The trucking industry operates on razor-thin margins and highly optimized schedules. Think free delivery from click to your door in 4 hours. Decarbonizing that kind of industry requires more than green intentions—it requires a highly reliable solution that drives real economic value. In the push to electrify large trucks, we often focus on the vehicles. But this roll out requires industrial scale access to electricity in the context of an often challenged distribution grid. My guest today is Patrick Sullivan, CEO of EV Realty. Building on decades of renewable energy development experience navigating electricity grid constraints, Patrick and team enabling EV semi-truck rollout today. We discuss the coming wave EV trucks, realities of the freight supply chain, and how EV Realty is building a network that works for the bottom line, local communities, and the broader climate.
The trucking industry operates on razor-thin margins and highly optimized schedules. Think free delivery from click to your door in 4 hours. Decarbonizing that kind of industry requires more than green intentions—it requires a highly reliable solution that drives real economic value.
In the push to electrify large trucks, we often focus on the vehicles. But this roll out requires industrial scale access to electricity in the context of an often challenged distribution grid.
My guest today is Patrick Sullivan, CEO of EV Realty. Building on decades of renewable energy development experience navigating electricity grid constraints, Patrick and team enabling EV semi-truck rollout today.
We discuss the coming wave EV trucks, realities of the freight supply chain, and how EV Realty is building a network that works for the bottom line, local communities, and the broader climate.
Links:
Chad: I am Chad Reed.
Hilary: I'm Hilary Langer.
Gil: I'm Gil Jenkins.
Guy: I'm Guy Van Syckle.
Patrick: I was talking with the, the CEO, who's the, the third generation. And he looked at me, he's like, dude, he's like, I live here. I live in San Pedro.
He's like, I breathe this air. He's like, we need to do this. And this is a guy who runs a drayage business. This is not a sexy. AI startup. He runs a 25 truck regional trucking company based in San Pedro, California. And like his straight up answer was, this is the air my family breeds.
Guy: The trucking industry operates on razor-thin margins and highly optimized schedules. Think free delivery from click to your door in 4 hours. Decarbonizing that kind of industry requires more than green intentions—it requires a highly reliable solution that drives real economic value.
In the push to electrify large trucks, we often focus on the vehicles. But this roll out requires industrial scale access to electricity in the context of an often challenged distribution grid.
My guest today is Patrick Sullivan, CEO of EV Realty. Building on decades of renewable energy development experience navigating electricity grid constraints, Patrick and team enabling EV semi-truck rollout today.
We discuss the coming wave EV trucks, realities of the freight supply chain, and how EV Realty is building a network that works for the bottom line, local communities, and the broader climate.
Guy: Well, Patrick, thank you so much for joining us this afternoon. To kick it off, would love it if you could share the through line from your work in renewables development to co-founding EV Realty and what kind of really drew you into the fleet electrification opportunity.
Patrick: Sure. Well, guy, first of all, it's, it's good to be having this conversation.
I would say that the aha moment in many ways for this business came directly from my experience in. Renewables development in some ways actually direct related to a pretty large project that. My former employer, ClearWay, worked with you guys on in, I think it almost was over a three year period starting in 2019, but yep, it was a series of now operational wind and solar assets from ClearWay where ClearWay owned the land.
And realized that once you had this really valuable and income producing, long-term contracted project being built on that, that there was an opportunity to unlock value with partners on the underlying value of the real estate. For me, that was, I frankly, I think for ClearWay, that was a little bit of an eye-opener, but that was one of the aha moments, which is, wait a second, the actual dirt underneath the energy transition is itself valuable.
And then the other through line that I think really directly related to starting EV Realty. Companies like ClearWay and, and its predecessor, N G's. Renewables business grew through acquisition. So as the, as the head of the development team, a lot of my work, my team's work was evaluating early stage development portfolios from other developers, which really meant you were looking at, uh, four or five legs of the development stool and saying, were they solid?
Could you envision a project there? And the one that mattered most was. The grid connection when you plugged that envisioned wind solar battery storage project into the system. What happened? Uh, what happened physically at the substation? Were there upgrades to the poles and to the wires? And then from a market perspective, by the time that electron got delivered all the way to the customer, was it worth 50 cents on the dollar?
Was it constrained? Was it sort of less valuable to the buyer? And so companies like ClearWay and and others really developed a very sophisticated way to assess and frankly model the transmission system such that when we did look at acute position, whether it was when we were thinking of entering ourselves or associated with a project we were acquiring or diligence in.
We had the ability not just to look at sort of the physical impact to the system, but the market pricing impact, the impact to downstream generation projects in the queue, and to the point where we actually go back to the utility and or, or to the regulator or to the ISO and argue on term, say, no, no, you modeled this wrong.
If we size the project this way, that doesn't need to be built. We can optimize within this substation. And we got really good as a company about finding ways to use the grid as it existed today to plug in more power plants. And so the real light bulb that went off in 2021 was now you're seeing this sort of inverse problem.
You have all of this load growth, and it's on the distribution system. It's up the totally other side of the electrical grid, but. It's in known areas. It's where, in the case of BB Realty, medium and heavy duty fleets operate domicile. It's along critical freight corridors. It's around ports and intermodal facilities.
If you could develop the same tools, means and methods to assess that aspect of the grid, and instead of looking at it as a way to plug in a power plant. Flip it and say, where can you model the grid? Really down to the feeder level, to the distribution substation level, to the transformer. Within that substation level, you can find areas on the grid where it's easier to pull power, and therefore from a time to power time to market, you not only can develop projects quicker, you can do so at lower cost.
And those were the two aha moments as, wait a second. Dirt has value under this stuff, and in the case of finding power where it exists already, we flipped it on its head. I just
Guy: love that example of. Taking the learnings from the solar, the storage, the wind side of things, and applying that to this next wave of decarbonization solutions.
And I really think it's like an example that can be a model for a bunch of different industries going forward. So love what you're doing there and certainly grateful for your efforts back in the day. ClearWay and those projects working great now in Hasi portfolio. So. Patrick, when you're looking at EV Realty and you're looking to explain what you do to a non-energy friend, what's your kind of simplest description of what you do and why it matters?
Patrick: So this is, uh, a question. I'm, I have a 6-year-old and a 9-year-old daughter. Uh, and so I have, first of all, they think daddy works at EV reality. Um, so it's ev ev reality. It is a reality, but I work at EV reality, but obviously my daughters have grown up ev native, I'm on my fourth ev and so the way I describe it to my 6-year-old in particular is.
That is building the biggest Tesla supercharger station you've ever seen, and it's only for trucks and that seems to be flavors of, that seem to be the way that to a non-energy person. Most people at this point have seen a big EV charging station. Yep. Building those at true industrial scale power, plant size, scale.
And for fleets, and again, I have an EV native 6-year-old and she's like, oh, cool. This is gonna be a really big Tesla, the supercharger.
Guy: That's great. That's great. Yeah. I've started to see kids toy trucks and cars starting to be converted to ev so I think that's a good sign of, of where we're headed more broadly too.
Patrick: I will say there's, I was disappointed. I, I took my kids recently to Disneyland and there's the cars ride at California Adventure Uhhuh. Yeah. Which is still diesel. Like if there was ever an opportunity Yeah. Right. In California to switch that ride to electric vehicles. Um, that was absolutely going through my mind as I was standing line.
Guy: Absolutely. Alright, next up for us, when you're looking at the deployment, scaling of electrification, decarbonization of fleets. And you're thinking about kinda main bottleneck at this point. Is it truck availability? Is it distribution capacity to the sites, total cost of ownership to truck drivers?
Something else, what, you know, where do we stand today?
Patrick: So in some ways, guy, it's all of those things and it's others as well. I would say the biggest bottleneck to this adoption, really taking off and scaling. In most ways can be summed up as incumbency, put aside electrification or EVs at all, and just think about the trucking and sort of freight logistics industry.
It is, first of all, uh, heavily commoditized business. There's a ton of competition amongst carriers. Obviously, you and I haven't paid for shipping in. Sort of the thought of somebody charging you to get your Amazon become anathema in society and trucking businesses have operated in. Heavily commoditized, very predictable ways over a long period of time.
And electric trucks, electrification, the concept of electric fuel are all new and in some ways disruptive changes. And because the business and sort of the supply chain around how. A box comes from China onto a boat, into a port, onto a truck, out to a warehouse, then to other warehouses, then to us, because that has been so finely tuned, the thought of changing that is a challenge for our industry.
And so I would say incumbency risk is the biggest. The least bottleneck certainly for us is the availability of power. Okay. That has been frankly, sort of a, a red herring and a somewhat convenient, uh, scapegoat for folks. Um, certainly across our portfolio, like we own five properties just in California.
Every single one of them has all of the grid connected power we need without upgrades or onsite generation. And we figured out how to find those places where trucks want to be, where they are, where they go. Over time that'll change. Like you're not always gonna have that, but I absolutely do not see that as the constraint.
Guy: That's great to hear. And, and even in the context of, you know, we're hearing all the data center challenges on securing load or uh, distribution capacity. Uh. That hasn't necessarily trickled in your realm yet, or, or how's that looking?
Patrick: I would say it has absolutely trickled into my realm, but there really, first of all, when you think about data center load growth and vehicle electrification or industrial load growth, generally.
Data center load growth is happening on the transmission system at the Bolt power system, and electrification in particular. Transport is happening exclusively right now on the distribution system, and while there are implications and two systems are completely connected, the load growth from data centers has affected our business in so much as it has in some ways overshadowed.
The load growth coming from everything else and the fact that the distribution system versus the transmission system is much more riddle, is much more diffuse, um, and has in very, very locational pockets the opportunity to be underutilized or massively constrained. And so they are associated, but there's sort of two ends of the system that right now from a competing for the kilowatt hours.
Not really an issue. Competing for the mine share. Competing for the regulatory focus. Competing for the utility investment upgrades. Absolutely.
Guy: Yeah, that's definitely a helpful distinction there. And uh, I think people in many ways are sleeping on the wave of demand coming on the electrification side of things.
So
Patrick: to get back to your question though, the other one, which I do think has been. A challenge, but I think there are real, very, very clear opportunities and, and signals that that challenge will be overcome is the availability, the price, and the performance of the heavy duty vehicles. When you think about, again, I I said my, my kids are ev native.
When you think about the electrification of passenger vehicles 10 years ago when I got my first Chevy Bolt was, uh, sort of, they were new and novel and weird and somewhat goofy looking, and you've seen this. Steady sort of drumbeat of, uh, both progress on the battery cost of the vehicles, range of the charging.
We're. Seven years behind on the heavy duty side. Right. Um, the, the Gen one, gen two products out there are not great. The products that are coming both from the legacy sort of truck manufacturers, and importantly the disruptor Tesla, are materially better from a cost, from a performance, from a battery range, from a charging, uh, and certainly what you're seeing outside the United States like it's.
Really impressive, the capabilities of electric trucks outside of the United States, so that will eventually be solved. It is currently a model.
Guy: Got it. And when you're seeing kind of what's next up on the deployment side of the vehicles and that gen three, maybe for the audience's benefit, kind of the distinction of the, the trucks that you typically serve, whether those are the big, you know now, EV 18 wheeler types or kind of your more mid-range vehicle, how do you think about the target vehicle that would be coming to EV realty sites?
Patrick: Sure. So today we are focused primarily on medium and heavy duty commercial fleet vehicles. So at our first, uh, fleet charging hub site, the majority of the customers will be class eight tractors. So these are the big electric semi trucks that, um, can sort of pull a 53 foot standard trailer and a 40,000 pound load.
We also had medium duty customers. You could think of those from a vehicle perspective as. Delivery vans and service vehicles that are pickup trucks or box trucks or sprinter vans. And increasingly we're seeing opportunities for light duty commercial fleets. Mm-hmm. Um, those would not be fleets matched to our first sites.
Our, our first projects here in California are very, very focused on medium and heavy duty freight transportation. So really thinking about the local and regional goods movement and supply chain in the case of Southern California, that's Princip Lee. Export out to the Inland Empire and from big warehouses to smaller warehouses.
It's not really last mile routes, and it's not. Long haul trucking. Right. This is all very, very focused on regional and local defined route-based trucking.
Guy: Got it. And that, that's the, the term there is drayage, right? Between ports and warehouses. More than just drayage. More than just drayage
Patrick: truck. Yeah.
And in fact, well, I think the drayage truck community here in California, fortunately based on a lot of the support from the state. Has been, uh, where you've seen a lot of the initial turnover to electric vehicles, which makes sense for a few reasons. Number one, the drayage trucks are the oldest nastiest, polluting trucks, like trucks go to drayage to die, not where you put a, a diesel efficient diesel truck.
Um, and so there's a real opportunity from a mobile source submissions. Number two, they drive relatively short routes. I mean, a drayage truck a heavily utilized drayage truck is maybe 40,000, 50,000 miles a year. And so they right now make sense for those duty cycles and the, the capability of the battery.
We have drayage customers. We are also an, an increasingly more focused on larger. Regional trucking companies, they may have drayage operations, but often our customers have dedicated long-term routes with specific shippers. Shippers were delivered good to their customer. The drayage is part of it, but we're really thinking about regional and and local trucking.
Guy: Got it. Got it. That's helpful. Those regional trucking companies, contractors, they basically. Work on behalf of somebody like an Amazon or a Walmart or a PepsiCo. Is that right? There's sort of the, the intermediary there that's, that's moving their freight.
Patrick: Yeah. There's a couple of different models. So, uh, and, and not to get too into specifics about sort of the, the, the trucking and transportation.
Sure. Although, guy, I'll tell you one of the best parts about starting EV Realty. I love learning new things and I've been a solar and wind and battery storage guy for 18 years and I've gone to school on freight logistics, supply chain trucking. It's fascinating, but the customers that we're working with, the carriers either have long term, so regional trucking company A has a three year contract with Pepsi and they are moving under a long-term contract.
On dedicated routes goods for Pepsi. It could also be somebody who is a regional trucking company who works through brokerage businesses, so an Uber Freight or some other sort of logistics broker where the broker is matching 6, 12, 18 month contracts from shippers with a trucking company who then will have a dedicated route.
Uh, and then occasionally we are working with company owned fleets, and we have a couple of those on our site. So these are trucks that are company owned and only move back companies goods, and there's a smaller subset of those, but those are food and beverage companies, beverage distribution companies, obviously the company that delivers a million miles a day and other examples like that.
Yeah, there's various different flavors of these, these trucking and transportation companies.
Guy: It was super helpful and super fascinating to get that in a snapshot of the, this whole realm that we rely on so heavily, but rarely. Think about how my Amazon package got to my house in three and a half hours.
Yeah. I didn't, this is, this is
Patrick: perhaps my ignorance going into this, but, uh, I followed now a number of. Professors and, uh, PhDs who like have focused on like trucking economics and supply chain logistics nationally. It's like this is an incredibly sophisticated and optimized supply chain network that we're trying to disrupt.
Hence my comment about incumbency. It does work right now. It can work better. We can save customers money, we can unlock new routes, but we're disrupting something that is highly optimized.
Guy: What's motivating your prototypical customer? What do you think that customer is going forward? Why are they shifting electric?
What's compelling them? Exciting them about being a leader on that front and partnering with the EV Realty team?
Patrick: It really varies by customer and frankly, it's changed over the last year in particular. And, um, I think, uh, we can all acknowledge that the political environment that. Companies like mine are operating in that trucking companies are operating in is dramatically different than the last three to four years and.
You don't hear. And frankly, we started this business not assuming people would do this because it was quote the right thing to do, or they wanted to pay the green premium. The best run trucking companies, publicly traded trucking companies in the United States operate at like 5% net operating margins.
Yep. These are commodity. This, so we, we knew you weren't going to sell the dream, the hope, the save the planet. That said, we have seen sort of reasons from customers range from, I can make more money doing this. The combination of the subsidies on the truck to make it competitive day one on a price point versus diesel.
Plus operating cost means in a commodity market where freight rates are set by the clearing of diesel, if you can operate below the price of diesel, you either can charge less and win more volume, or you can charge the same and get more profit. And so there are increasingly, that is the vast majority of customers who are doing this is 'cause they're seeing like, oh wait, I can do this and actually improve in my bottom line.
Then you have the customers for whom, uh, on the large end companies like Amazon and Ikea and Walmart and Microsoft and other leaders they have made and continue to abide by their public commitments for decarbonization. They're doing this globally. They see the economic benefits outside the US and so they're doing it here.
And then the story that I love and I, I will, I will keep the company name out of it, but it is a drayage company. It's a family owned, third generation business. Uh, and I was talking with the, the CEO, who's the, the third generation. And he looked at me, he's like, dude, he's like, I live here. I live in San Pedro.
He's like, I breathe this air. He's like, we need to do this. And this is a guy who runs a drayage business. This is not a sexy. AI startup. He runs a 25 truck regional trucking company based in San Pedro, California. And like his straight up answer was, this is the air my family breeds. Um, and that's pretty cool when you still have that.
Um, but the vast majority of customers like it has to make dollars and cents. Um, it cannot be a premium product. It can't be a feel good story. Um, it really has to be economically driven.
Guy: No, and I, I think that is. Again, what's really compelling about it? There's a rigor that comes with when you're dealing with 5% margin businesses and delivering them value, and then they can recognize the, you know, really significant local community benefits associated with that.
And you have that, that tailwind of not only addressing, you know, kind of the broader climate dynamics, but really on the ground air quality in these communities. That's plagued so many folks for so long.
Patrick: It is, I mean, one of the things that I'm often asked guys like, why did I. Choose this. Why did I choose to try to figure out how to decarbonize transportation ultimately from, from, from my values?
Like that does matter to me. Yeah. Um, like cleaning up our environment is a core value of mine. But really when you, when you think about it sort of more practically, we're not gonna decarbonize our planet on the backs of the power sector alone. You and I have seen. Phenomenal growth in renewables over the course of our careers.
Um, we've made a dent since I started, I started in 2008 in renewables, so the stat goes back to 2005. Maybe predating me a little bit, but what, what We've taken out 35% of the carbon emissions in the, the US power sector over the last 20. One years and over that same period of time, emissions from transportation have gone up.
Mm-hmm. They're a third of GHG emissions Nationally. Yeah. Almost 40% here in California. Like that's the next wedge. Like it's, and it's gonna happen way sooner than like small modular nuclear reactors or other cool stuff that we need. But when you think about the wedges to tackle, it was. Blatantly obvious to me that this one was next.
Guy: Yeah. Maybe zooming in a little bit on the customer dynamics and how you actually kind of book up. It's helpful to get the breakout of, of the different folks in the ecosystem, what does that kind of contract with the customer look like? Are they coming to the site spot charging? Are they tuning into longer term contracts?
Patrick: I'll start with a little bit of the philosophy and the through line for how we're building this business. You know, based on your experience with ClearWay and obviously has, he's experienced generally. The reason renewables took off is number one, cost competitive with the incumbent fuels or better, and then long term bankable contracts that unlocked.
I forget now. I'm rusty on my stats. I'm, I'm four years removed the Gigawatt Club. Now I'm in the kilowatt club soon to be gigawatt. We're getting you there. We'll get I'm, it's, I'm moving it to the megawatt club. Alright. Alright. We're gonna get to the gigawatts, but I forget what the annual US project finance market is for renewables, but it's 1820 $1 billion.
Yep. Of, of project finance projects, we are looking to build a business model where eventually, whether it's on an asset or an asset portfolio basis, they are supported by long-term recurring customer contracts such that you can really unlock infrastructure capital. That's how we're gonna, we're not gonna scale this on the backs of venture money or.
Really expensive private credit. And so as we have thought about signing up customers, a few things. Number one, our sites are not public truck stops. You cannot just pull into our site and charge, and that is very much by design. Um, these are meant to be extensions of a fleet's, logistics, and dispatch operations.
Our sites are usually not for a single fleet, so we will sort of bring multiple fleets onto a site. They're all under contract with us. They all have, these are gated, fenced with all sorts of technology to get in. They know where they're supposed to go, and typically speaking, we have two, maybe three different versions of customer contracts.
Our core customers today are customers that are actually basing their electric fleet operations out of our site. And so they are taking multi-year contracts for both parking and charging, and they are running their vehicles through what really are dedicated chargers of theirs. And, and this is some of the details of the way we optimize our sites, but they have access to certain amounts of power, so they're really able to.
Effectively rent the space, reserve the power. And as much as they use it, they drive down their costs. We're not just passing through a markup on a retail kilowatt hour mm-hmm. Because we're not aligned with our customer. Every, every truck they charge, we just keep making more money. We want our, our, our customers to really prove the thesis.
So our core customers right now are domicile at our sites under multi-year contracts where they physically have a mini depot. Within our facility, we also recognize that's not the only use case for trucks and in particular, when you think about the Southern California freight supply chain, you really do need to be able to add.
Additional range, additional routes to an electric truck. So you think about a truck that doesn't live at my site in San Bernardino and maybe lives in Port of LA or Port of Long Beach to get all the way out to the Inland Empire and back requires. Charge right now with the trucks mm-hmm. That are out there.
Mm-hmm. So we're able to provide range extension or long route charging. We do that through super high powered MCS Chargers. These are pull through stalls. Those would be sort of a kilowatt hour payment, but they are reserved. And again, it's sort of this gated access concept. And then increasingly what we're we're seeing with some of the larger enterprise customers is.
How can we block out certain amounts of kilowatt hours that they commit to use? Uh, and then structure sort of contracts around that. You could think about this guy as taking early steps towards a take or pay contract structure mm-hmm. In renewals. Mm-hmm. But a lot of our mindset has been, you can't turn this into a PPA.
Our customers have wheels. They're real people, they're truckers, they're moving boxes. They can choose to leave, but we have to figure out how to put some contract certainty around this, and that's how you unlock catalytic and lower cost capital with scale.
Guy: Now I think leading from that perspective on how do you ultimately bring down the cost to all involved as efficiently as possible by thinking ahead on those contract structures again.
Definitely Sounds like you've taken a lot of the learnings from your, your past and layer them here, which is super
Patrick: try to but but also recognize that those are biases. Um, and this Yes, of course this is a totally like. Try using the word power purchase agreement for regional trucking company. Like what are talking about.
Yeah,
Guy: yeah, yeah, yeah. Leading with some humility as well about, uh, all there is to learn about pretty impressive industry on its own. We touched on this briefly, but when you're looking at evaluating particular sites, right? Mm-hmm. And evaluating distribution capacity, kind of where you place them, what goes into that process, any kind of snapshot that you can share would be great.
Patrick: Yeah, this is one of the areas that I'm most proud about with our business. When we started, one of the very, very first things we did, as I mentioned, companies like ClearWay had really developed this ability to model, map, analyze, scenario, plan around the system, and then use that to engage on terms with customers, with PTOs, with regulators, ISOs.
We built a really interesting software tool that takes in all sorts of data. Grid data, customer data, real estate information, routing information, pricing information around freight lanes, a whole bunch of other things. And now increasingly actual customer data. And that is how we find our sites. We're not just like driving around in concentric circles, near warehouses, looking for vacant land.
And in some ways we've built probably the most, uh, sort of under marketed value of this business is like we've gotta. A tech stack that allows us, we're five for five in a state where everybody else is there no power? Like, yeah, I'm not having that problem. And that's because we built a proprietary software tool to really enable that.
I mean, we have two full-time data scientists on our team who are doing nothing but really helping us. It's not looking for the needle in the haystack, it's moving the, Hey, that's been our approach and continues to be our approach.
Guy: I love it. And then. Congratulations is an order, not surprising, but congrats again on the $75 million series C recent raise.
What do you think, you know, those investors see in your model that maybe the broader market is potentially missing about the EV charging opportunities? Obviously some, some headwinds for the industry at large, but seems, you know, again, to be able to raise in this market really, really impressive.
Patrick: Well, thank you.
And look, you are right. This is a brutal market for early stage and growth stage. I don't know if they're called energy transition companies anymore. I consider myself an extension of the trucking industry, but the fundraising environment has been challenging and to see NGP Step Up and, and Greenpoint as well now who have been investors with us from the start.
Is a really good sign of affirmation of what we're doing. I think the reason that NGP led it is a few fold. Number one, I think it comes down to our, our core business model, which is, um, and we've talked a lot more about the trucks. Those are my customers, but I'm a developer through and through and when we thought about building a development business around this space.
Not only did we realize the land had value, but we realized that if you actually own real estate, that itself is income producing. The day you buy it and you don't overpay for it, you have an asset base upon which to build. And then when you have the customers, when you have the demand, that's when you build, you don't build on spec.
Mm-hmm. You don't build on land you don't own. 'cause you can't take 70% of the investment with you when you leave and you earn income while you're waiting, so to speak, to go vertical. I think the main reason that NGP and and Greenpoint continue to be supported is they, they understand the fundamentals of our business.
It's got a, an asset base, a downside revenue protection, uh, sort of a put, if you will. And it allows investors to be patient. You're not just playing the utilization game. Um, you're building, uh, real estate book of business that you're eventually going to develop into higher and better use. And I think that was fundamentally.
The core. I think the other is, uh, and NNGP in particular has made a couple of really interesting pets around this space. Global relief infrastructure. The, the data center developer is, is, is one, but these guys fundamentally see the intersection of like. The value of industrial land, the electrification of everything and persistent grid insufficiency as being themes to invest against like what the utilities are always going to be behind the infrastructure is always going to be a constraint.
You can figure out how to build durable asset based business models around that nexus that there's a real opportunity for value creation.
Guy: Yep. Yep. I believe you're in the interim kind of using these sites for industrial storage and Yeah. Correct. We've
Patrick: got, uh, large mega customers, uh, under long term contracts, parking and storing trailers and trucks.
We've got construction logistics lay down. Up until recently we had a, a company, uh, parking excess cars that they hadn't sold on one of our sites. Mm-hmm. So it's not sexy businesses at all, but it helps to sort of. Extend and, and, and lessen the cash burn. Mm-hmm. Creates income and then provided you didn't overpay for those income streams, right.
You're owning a industrial or commercially, appropriately zoned asset that you can sell for value.
Guy: Sure. Super compelling. And I think, uh, a level of realism around it. I love it. And then another congratulations here, the, the partnership with Prologis. I believe I was reading a stat the other day that 2% of global GDP flows through their warehouses.
So certainly, uh, a behemoth as it relates to the real estate side of things and logistics side of things. Maybe could you just give us a sense of how that partnership works, what you're excited about there?
Patrick: Yeah. Uh, thanks for asking. That's another area that I think our team is, is really proud of. And you're right.
I mean, Prologis is the 800 pound gorilla in the industrial warehousing and sort of logistics business. I mean, the stats I've, we, we know Prologis quite well and I've developed a, a really strong relationship with Henry Holland who leads their mobility business. Mm-hmm. You could cut it 11 different ways, but it is incredible what flows through those warehouses out, out to consumers across the world.
I mean, yep. The rooftop space alone, these guys know it's just insane. But what we are specifically doing with them, which I think is, or to. The way we approach building this business, I am not a world conqueror. I do not think we are going to build a global fueling network for all of the trucks and capture 90% market share.
I realize that I'm trying to create a durable niche in a very, very interconnected global logistics business. You do that with partners, and you do that by sharing in the benefit, so what Prologis and EV Realty have announced and, and what we're actually doing in, in the real world in Southern California.
They have a mobility business. They're building, both charging at their warehouses for their customers. They also have a handful of third party hubs, depots like ours. We're linking them. We're linking them such that a Prologis customer can drive onto an EV realty site, use the charging with absolutely no sort of authentication, additional payment, additional onboarding, and vice versa.
And when you think about that from the perspective of our shared customers, now a customer switching to an electric truck immediately has across two companies. A network of charging options, and maybe they domiciled their truck at my site, or maybe it's domiciled at a Provo site, or maybe it's just parked on their lot, but all of a sudden you're offering them a network.
And what we're doing in the backend is making sure that it's seamless and interoperable. The language speaks. What's crazy to think about this guy is like. We all take for granted now that like public and passenger EV charging generally speaks well, it's getting better. It's sort of, kind of, yeah, some do.
It's like, nobody's done this. Everybody thinks they're gonna build their own walled garden, right? It's gonna be, I'm the only company that's gonna do this. I'm like, the reality is. We've, we've gotta create, whether it's an actual network or in our case, a partnership network where a customer can access multiple sites in a seamless single bill coordinated fashion.
Absolutely. That's how you get scale. Absolutely. So that's what we're working on. And uh, that's both in Southern California as well as in Northern California,
Guy: which is. I think that shows like a customer focus and an appreciation for people who just want a smooth time charging confidence that they can get between various depots and simplifying for that.
Them, I, I'm confident is highly appreciated.
Patrick: You, you mentioned Will as a, as a fellow Cila. Yeah, but Quins our, our head of products and operations, he's amazing. Will's sort of mantra. It just has to work. Right. Yeah. Like I was a Tesla owner for three years. Tesla superchargers just work. You don't just work how they work.
There's no credit card, there's no screen. You just plug it in and it works. We aspire to get to that for our customers and not just on our sites.
Guy: Yep. Well, grateful, uh, will is on your team as Rose is over there. So please tell those, uh, friends from CLII say hello and, and thank you for their good work. We touched on this briefly before, but would love to hear about your engagement.
With local stakeholders and educating folks about these depots coming to their communities in many ways, addressing some really systemic, multi, multi-decade issues around air quality associated with diesel trucking, but also considering that a lot of these communities have drivers and truck donors that, you know, are seeing this as a very significant change to how they might be operating.
Can you maybe walk us through what, what type of engagement's going on there and, and what type of feedback you're getting?
Patrick: Sure. Um, and, and this guy is absolutely where I credit my education at companies like NRG and Career ClearWay. All development is local and the best laid plans, the coolest, great connection, the slickest financial model, if you ignore the realities on the ground and don't develop that sort of coalition of the willing around the physical asset and a permitting process and the benefits not just to your project, but to the community.
You're missing the point. Um, and so my co-founders and I very purposely built a true development team around that, which means that from a engagement with the cities where our projects are, it has been nothing but positive. And I, I'm not just saying that, uh, the city of San Bernardino, the city of Torrance, the city of Livermore, um, like these are jurisdictions that.
In all three cases, we were literally first past the Post Livermore. We were second past the Post. They had seen me be charging before and they were open-minded and engaged and asked good questions, and ultimately we were able to get what we needed from the city. Through all three of them, first of a kind.
That's not uniformally gonna be the case everywhere you go, but what I think is different and San Bernard is perhaps a great example. It's literally Truck city, USA, it's all trucks. Um, and the air quality, I mean our West Mill site. Is in the 98th percentile for Knox and the 99th percentile for particular diesel emissions statewide.
Just wow, nasty. The city of San Bernardino is obviously not going to completely kick out. Trucking. They, that's their, their economy is around warehousing and logistics in the intermodal facility. For them. This is a huge benefit that our customers stay and their community benefits from there. Yeah, and I've seen that message really resonate.
I think it also comes down to the physical locations and how you engage with your neighbors. And again, in these places, their. Industrial communities and coming in with a level of humility and understanding of sort of how the tax base works, whether it's sort of hotline issues, what has been the, the, the challenges in the past.
If you don't do that, you're really setting yourself up for a challenge. And I think fortunately, guy like. I don't know. First time I permitted a community solar project in Minnesota. There was no statute for community per for permiting. Sure. Yeah. This is not my first rodeo in terms of like Right.
Convincing a jurisdiction that like this is a new thing and no, you probably shouldn't view it as a gas station and make me permit it like a gas station. Right, because it's not a gas station. Yeah. It's totally different. Ah,
Guy: well that, that is great to hear on engagement there and how you're really.
Connecting with the, the community and you know, maybe looking forward here, obviously you've had success on the initial five sites in California and some partnerships there and scaling would be curious, you know, what you think about when you're looking at next markets up for the Howard Properties model and, and scaling the EV Realty solution.
Patrick: Yeah, a couple of different things that are, are, are really exciting that we're looking at. Number one, we do believe that we are able to offer. Our customers an economically compelling alternative, meaning they either make more money doing the same or do more, and taking that outside of California is super exciting to us.
Whether or not it's all power properties led, meaning like we're out buying real estate in advance of customers is to be determined, and that has a lot more to do with sort of the value of real estate in other parts of the country versus. The value of it here in California or places like New York or other coastal grid constrained high real estate cost purchase.
But I see enormous opportunity in Texas for great electric trucking, um, especially with the Tesla Semi, and that will be a near term market for interesting new realty. What is it about Texas that, uh, so a few things. Um, number one, when you think about the Texas Triangle and you think about, and, and again, I, I really try to start by looking at the fundamentals of the logistics and freight market first.
Mm-hmm. You have a lot of two-way freight flow between Dallas, Houston and Austin in particular between Houston and Dallas. You have major rail intermodal facilities headquartered principally in and around the Dallas metro area, and those are both the major north south intermodal. Obviously with. We'll see what happens with the tariffs.
But if you believe or continue to believe, Mexico will be a significant import and manufacturing hub for, for North America. You've seen all of the rail companies, and frankly, a lot of the trucking companies invest in, in cross border. Mm-hmm. Mm-hmm. Pretty close. And so the dynamics of being a trucking company in Texas, you're almost never running empty miles, especially if you're going back and forth between Dallas.
True. Right. Which means your revenue miles are productive and. Whereas on a single charge with trucks that exist today, nobody could get from Houston to Dallas or vice versa on an electric truck that exists today without sort of charging, being somewhere in the middle. Mm-hmm. It's no longer the case with the Tesla Semi and some of the next generation vehicles.
Such that you can really make the economics work on a revenue mile basis, frankly, almost unsubsidized in Wow, Texas. Right? A little bit of subsidies on the truck will help, but it's a massive bidirectional or three-way freight flow. And with the range of these new trucks like. Came on and coupled with super interesting competitive energy market.
So think about, yeah. Yeah. California cost is totally different structure. Yeah. Um, but your ability, I mean like we're working with customers where if, if their ambitions. In places like Texas are real, you're talking about 14 to 18 gigawatt hours of annual ev charging load for a single fleet. Like that's huge, right?
And, and that gives you a really interesting ability to have a conversation with retailers in Texas. Surround structuring energy prices that work for that fleet.
Guy: Absolutely fascinating. Well, that makes sense, right? Texas has now overtaken California on the renewable side of things. And maybe next up on the trucking side,
Patrick: we'll also, uh, markets like Washington State, New York, Illinois are very much on our radar for all markets outside of California.
We're gonna follow our customers. We want to work with customers who see the economic benefit and where they do. We're gonna be right there.
Guy: That is certainly the Hasi strategy as well. Always follow the clients. Always follow the customers, and we touched on it. Just a dash there. But as we wrap up here, Patrick, how do you find your zen with all the craziness, uh, around policy and tariffs and every other, uh, you know, rule, uh, under discussion these days?
So, putting aside all of my bad habits, I'm not gonna talk about, uh, uh, aside
Patrick: from that,
Guy: habits that help balance us out, you know, you know,
Patrick: I would say a few things. Number one, uh, on the good habits side, I run anything that allows me to empty the tank, clear my head, be outside. That's how I've stayed sentence since I was.
16 years old and realized I was a pretty good runner. So that's primarily it. I would say more sort of around the noise, the churn, the political ups and downs. Frankly, the tariffs is really what bothers me the most. 'cause it affects my customers most directly. Right? The rest of this stuff, it ebbs and flows.
Where I get Zen is, uh, and I said this before, I say this to my team all the time, this is not our first rodeo, right? Mm-hmm. Like we are building a long-term business. The long-term trajectory is clear and remains clear, and like whether it was the extension of the cash grant, that's how long I've been in renewables in 2009, or the various sunsets of the PTC and the safe Harbor Bingo that we all played, Uhhuh.
Now two recessions, including the great financial recession that I entered my career into. Like I have some perspective that we're playing a long game here. And the challenge to that zen is how do I share that with my team? How do I translate that to my customers? Because we're all overwhelmed by just the barrage of.
Information and negative news. Um, so the, because then I haven't found is how do I live that? Mm-hmm. I feel it. I believe it, and I've built a successful career over a couple of cycles. But how do you live that is the continuing challenge.
Guy: Wow. That is, that is the eternal question. I think we're all working on that one a little bit.
And then to bring us home, what's something that you're particularly proud of about ev Realty's, uh, work to date and the team's efforts more broadly?
Patrick: I would say that I am proud of the fact that our eyes are not bigger than our stock. I think that one of the reasons that we are sort of freshly capitalized under a full underwritten five year business plan at this point is because we started.
Logically and small and you get Guy, you and I were emailing back and forth about the sort of less hat, more cattle, and I have really developed that mantra. I can't lay credit for it. One of the amazing wind developers who worked with me at ClearWay was the soon introduced me to that particularly, this was when we were in Montana and he was orienting me around like, which ranchers are for real?
But I am proud of the fact that as a company, we've tried to be a lot of cattle and not a lot of hat, and to have real things to do.
Guy: I love that. Well, Patrick, we'll leave it there. I appreciate you so much for all the good work you're doing, scaling here, exciting times ahead. Certainly.
Patrick: Yeah, I appreciate this was a, a really fun conversation.
Guy: If you enjoyed this week's podcast, please leave us a rating and review on Apple and Spotify. It really helps us reach more listeners. You can also let us know what you thought via Twitter at ClimatePOSIpod, or email us at climate positive@hasi.com. I'm Guy Van Syckle and this is Climate Positive.