In this episode, host Gil Jenkins speaks with Tim Hade, Co-Founder & COO of Scale Microgrid Solutions – a New Jersey-based company that designs, builds, finances, and operates distributed energy assets that are cheaper, cleaner, and more resilient. Tim talks about his journey since founding the company in 2015, how customer demand for resilient energy solutions is evolving, the intersection of EV fleets and microgrids, the merits of cogeneration technology, his perspective on energy security as a U.S. Air Force veteran, the prospects for federal climate legislation, and much more.
In this episode, host Gil Jenkins speaks with Tim Hade, Co-Founder & COO of Scale Microgrid Solutions – a New Jersey-based company that designs, builds, finances, and operates distributed energy assets that are cheaper, cleaner, and more resilient.
Tim talks about his journey since founding the company in 2015, how customer demand for resilient energy solutions is evolving, the intersection of EV fleets and microgrids, the merits of cogeneration technology, his perspective on energy security as a U.S. Air Force veteran, the prospects for federal climate legislation, and much more.
Links:
Scale Microgrid Solutions on Twitter
Scale Microgrid Solutions on LinkedIn
Episode recorded: April 8, 022
Email your feedback to Chad, Gil, and Hilary at climatepositive@hannonarmstrong.comor tweet them to @ClimatePosiPod.
Chad Reed: This is Climate Positive – a show featuring candid conversations with the leaders, innovators, and changemakers driving our climate positive future. I’m Chad Reed
Hilary Langer: I’m Hilary Langer.
Gil Jenkins: I’m Gil Jenkins.
Tim Hade: In a purely free-market way, we are going to transition to 100% renewable energy because it is the cheapest and best way to provide power to people. The problem is time. We have to solve this faster and if we're going to solve it faster than the free market can solve it, we need Congress to step up and provide the springboard to accelerate the transition.
Gil: In this episode, I sat down with Tim Hade, Co-Founder & COO of Scale Microgrid Solutions – a New Jersey-based company that designs, builds, finances, and operates distributed energy assets for cheaper, cleaner, and more resilient power.
Tim talks about the journey since founding the company in 2015, the new and interesting customer demand they are seeing for resilient energy solutions, the intersection of EV fleets and microgrids, the merits of cogeneration technology, his views on clean power and energy security, the prospects for federal climate legislation, and much more.
I’ll admit that I was pretty intrigued by what Scale Microgrid Solutions was up to before we taped this pod, but I had no idea I was going to meet such a driven, passionate and articulate young leader when we taped this. Tim is a righteous dude, and we had a rich discussion. While my voice was croaking a bit from getting over a recent cold, I hope my enthusiasm still comes through in the interview you’re about to hear.
Hilary: Climate Positive is produced by Hannon Armstrong, a leading investor in climate solutions for over 30 years. To learn more about our climate positive journey, please visit hannonarmstrong.com.
Gil: Tim, welcome to Climate Positive.
Tim: Thank you guys so much for having me, big fan.
Gil: I want to get right into it. Scale MicroGrid sells modular microgrid products to commercial industrial customers. For the uninitiated, could you break that down a bit further? Give us a bit of color on the business and what you guys are trying to accomplish?
Tim: Yes, absolutely. I think when we started the company in 2015, the number one thing we were focused on was modularity. Basically, what we saw happening in the market was the use case for distributed energy resources was growing exponentially, but one of the big barriers to actually deploying distributed energy was the customized nature of the average project, certainly in the commercial industrial space where we spend our time. As a result of the customized nature of the average project, soft costs on the average microgrid were really, really high.
The amount of time and complexity that went into it, both from the engineering standpoint but also from the customer standpoint, were a really big barrier. The initial thought was, if we can just build these things out of Legos, that's going to reduce soft costs and make it a lot easier to deploy these projects for a whole group of people that currently don't have access. I think we've been fairly successful in doing that.
In the process of the last six years, what we've really figured out is that, in order to be a successful micro grid company, we had to get good at other things beyond technology. Right now, the way we're basically structured, we call ourselves a vertically integrated micro grid company, but that basically means that we took the technical side of it, the legal side of it, and the finance side of it and brought it all under one roof, in the hopes that the synergies created by those people working closely together, were going to help us streamline project development and get projects done faster.
That's very much a work in progress, but we're getting better at it every day.
Gil: Let's talk about demand. Where are you seeing demand for microgrids and resiliency, broadly? What's driving that? I imagine the last two years have been interesting, but give us some color on demand.
Tim: I think right now, there's three big drivers in the market and a lot of different groups of folks that are getting interested in microgrids and distributed energy more generally. The first driver, and the thing we focus the most on as a company is resilience. Perhaps unsurprisingly, where we see the biggest demand for those types of projects are regions of the country that have experienced grid reliability problems over the last few years. California is the fastest-growing market for us right now.
That's largely correlated with wildfire mitigation, and public safety, power shut-offs. We can talk more about this. All of the things that utilities are forced to deal with right now that they haven't traditionally been forced to deal with, which is resulting in a lot of unplanned outages, which is a material threat to businesses across the state. We're also seeing a lot of demand in markets like Texas. They had the freeze in February of 2021 that took their grid very close to the point of no return. A lot of demand coming from that state as well.
The Northeast market has been a strong market for a long time when it comes to distributed energy. One of the reasons we started this company, and I think one of the turning points for a lot of people in the Northeast was Hurricane Sandy or Superstorm Sandy in 2012. I think New York, New Jersey, Massachusetts, and Connecticut, states like that have been on the cutting edge of this type of stuff for a while and that continues to be a strong market.
Then increasingly, we're looking at a lot of island opportunities, so Puerto Rico, the Caribbean, more generally, Hawaii, which has always been the flag bearer for distributed energy, those types of states are really hot markets for distributed energy right now. Then I think the second big driver of customer demand is ESG stuff. It's hard to quantify this. Over the last few years, I think you've seen a real turning point amongst certainly publicly traded companies with respect to how they're thinking about sustainability and climate impact over a long time horizon.
The sustainability benefits that come with microgrids and distributed energy deployment are really appealing to a big segment of corporate America right now. Then the final thing is energy economics. Electricity prices are going up. More specifically, transmission and distribution charges are going up. One of the interesting things about I think energy economics right now is it's getting cheaper to produce kilowatt-hours, but more expensive to deliver kilowatt-hours, from the point of generation to the point of unused consumption.
That basic structure is exactly the use case for the economic benefits of distributed energy. I think at the end of the day, for most people in the United States, for most businesses in the United States, energy costs are still a relatively small percentage of total operating costs. I think resilience is the number one driver. Sustainability is the number two driver and then there's a little bit of a lag and then there's economics, but the economics of these projects have to work and they do in a lot of areas of the country.
Gil: Let's talk about customers. I was fascinated by your partnership that you announced earlier this year with the electric bus maker, Proterra in Santa Clara Valley transportation authority to charge 34 electric buses with a solar power microgrid. Really, I think showcasing seems like that's a perfect match for the future of transportation, microgrids and EV fleets. Could you talk about what that project means?
Tim: EV fleets are maybe the best use case for distributed energy I've ever seen in my career. If you look at the basic trend that's evolving, fleets are going to be electrified. The train has left the station. I think most of the major fleets in the United States or at least the major commercial fleets have already announced that they're transitioning to electric vehicles and the timeline for companies is different.
Some have a five year trajectory, some have a 10, some are 15 to 20, but it's definitely happening. I think the driver of that is the auto makers. There are fleet vehicles, electric fleet vehicles available right now that deliver a better value proposition to logistics companies, delivery companies, people who manage fleets than comparable internal combustion engine vehicles. People are going to buy these vehicles.
The next problem becomes how do you charge them? I think that's really where people are starting to run into a lot of problems right now with electric infrastructure. One, there's just a system wide problem of these fleets require a lot of power. In places where you traditionally haven't had a ton of load, you're now adding 10 megawatts, 15 megawatts, 20 megawatts of needed capacity.
It's really difficult for utilities to accommodate that, really almost impossible for them to accommodate that on a quick basis. Time is actually a big factor in getting these things done, where people are going to require these vehicles, they need to have the power to charge them. They can't get the power from the utility. You got to make your own power, but then I think the resilience point is really important here as well.
Which is if you're going to transition to electric vehicles, especially if you're a mission critical fleet, you can't stop operating or searing your customers when there's a power outage. Inherent in coming up with an infrastructure solution for the electric vehicle space, you have to think about resilience so that when there's an outage, you can continue to serve your customers, do mission, critical business, that type of stuff.
Then when you look at the economics of these deals, especially the role that stationary storage can play in compliment with utility and some vehicle to grid stuff and a lot of nuanced things that are happening in the space right now, the economic value proposition, and the end use customers really attractive in a lot of cases. I think you put all those things together and microgrids are a no-brainer to support EV fleets.
I think that's the conclusion that a lot of independent fleet operators are coming to. Then the challenge becomes, how do you build it? If you think about this from the microgrid standpoint, there aren't a lot of microgrid companies that understand the automotive world very well. Conversely, there aren't a lot of automotive companies that understand the microgrid world very well.
I think that was the basis of our partnership with Proterra. As we came to the table and said, "Look, at a high level this makes a lot of sense, but we don't know a lot about electric buses and you don't know a lot about microgrids. Let's just put everything on the table and see if we can figure out a solution that works for everyone." I think the VTA project is our first attempt at doing that.
I'm really excited about it. I think once it's built sometime next year it's going to be a real reference project and a real signal to the market that this is a really good way to do this, but we're continuing to evolve design, we're continuing to work together and figure out how our technologies can complement each other.
In general, I think that spirit of collaboration is something that permeates clean tech right now. Something that I actually really like, where we're all trying to solve the same problems at the end of the day. We got to figure out ways to work together in order to do that.
Gil: Certainly in the case of California with the VTA, there's a healthful policy tailwind as well. Isn't California requiring a 100% EV for public transit authorities by 2040? I always think of the analog to the renewable portfolio standards, as we see more of these states and localities have those standards. That's huge for driving this market.
Tim: Yes, absolutely. The State of California has been huge in making this happen. In addition to some state legislation that's helping from a top down standpoint, the California energy commission gave us a big grant to build this project. Without that, I'm not sure we would've been able to get to balance all shareholder interests.
The State of California is a really great partner in this. I think ultimately their belief that this has to happen for climate driven reasons is permeating a lot of these decisions. Look, there's no secret that the energy market is essentially a public private partnership. Right?
I think one of the things that we've found is that when you find state governments specifically that are willing to be open-minded and work with you to try to accomplish innovative things, that's the best case scenario.
That's definitely one of the things we think about when we're talking about what new territories are we going to expand into? Where are we going to do business? One of the key criteria is, what does that state look like?
What programs do they have in place? Is the administration open-minded to new things? That's a big differentiator. I think something that a lot of entrepreneurs in our states have to think about a while.
Gil: We're going to come back to policy later, but just staying on customers, I saw that you and your co-founder Ryan were in Arizona a couple months ago for the Greenbiz Conference, which is the big gathering of all the corporate sustainability types.
All of these corporations have net zero goals. That's certainly been helpful for the clean energy market. What were those conversations like this year with respect to the microgrid solution? Anything surprise you?
Tim: Yes, I think one of the things that we're trying to figure out internally is how does ESG work? One of the reason that I think that specific Greenbiz event was great, is it brought the clean tech community and the ESG community together to have a lot of these conversations.
Look, I think from a long term standpoint, the conceptual idea of ESG is not only great, but it's necessary. We have to price these types of externalities into our market dynamics or else we're not going to succeed in mitigating climate impacts.
The problem right now is that in the short term, it's a mess. Everyone is thinking about ESG differently. There's not a lot of consistency. A lot of the metrics that companies are using for thinking through decisions that they're going to make are disjointed to be perfectly honest with you. Look, I think what we learned and what we've seen, not just at the Greenbiz Conference, but in a lot of conversations with leaders throughout industry, is that the intent is there. People want to figure out how to do this and figure out how to do this the right way.
I think one of the things that's challenging about it is to some extent, when you're developing an ESG policy, you want to measure twice and cut once. You want to make sure that you've thought through like, "How are we going to do this? Does it make sense?" The downside of that is we also need to take action now. I think that's the trade off a lot of ESG folks are dealing with right now is yes, we could spend the next decade thinking through how to set up the perfect ESG strategy for our company.
Gil: It's too late then.
Tim: Yes. If you don't do anything in that 10 years, then we're in trouble. That's really where I think the ESG community is at right now is, how do we walk and chew gum at the same time? How do we figure out how to build a long term strategy that makes a lot of sense? But also do a lot of work over the next decade to make sure that we don't fall too far behind that we can't catch up. I don't think there's a silver bullet answer to that, but I do think the right people are at the table, we're having the right types of conversations and the intent is there. We'll figure it out.
Gil: Just one last customer market's question, we talked about transportation. How about other vertical markets? I noticed you're doing some work with fruit companies. Anybody with a large facility warehouse, could you talk about that? Is that market certainly California? Do you see that growth in that particular vertical?
Tim: Yes. I think if you think about it from the highest level, we're really focused on mission critical companies. I think the difference is, we have a slightly different definition of mission critical than I think the industry has traditionally had. Basically if you think about mission critical being any business, wherein a major disruption to energy is going to have a material impact on that business. Those are the types of customers that we like to talk to and like to focus on and where we think our value proposition resonates the most. Like agriculture and food, logistics has become a huge market for us and something we're spending a lot of time on. In some ways, the pandemic really taught us that logistics were maybe more important than we gave it credit for.
When we went from everyone going to the grocery store to everyone ordering their food and their groceries to be delivered and all that type of stuff, we were able to make it work. The logistical requirements of doing that behind the scenes were absolutely crazy. I think what that's caused is a lot of food logistics providers to rethink their general approach and their general strategy to how they're servicing their customers.
Also has spurred this idea that we can't just build a business that's optimized for blue sky conditions. We have to think about different challenges that are going to come up, play three-dimensional chess, and figure out how we're going to deal with those. I think that's really created a lot of interest and power resiliency in the food logistics space so we're doing a lot of work with warehouses and cold storage facilities up and down the supply chain.
We're talking to a lot of grocery stores on the retail side. We're doing some of those projects. We're talking to distribution warehouses. We're talking to cold storage warehouses. Each one of those have unique technical requirements, but I think the general motivation is the same, which is we are a mission-critical entity. We can't have operational disruptions to the grid result in food shortages to the public. We have to figure out how to deal with that. I think that's something that's been embedded in a lot of executives' minds in that industry and that's where we come in.
Gil: I want to ask a technology question. It's probably fair to say the bulk of your microgrid systems are solar and batteries, but I think you guys probably do CHP co-generation as well. What are the advantages, we're a big fan of co-gen as well? What are the advantages that people don't realize and just understand there are different thermal needs for resiliency? I always think of hospitals that need to have the steam and sterilize their materials in and out situation and co-gen I think is misunderstood.
There's a lot of electrification we need to do and certainly renewables, but they can work together. Could you talk about the importance of co-gen? It's also one of the top climate solutions, according to project drawdown. I'd love for you to talk about that as a solution in the economic and decarb benefits that I don't think is well understood.
Tim: Yes, so look, co-generation is an amazing technology. I think in order to tell its story, you have to start at a high level. Which is, unfortunately, I think a lot of climate discussions in this country and globally have become too black and white where it's either like your net-zero or you're not. Those people don't like to talk to each other a lot but the reality of the situation is that if we're going to do what we need to do to mitigate climate change, we have to think in a more nuanced way.
The reality is that the way our electricity grid works right now, there is a massive opportunity to quickly accelerate the transition to renewable energy. Over the next two decades, I could see a range of scenarios, but we could get to 70%, 80%, maybe even 90% of the kilowatt hours we consume coming from renewable energy, but there's still going to be a role for fossil assets to play in that mix.
Right now, the technical properties of dispatchable generation, which is typically the role that fossil gas provides in the market is really important to load balancing and capacity issues. A lot of other things that, I don't know, not a lot of people think about except for energy engineers, but it matters quite a bit. The question is if we're going to be in a scenario where 80% of our power comes from renewables and 10% to 20% of our power comes from fossil gas or fossil assets, it's really important to think about using that fossil gas as efficiently as possible.
Gil: Absolutely and co-gen behind the meter is one of the most efficient uses.
Tim: It's unbeatable. Behind the meter co-generation is the most efficient way to use natural gas in the electricity system today, because look, the average gas plant, the average gas Peaker plant has an efficiency somewhere between 35% and 50%. Which means for every unit of energy you put in, you get between 35% and 50% of that out as a kilowatt/hour and the rest goes to atmosphere is waste heat. Behind the meter co-gen offers the opportunity to recycle that waste heat and use it to offset gas that would've otherwise been used to produce heat or cooling or whatever the case might be and then you also minimize transmission and distribution losses. When you look on it on a net basis, the argument for co-gen is, unless somebody has a plan to get us to a 100% renewable energy within the next 10, 15 years, which again, outside of some academic theories, I don't think anyone's talking about that as a really practical plan. Then we're going to use some gas and if we're going to use some gas it therefore makes sense to use it in the most efficient way possible and that's essentially the business case for co-generation.
From a resiliency perspective, it's got a really strong value proposition. From a sustainability perspective it has a really strong value proposition and from an economics standpoint it has a really strong value proposition. The big barrier in the market right now is really more in this political spectrum where because it's natural gas or because it's using some fossil-based asset to produce electricity and heat, it's bad and people don't really want to think about it. Again, I think we probably should be having a more nuanced conversation about how we're going to get where we need to go. Look, I think you could make the argument that there's definitely a role for co-gen to play in that, which is why we like the technology.
Gil: Very well said. Thanks for articulating that. You're an Air Force veteran. Let's talk about energy security. Let's talk about national security. Let's talk about climate security. I saw the new ads that you participated in with Clean Energy for America and climate power and the letter that you published in the New York Times. Now the floor is yours, I think we should, what did you say? We should listen to veterans when it comes to energy security, so please make the case.
Tim: Look, this is nothing new.
Gil: We've had this conversation before.
Tim: For decades and decades and decades we've been talking about the national security implications of having an energy system that's overly reliant on oil and gas specifically. There're some fundamental structural problems that caused national security concerns for us. For people that are just getting into this, basically the history on this is everyone was worried about this until, I don't know, somewhere around 2005. In fact when I was at the Air Force Academy in the early 2000s this was something that was talked about all the time. At that time one of the reasons that Republicans were interested in renewable energy was because of the national security implications. The need to have redundancy against a very volatile oil and gas market that was overwhelmingly controlled by people that didn't have, let's just say, aligned values with the United States of America.
Then we figured out how to frack and fracking, 2005 to 2015 timeframe, alleviated a lot of those concerns because the US went from being a player in the oil and gas market to being the player in the oil and gas market. We basically figured out how to extract all the oil and gas we could ever need and the national security concerns phased away. We stopped talking about them, but we shouldn't have stopped having that conversation. The reality of the situation is what we're seeing in Ukraine right now today is a direct result of a global economy that's overly reliant on oil and gas and the reason Vladimir Putin is able to do what he's doing in Ukraine and commit the atrocities that he's committing in Ukraine is largely because of funding he's received from the oil and gas industry.
That has to stop. I think the difference when we look at it today and when we looked at it 15 or 20 years ago is today we have the technical solutions to wean ourselves off oil and gas fairly quickly. Whereas if you were making this argument in 2002, that was always the argument against it, which is like, "Well, what are we going to do?" The answer now is we need to transition a renewable energy. Look, I think that's a conversation that we need to be having outside of the climate sector which is one reason we need to transition that renewable energy is because of climate change.
Another reason we need to transition a renewable energy is because it's a fundamentally more secure way to build an energy system because even though there are a lot of concerns that we should talk about. We're talking about the difference between CapEx and OpEx, once you've build solar panels or once you've build wind turbines--
Gil: No fuel cost.
Tim: Yes. No one can turn that off. No one can restrict supply and make my cost of driving to work go up to X because they decided they wanted to [unintelligible 00:25:00] a sovereign democracy. There's that fundamental difference between renewables and traditional oil and gas plants that makes a huge difference in this equation. With that said though, transitioning a renewable energy in and of itself does not mean that we are not going to be at the whim of people that don't have aligned values with us.
Another thing we need to be thinking about is if we are going to make this transition, how do we do it in a way that ensures that we are not subject to the whims of dictators? Right now, lots of the solar panels we're deploying in the United States come from China. We have to have a conversation about what are we going to do about that? Do we want to pay more for solar today so that we can build domestic manufacturing plants and make sure we have the supply chains to ensure that if China wants to go into Taiwan?
We don't have to continue to buy solar panels from them or continue to buy wind turbines from them or whatever ever the case might be, or do we not? I think that discussion needs to happen. I would argue that, yes, that should be baked into our national security policy, which is we have to diversify our supply chains and make sure we're not subject to the whims of people who are subject to do crazy things, but that discussion isn't happening.
I think that's where a lot of veterans are coming from on this front to say, look, it's very, very clear that the current system continually puts our national security at risk. There's a way to change that. We need to be having conversations about ways to change that that make the problem better, and not just assume that it's going to make the problem better.
I think a lot of veterans were fired up about this because we went to wars that were at least partially driven by the need to secure oil and gas supply chains. We lost friends to those wars and to see our nation, not acknowledge that and realize that and transition past that is exceptionally frustrating. Look, I think we want people to listen to us because it's a real thing that affects a lot of people, both in the United States and globally, and not enough attention is paid to it.
Gil: It's very moving what you said. It's got me fired up too because whatever [unintelligible 00:27:25] of patriotism, we all share. This is the universal thing. This is going to happen again. We don't like these price shocks. We don't want it to be dependent on Putin or the other oil Petrol state dictators. Come on America, let's charge up, let's build it here. These strikes me, these are universal things, but in our time nothing is as obvious or patriotic as they would seem. The point is true on batteries as well. We can catch up there with some smart policy, but go ahead.
Tim: No, for sure. Look, I think if you start off with the premise that a clean energy economy is fundamentally safer, that in and of itself is a very nuanced conversation, but everyone who knows a lot about this comes to that conclusion. A clean energy economy is a fundamentally safer economy from a national security standpoint. That doesn't mean there aren't real concerns.
You think about batteries and you think about the mineral supply chains associated with batteries. I don't really like anywhere that cobalt comes from, there's huge humanitarian concerns with that. We can fix those concerns. We can address those concerns. We can innovate our way past those concerns, but that's not going to happen on accident, and it's very unlikely that the free market is going to price those concerns into the cost of goods.
That's why we have a government. That's why back to what I was saying earlier, energy has always been a public private partnership. It's, if not the, one of the most heavily regulated industries in the country and that's for a reason, because energy security is national security, and you have to think about those things in concert. Again, the free market is not going to pay an extra dollar a kilowatt for a fair trade cobalt product. That's not really how that works. The government has to step and say like, "You have to do that."
When you think about this over or the long term, there's no doubt in my mind that those types of policy decisions are 100% necessary in order to get us where we need to go from a national security standpoint, but look, it's really, really frustrating. I think one of the things that everyone in clean tech and everyone in the environmental movement more broadly is struggling with right now is in order to make that happen we need to get more than 50% of the country to believe that's the case. Everyone's trying to make this case from their own angle. I think our hope is veterans, and one of the reasons the Veterans Energy project came together to use this crisis in Ukraine to try to explain this to people is maybe talking about this from a national security standpoint, instead of a climate standpoint, resonates with a few folks who weren't on board with this prior, but look, I think when you look at it from a utilitarian perspective across the board, there's no doubt that we should be building a clean energy economy, and there's no doubt that we should be doing it a lot faster than we're currently doing it. The barrier to that is getting the majority of people in this country on board with the plan. That's the challenge.
Gil: Let's state one more policy question. The climate reconciliation package, very close potentially to a finish line. The latest is maybe made fingers crossed. May, June window. You've been engaged on this like many of us in the community, making your voice heard. Tell us why this particular climate package is so important. I think we know the clean energy incentives, which are the bulk of the climate package. Talk about that and what the need for that to really further accelerate this market to have any shot at our Paris Kohls.
Tim: I guess, to start out with I'll share a little bit of a hot take I have which is, I came out of this whole process the last year, year and a half that we've been working on the energy provisions that were originally called, the energy provisions of the Build Back Better plan are now going to be called something else. Really, really optimistic even though that in December, it looked like we failed. I think the reason for my optimism was our community, the Cleantech, environmental activist, finance, all the folks that are trying to make this energy transition happen, did a remarkable job of navigating a very complex policy landscape to get to a deal. Just for those who aren't familiar with this, the reason that Build Back Better did not pass, had nothing to do with the energy provisions. We were there and I think continue to be there on the energy provisions. It happened because of this weird reconciliation packaging process in the Senate and the fact that they tried to lump a lot of different programs into a single bill.
Our good friend from West Virginia had some issues with the non-energy provisions of that but on the energy side of it specifically, which is what we can control, it was a remarkable effort by a lot of folks. For anyone who's been in this industry for a long time, a decade ago, there's no way we could have navigated that. It was a fragmented industry, no one really communicated internally. There wasn't a lot of organization. We didn't understand how to work the hill, myself included. I remember talking to Bob Johnson, your buddy at Hannon Armstrong and asking him a lot of questions about this.
I don't know, a decade ago. We were just disorganized. The transition we've seen over the past decade has been really remarkable. The Cleantech industry is a real player in Washington DC right now. We understand how to navigate things and we understand how to get things done. I think the effort was remarkable. I'm still very hopeful that within the next month or two, we're going to see the light at the end of the tunnel and this is going to get passed by the Senate. Now with that said, the reason that Congress needs to pass this $555 billion energy package has to do with time. The reality of the situation is from a business perspective, this energy transition is going to happen. It's inevitable at this point.
Gil: It's just a question of pace.
Tim: Yes. There's nothing that can stop it. In a purely free-market way, we are going to transition to 100% renewable energy because it is the cheapest and best way to provide power to people. The problem is time. If there wasn't a clock on climate and if there wasn't a clock on some of these national security issues that we just talked about, my view would be like, "All right, just let the free market take its time and do what it needs to do. If we get there in 2050, great. If we get there in 2075, okay," but that's not the situation we're in, we're in a situation where the clock is ticking and every time the IPCC comes out with a report, everyone who reads it has a minor panic attack and it just keeps getting worse and worse and worse and worse.
We have to solve this faster and if we're going to solve it faster than the free market can solve it, we need Congress to step up and provide the springboard to accelerate the transition. In that $555 billion package, no one got everything they wanted. There was a lot of compromise. There was a lot of conversation. There are things that didn't go in there that I thought should have been in there. There are things that are in there that I don't think should be in there, but as a general rule, it is an amazing package that can serve as a springboard for the clean technology industry to really accelerate the energy transition and if you want to do this whole thing in 20 years, instead of 50 years, you need congressional action to spur that and send the right messages to the market. There's a lot in there that's going to do just that and that's the reason it's so important to get this passed.
Gil: Excellent. Let's turn to our hot seat lightning round part of the episode. The first is fill in the blank. The most important advice I have followed is.
Tim: Don't die. Let me expand on that. One of my mentors--
Gil: Please, yes.
Tim: One of my mentors is a guy named Jigger Shah who has been incredibly generous to me over the years. When I first met him, he-- I'll never forget this, he told me the first rule of energy project development is don't die. I think what he meant by that is that if you're going to pursue a career in this sector, you have to be really disciplined about taking risk. There are opportunities that come up all the time where you can bet the farm on something, but a lot of times things don't work out for reasons that are outside of your control.
If you're coming into this industry, you have to understand that this isn't like a SAS business where you can work hard for six months and then cash out. That's not how it works. This is fundamentally a hardware business and software plays a very, very important role but at the end of the day, this is a hardware business and things take time. Staying in the game and keeping going, serves me really well and that's the first piece of advice I give to new people who are coming into the industry today.
Gil: That's great. That reminds me of what our CEO, Jeff Eckel says. You can't make a difference if you're not in business. We're investing in stuff that the last decades and it's complicated and it's important and expertise matters, and you got to diversify your bets there so you can make a difference, right?
Tim: I think that's exactly right. That's one of the reasons Hannon Armstrong is so impressive as a company. I think Jeff is really a role model for a lot of folks who do what we do. I think if memory serves like the first renewable energy project he tried to do is in 1987 or something like that. He didn't accomplish what he wanted in the '80s and he didn't accomplish exactly what he wanted in the '90s and he didn't accomplish what he wanted in the 2000s.
I haven't talked to him recently, but I bet you, if you asked him today, he's still not accomplishing everything he wants to accomplish, but he keeps going. He keeps showing up and he keeps making progress, and then when you look back on that and you look back on his 30+ year career doing this, it's like, "Oh, you've changed the game." I think that's a lot more representative of what a career in this industry looks like than a lot of the stories you read in fast company about people who had an idea and were billionaires like six months later. That's not really how this works, and so it really is a long game. It's a marathon, not a sprint and you got to go into it with that mentality.
Gil: How about the word or phrase I most overuse is?
Tim: I have a lot of verbal ticks, so I'm probably a bad person to ask about this, but bring it back to the industry. I think probably the phrase I use the most is that I want to change is load balancing. I think as a broader point here, one of the things that has been very difficult for me in building a business and learning how to communicate with customers is I came at this problem set originally from a very technical place. When you actually get into the nuts and bolts of how electricity is made, it's magic, right?
It's insane, but it's super-duper, duper complicated, and I think one of the things I still find myself doing way too much is using industry lingo that makes a lot of sense to me when I'm talking to people and the net result of that conversation is they have no idea what I'm talking about. That's something that I've been trying to work on over the last few years, in terms of, how do you tell this story in a way that resonates with people who aren't experts in electricity or power systems management or things like that? I don't think I'm there yet, but that's a good example of something I say too much.
Gil: What habits from serving in the Air Force have stuck with you.
Tim: There's a lot, there's no doubt in my mind that I wouldn't be able to do what I do today without the experience I had in the military. I'm allowed to curse on this podcast. Yes?
Gil: Yes.
Tim: All right, good, so I think the number one thing I learned, is the world is a fucked up place. Look, we have a lot of problems in the United States and I don't want to dismiss or discount any of those problems. They're real. They matter to people. We should all be having more conversations about how we can make this a better country for everyone. However, on balance, this country of ours is an amazing place. I think when you go to places like Afghanistan or Somalia or Iraq and you see what life is like for people, who we don't talk about all the time or we don't really see all that much, you start to realize that we as Americans are in a unique position to make a difference in the world. When I left the military, the number one thing that I told myself is, "No matter what, I'm going to try to find a way to make the world a better place." Which I know has become a cliché thing but really matters to me, and I think really matters to a lot of people that work at our company and a lot of people that work in our industry.
The world can't solve climate change without America. I guess that's a little controversial to say but it's something I wholeheartedly believe. We have to be leaders on this issue. In a lot of ways, we have a moral responsibility to take a leadership role because we have the opportunity to do it. We have the best research institutions, we have the best companies, and we have the best economy for entrepreneurship, to exist in the world. If we don't do this, no one else is going to figure it out.
I think, ultimately, that's what my military experience taught me, is that each one of us as Americans who by luck of the birth lottery we're able to be born here and we're able to have a lot of the opportunities we've had, with that comes a responsibility to try to figure out how to maximize that opportunity. That's what I tried to do in the military and that's, I hope, what's carrying over into my professional life today.
Gil: I'm reminded of-- I don't want to cheap and how beautiful you said, like Spider-Man.
Tim: No, no.
Gil: "With great power, comes great responsibility."
Tim: Yes, that's one of the most insightful things ever to come out of a comic book. Right?
Gil: That's right.
Tim: It's 100% true. I think one of the things that is frustrating about the current level of discourse in this country is that people aren't respecting that power that we inherited and they're not using it to the maximum extent to do good things. We should be doing that. The energy transition is a perfect opportunity for us to step up and get this thing done.
Gil: Awesome. Final question, a tradition. Finish this sentence. To me, climate positive means?
Tim: Success. I'm a really results-oriented guy. I think one of the things that we need to stop doing is arguing amongst ourselves about what the right way to do this is. The reality of the situation is this is extremely complicated and there's not one right way to do anything. We just need to go. At the end of the day, the thing I'm most fearful of is we're going to spend the next 15 years having debates about how we should build the perfect energy system and then we're going to wake up one day and it's going to be too late.
We're not going to be able to leave our kids a better world than we inherited which, ultimately, I think is the definition of a generation success or failure. You think back on, why do we have such reverence for the greatest generation? Because they went and they did something that was nearly impossible. In the face of all of it, they push through and they preserved the world for democracy. That's what I think our generation's legacy can be when it comes to climate.
We can be the generation that solves this problem, but we're not on that track right now. No matter how hard we're trying it's not hard enough. This is a measurable thing. The average global temperatures are either going to go up by more than whatever metric you use, one and a half degrees or two degrees, or they're not. For me, that's what we need to be focused on, and we need to do everything we can possibly do in order to make sure that the worst-case scenario doesn't happen.
Gil: Awesome. Tim, thank you for being on Climate Positive. It was really fun to chat with you today.
Tim: No, thank you guys so much for having me, and thank you guys for what you're doing. I think this is an awesome series and I'm a big fan.
Gil: Climate Positive is produced by Hannon Armstrong. If you enjoyed this week’s podcast, please leave us a leave a rating and review on Apple and Spotify, which really helps us reach more listeners.
You can also let us know what you thought via Twitter @ClimatePosiPod or email us at climatepositive@hannonarmstrong.com.
I'm Gil Jenkins.
And this is Climate Positive.