Battery Storage in the Northeast, PJM & NYISO with Paul Reed (CEO & Founder @ RSunrise Energy)

Hello, everybody, and welcome to the Transmission Podcast. It's me, Quentin. And this week, we've got Paul Reid, founder and chief executive at r Sunrise Energy.

Paul is well, he's got fifty years experience in the energy sector in the US, but he's now very, very focused on the northeast and is a developer of battery assets in the northeast. So in this conversation, we spend quite a bit of time focused on New York, PGM, and northeastern RTOs, and the incentive structures that are there for battery developers, what that means for the business case. So really enjoyed this discussion with Paul. As ever, please do let us know what you think in the comments, and don't forget to hit like, subscribe, and all the good buttons. They really do make a difference. Right. Let's jump in.

Paul, welcome to the podcast.

Thank you. Thank you.

A very proud Philadelphian is what I'm getting already from you.

A touch. You know, born and raised and, yeah, there's local pride to be had up here. You know, when it's in the cold weather and what you know, whatnot and there's a lot of growth to be had, it's good to, you know, have that pride.

We're gonna talk a lot about battery storage, of course, in this episode. But let's start with Philadelphia. What's happening with batteries in Philadelphia other than you and your firm?

You know, there was a lot of growth here and, you know, in this region, call it ten years ago. I think a lot of trailblazing happened, the sector projects, you know, things like that. There was, you know, some some batteries were operating in two thousand eleven, two thousand twelve.

First Batteries in PJM, you know, I've been a part of companies that had a part in that. And then, you know, now seeing California and Texas grow so much while the northeast has lagged behind, There's, you know, just that northeast mentality of watching others see a lot grow. But, I'm looking forward to trying to help bring that all back around here.

The the it's gonna be BoomTown again. And we've gotta talk about you you kind of alluded to it there, your time at all, Matt, which was you spent many years at Ormat, and they had a big, big impact. So do you just wanna talk about that for a second? What what did he do at Ormat, and what did the firm do, and what what were some highlights?

Sure. Yeah. So when I joined, it was, two thousand twelve, and it was I've rated the energy. So Audrey Zibleman had, she was COO of PJM, and she left and formed this company in two thousand nine, ten ish.

I joined in twelve. It was growing close to a hundred people at the time. And, you know, early days in demand response, first battery in PJM reg d was a project we had. And, yeah, kept the company going.

Demand response software behind the meter storage, and then eventually acquired by Ormat in seventeen and, stayed on through about twenty seven, nine years overall. So was a cool story. I mean, I was the ground floor sort of account manager guy starting out. And then, by the end of the last couple years, I ran the most of the legacy business, all the demand response, the software, and, BTM storage was, was under me.

And now our Sunrise Energy, which is your company, you founded and a chief executive of, give us the lay of the land. What are you guys doing? And we're gonna focus a lot on development here. So keen to understand some trends you're seeing through the developer's point of view.

Mhmm. Yeah. And, yeah, Doug, I guess the quick gap kind of post format was, Doral for about two and a half years. So switched from kind of behind the meter smaller stuff to the super large, great scale, but, purely greenfield side of the world. Doral's pipeline now is close to fifteen gigawatts or so. And, yeah, about a year and a half ago, kinda started my own venture.

So consulting to keep the lights on, I guess, kind of, you know, pun intended, And then, raising capital and and look for projects. So both, greenfield dev, but then, you know, there's a lot of great folks in this area that have started to develop projects that are early, mid, you know, latest stage is tough post, QA form. But, yeah, I mean, the trend is, there's there's a lot of take a lot of stuff here.

Sorry. Just just to jump in, and I've got a habit of doing this. Yeah. What's queue reform?

So FERC twenty twenty three, essentially, to me is a good thing. It's, clearing the queues out. You know, for over a decade, it wasn't hard to to file a queue position.

I mean, it even used to be where you could file without land control because the tool This is good connection queue we're talking about.

Yes. Yes. Yes. Yes. Yeah. So the MISO queues, there was a lack of tools and knowledge on how to really understand what can I connect at a certain server line?

So folks would kinda just leverage the ISOs to to do that for them because it was cheap and refundable and, you know, there was very little risk. So the queues have been overloaded, to the point that PJM and New York kinda paused their queues for a couple years. But so now post queue reform, the the queues would be clearing out, leads to certain assets become available to potentially acquire. But the very least, it forms a more functional system similar to what has been there in in Texas, for example.

So the world's changed since Q reform, which was nationwide pretty much apart from Texas because it's outside of FERC.

Mhmm.

And that means that for developers well, tell me. How does that change things for developers?

Well, there was a pause. So it kinda put a stop in all, you know, all dev, at least new dev in the area for a couple years.

So folks all gravitated elsewhere. Alright? So lots of, you know, ERCOT, WEC, SPP, some MISO. But you combine that and then those pauses lead to higher capacity price of clearing PJM, for example, that triggers a bit of a signal to to come back is the mindset.

So supportive state policies, stable markets long term. Yeah. That's, you know, that's what folks are looking for. So, I guess, very tactically with QReform.

Right? So deposits, letters of credit, lot will not be as refundable as it was. So we'll lead a lot of projects becoming distressed from a from a capital perspective.

They'll have to sell. They'll have to, you know, let options go. So there's gonna be a bit of a market for transactions in the next, call it, eighteen months, PJM especially.

And then, you know, should lead to a hopefully quicker, more efficient, actually functioning queue process for the next, you know, three, four, five years.

And so if I hear you right, before the change, you could submit the the the incentives weren't there to prevent loads and loads of grid applications because the amount of credit that you needed or the amount of work you need to have done or the capital requirements or whatever weren't, well, they created a world where everybody was sticking in tons and tons of grid applications.

And then the changes come in where it's become a lot more rational, and you really have to vote with your capital and be a bit smarter about where you're applying for grid connections, and there's more capital at risk. And that means that a lot of these sites or projects are gonna have to come to market. They're either gonna have to raise money or they're gonna have to come to market. And that's quite interesting. So then what happens?

Well, you get a bit of a churn and, you know, turmoil. Yeah. But, again, the goal is to take this hit rate of about ten percent of projects actually reach NTP from queue filing. This also led to quite a growth in the the software business. Fantastic tools are out there. You know, tools like Anira, for example, and, you know, some newer players like Peak, for example. But now companies either can go out and buy these tools or build them themselves and not have to leverage the phase one, feasibility studies to know what can I connect, how much should I, you know, you know, apply with for the queue?

So, thankfully, those tools are now coming out. And, yeah, it's just the the market and smart folks coming to meet the need of a of an issue of knowing how much can I build here?

Because you can't do the scattergun approach anymore. You have to be much more tactical.

Mhmm. Yeah. The yeah. It has to be deployed very carefully.

Could we just talk about state and federal policies for a second? So the IRA or other incentives. You you sort of alluded to this earlier in what you're saying. Can you give our audience the lay of the land? It's quite a broad question, so excuse me. But the lay of the land with incentives, maybe we start with the IRA, and then the the incentives that you think are really attractive that you not to give too much of your intellectual property away, but where are the areas of these incentives that you think are really moving the needle and affect what you're doing?

Yeah. And it it's it's a neat way to kinda parse it out, you know, policy driven versus cost driven dynamics. I think with the IRA tax equity, it's made it big business, first of all. So all things election, all that stuff aside, it's protected now in ways.

It's helped to make it towards this, you know, sort of a no brainer approach and approval. You know, when you end up to collect sales of debt and equity and all that, at least you have this kind of federally backed mandate that you can run with. And then once you're within a market, you know, there's gonna be it'll be mostly pretty homogeneous on value, but that's where certain state policies then come into play that'll help attract, you know, more growth and more development in those states. And that just makes it easier whether it's sort of upfront incentives, like in New Jersey and Illinois or, New York with the ongoing sort of a, revenue certainty, you know, product that they're coming out with.

But either way, it's about upfront incentives and then ongoing revenue certainty, but that'll just attract business to your state.

So can we talk about a couple of those in more detail? Let's start with New York because that gets a, I guess, a lot of press for good reason. So what are they designing in New York?

Yeah. So the, index storage credit seems like a very, it's a very I'm a New York way to do it.

Sort of a bidding process and then Philadelphia is shining through now.

It's fine. You know, when you can speak the language too and, you know, it's a kind of thing where if your sports team is, you know, going against, like, somebody from the west or the south, like, then you're cool with them. But day to day, you're yeah. You're not for them.

But, no. It's it's it's a neat concept, and they're tying it to kind of market factors and market signals that folks in the know can kinda get a feel for. So the top bottom four hour way to normalize kinda what you should have made per year. It does seem to be there's gonna be a bit of a bidding process, and you kinda set up, like, a make whole number that you would want and need. But the very least, there's a way to provide a mechanism for folks to at least have that confidence certainty.

It's it's a risk thing. So as long as there's more policy that supports kinda risk management, that'll just lead to more capital deployment.

So how how does it actually work in New York then? If you if you in your job, you're finding and developing sites, and you have to think about, let's say, a twenty year life front of an asset, and you build a business case in Excel.

The most perilous thing to do, in any working life is putting this stuff in Excel. And so how how does what New York is planning to do impact your business case? And and how does it work in practice? Where how does it make sure that the dollars appear in your business case?

Yeah. And and I guess what's nice now is kinda looking at so many different states. I mean, northeast is, you know, twenty states when you look at the three ISOs up here. You know, it's about a revenue certainty, but for the purpose of debt coverage, really. So really what I see this mechanism is a way to provide that, you know, other percentage or project that is debt. What is my annual payment I know I need to make no matter what? And then it's about finding the right folks that are happy with that sort of upside potential.

So what I see this mechanism is is just a way to cover some, you know, downside case. Similar as, you know, you know, hedging and bilaterals and PJM on capacity. You know, taking parts of the value stack, lose that upside, but guarantee it, you're covered on debt. And then as long as you have the right folks comfortable with the, you know, merchant aspects or other types of offtake, then you're pretty well covered and you can deploy and take care of all the other odds it ends.

And when's it coming, and how much are they gonna buy, and at what price?

So New York. Right? They, set a target of, three gigs. Right? By what was it?

Twenty twenty twenty? Something like that. And then they knew they weren't gonna hit that, so they doubled down and just said, let's make it sixty, you know, gigs now by what? Twenty thirty?

But there's a lot of learning that yeah. There there was a lot of tech risk, throughout the industry that, thanks to the growth in California and Texas, has helped make it bankable. Right? There's it's it's about the boring stuff now.

Insurance, warranties, guarantees, and finance. No offense to anybody that works in that field, but it's much less about the tech now. And as long as that certainty is there and the lawyers are happy and the CFOs are happy, you know, projects will deploy.

And, so it's just it's a nice way to go about that.

When, just as an aside, I I had this big realization. I think I've talked about it on this podcast before. My old boss, when I worked at a company called Kiwi Power in in the UK, I remember him sitting I was an engineer, and I remember him sitting me down saying, Quentin, it's all very well. Banging on about the engineering, but it's the finance that really makes a difference.

I had this big realization in my late twenties.

You know, I've always thought it's the it's the technology that matters. And, actually, I think he said it was a cost of capital that matters. And I think he was, in many ways, right, but I'm gonna fight it a bit more.

Which, sorry for you, sorry, as far as engineer. What what what type of engineer were you?

So I wasn't I was an electrical engineer electrical and electronics engineer, and I did a bit of engineering. Mhmm. Did a few years at big big PLC in the UK, but I found so I loved learning I love physics. And here we go. I'm it's it's podcast about me now, but I I love the engineering and the maths and the science, and I love building things. I love that those skills.

I just found working to standards very difficult. So I found that the engineering job became someone else to to find the standards. Yeah. It's my job to fit within you know, you can be creative within these very fine defined guardrails.

And my brain struggled to do that day in, day out. So I decided engineering wasn't for me long term. And now I do this, whatever this thing is. This is what I do to this is what I my daughter says, what do you do for work, daddy? I don't really know.

I'm coming Oh, I believe it's Anyway, that's beside the the point.

Sorry. I was a chemie and had a minor in physics, and I'm with the Okay. Those guardrails. Like and now I love that we have that for this industry, though, to to pull back.

I mean, you know, all the UL, all the National Fire Code. Yeah. The last five years have been fantastic with what's happened in other states. So I think now it's more bankable to now come back to the northeast.

It's part of my investment thesis.

Yes. Although, it could be quite different if, we've got to build a manufacturing base, which we are in the US. I'm not gonna say from scratch, but it's not far away, is it? So we shall see how that plays out.

But let's come back to New York. Right? So you so New York's gonna do six gigs of grid scale batteries by twenty thirty. It sort of moved the goalposts, but that's okay.

What about the other the other incentives that you talked about there? So you mentioned Illinois. You mentioned PJM. What what what's happening elsewhere in the northeast?

Yeah. And just real quick on New York, I I I do think they've taken that that six gigawatts and they parse it out into two two two.

So two plus grid, two plus DG ish, and then two ish resi stuff or small c and I. So they are gonna try to split that up, which just leads to Jersey, for example, you know, two different incentives.

So, you know, some level I heard, like, twenty and forty dollars per a mile an hour, which doesn't sound like a ton, but at least they're gonna kinda bifurcate the great scale versus, DG scale. But just a really basic sort of upfront incentive, nice and simple.

Same as Illinois. The Jersey numbers, I do need to go back to and double check. I think it might be bigger than that actually quite a bit. But we do know as far as Illinois, it's two hundred fifty per, kilowatt hour upfront. And even paired with a PD What? Two fifty per kilowatt on the PD side.

Two hundred and fifty what? Dollars. Two hundred and fifty dollars. Okay. You get that up front.

Mhmm.

That's pretty high, actually. Yeah. Let's say it costs you, say, five hundred dollars a a kilowatt to build.

It depends on on Chinese tariffs and whatnot and and all and all sorts of stuff. Let's say ballpark five hundred dollars. Sure. That's pretty good.

They're trying to make it, you know, a, no brainer policy.

Take away all the risk for everybody so you just you have to do it. Because, again, folks are still they struggle to get comfortable with it. Takes time.

So let's talk about the inflation reduction act then. How does the IRA fit in? And as somebody who is largely exposed to the IRA, I'm sure you've been grappling with it over the last couple of years as, you know, there was a big announcement, and then there was, okay, guys. Now how do we actually implement this thing? What what what are the gray areas look like? But could you just talk through how the IRA incentives work in brief and then some of the refinements that have been made along the way that may have had a fairly big impact on you and what you do as a developer?

Sure. The the biggest thing started out was to have a guaranteed stand alone storage tax credit. Right?

In the past, had we pair with PV, charge from from PV, I guess, or when Charging the battery from PV.

Correct. So just a key key distinction for our listeners that not to jump in. Good. It's funny. We've got people in the YouTube comments who say always jump in. Maybe I do.

No. No. Please. It's better.

But yeah. So could you just explain the charging from PV thing?

Yeah. There was a sort of a set of cliffs, if you will, that if you you know, one hundred percent charge in PV, then you get the full, you know, thirty percent ITC.

And then, you know, for every percentage of charging that was not PV, you would lose a percent of the ITC, but not, like, you know, so thirty to twenty nine. So after if you're charging less than seventy percent from PV, you would lose your full, you know, storage ITC.

So the IRA addressed that by making, you know, stale and storage, you know, fully able to earn thirty, forty, fifty percent ITC depending on Of the CapEx.

So you you get thirty, forty, fifty percent back from the tax man Mhmm. For building the site. Correct.

And provided this, you know, kinda tax equity, tax credit transfer market sort of open things up quite a bit more. In the past, you were going to, you know, a couple houses, you know, big financial houses to be able to transact. And now the tax credit transferability is is, you know, much, much, better than it used to be.

Because there's a range of institutions out there that will more than happy to take that on as a Mhmm. Bit like a bond, like a fixed fixed price contract.

And then what about some of the gray areas from the IRA? The IRA, has been fairly politically divisive, and we probably won't get into the the political side of it. But what about, how developers and investors have been coming to terms with the specifics of how the IRA will work in practice?

Because it's taken a while for there to be clarity, and the the lawyers, I'm sure, have have, have enjoyed themselves all over it.

Lawyers and insurance guys. And I have some fantastic insurance folks and now, sort of a market sprung up to do the the tax equity insurance, you know, tax credit insurance, you name it. I think a lot of that is being figured out in sort of normal, you know, kind of normal course of business. I guess the bigger questions are around what does, domestic content really mean? You know, systems, subset of systems, what percentage needs to be domestically built and made.

Which is a a requirement in some cases. Right? The the thing you build is made domestically. Correct. Sorry. Just to to come No.

Of course. No. Yeah. So for that ten percent, you know, domestic content bonus, some percentage, which is still kinda being figured out, you know, has to be made in the US.

I have a hunch there's a certain individual with a company that makes batteries who has a hand in federal stuff might be able to trail blaze on that, which is hey. I mean, Bryson Tide raises all ships, and if they take it on the chin to figure it out and then other companies can start manufacturing yeah. I do have this kinda northeast PJM dream of turning the rust belt into the battery belt. I think it would be a pretty cool thing to see.

So What's that policy tagline. Yeah. Yeah. And and it's a dad mode. The the the taglines come in.

You know?

Let's let's go back to your firm, our Sunrise Energy. So so what exactly are you guys doing? What are you focused on?

Mhmm. So I've really started it just to have a, you know, my own LLC, cover, you know, consulting. Yeah. There's a lot of great folks in the DG space.

A lot of folks are doing solar for ten, fifteen years that are kinda curious about storage. So it's allowed me to to work with a lot of other great folks, local, regional players, you know, teams of ten and twenty and thirty and forty, looking at storage. So a lot of great consulting. Yeah.

A lot of growth on, again, that scale. But then the other side of it is, you know, this kind of, grid scale dream that I have for Northeast.

You know, have a have a name for the SPV. It'll be the the new face of it. So our Sunrise will kinda go to the background and then this other name, which hope to announce by the end of the month. We'll we'll do a nice launch for that, working on final capital and all that.

So the real dream is probably gig and a half, two gigs of of storage in the northeast in the next few years. Mixture of projects we'd acquire. You know, a lot of stuff is mid ish stage, so acquire call about five hundred megawatts or so. Then greenfield about a gigawatt plus.

You know, it's been nice starting this and connecting with all the local folks that, you know, you don't see in LinkedIn. You don't see in reports. But people are sitting on LAN and potential queue positions. I mean, barely sugar treating. It's five plus gigawatts of of good looking standalone projects, you know, hundred megawatts and up. You know, here in the northeast, you know, a lot of PJM.

And, so, yeah, my goal is to look. I know the next three to five years is a good time to, you know, nose to the grindstone and, rather do it for myself.

So so your background in energy management software is really interesting because I wanna ask you, knowing all that you know and having having done it from a demand side response perspective and a battery optimization perspective, what do you think about the role of optimizers or offtakers or power purchasers in the world of batteries for the northeast?

So, you know, having spent close to nine years no. I didn't necessarily work in the NOC. I was kinda in there every day. It's a I'm a network a, network operation center. Just gained a lot of physical comfort with with seeing batteries operating, you know, day in day out. So there's a couple points there. I mean, one is I love all the smart optimizers, EMS.

It's great. It fills a need. Especially in these multistate ISOs, a lot of the controls, a lot of the smarts need to sit within the four walls of the market operator. So the customized energies of the world.

Right? They see a lot of things that, sure, you can, you know, set a weekly schedule forecast, you name it. But my goal for as I go to operate projects will be to have as few hands in a handshake as possible. And then while I have a lot of, you know, comfort with, you know, merchant operations, revenue certainty and and, again, whether it's policy based or you're going out, towing agreements, you name it.

Some of the great things have happened in Texas, we can bring to the northeast as well. So there'll be a few different ways to kinda, you know, guarantee parts of the value stack, if not all of it.

But the key is strong, tight operations where, again, there's a lot of the smarts is in the same four walls and not spread across three different companies with three different contracts. That's the recipe for, not to say disaster, but a lack of upside.

So in my job, I'm I'm very lucky enough. I get to see what what happens in Europe and Australia and in the US. And it's a real privilege. And it it's good and bad.

It means that, I'm no longer really really an expert in a specific market, like I used to be when I was just in in the UK. On the other hand, I get to see some big picture stuff. And what strikes me is the difference in appetite between the US and and UK and Europe in vertical integration. So not only building you know, the skill set that's required for developing assets, lots of companies will take that through to asset ownership as well.

And then the the skill set that that that is needed for asset ownership and operations and maintenance and asset management is quite a different skill set to trading in the market or building software and technology. But, again, in the US, a lot of firms choose to do that themselves and vertically integrate. Whereas, we notice in in other markets, that's not so much the case, and people are more more willing or even if they find it more attractive to hand off that bit of the process and just be good at their little bit. And there's nothing wrong with that.

In fact, you can you can actually arguably make, the same, if not better returns by doing that, by being highly specialized.

But it is interesting to to follow, but it's an early it's it's early days, and it's an early market. And we we don't know how all this is gonna shake out. And there's some fantastic market market market access providers and optimizers out there. So we shall see. But in the northeast, is it demand side response companies that are edging into battery optimization, or are there specialist optimization houses or off takers that are popping up? Or, what what does the market for that look like?

Yeah. And it's a bit of kinda listening to the market. I do think there's gonna be a lot of growth in the DG space, that kind of five megawatt storage, solar storage community, you know, whatever.

So some of those smaller scale, you know, demand side focus folks that they have a knock, they've run, they operate, They're trying to do storage. Right? But they're kinda relying on people putting it in and then coming to them. I do think it will be a nice market for some of those players on the DG side of the world because then the folks that are incumbent on doing hundred megawatt plus projects, you know, they'll be there to to cover the the need on the, grid scale world, you know, the Tenascos and customized other worlds. But, yeah, I think there's gonna be a nice market for, you know, sea powers and and whatnot, CISO as well-to-do that kinda small to medium scale that there's gonna be a lot of growth. And policy is pushing that because folks can wrap their heads around that.

So being a developer, you have this really interesting job, which is that you have to develop the site, but you also have to sort of specify the site even though you may not be the one that builds it or or goes on to own and operate it in the future. And so you're you're at development stage, you're making decisions about the asset you're gonna build really early on because you have to with land sizes and grid connections and technical capabilities and, you know, all of the other regulations that you need to comply with.

So when you're developing sites, what what the what the critical technical challenges that you're considering in a development phase beyond the basic stuff? You know, how many megawatts and how much land do I need? What are the other things that are are starting to pop up, especially as the market is maturing and we're having more and more regulation come in, rightly so, to make sure these assets are viable and safe.

So first of all, from a mindset approach, just having that comfort of doing that experience, we actually own and operate. That's how I am approaching it, even these, you know, sort of greenfield early stage developments. Sure. I may end up flipping projects, but I approach everything for the mindset that I would own and operate.

I do think when, you know, you're in the, you know, you're in the thick of it and that there's a a choice to make where it's a hundred grand or a hundred fifty grand, if you're gonna plan to own and operate yourself, you'll spend the more money and, you know, end up with just a better project overall. The the key on the targeting, the, you know, specifics, it's the good upfront software tools. So tools for the revenue modeling, tools for line and subcapacity, then great land permitting zoning tools. And then as much as folks love to hire and build their teams out, that's where companies are ending up a little bit distressed.

So to the extent you can leverage fantastic local resources, consulting firms, prime you know, all that. It's all there. And instead of me hiring one or two people, I can hire three companies that each have twenty, thirty, forty, how many other, you know, you know, number of folks. So I'm covered on all those fronts and can spin them up, spin them down as necessary.

And so that's why with all this focus on, you know, the revenue side, revenue certainty, to me, that's kinda one fifth of the overall solution. Right? You still gotta do the basics that I think you know, can be lost in the you know, it's some of the boring stuff. Right?

But environmental, zoning, permitting, good local relationships. Yep. Know the folks, know the area, know the people. I think that's a lot of where, know, if you're planning to own operate yourself or at least you're locally based and you're planning to dev and flip, you know, it's a very important thing.

I especially learned that during my time at Doral. You gotta be local. You gotta be there. You gotta get in there.

You can't big time people. You know? You know? You have to be able to go from the the boardroom to the to the farm you know, farmhouse, farm kitchen, whatever.

Suit and tie with some Wellington boots on.

Yeah. Gotta be versatile. Chameleon.

So the so so the narrative in the last couple of years has been that northeast is too complicated. The queues are too long. It's everything is just stuck. You know, why why why focus on the northeast when you can deploy your capital in California and and and ERCOT easier, quote, unquote.

So tell me I'm wrong.

For me, in one, because I'm here.

Two, because I've seen it. All that, you know, volatility has made Texas very attractive. Two years ago was, you know, amazing, and this past year was a bit less. You know, volatility does go the other way.

If you want long term stable markets, here's PGIM, you know, thirteen states, relatively stable pricing, except now, going ahead, prices are gonna spike. You know? June one twenty five. You know?

One third of your cost stack is, you know, going several multiples up. High costs are high opportunities, right, for for power plant developers.

What does that mean? June so on the June first, something's gonna happen.

Yeah. So the new PJM, delivery year starts, and, their capacity auctions were also paused for a couple years. You combine a lot of, you know, expected load growth data centers, you name it, combined with ongoing retirements. You know, it's really is a ten year trend. I mean, we saw some of these spikes in the twenty fifteen time frame in the at sea zone, for example.

So as people are shocked by seeing some of these items, I'm close to fifteen years, and I've seen a lot of stuff happen in various ways. So keep calm develop on. But, again, the the key point is the price of capacity in PJM is gonna spike RTO wide. And those are market conditions that are gonna remain.

So that's a build signal, not only on the grid scale side, but then cost avoidance for demand side folks is gonna be a very prevalent item.

It's it's gonna be interesting, starting June one.

So we should probably put a link to the show notes about that because it's worth our listeners taking a look at. But, yeah, there will be knock on effects, and it will get a lot of attention in the press when these dollars start to appear on bills.

Yeah. My, I don't know, my, PSA to anybody with the retail supply contract where they have on their bills broken out cap and net charges, please go look at those. And just be forewarned that while your number of kilowatts or megawatts during the five, you know, PJM peaks may not have changed much, that dollar amount is, you know, possible to spike quite a bit. You know, multiples, higher.

Looking forward then, so if you could come up with a shopping list of new incentives or market changes or even tax breaks, why not, for the northeast to get more batteries built on top of what's already happening, what would be on your shopping list?

So while I'm a bit altruistic, I believe rising tide raises all ships. I mean, you know, I'm a believer. There's a part of me that doesn't mind some barriers to entry, gives me more time to secure my capital and go capture as many projects as I feel comfortable doing so. I mean, to me, a lot of it is there.

The biggest item was was QReform and then the ISO compliance with QReform. Yeah. Which still we're still waiting on, ISO New England to to comply. But I'm happy PJM and NISO have, you know, put in their compliance filings and, you know, relaunched their queues.

Number one, just Why are we why are we still wait just to jump in there.

Yeah. Why are we still waiting on New England?

Not sure. I think they've had less issues, So they have really to pause their queue.

But at some point, they're gonna need to do something to at least comply. But it might not mean a full pause and reset, you know, like we saw in PGM, for example. But my, you know, one wish list is just, hey, guys, stick to it. You know, we gave you time to pause, refix everything.

You know, let's not wind up back where we were is kinda number one. And then two, you know, supportive state policies. You know?

Yes. I don't wanna see systems and projects of any type going in a place where it's shooting at the township level. But there does seem to be a healthy balance of states coming in to, you know, help override certain townships that may act a little wonky for whatever reasons.

But it's also on developers. Right? You gotta be good. Gotta be local. You know? Talk to people.

Hire good local folks, which is good for local business, frankly, as well. So, really, you know, that's the queue side, the policy local, you know, hearts and minds side. And those are the two most critical things to me that I think get overlooked, at least the local policy side of things. And then, otherwise, yeah, it's gonna be, you know, banks and lenders and investors that are you know, they've seen a lot of great stuff in Texas and then, you know, kinda get excited to see what's gonna happen up here.

You know, we're, you know, talking three times the size of California and Texas combined within these, you know, twenty states. Right? Yeah. One third of the US is up here, and we're lagging behind heavily in deployments.

So, guys, come on up.

Bit the doesn't it? It needs to be said more. I mean, we've just scratched the surface really with Texas and California. Even, you know, Texas and California themselves have got a lot more growth to come, and then there are whole regions that have just not even started yet. Mhmm. So reading between the lines, it feels like you're excited about an opportunity over the next couple of years, which I think you're saying you think there's gonna be some capitulation with developers, and that might move some good projects onto the market. Is that am I reading you correctly?

Yes. And, look, there's a reason there's as many gigawatts are in the queue as there are. I mean, a lot of folks are doing a lot of dev up here. Things just got kinda jammed up. It's just there will be a natural push up this way. And, again, there's gonna be churn. There's gonna be turmoil, but it's gonna ultimately lead to the right projects getting through and operating in the correct ways and, you know, keeping the grid happy and healthy.

And is there anything in the next, let's say, five to ten years that you're really excited about that will change grid scale storage? Maybe it's on the supply chain or it's technology or regulation or capital. Is there anything you'd like to point to that really gets you going?

So besides just seeing kinda what I do in the news day to day you know, my parents live in Las Vegas, and, they they send me articles out like, oh, there's a two hundred megawatt project with the NV Energy coming about. And then I go to folks, you know, in my area and, you know, it it's still foreign. Right? I mean, you know, battery stores in Texas is a pretty well known thing.

Right? Again, it's it's in the news nowadays. Up here, you don't hear about it much. So I'm still talking to very smart folks, folks that work in energy and have zero exposure to what this is.

So, you know, one, I would love to see multiple gigawatts, you know, coming on board in the next, you know, five years. Well, dozens, honestly. About two of those, hopefully, mine would be, my goal. And then, yeah, I would love to see the rust belt turning to the battery belt.

You know, jobs in the US and in all these states, and, I think it could be a fantastic thing for the US and be tech forward and tech focused.

And, yeah, it's to me, it's the right way to move. Let's let's create value is, my mindset.

Very exciting. I'm gonna take that. The you have to trademark that one.

Yeah.

I have, like, a list of, Rust belt to the battery belt.

Go on. Let's let's let's have the list. Yeah. I'll kind of bump the bumper stickers.

Actually, let me think. Yeah. Rustle the battery belt.

There's a few that come out, especially when I run through my my, pitch deck. There's a lot of things I say when I'm doing the pitch that folks are like, oh, that should be in the deck. I'm like, no. No.

No. I like to deliver it. Really, punchline. You know?

And so the last two questions, the same for everybody. So firstly, is there anything you'd like to plug to our listeners that tend to be energy storage folks in Europe and the US and Australia, tend to be asset owners or bankers or financiers.

Anything that you wanna tell them right now?

I guess, for me, selfishly to start, I'm always interested in projects and capital. So folks have project in the the northeast are looking to flip. I move quick, and I I get it. So won't waste your time and can be a great buyer.

I love to pay more the same as others and have it be a cheaper transaction. And then the other flip side is the capital side. And these are, you know, this is a big capital, you know, pitch and plan that we're we're getting close on, but the more folks I wanna be involved, the better. So happy to talk to folks about it.

And I love to educate as well. I have a really good battery storage one zero one, that I'd love to run through. And just after this amount of time, I love taking the complex and making it understandable.

So yeah. And then, yeah, again, just banging the drum to the northeast.

Battery storage is my, you know, the central tenant.

That's your jam. And then so we always finish with the same question, which is what is your contrarian view? And I think it's my favorite question. So is there anything and I've got a feeling you might have a few of these up your sleeve. But it's it's only thing that you believe that not necessarily the rest of the world believes.

So besides come to the northeast, which I think we've we've hammered home pretty well. I guess one of the other little mantras is you really wanna minimize the hands in the handshake on on actual market ops. And, again, I love optimizers. I love EMS folks.

I love the smarts that they bring to the table. But it's about again, not to say a it's a higher investment item, but the market operator. Right? You want the smarts in the same four walls.

I'd really heavily believe in that. So that might be a contrarian view, but to the extent that folks can come together or they come up with great optimization, great algorithms, you name it, but really partner deeply and tightly with the folks that, you know, have the hands on the wheel. You know, the folks that have that, you know, twenty four seven, three sixty five desk. Because, again, when stuff's in the fan, you really wanna make sure that the the operators are able to make decisions that can make you that extra five, ten percent, you know, year over year.

Paul, wanna say a massive thank you for joining us on the podcast. And see what if you're in Austin or New York, come see us. And if we're in Philadelphia, we'll we'll head down, and you could take us around the pubs.

Perfect. Let's do all three.

Alright. Thank you very much.

Thanks, Kia.