Managing merchant risk in clean power with Lee Taylor (REsurety)

Hello, and welcome to Transmission. This week, Q is joined by Lee Taylor, CEO of Resuriti, whose company just secured a groundbreaking regulatory license for their new clean energy marketplace, Clean Trade. They dive into the massive effort behind earning a swap execution facility license, how Clean Trade aims to revolutionize clean energy markets by bringing transparency and liquidity, and why fixed volume contracts are no longer viable in a world of intermittent renewables. Want the latest news, analysis, and price indices from power markets around the globe delivered to your inbox every week? Subscribe to The Weekly Dispatch, our email newsletter. Now, let's jump in.

Hello, Lee. Welcome to the podcast.

How are doing, Q? Thanks for having me.

It's a pleasure. And I guess this is an important time for you because you've got a huge announcement, which is that you've just got your license.

Well, actually, the audience what's your license all about.

So the license sounds really technical. It's called a swap execution facility.

So we're approved by the CFTC. But at the end of the day, what that means is we now have the right to operate the first marketplace for clean energy. So if you think about intercontinental exchange and what that meant for power markets, creating that centralized electronic marketplace to see the entire market in one place and drive liquidity.

That has been supporting basically every form of energy to date other than clean energy for reasons I I think we can get into on this episode.

But we've changed that to make sure that clean energy has access to the same sort of financial tools the traditional energy markets have. So it's a it was a long process, started almost four years ago on partnership with Citibank. So delighted to to finish that process and and get to work supporting that liquidity.

And the more I've understood this, the the more it's blown me away how much of a labor of love this has been for you and the team. I mean, is such a long process. And building these things is incredibly difficult. And the the technical challenge and then, of course, all the regulatory stuff.

But So a big moment for you last few weeks. You've got your license. We're gonna talk all about that marketplace in a minute. But before we do that, Lee, could you just get our audience up to speed?

What is Resuracy? You're the CEO and founder. What does what does the team look like? What does the business look like?

And how has the journey been from twenty twelve until now?

So as just mentioned, the company was founded in twenty twelve. We set out to basically try to solve intermittency risk as a financial challenge for clean energy. So if you have history in power markets, traditional fuel has always had to manage the risk of what's the cost of the fuel you're going to burn relative to the value of the power you're going to produce.

Renewables don't have that challenge as a benefit, as a, you know, a new risk and new challenge they have to solve they don't control when and how much of the fuel shows up in any five minute interval if you're an energy storage asset, any hour, interval if you're, you know, bidding into the day ahead market, or monthly, quarterly, annually if you're trying to set, budgets as a buyer or seller of power. So at a fundamental level across technology solutions, across services, across marketplace solutions, Resurdy as a whole tries to solve the intermittency challenge for buyers and sellers of utility scale clean energy.

Wearing the CEO hat means all about communicating very very complex things in simple ways. And sometimes you hear something, you see that I think that's magnificent. And I think that is magnificent, solving the intermittency challenge. It's a big mission, though. Right? And what's interesting is a lot of people think the solutions to that challenge is building more stuff, which it is in some some cases. But your business, for surety, is doing it without is it without assets, with contracts and data and systems.

Yeah. It's and to your point, I think when you think about intermittency risk, it is both a physical and a financial challenge, and it needs both physical and financial solutions.

So there is no way to hedge your way out of the fact that if nothing if the industry does nothing but win, build intermittent resources and retire firm resources, you have more volatility coming in the market. But as you know better than anyone, if you're also adding energy storage, if you're adding natural gas peakers or operating them, you can operate a very high renewable penetration market with a huge amount of reliability and we're seeing that happen in places like ERCOT where the growth of wind and solar and storage altogether are driving to a low cost market that is also highly reliable.

But physical solutions on their own are are usually not enough because not everybody is equipped to own and operate energy storage asset as a hedge on their intermittency as a buyer or a seller of power. So the ability to chip away at the underlying, you know, problem of intermittency with physical solutions, but then have the financial tools to make sure that that risk is held by the party best equipped to manage that risk is really, I think, where the physical and the financial interplay and and where I think there's a lot of overlap of what we do and and what your team at Moto does.

And we're gonna spend a lot today talking about clean trade, which you've described as the ice for renewables, which, again, hits the nail on the head.

Before we talk about how that system works and what that's gonna do for the market, would you mind, please, explaining to me like I'm a five year old, how the market works before clean trade or the ice for renewables comes along? So who are the participants in this market, and how does that all work?

So I'll talk a little bit of how what it's like being a buyer or seller or trader of energy, both traditional and clean, to highlight how different the clean energy landscape has been. So if you wanna buy, sell, or trade natural gas or a lot of oil linked products, you can go to Chicago Mercantile Exchange, you can see the price today of what the product you wanted to buy or sell and if you like that price, can act on it today.

If you want to buy, sell or trade traditional power on peak in Western PJM, you can log in to Intercontinental Exchange, see a price today, act on it. If you own wind farm x or solar farm y and you wanna sell and you're running merchant and you wanna sell power for the next year, you call or email a bunch of humans who call and email a bunch of other humans, and many months later, you may or may not have a transaction.

Wow. Really? So it takes months?

At least. So long term transactions can take over a year because these are you're running an RFP. Oftentimes, you're running multiple versions of an RFP. You give people weeks, if not months, of lead time to submit information. You're then reviewing it, going back and forth, shortlisting. If one of those falls through, you restart. So it can be a very laborious process because it's all bilateral one to one matching of these contracts as opposed to having access to a true market.

So then to so so I'm a solar owner. Right? And I've got a big solar plant in, let's say, New York. And I've got to find someone to buy that power that I produce.

So then I I do an RFP. Right? So I assume that's a request for proposal. So I'm telling the market, hey, I wanna sell this power.

Does anyone wanna buy it? Right. And then then what what who do I email?

So you'll either email your if you hire a broker or adviser, you might email them, and they email all of the relationships that they have.

Or if you have enough relationships, you do that yourself. And so you email fifty developers, twenty developers, a hundred developers depending on how many contacts you have, and you get back Excel files generally for every offer.

You then have to digest all that information, decide how to compare them. So if you've got solar projects all over a certain area, some of them are tracking modules with bifacial panels that are in areas with high transmission congestion being offered against projects that have totally different technology and region, you're trying to compare those on an apples to apples basis.

And then a buyer like Microsoft or Meta who's got a huge power demand and wants renewable power has got to figure out which one of these assets makes sense for me and which one of these contracts. Nightmare.

That's correct. And as you go through that process, one of the challenge comes up that you say, okay. Well, I'm three months in. I've analyzed everything.

I've I've picked my winner. This is the project I wanna work And then for any number of reasons, tariff, you know, political, there's an impact of tariffs on the project or land use, landowner decided to pull back on a lease that was critical to the project, That project doesn't move forward. You're now three months since you got all the bids for the RFP and you have to go back to everybody that you said no to or you said were on your wait list and say, can you resubmit your new pricing to show me if and how much it's changed? And so it's not real time.

It doesn't move forward. You are sort of having to pick your dance partner and commit to that and not get a sense of how the rest of the market's evolving. That has been fairly unique to the renewables market. So if you are in a traditional power, you haven't had to do that because of your access to regulated marketplaces that provide a real time view of every bid and offer in the market all the time.

And that would be ICE?

That would be ICE.

And so and I I say we've experienced this. We've been a commodity trading adviser under the CFTC since twenty fifteen.

So we What is the CFTC for our listeners?

Commodity Futures Trading Commission. So it's one of the independent agencies of the federal government that basically oversees all commodity trading and particularly swaps. So virtual power purchase agreements, the vast majority of which are regulated as swaps, fall under the CFTC's jurisdiction. And so if you want to create a marketplace to show all the bids and offers for something like virtual power purchase agreements, you need the blessing of the CFTC to operate that either as an exchange or they call a DCM, designated contract market or as a, basically, a matching engine at scale or a marketplace, which is called a swap execution facility. And that's what we've gotten approval to do.

And these are this is a this is a serious people. Right? This is this is serious regulators, and there is a big stick to make sure you get it right.

Correct. I think, at last count, the set of materials we submitted that, you know, our rule book compliance manual exhibits about how we handle tracking for and responding to, you know, attempted market manipulation, all of the above. I think the final submission the CFTC accepted was nine eighty six pages. And so, it is not a light lift. It is a very high bar both for us, but also one of things that's I think is a real value proposition is it's a high bar for market participants. So you asked how the market works today. There are information platforms that are available where effectively they're RFP facilitators.

RFP facilitators. So the and that's the bit where going back to our conversation, I'm the solar farm, and I'm asking for offers from buyers so that they can facilitate that bit. But there's nothing actually traded at that point. Right? That's just information.

Correct. You collect there are information platforms available today, but the requirements on them to make sure that the parties who are bidding and offering are eligible contract participants. Right? That they are even legally allowed to do the transaction that they're they're bidding.

Those bars aren't there. So one of the things that we've had a lot of groups we talked to as we were developing Clean Trade and talking about what it is that you know, what problems they're trying to solve in the market, knowing that the bid or the offer and the participant on the other side of the table is real and not someone who's submitting some of these information platforms, have to submit an offer in order to get information back about the state of the market. So you get bids and offers that are effectively buying market information. Occasionally, those match and someone will say, hey, I'm interested in your bid.

Like, I was just submitting that really for informational purposes. I'm not I'm not prepared to transact on that. And and that degrades confidence in the market and that's something that isn't allowed on a on a regulated platform.

You're making representations about wanting to enter into market risk when you're adding those bids and offers, you're making representations, and there's, you know, KYC also know your customer provisions about who you are and are you eligible to do that sort of transaction. So it raises the bar who can participate, which gives buyers and sellers a lot more confidence that they are serious buyers and real bids and offers on the other side of the table.

Quick break. If you listen to this show, then you probably work in energy. And at Modo Energy, we're not just talking about the energy transition. We help our users to actually make it happen. All energy storage, solar, and wind assets on the global balance sheet need to be valued and benchmarked, and that's where Modo Energy comes in. Our benchmarks and forecasts are transparent, bankable, and trusted by the world's leading banks, asset managers, utilities, and developers. So if you want to learn more, go to modo energy dot com.

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So right now, folks have to send a lot of emails so they can go through an information provider, and there's all sorts of issues with that bit not being regulated because you lose some functionality of the marketplace.

And then when did you decide to do this? Obviously, was more than four years ago. Yeah. But when did you having the more I've learned, as I said about maturity, the more I've learned how much effort and time and blood, sweat, and tears has gone into this thing.

When did you decide to do this? And and how did you plan it out? I assume you didn't think it was gonna take you four years plus to get this done. No.

That's not a I'm not it's not a dig. That's not a dig.

No. It's a fair we did not expect it would take four years.

So this started in in mid twenty twenty one. We started talking with the team at at Citibank commodities to kick this off, and there was a reason that it was mid twenty twenty one, which was in February of twenty twenty one. Winter storm Uri happened in Texas and basically upended traditional hedging and trading of clean energy. So up until winter storm Uri, it was fairly common for intermittent assets to try to hedge their generation with what are called fixed volume contracts, fixed volume swaps.

So you would say, I'm a solar project. I will hedge my generation value with an on peak, meaning just during the base of the daylight hours contract. And that's a contract that's tradable on ice today, and it and it was in twenty twenty one, was before that. The great advantage of that is on peak power was liquid, transparent, all the things we just talked about because of its existence on a platform had all those benefits.

It had a very significant drawback, which is that solar projects don't produce on peak power. They produce power when it's sunny. And so depending on what time of year, whether there's a cloud cover, you are gonna be long or short power pretty much every single hour if you've committed to a fixed quantity. Now For the for the imbalance?

Correct. So just start of the day, some just coming up on peak, you're gonna be short power. On a normal middle of the day, you're gonna be long power. You're gonna be overproducing what you've sold ahead through that swap unless cloud cover comes over and for that five minute or hour long interval, you produce way under what you've committed.

And so the challenge was and remains that because you are long and short, if the prices go up or down dramatically during those periods, can have a significant amount of risk and importantly, you can effectively create even more risk than you have hedged by entering into those sorts of contracts. That's true for wind as well and I think that that was known going into the winter of twenty twenty one. It was an increasing challenge. We saw challenges during the price spikes of twenty nineteen when there was a heat wave.

But winter storm URI, we went from power that was, you know, generally around thirty dollars a megawatt hour in Texas to power that spent three and a half days at nine thousand dollars a megawatt hour. And so it was a great three days if you were long, if you had excess generation from what you hedged during that period.

If you were short because you'd committed more and during that period it was generally low wind speeds, there was a lot of cloud cover, so renewables as a whole, if they were online, were not producing a lot, neither was the gas fleet because a lot of that was frozen. And so a lot of groups ended up basically having to go buy nine thousand dollar power in order to deliver it to a fixed commitment at thirty dollars.

That's a very expensive They sold on ice.

Correct. And so following that, it became clear that using fixed quantity contracts to financially hedge renewables was basically dead as a strategy overnight.

Because you're trying to match just to simplify this, if I've got this right, you're trying to match a very squiggly line to a square.

Exactly right. That's a better description.

As soon as you deviate from that square, who knows what's gonna happen with the price. Right? You're on a hook for it somehow.

Correct.

Or some one of the parties is on the Correct.

And so that was a big challenge for industry because basically, you know, back in twenty twenty four, we built sixty gigawatts of wind solar and storage in the United States, and we built two point five gigawatts of gas. So the vast majority of what is being built in this country and globally is, you know, intermittent as wind and solar or is a function of intermittency as storage is really the value proposition is how volatile is that market. And so as a result of that, you know, this became a big problem because the view and this is, you know, it's not it's telling I think that Citibank was an early partner in this. A market of this size, a commodity market of the size of clean energy has to have access to transparency and liquidity for it to function well and it didn't have it.

And so that was where we set out on this.

We did think it would happen faster than four years, but we're But that was not me saying that you're taking your sweet time on it.

It's just a more of a recognition of of of the mountain.

Yeah. No. It's the the hurdle is is quite high from a regulatory perspective, and importantly, the technology that's needed to comply with that. Right? So writing nine hundred and eighty six pages of compliance policies is time consuming.

The really time consuming part is building a technology platform that can comply with those nine hundred and eighty six pages in the entire Commodity Exchange Act. Can you give So that's the challenge.

Can you give a couple of examples thinking about product now? Because everybody's seen marketplace screens before. I would have not everybody, but I'd imagine if you listen to this, you probably have seen. Right?

Could you give a couple of examples of of fruity features that you had to add for the regulator? Right? I imagine there's all sorts of access control and security. But what else?

You know, what else did you end up having to build that you never ever scoped in the first place?

So access control security, that was expected.

You also and and we knew this going in, but the the scope of it so we have to have a third party provider. We work in a group called Aventis. So it's basically a third party software that has to sit behind your software and real time monitor every bid and offer to make sure that there's no market manipulations. They're looking for phishing, spoofing, somebody who's putting in offers that they don't actually plan to transact on but they say, I want to transact at X, so I'm going to put a bunch of bids in at X plus ten percent to try to make it look like that's where the market is in order to get my transaction at X.

Know, Ventus works with, you know, across equities, across other commodities, so having somebody monitor for that market manipulation, this comes back to the confidence. And one of the things that the CFTC is core there is it's sort of it's a fair market for all participants. You don't you know, you can be the largest player in the market to the smallest player in the market. You should have equal confidence that you have access to the information, etcetera.

So I'd say those are sort of some of the examples that would come out of things that are not normal on a traditional contract. Would say other examples of that are really just tracking transactions end to end through the platform. So one of the things that regulated platform can do that an information service can't is really end to end. So, you know, you're coming on, you're listing a bidder offer, you need a lot of information and data to make clean energy comparable on an apples to apples basis because of the intermittency. We provide all that information so that bids and offers can be comparable in that full market spectrum. You can evaluate them on absolute value, on expected value, on the cost of the carbon content if you're focused on it from a on an impact perspective.

But all the way through to if you click transact on a regulated marketplace, it is automatically reported for Dodd Frank reporting as an example. So it's that end to end of like I'm putting out my first bid through it's handled my post transaction compliance.

All that sort of end to end features has to be built and tested. As just sort of an example of sort of the CFTC's bar, we had to do a technical demonstration with the CFTC staff to prove that we could comply with all levels. I think it was six hour grilling session with sixteen different staffers from the CFTC who were coming at it from data reporting, compliance, and so you really have to demonstrate that the technology platform can comply with this very rigorous set of requirements that all come back to providing transparency, providing liquidity, and making sure it's a fair market for all participants.

And so where we're headed on this then is that, if I've got this right, buyers and sellers of intermittent power are showing up on your platform, on your exchange. Do you call it an exchange?

Marketplace exchange. Yeah.

They're showing up, and they're they're transacting with each other all within the platform, or do they have to because it there's a contract element as well. Right? Yeah. And the contracts, does that also happen on the platform?

It can happen on the platform. They it have to be executed on the platform. If you start there, you have to finish there, but the contracting portion is important. So maybe just a step back, who who uses this platform in the first place?

So if you are a greenfield project developer and so you have an open field, that you plan to develop by date X, and you need a twelve year offtake agreement for someone in order to get the financing, you would list a twelve year power purchase agreement. You might list it, let's say it's a one hundred and fifty megawatt asset. You might say I'm going to list it for one hundred and fifty megawatts if someone wants the whole piece at price X. You might say I'd sell it off in you know twenty megawatt tranches at price Y.

So I'd price a ten year deal at z. I would price a fifteen year deal at w. So you can list the same asset fifty different ways to try to figure out, well, different people have different preferences, different sizes.

That's very difficult to do in a request proposal process, whereas that's natively enabled on a platform.

I often think about this a bit like office space. You know, when you go go to get an office and there's like a skyscraper and the realtor is showing you around. And they're like, well, you could have ten thousand square foot here in five years or you could take you could chop it up and take five thousand here or you could have forty thousand the whole floor or whatever. And you're thinking for this asset owner, this is so this is so complicated.

There's so many different contracts to manage. And of course, in that world, the the realtor or the real estate adviser takes their cut. Yeah. And if there was a marketplace for that, that would kind of solve the same problem.

So I often think about the PPA market looking a bit like that, where you you chop these things, these very big assets up into smaller durations or amounts.

Right. So that's that's the greenfield side of things. On the same side, you have greenfield buyers. You have in particular, you have corporate buyers who are coming in who want to procure power to achieve a sustainability goal, they're bringing in I'm looking to buy power for ten years, for twelve years, and it's important to me that I get RECs in the market that I'm operating or in a market that has high emissions intensity depending on their goals.

That's That's sort of the more of the greenfield side of the market. You then get into the operating side of the market, so you've got independent power producers that have a project that was either built fifty percent and fifty percent of it was left merchant but they want to sell it to someone who doesn't want the commodity exposure of the other half. They need to add a new contract onto a project that's been operating for three years. Or it's a project that's twelve years old and just rolled off its first PPA and they said, I I don't like being a merchant asset.

My cost of capital is lower than that. I need lower risk than that volatility. So I want to enter into a five year contract. You also have the secondary market which is really starting to grow fairly quickly now.

So you have a lot particularly on the corporate buyer side. You have lot of folks who bought power for two main reasons.

One, they like the long term hedge on energy prices, so if you have a PPA and natural gas prices double in five years, your retail rate's going to change, that's a hedge against it. And you also get the renewable energy credits and their environmental value. But along with those, you get monthly settlements every month that are generally at best a poor hedge on energy costs and are most often just sort of speculative exposure to power markets. A lot of CFOs are increasingly saying, why are we holding this commodity volatility, on our, p and l in connection with our sustainability strategy? Historically, the answer has been because you have to. There wasn't an option to hedge out of existing PPA exposures.

There is. This is one of the ways that gets facilitated. So if you're, say, if you're a PPA buyer and you're four years into a fifteen year PPA and you made more money in twenty twenty two than you expected and then you lost much more money last year than you expected, and the answer is, Hey, we're sick of surprises in our budgeting around this. I just want to know how much my PPA is going to settle in the next five years. You can hedge out of that. So you can say, I want to basically sell out of my PPA, keep my RECs for the next five years.

I would do it at this price or you see people who are bidding and you match with their price. So the visibility into how you can lock in a price for PPA settlements is sort of the other bucket of activity that people are coming to the platform for.

So let's talk about actual launch then. Okay. So take us through how do you build how do you launch an exchange? How do you how do you build liquidity on both sides and then get the timing right? And then also, you mentioned Citibank a few times. How does how do they come in?

On Citibank's role, so they started clean trade within Citi, sort of an incubated because their view was Arkham Eye Desk wants access to a regulated exchange for clean power. There isn't one. No one's building one. We will, and we'll spin it out. So they started incubating it, brought us in as effectively the data back end because we are for tracking PPAs, for underwriting and written PPAs. We've been the leader in that for a long time. That's the clean site software side of our business.

And so we brought on all of the data to support the sort of pre and post trade information services that combined with the transaction infrastructure that Citi was building and then as a large bank, operating a swap execution facility or a marketplace within the bank wasn't the goal for a variety of reasons, not least of which being they want all the other banks to be on it. So to have liquidity, they didn't want to be viewed as sort of a captive entity, so to speak. So they carved it out of Citi, invested into us as part of our Series C. And so Citi is on our board, but they don't have any role in the platform other than that, aside from, you know, working with them to onboard them as a, as a buyer and seller of and liquidity provider as well.

So that's the Citi role, and the relationship there. In terms of what launch looks like, in terms of the timing, you know, the our control over timing was really when the clicked the button, so we were waiting, until that that landed. That was very end of August. But we had you know, we didn't start from that point.

So prior to that, we'd been marketing this and talking to folks about how the problems this solved for a long time.

We'd already onboarded about one hundred and ten bids and offers prior to launch and what was basically the beta pre launch phase. And so, now we're just off to the races adding to that liquidity today. And so, you know, close to a hundred buyers and sellers and traders we've been talking to for the past you know, we didn't start talking to everybody four years ago, but about a year ago, started telling people that this was coming.

And you've you've been working with some big names.

Right? So Meta and HASI, folks like that. Are they are they now using the exchange?

So I I have to check who whose names we're allowed to say is is on the exchange, but you're you're right. I mean, I think the thing that I would wanna highlight is that while Clean Trade is new, Resurdy is not. So, we work with a lot of the largest names in clean energy investing, clean procurement, clean energy selling and so, a lot of those groups, we track more corporate PPAs than any on the planet today through our software platform.

Because of that, we know a lot of those groups, the ones that are unhappy with the volatility they've gotten in their settlements are starting to say, Well, what's the solution for this? And so we're saying, Well, CleanTrade is a tool to mitigate the risk that you are tracking through the software platform. So that was part of the reason that it made a lot of sense for us to bring CleanTrade in because really it's when we think about having that end to end solution for off take, setting the strategy for what you want to buy or sell, you know, underwriting which contract you want to choose and why, executing that contract and then tracking that contract, making sure that you are doing accruals and auditing and budgeting properly.

We were already doing three of those four things, right? The strategy setting, the underwriting and the tracking. The only thing that we weren't doing was the execution support. And so our customers were using our data, our analysis to figure out what market they wanted to be in, what PPA they might want to sign.

They were then leaving to go through this fairly painful bilateral process that we just talked about and then bringing the transaction closed back to us for us to track it, you know, afterwards. So this lets us support folks really from that initial strategy setting towards the full portfolio portfolio tracking. So that existing client base has has been really helpful to to driving liquidity quickly.

And then give us the vision. So what does this new marketplace look like in three years' time? What do the twenty thirties look like? What you know, what how does this change the game for renewables and power in the US?

So as a starting point, so we we launched Clean Trade in the US across the seventy regulated markets. So basically, every part of the US other than for non CAISO, WEK, and SERC, you can do transactions in all of those markets across wind and solar.

Is that a requirement for your It's not. You just so you just chose to do that?

Chose to do that. So that's starting with US coverage and the starting point is to be the liquidity provider to that market. So talk about being the ice of renewables, that's our aspiration. You think about the it's about sixty percent of, you know, electricity futures that transact through ice today. That's exactly what we would like to do. So if at any point in any part of the country where you have a transactable market price, you want to know how you can get into or out of a market position in power, we want to be the place that you go to do that. A, that would be good for our business, but B, you know, most importantly, one of the challenges that renewables have at the moment is when you ask somebody what market is, you will get a different answer from every person you ask.

And that is on Is it market price?

Good point. That is on market price. That is on what is the market for credit support. That is what is the market for, basis sharing provisions in a PPA. What is the market for name your feature? Part of that is because all these transactions are done bilaterally behind closed doors. Nobody there's no visibility, no centralized place that this is happening.

You have course, you have exactly the same problem in off take agreements for storage. Right? It's just such a mess. Right. And, I mean, it's good business to be if you're a lawyer, but, yeah, there needs to be some standardization.

Yeah. So when the industry says, what's the market for term x for price y, there should be a good data driven answer to that, and today there isn't. So our goal within where we're launching, wind and solar in the US, is to solve that problem for the market. Beyond that, an important point to your listeners is, I would say it's eight out of ten demos we give where someone says, When can I have storage?

And some of that is standalone, but a lot of it's also co located. So I'd like to bid my PPA with no storage. I'd like to bid my PPA with two hours of duration. I'd like to bid my PPA with four hours of duration.

How different of a price will I get from an off taker if I'm committing to, you know, shifting the power around based off of value of the power? So I would say from a technology perspective, storage is absolutely where where we're going next, and then it's from a geographic expansion. So, starting in the US, but it's the same problem internationally, that we that we wanna solve. And so I would say, the liquidity in in the core launch followed by storage followed by geography is is our plan.

And so we've done this conversation without talking about carbon or emissions, which of course your company is very well known for tracking and talking about. So how do carbon and emissions data fit within clean trade?

It's a great question and one that's topical, particularly being New York Climate Week where it's been coming up a lot. Maybe a step back for a second before we talk about how clean trade tries to address this challenge. If any of your listeners are not closely following or historians on Scope two accounting, if you think about a lot of the clean energy procurement that's happened globally as well as in the U. S, it all comes back to a rule book called the Greenhouse Gas Protocol and in particular scope to accounting and so when you think about somewhere between thirty and fifty percent of clean energy assets built in the U.

S, this has been primarily wind and solar but are now increasingly you're seeing voluntary corporate interest in storage, It all comes back to how do they take credit at the end of the year for their actions. So when someone says, Because of my activity, I am now thirty percent carbon free, forty percent carbon free, the rule book that lets them make that claim and defend it is called the Greenhouse Gas Protocol and it's being rewritten right now in order to be more accurate, more granular, more impactful. And so there are really two ways that we see the market changing fairly dramatically and you have people picking one avenue or the other or some combination of the two.

The first is to make carbon accounting a more accurate physical inventory. This is often called the twenty fourseven method. This is a group saying, I'm trying to make sure that my specific facility is fed by clean energy. So that means that I want a contract with projects that are either producing in the hour that I'm consuming or I'm also investing in storage that will charge with clean energy until I need it.

And you're typically doing that in what they call physically deliverable basis, so it means you have to be buying all these things very close to your load. So our platform supports that if someone wants to say, Hey, how would this wind farm's generation align with my typical load profile? That data is served up so you can compare them as to what market, what geography would work better. Where we spend a lot more time on the analytics is really on the carbon impact side.

So you had Emma from Tiara Climate on this podcast.

Yeah. Shout out to Emma.

Yeah. Shout out to Emma.

Brilliant brilliant woman.

Yeah. They've done a fantastic job highlighting how the current intensity of the grid varies wildly location by location, hour by hour. In the middle of the day in California, adding more power to the grid does very little from a carbon perspective because you're mostly just crowding out solar at that moment.

Adding new generation at night in West Virginia almost exclusively crowds a coal plant out of the market. So depending on where and when you generate or where and when you consume, you have these dramatic differences in carbon intensity And so this is where we're seeing groups say, you know, city of Cambridge publicly came out and said, we decided despite the fact that we're based in Massachusetts that we're gonna buy solar in MISO.

No offense to the listeners in Cambridge, UK for this matter.

I'll say my I'm yeah. In Boston.

So my Cambridge walking the dog somewhere.

They've just fallen over. Giving up. Yeah.

They bought power despite being in New England, in MISO from a solar project specifically because that was an area and, you know, that project would displace more carbon than buying one that was closer to their load profile. And their goal was I'm buying clean energy to reduce carbon emissions, not to source physical electricity. I can go to my utilities, source physical electricity. I'm trying to make sure my dollar goes furthest.

That analysis, so by electrical node by hour, we feed in data from our clean site system to show how impactful a project is. So what that effectively means is in a marketplace, you can rank order the entire market by dollar per megawatt hour expected gainloss or by dollar per ton of carbon cost. So that means that a PPA that looks moderately more expensive on a dollar per megawatt basis might actually be the cheapest on offer from a dollar per ton of carbon because it's in a particularly dirty part of the grid. Whereas a project that is built in an area that already has a lot of renewables might look attractive on a dollar per megawatt hour basis because it's a cheap area of the grid to build, But because it's being added to an area that is already has a lot of wind or solar development in the absence of more transmission development, the incremental benefit of that project is more limited and so the dollar per ton of carbon impact is much less attractive.

And so we've been integrating that because increasingly what you see is particularly on the voluntary side of the market, groups are saying, I'm not in clean energy because I love electrons, I'm in clean energy because I'm trying to reduce my carbon footprint. So I wanna do my transactions in the unit of the thing I care about, which is carbon.

So usually at this time in a podcast, I say, have you got anything you want to plug? But it feels like we've probably we've probably plugged the the marketplace enough. But I do wanna ask you about your contrarian view.

So, Lee, what's the thing that you believe or a couple of things if you got them? What do you believe that not a lot of other people believe?

I'd say my contrarian view at the moment, and I hope more people believe this, is that clean energy should not be a political issue today. We're in New York for Climate Week. I've been at a lot of panels that focus specifically on sort of us versus them in this world and I think that it's become in the US in particular, Republican and Democratic issue that it absolutely shouldn't be. At the end of the day, regardless of your views of climate change, if you want to support AI growth, if you want to support on shoring of manufacturing, if you want to support low energy prices, you like clean energy not because it's clean necessarily, but because it's energy and it can be built quickly and it is the most cost effective source of new generation.

So I would hope on both sides of the aisle that we can depoliticize what at the end of the day is really valuable infrastructure development that we need for economic competitiveness. And so I would say that'd be my contrarian view is take some of the politics out of energy and let's focus on building what we need to keep costs down and to and to power economic growth.

Okay. So let's take politics out of renewables.

Probably contrarian, and it shouldn't be.

So we've run out of time. I wanna say a massive thank you for joining us on the podcast. If folks wanna find out more about Resuruity and and crucially about clean trade or if you wanna participate on that marketplace, then we're gonna put links in the show notes. You can go and follow Lee and the team and see what they're up to or go and visit them in Boston. I would certainly recommend it.

Thank you very much for joining us.

Appreciate having me on. Was a great conversation.