EPC companies able to sort of make a good game there. As we get to $30, $40, $50 a megawatt hour, now you hear $60 a megawatt hour is almost a way to quantify this discussion that it is just going to come at a price. If it means it is a $70 market, it is a $70 market.
Whether that is a post ITC discussion, whichever regions that that fits, whether that is because of the trade effects, et cetera, is it just going to be a matter of price, or is this future conversation? Imagine we are sitting here, and I am first putting this in front of the developers. We are going to sit here in 2029, 2030, and they say, "Well, we had a bunch of projects we were able to do, but we ran out of access to inverters. We bought up Dan's factory and we couldn't get more from SMA and the Chinese were out of the market." Would you say that it is all just going to come down to price, it will price in and it will still be cheaper than alternatives.
There is still tons of it in the queue, and that is the way to frame it, and that is what we will look at when we turn around in a few years from now and see solar is continuing to be on the rise? Or is it that solar is still going to be the best, so to speak, solar plus battery, et cetera, but we might be constrained as an industry physically, in a sense?
Okay. Two things. Once the solar farm is built, the biggest cost of goods sold is our cost to financing. The 10-year is 5%, the 10-year is 60 basis points. That in and of itself is $10 a megawatt hour.
Okay? Maybe even more. Commodity costs have come up and labor costs have come up. When we are pricing our power purchase agreement, we are taking all the latest costs. What is Dan selling us a tracker for? What is George giving us a BOS for? What is a module cost? What are interest rates? Then what are we targeted rate of return, and how much risk is in there? All of that factors in, and unfortunately, that has been inflationary. Moses, at the long term, that is bad because the best thing you do is you are selling a commodity good.
You sell a commodity, the cheaper you sell it, the more you are going to sell of it, and the less competition. Now, the good news is everyone's price has gone up. I see some announcements on SMRs, and I just laugh at the price that they are charging. Okay?
Renewables are massively cheaper. Look at where gas prices have gone. I think you got to think what is the competitive product? People need power, they are going to need more capacity, so you are pricing that in. Now, Moses, I see no worry about the ability to get product. We got a lot of smart people. There is a lot of capital in the space. If we go and say, "Dan, we want to buy a lot more inverters," he is going to build a lot more manufacturing. Same thing. I see no shortage of the ability to get the equipment. Maybe in any six-month window, transformers have probably been the most challenging thing we have had. To give you a sense, we own 60 transformers for projects that we have not built because we saw the supply chain.
I do not put any worry of that in any type of medium-term concern. But over time, as the price goes up, you start to introduce other options. Would you do more runtime? Can you do an operative facility? Do you do more energy efficiency? I do not want to suggest you can continue to raise prices $10, $20, $30, $40, but where we stand today, we are super competitive with all the alternatives.
There is a lot of room there. Yuri, would you agree with that?
Yeah. I am not worried about the supply of equipment at all. We have a grid that is 20, 30, 40 years old, and that grid sustained the U.S. for decades with minimal demand growth, but it is decades old. The average coal plant, I think, is 40 years. Many of the gas plants are decades old. No one even knows how to build gas in the U.S. anymore. They literally have to go find people to build the gas because everyone is too old to build gas. We have a system that is decades old, and we have a massive increase in demand. As I said, 12%-19% increase in demand over the next five years. Prices are going to go up.
It is not politically palatable to tell consumers that because we are in a moment in time or a period of time where there is significant inequality in wages and wealth. Yes, prices are going to go up, and they are going to go up when you introduce SMRs that cost $250 a megawatt hour, or new nuclear that costs $200-$300 per megawatt hour, or new gas that costs $100 +, $100, $150 per megawatt hour. Those are the numbers that no one is talking about. New geothermal, which is, I am a huge fan of geothermal, but it is expensive. Taking old nuclear and putting it on the grid, that is expensive. It is $100-$120 per megawatt hour. You can go and find that out if you look at the Meta PPAs or the Microsoft PPAs.
Electricity is getting more expensive, whether solar is contributing to that or not, and it is because we have an outdated grid that needs to be upgraded. The first thing that we should be doing is making the grid more efficient. That is the very first thing we should be doing. Rather than spending huge amounts of money, Duke spending huge amounts of money on nuke gas, they should be investing in T&D to make the grid more efficient. They should be investing in storage to make the grid more efficient. That is not what they are investing in because they can make a lot of money investing in gas, and so can all the other utilities. There is a decoupling there of the consumer interest versus a regulated utility, and that needs to be addressed. That is not my job, but someone should address that.
Solar is going to be more expensive in the future, and when the ITC rolls down, it will get more expensive. But it is going to compete head-to-head with gas and we can do 12-hour storage for less than most gas is built at right now. It is going to compete. It is not going to be a shortage of supply on equipment. It is going to be coupled with gas and it is going to be coupled with storage, but solar is going to compete.
Moses, can I build on Yuri's comment? I started my career, I am an electrical engineer. I was working for Pacific Gas and Electric doing electric transmission planning and operations. What Yuri said about the grid is true. It is really hard to build transmission, new transmission. It is how many lawyers per mile. It is just hard. If you look at the circuit miles that have been built in the U.S., they are really low. Now, there are these advanced grid technologies. You have these conductors that use a carbon fiber core that can carry in the same physical size of wire 50%-100% more current. You can use the same corridor, usually the same towers, and get a lot more current. Even there, utilities are really slow in the U.S. to take this on. They are just not building that much. The tech is there, but they are not.
That is where batteries come in. This was like an epiphany to me when I started getting my head in this, the whole storage thing. We had seen, we delivered at Nextpower 30% CAGR for five years in a row on solar. We are still delivering a strong growth in solar, but that growth has slowed. We looked at batteries because my major customers are doing storage on most if not all of their projects. We also saw it as a way to help solar and a way to contribute shareholder value. What I didn't appreciate when we started first looking at this is how much flexibility these storage and modern power electronics add. All these data centers, everyone wants the grid. You want the grid. You don't want to build as a standalone.
You see some news articles about this and there are a few, a handful of projects. They all want the grid for reliability. What these batteries and power electronics allow you to do is use a grid that may not have sufficient capacity to serve you even with normal loads, let alone these learning model data centers. Now, we acquired a company, Prevalon Energy, which had, the origin was out of Mitsubishi Heavy Industries, so they knew how to interact these battery systems, also to support rotating machines. If you have a grid, I want to put a rotating machine on the customer side of the transformer. That is good, but the rotating machine cannot move fast enough to address these intermittent loads. You can literally snap the shaft of a million-pound rotating machine by having these data centers start consuming power and then going off again.
The battery can solve that issue. There are also more routine loads. Putting the learning model data center on the side, utilities have grids that they may not be able to serve their existing loads. The day we closed the Prevalon acquisition, which is now Nextpower Energy Storage, that was this quarter. We flew up to Idaho and visited Idaho Power. They have nine battery systems operating in their grid. The company we just acquired had just delivered a 200 MW, 800 MWh system up in Boise. I was there. I heard the customer, Idaho Power speaking. A large chip manufacturer had, through the CHIPS Act, built this huge factory out on the line. But for the battery, they just didn't have enough peak power during critical hours to supply the chip factory and their other customers on the line.
The battery was existential to them using the existing grid. The existing grid that is there is the grid we are going to have. There should be more investment. I am not seeing a lot of utilities leaning in. With this tech that is now commercially available, affordable, and we are scaling, it provides solutions to allow customers to come online in the near term. You are not going to see very many of these islanded applications where, oh, we are doing a big solar wind gas thing. It is totally off grid. I think there will be a few, but that is a sideshow to what is happening in the real market. This new tech is a very exciting way to serve the very strong growing load with the grid that we have.
No, brilliant, Dan. I think we are going to return more to battery.
A little further in the discussion, I want to also move to George on the EPC side. One of the perceived, I do not know, constraints, if that is the right word, is we cannot get enough labor, we are competing with other forms of generation, we are competing with the transmission build, the data center build itself. There is a deficit of electricians in the country. How do you slot it in? Think about that now by region. Solar and battery are now shifting in terms of the regions that are more popular than ever. Texas is still big, but other regions are coming up. How do you pull that all together as one of the top EPC players? Talk about execution. Talk about what those bottlenecks are or are not. What do you do from an innovation standpoint to break them?
Yeah, I think we have talked a lot about how scale matters in this industry from pricing and deployment. It absolutely matters in execution. What we are seeing now is that the top-tier EPCs are not only growing in scale because of project sizes are just getting so large that they are starting to size out a whole middle market of EPCs that just cannot compete in this market because of project size and demands. What that is doing is, one, it is driving market share of projects, but it is also importantly driving market share of talent. We are seeing a movement in talent to organizations like ours that have a large visibility in pipeline because of our backlog. If you are a skilled electrician and you want to come to companies that have a long runway of work and opportunity, right? Workforce wants to work.
What we are seeing is that more and more of that trained workforce is moving and coming from other smaller, maybe tier two players that just can't size into this market. We are seeing that talent shift. We are investing a lot of money in our own development of talent. I have been doing this for 20 years now, and I am proud to say that guys that came in as interns for us are now running the largest projects in the world. They have worked through that entire progression. A general superintendent that is running a complex of 4 GW of work for us, started as a pile driver for us a decade ago. We have a huge commitment in our organization to really train and develop leadership within our organization.
We attract talent, but we train talent, and that is what really delivers an organization that we trade on operational excellence and certainty. Right at the end of the day, what David and Yuri need is they need a competitive price, but what they really need is certainty on execution, because that is what their customer demands. That is really what we continue to strive for. We are looking at ways because we understand we have been in this business and we want to continue to deliver at the best and lowest cost to serve. We are looking at ways to optimize through automation, robotics. Our business looks a lot more like a manufacturing business than it looks like a construction business.
I spent 20 years in commercial construction before I started this group in 2008, and we have modeled it more like manufacturing than we ever modeled it like construction, because we do the same thing over and over again, just happens to be out over 20 sq mi, but we are doing millions of modules. We think about automation, where automation works, and we are doing autonomous pile driving on projects alongside of manual pile driving because we can optimize the crews that we have.
We are still hiring 650 people for a job, but we can get more production out of 650 people because we are using autonomous module installation and autonomous pile driving. Those autonomous crews might work three shifts a day, and our manual crews and manned crews work one shift a day. But we can get more production and complete projects faster, which ultimately drives down the costs.
David talked about cost to carry, that is real, and so if we can finish early, they can deliver energy to their customer early. That drives down costs. While costs are being pressured in every way, I think I know from the execution side, we are looking at ways to help mitigate these cost increases. I am not saying they are going down by any means. I am saying we are trying to mitigate.
Bigger project that can even be done in a shorter timeline and more automated and so on and so forth.
Sure.
If you took a trailing market that was 35-40 GW, you really see the EPC side better than anyone. What would you say that upper limit might be if we are looking a few years out? Is it the market can handle 50-60GW, assuming the demand is there, which it seems like it is, and that we can get all the product necessary?
Yeah, I think we-
Is there an upper limit to that market?
No, I think we saw 50- 60GW coming. I think we saw projections, if we looked at way back into IRA projections and other things, that we were sitting in that 60GW scale. I think demand is there. I think that the supply chain is in better position than it's ever been. I think if we sat back five years ago, we had supply chain challenges. I think Dan has done a great job of scaling his business. I think that we're positioned to deliver. There's an operational efficiency that's happening as well. As projects are getting larger, we can get. Think about what I need is, I need skilled management, superintendents, foreman level to manage a project. If that project is 200 MW, I need that group of people. That group of people can now manage a gigawatt project.
I don't need five times more of those people. I need a percentage of more tradespeople. I need maybe a percentage of more junior people doing tasks because of the scale of the project. That's where a lot of the efficiency is growing in this market, is just that we could not grow at the scale of gigawatts annually if I was doing it at a 200 MW chunk.
I can grow my revenue significantly because for every 200 MW project, I'm now putting in a 400MW project or a 500 MW, and with a couple of gigawatt projects that drop in there, too. So, that's where a lot of the scale efficiency is coming. Without just sheer manpower, I would have to.
Larger for same.
Yeah. Larger for same, which is, I think, in everybody's business model, much more efficient.
David, what's your limiting factor in your business? Is it financing, safe harbor? We discussed a lot on the product side in general. You've increased the scale of DESRI. We could see it through the numbers that we can find from public data sets.
The capital markets are strong. We go to the project finance market. This year we'll raise about $10 billion. It's maybe not the best market of my career, but one of the better markets. There's some pretty good depth in that market, so I'm not worried about the capital side. A little harder on the tax credit side, but I don't think that's a binding constraint. I think we can buy as much trackers as we need to fulfill. I think we can get as much EPC as we need. So I don't think it's those constraints. We probably run into two challenges, Moses. It's just human capital. Every one of these projects, you got to underwrite correctly. Every single one of them, we have 15- 18 FTEs spending 30% of their time for six months getting design right, getting financing, getting an independent engineer, getting legal.
Just a little bit of human capital. That's probably one. Then two, there is a growing market, but I don't want everyone to think that everyone, any price, any time, go ahead. That's overstating the demand. Demand is there, but demand is there in sort of two buckets. One, the hyperscaler will pay the price they want if you get them a data center. If it's just to buy renewable power, that's their price plus a dollar. I tell the team, "ESG is dead." Nobody cares. Nobody cares about anything except for, "Did I get my data center built?" Then there's the usual utilities I've got to buy, but they've got to be cost-conscious. So, Moses, I think there is demand.
We're in a lot of discussions. I'm positive on demand, but I don't want people to think you walk out $70, no $80, no $90. I wish it was that good. It's not. I think it's a little bit of good underwriting, it's a little bit of human resources and a little bit of do you have the projects that are ready for development? I'll just hit one point. The 90%+ of the projects that are built go through the interconnect process. We have a project in PJM that George built for us, in Ohio. We have an expansion to that project. In PJM, that meant you go through a fast-track process because our interconnect costs are less than $5 million. So expansion in a place we have a site that we have a less than $5 million of upgrade costs.
We started in 2019, we'll be online in 2029.
By the way, that's not that uncommon. I mean, that's long, but there is a real process. Interconnect takes time, permitting takes time, development takes time, shit goes wrong. All of those things, Moses, just constrain how fast you can now go. That's why when I hear data centers were putting it up in 12 months, other than maybe Texas, that's just not practical. These just take time. It is often a two to four year permitting process. The interconnect process is usually three to six years, some of it is just constrained by the natural course of time. MISO 2022, we're a big player in the middle of the U.S. MISO 22 has not given you your full interconnect.
We expect to get our full interconnect in 2027. They often have to build upgrades. So that's a seven or eight-year process from the time you started just to get your project online. Those are all constraints.
No, that is fascinating. Yuri, if you take that commentary on customers, especially you built the business originally from the SREC side. I am sure you have some insight into how contracts are designed in that sense, the value from the energy, from the credits, et cetera. Speak to us about the VPPA market.
Sure.
David, you could have as well, but what do you see in the VPPA market? How is that changing? What does that mix look like over time? Is corporates going to continue buying in Texas if the value of the solar without the battery, pre-battery, could drop to 35, but they will still sign a contract at 60? These are some of the things that confuse us when we look at the market.
Yeah.
How do you see the value of solar and then the value of solar with battery and the type of customer evolving?
Yeah. So, I agree with David that ESG is dead, but I think that is because ESG was a terrible terminology for what most of the corporate America is doing.
It's not the tagline of the BNP.
It's-
At conference.
ESG was a screening tool for stocks. It's a misnomer. Just take it out. It's sustainability goals. Those aren't dead. David, I might respectfully disagree with you. They are just in the background of a hyperinflationary decision-making process, which is data centers because that's what they're being told to do. When you actually talk to people at Microsoft or Meta or Amazon, really any of the hyperscalers, Anthropic, OpenAI, they're not talking about sustainability if it's dead. They are talking about focusing on data centers at scale. I do agree with David that you have to prove that your project was going to enable data centers. Generally, that's done with combining solar plus BESS because in markets that are traded and non-regulated markets, you need capacity to site your data center.
That's a big reason why Dan has gotten into batteries is because they enable what is a huge economic I think it was like 48% of all economic growth in the U.S. last year was AI related or something like that. You guys know that stuff better than I do. I don't believe that their goals are dead. I do believe that they are looking at the Venn diagram of where can we meet these goals and where can we enable data center growth? They're doing data centers all over the country. We're in the process of signing a PPA in Texas. I don't think that energy prices are going to go back down to $35, just to be absolutely clear. I don't know that anyone in our space believes that. That's just not what's happening.
You can't build new energy on top of old transmission distribution infrastructure and expect it to be $35. It's never going back. I think we will be competitive. I do want to say one constraint for our industry and for any industry doing infrastructure right now is community opposition. Someone asked me, I was talking to someone from OpenAI the other day, they said, "Is that good for you guys or bad for you?" I said, "Oh, it's terrible for us. We're going through the same thing you're going through. You're doing data centers. We're doing solar. It's really, really hard." It's also really important that we change the way we do what we do. Actually, I think the answer might be a little more complex than that.
I think as you saw with OpenAI and New Mexico, they were going to power Stargate with natural gas, then they were going to power Stargate with Bloom Energy and natural gas, I think, because that's how Bloom works.
Yeah.
Now they're going to power Stargate with solar. OpenAI was not a leader in sustainability. Anthropic was ahead of them, and Meta and Microsoft and Amazon and Google were all far ahead of those two. It is part of what their messaging needs to change to, which is a respect for communities. What our company does is we do far fewer projects than David. David's a monster. He's awesome. We probably do about half of what you do, David, maybe. But we do smaller pipelines, but we try to do fewer projects and do them really, really well with the community. I think there's a lesson in that for data center developers as well, which is you have to shift your whole focus to we're building infrastructure in partnership with the communities we're in.
When you ask what the constraint is, that is one of the biggest constraints for our industry is we have to start building smarter and more thoughtfully on the ground because we're building massive infrastructure as this industry scales, as data center industry scales. Those pieces of infrastructure, those projects influence, they change communities. So you either have to embrace that and say, "We're changing the community. How are we going to do that well?" Or you could ignore it at your own peril. I do believe that's one of the biggest challenges we have as an industry is adjusting to that new norm because that's not going back anytime. Actually, that's never going back. We're all adjusting.
One more from me before we open it up to the crowd here. George had touched a lot on innovation. In some sense, a lot of these answers really touch on innovation. Dan, I know I am going to get this question from people like, how could you not ask Dan about where we are on bundled product? Doing more both to help the customer, to help the install, to give an umbrella warranty around it perhaps, make it one-stop shop. Just give us a sort of mark to market. Everyone follows this rather closely, but I always want to hear where you are on this strategy.
Yeah. Well, it really comes to serving these projects, giving George something that installs better and faster, giving Yuri and David something that produces more energy and is more resilient to things like hail. What we did was our strategy when I founded the company was start with trackers, become global leader. We did that for 11 consecutive years. We have been global leader and U.S. leader in trackers. But then start to add these adjacent things, not just to add slices to our revenue and earnings pie for investors, which is great, but to deliver more value to customers by having a more integrated, optimized solution. I will give you a few examples. So, 10 years ago, there were a lot of easy sites being built in easy soils. A lot of the projects are on difficult ground, like on rock. George is at SOLV Energy.
They are a super user of us in that. So we acquired a company that had over 50 patents with a large machine that the operator loads a part in and the machine, in a fully automatic way, goes to exactly where it needs to go, has a hollow screw that drills through with a rotating hammer drill, blows dust out, and sets a screw in a fully automatic way at exactly the right position that provides predictable productivity on a very difficult site and reduces cost and machine run. We acquired that company a few years ago. We integrated it. We are building gigawatts of that today. But then once we acquired it, they had a version that was like a Swiss Army knife. Oh, it worked with any tracker.
Well, we got our head into it and we are like, "Hey, we are going to optimize this." We took the key area of this foundation tracker interface that had 17 parts, and we were able to reimagine and reduce that to a single part. So that radically sped installation time, reduced our costs significantly, provided more velocity to that product line. Similarly, we are doing that in the electrical area, in the inverter area, in the battery area, and we are actually making frames for solar panels. Which sounds like, why would you do that? But the reason is that the interface between the solar panel and the structure is very critical. By doing that, we can radically, over time, reduce the installation costs, provide a more reliable product, and provide domestic content, which helps, again, the owners achieve their domestic content goals.
Acquisitions in and of themself are great for financial reasons, but what is the most exciting thing is when you can co-optimize and land with a better product that installs faster, reduces cost, and is more resilient to extreme weather. Do you have time?
Sorry. Go, George.
I think this is where industry does really well, because our teams and Dan's teams have worked together through the years to come up with what are We are not a product company, we are a services company. But what we do know how to do is deploy product. With the close relationships and feedback, we are able to say, "These are things that will help us deploy. If you can adjust your product by X, we are going to deploy it faster." I think there is really a good feedback loop in areas within this industry to able to help optimize. So you are building a better product that is serving us, you are serving the industry with a better product, too.
I think those things are really unique, I think, in this industry, is that we really want to advance the overall product and industry and deployment, and where we can help, we are working together.
Yeah. The reason we've been a leader at Nextpower isn't that we've got better ivory tower people. It's that we listen better.
Yeah.
That's right.
Actually, George and DESRI were like, "We need a tracker that follows the terrain. Bulldozers are bad." George dragged us kicking and screaming to develop a product that did that, and we did it seven years ago. Similarly on the hill, every meeting starts with, "What are your issues?" David told us, "Inverter, inverter. Those are my three issues." Okay. I said, "Gulp. Okay, that's hard," a few years ago, "but we're going to do it." We took on this inverter thing, and I'm so glad we did in light of all these executive orders. Building in the States turned out to be a good thing.
Great. Soon enough, they're just going to call George, call Dan, panel company. You'll be all set. You wouldn't have been-
That is the easy button.
Yeah, exactly. Let us open it up to the floor. I am sure there is a mic walking around, so please do not be shy.
Hello. Sorry. I will just speak louder. Thank you for that. Are there any states in the U.S. that you would rather do business in?
The question- Yeah. We have projects in 24 states.
Repeat the question. Is there any states you'd prefer to
Prefer to do business or don't prefer to do business?
Yes.
We're in 24 different states. Things that you like in a state, a permitting regime that you can follow.
Okay? I use Minnesota, they do an outstanding job. They want professionally done development, and it goes through the Public Service Commission. It's about 18 months, and if you do your job well and you treat the community correctly, you're going to get a permit. About a decade ago, maybe more, we went to the state of Vermont. It may take you seven years and you're still not going to get your permit. So not that excited about Vermont, excited about Minnesota. George is going to care about where you can get labor. Where will labor work? Where will labor have less constraints? So those are things you think about in the development, and of course, you think about where the demand is. There's not that much renewables going on in Montana. There's obviously a lot in Texas.
We try to think about where can you get your permit in some reasonable environment. By the way, if it is too easy, that is not that attractive either, because then all of our competitors go there. So where you can get your permit, an environment where they want power, and that you can build at some reasonable cost. There are some states that are very challenging to build, and therefore, makes your cost to deliver power very high.
Is Texas too easy? We see some-
We do not do anything in Texas.
Okay.
Nothing. Because Texas is just way too easy. I am talking about ERCOT Texas, not MISO Texas.
Just too easy. Everyone can go there. You can get your permit in three weeks. You can get your interconnect in a year. It's great for the rate payer, but it makes it very challenging to make any money because it's pretty commoditized.
Less here.
That's too easy, yeah.
A bit shy crowd.
Yeah. Everybody shy? Asked all their questions. Wow.
Well, I am going to continue with more then, in that case. AI power, we dance around it. David, before you threw in a comment where you are like, "We cannot just run to 70GW, 80GW, 90GW." Would you have thought that we would have been in an environment of 50- 65GW, depending on where we are now, right? I say that in the context of AI power because if the demand continues to move, not where the demand seems like it is today, on just a forward basis on one to two years, but if we see demand continue to move, energization of the data centers, not just their peak, which batteries kind of help, is that an environment that you would have expect that you might be surprised? I really pose this to anybody here.
Well, in 2016, we did 16 GW in solar, and that was a big year. Okay? But a couple things have improved. One, a typical module is double the size. They are building much bigger sites. So over some measured period of time, you can certainly get to 80GW or 90 GW, but Moses said, "I do not want to minimize the transmission component of this and the interconnect side." So you need the infrastructure for that to happen, but if you do that, you can, because actually, land is not the issue. It is the cheapest form of power. Those are all positive. Certainly we could be in a world in that, but that could not happen next month because the infrastructure is not ready.
Is interconnection going to be a limiting factor to the scale of the industry in general to make it go down even? Could we be in a world where we are sitting here in the 2030s with or without ITC because we could always price against it, transmission needs to be built out even further from the grid. One of the negatives on solar is energy density. But even with batteries, a Texas market goes from 3-5- 8- 10GW , maybe it peaks at 12GW or 13GW, 14GW a year, and then it goes down a good amount. Would we be seeking new territory? What is your view in the 2030s? This is really for everyone here.
The view in the 2030s in an environment where grid integration becomes the bigger difficulty for additional solar, additional wind, additional battery, but the value could still be there relative to base load technologies that are very expensive.
Solar is going to look really different in a place like New England, Vermont, for example, Massachusetts.
New Jersey.
New Jersey, than it is in a place like Illinois or even Indiana or Arizona or New Mexico. I think we think of this as this sort of monolithic thing, which is how's it going to look? Interconnection's absolutely going to slow solar down in places like New England, but so is public sentiment, because it's a dense part of America. I think we need to think of the portfolio approaches depending on geography, and my sense is that we will evolve our T&D route the country to meet the needs of solar and the electricity needs and demand needs of the customer. But yeah, we're not going to build 400 MW projects in the middle of Massachusetts. That's just not going to.
Maybe you will find we will be building in TVA. We do not build that much there.
Well, in Massachusetts they will have rooftop solar, and they will rely on hydro, and they will rely on gas. So there will be a mix, but yeah, it is going to slow things down in some areas. In many areas, I think most areas, we will plow right through it.
Storage is going to play such a meaningful change in this as we have talked about how are you going to optimize transmission. When you think about utilities are thinking about putting storage on every substation that they own, right? We are already seeing this in Southern California. There are challenges with transmission. SCE has already come out and said, "Our plan is to put storage on every one of our 1,000 substations." It was part of our thesis on why we went out and got a urban energy services company with Roberson Waite , an acquisition we just closed, is because they have exposure into that business. Our traditional business, we deploy a lot of solar, a lot of storage.
Almost every plant we build today has storage on it, but every plant is land in an airport, drive four hours in the middle of nowhere, and that is where we build our projects. We do not have the expertise to go into urban environments and build in that densely populated areas. It is just not the same workforce. We went out through acquisition, recognized that this is a growing part of the business when you talk about transmission. We have a transmission company as well, and we are building transmission in many areas of the kind of southeast, southwest. We also recognize that Spartan Renewable Energy is not going to build into urban centers. What we are going to do in urban centers is do battery storage. So batteries are going to change how we look at solar deployment in five or 10 years, I think dramatically.
I jokingly say sometimes we are a solar plus storage company today. If I sit here 10 years from now, I might say I am a storage-
You stole my next phrase.
Right
We are going to turn into a storage plus solar business.
I-
ITC included, because you still have that.
David, we never talked about storage years ago. Now we spend a whole bunch of time talking.
Totally right.
Yeah. Moses, I think also we've really been focused on the U.S. today, but there's also things to learn from other countries. So at our company, Nextpower, we're actually serving 45 countries today, and we've announced a major acquisition, which is closing shortly, called Zimmermann in Germany. They're one of the largest providers of solar power solutions in Germany, and they're going to bring us 15 additional countries in Europe that we're not currently serving. The reason I bring them up is Europe is very similar to some of the challenges Yuri mentioned in the Northeast, and they've developed alternative ways to build. For example, we've been on the structure side historically, a tracker company. Well, they have some really cool fixed systems, which are like sawtooth systems, which face east and west, which radically improve site density. So you can get a lot more.
We're seeing the efficiency of the solar panels has skyrocketed. It's doubled over the last 12 years and it's going to go up, continue going up. But this company we're acquiring is also the leader in Europe in floating systems.
[inaudible]
Which is kind of a weird, wonky application. Electricity and water, they do not mix really well, right? Well, they have engineered, this particular company has done 450MW of floating systems. So you have a lot of water treatment facilities, reservoirs, things like that, or places that you would not otherwise think about putting solar. There are solutions as we go forward. The main thing is I just want to take stock. In the first half of the year, the U.S. Energy Information Administration, 85% of the capacity brought online this first half this year was solar and storage. Costs are going to, basically, we are going to see the technology keep evolving, manufacturing capacity keep expanding, and we are going to keep innovating and provide solutions to keep growing out. But there are very poor alternatives. Once you get past gas, there is not a lot to choose from.
We are going to be a big part of the mix and figure out how to work as we have over time in undulating terrain. We solve that hail, solve that soft soils, we solve that. Now we can work in even floating systems and very high density. We are going to keep innovating to be able to serve solar over the long term.
Brilliant. That is a really helpful note, apropos. Thank you everyone for joining. Thank you, gentlemen. Really great panel.
Great.