Our guest, Jigar Shah, is an innovator, entrepreneur, author, podcast superstar and now Director of the powerful US Department of Energy’s Loan Programs Office with $40 Billion in its coffers. Shah joins host Bill Nussey in a fascinating and revealing conversation about the extraordinary efforts the DOE, and the LPO in particular, are making to reach out to cleantech companies in its efforts to accelerate the transition to a clean energy economy and particularly local energy. Shah explores how the DOE is going beyond just science and engineering in outreach efforts to help companies and the financial community understand the emerging business models, financial viability and long-term value of clean, local energy.
Here are some of the highlights from their discussion…
“… we’ve been able to build net zero homes since the 1970s using passive solar design. Right. It’s crazy that today all homes are not built net zero. It’s crazy. It literally costs you an extra two and a half percent to the CapEx of the home, depending on where you live, maybe it’s 5%. And you know, if you finance it over a 30 year mortgage, right, you’re saving 50% on your bills… I mean, come on.”
“You remember 2000 of our 19,500 towns in this country have local control over their electric utility, right? That means local control of their electric utility. Every one of them could cut their electricity cost by 20% by promoting local energy. And so when you think about the potential that every day Americans have to make a difference in their neighborhood, it’s just amazing how many people don’t take advantage of it.”
“And so now the entire ecosystem is coming [together] around local energy. Before this administration came in, local energy was like [a] side show. ‘Oh, you know, it’s growing. It’s great. And we’re glad all this job creation’s happening, but this is not part of the integrated resource plan.’ Well, it is part of the integrated resource plan now.”
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Check out these links to learn more
Loan Programs Office | Department of Energy
Podcast #002 – Luis Reyes: David Takes on Goliath in Local Energy
A battle for clean energy: the Kit Carson coop story
Northern New Mexico electric coop to reach 100% daytime solar by summer – Albuquerque Journal
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Full Transcript
Bill Nussey:
Well, happy spring to everybody out there in the Freeing Energy community. I am so excited to be here again. And thank you so much for the time that you share with us. We’re on a very important and exciting mission here to help accelerate the transition to clean energy. And all of you listening in, all of you in our community are a big part of it to help us spread the word.
Bill Nussey:
We have a really, really amazing guest today. He was one of the first people I interviewed for my book and his work in the commercial and now in public sectors are an inspiration to the industry. So if you spend any time in clean energy, you are familiar with him. He’s an entrepreneur, an author, a podcast rockstar, an investor, and is now helping lead one of the most important parts of the US government’s efforts to create a truly sustainable future. So I am really excited to introduce our guest today, Jigar Shah, the director of the Loan Program Office to the US Department of Energy. Welcome, Jigar.
Jigar Shah:
Wow. That’s a great intro. Thanks, Bill.
Bill Nussey:
We’re excited to have you. I read that when you were a teenager, you were really fascinated with solar energy. And one of the reasons you pursued a degree in mechanical engineering was because no one really could give you a better idea how to get into this solar business. And did I read correctly that you wrote the business plan for SunEdison as an assignment from one of your MBA classes?
Jigar Shah:
Yeah. Unfortunately guilty as charged. It’s very true. I mean, when solar industry was active in the ’90s, you really couldn’t get a job even as a marketing and communications consultant, unless you had an engineering degree. I mean, everyone needed an engineering degree to work in this whole industry back then. And then, yeah, I did my MBA at the University of Maryland and wrote the business plan for SunEdison there.
Bill Nussey:
So we like to start these conversations with something a little more in your background. So our producer, Sam, and I spent some time, and we learned that as a sophomore in college, you took on an enormous responsibility when you headed up the University of Illinois Engineering Open House event, host 20,000 people roughly. So what on earth motivated you to go for that role? And how did it shape your thinking since then?
Jigar Shah:
Yeah, it’s a interesting question. When I was in high school, I was one of those 20,000 people. I mean, the event really features, I don’t know, about 150 to 200 student exhibits and then high school students come in by the bus load to learn about what engineering actually is in very practical terms from students. And so when I got to campus, I participated in the Engineering Open House my freshman year and was super excited about it. And my sophomore year nobody else wanted to run for it. It seemed like a thankless job. So I got assigned it.
Jigar Shah:
I did have to give a speech, which I did terrible at, I think. And yeah, and then I ran it. The interesting thing with me is even at that young age, I think I always understood the value of communicating. And I don’t know that I did a very good job of running Engineering Open House at that age. I’m sure other people can opine on whether I did a decent job, but I remember the big thing that I offered was I realized that there was a t-shirt shop in Champaign–Urbana that would make quality t-shirts for you for $4.08 a shirt.
Jigar Shah:
And so I had a friend of mine who was a graphic designer who made a beautiful shirt, and I think I still have one of them today, although it’s got to be pretty torn up. And we sold them to everybody for $5 a shirt. And so we sold over 3000 shirts, I think, and it became the billboard for all future Engineering Open Houses. And I think they still make t-shirts today for Engineering Open House.
Bill Nussey:
That’s a great story. I think it reflects the fact that you are an entrepreneur at heart, but I think if you have a story about growing up in the ’80s and ’90s, it doesn’t involve selling t-shirts. You probably aren’t a real entrepreneur. You talk about making t-shirts to help kids get educated in engineering. How do you step past the science? How do you think about that?
Jigar Shah:
Well, I think that the Department of Energy for over 45 years has done an extraordinary job of taking basic human research and basic scientific research and really bringing it to a commercial ready status. Right? And I think that when you think about why those technologies haven’t gone mainstream, there’s a very long list of reasons, right? I think that it’s important to note that part of this is making sure that it’s not just better for people from the perspective of take your vitamins and eat your vegetables, but it’s also better for people in the sense that it’s actually something that makes their lives better, easier, brighter, lower cost, all the features that these things provide.
Jigar Shah:
But I find that growing up there was always a very popular science, popular mechanics approach to things which was … Remember the what’s new section in popular science and-
Bill Nussey:
Vividly.
Jigar Shah:
You were always wowed. You’re like, “Oh my gosh, that’s amazing. I can’t believe that’s happening.” And then when you think about what American families or others have to deal with on a daily basis around getting your kids to school and figuring out how to move a sofa into your apartment or whatever it is that you’re doing, a lot of these things have real functions, right? And figuring out whether the foreman function are lined up is something that I don’t think we’ve done as well in the past at the Department of Energy. And it’s something that I think this secretary in particular has really made sure that we start to think about, right? Because we do have the ability to make people’s energy burdens lower.
Jigar Shah:
I think you also have the ability to reduce pollution, right? I mean, and it’s not any more costly than it was before, but I think when you think about what it takes to actually weave the story together, it’s critical because when you think about it, the investors believe the story just as much as they want the hard facts, right? When you think about where Tesla’s stock is today and where it was in the past, et cetera, right, I mean, a lot of that was, does the story make sense? Is Tesla going to have some unfair advantage around market share in the electric utility space through its wall garden and all the other things that it has?
Jigar Shah:
And true to form, it’s a 75% market share leader even in the last quarter. And so I just think that this science versus where the capital markets and the entrepreneurs are has been disconnected for a long time. And I think we’re connecting them now.
Bill Nussey:
It’s a great perspective. I’m old enough to have grown up in the computer industry, and we watched layers of it grow, and it always starts out as functionality, which is, does it work? Can it accomplish? Can you put a number into an accounting package and get a report? And I think that’s largely where the energy and sustainability industry is today. The next level we used to say was integration. And then the final level, which I think Tesla’s an example, does a bit of already, which is the customer experience. It’s not just enough that it works.
Bill Nussey:
And I love to point out to people that one of the first minivans it took off in the market and took market leadership dominance, one of the reasons cited, was that it had cup holders. And it’s these small things that can make an entire difference. And I think you’re speaking to it very well. I think a lot of people were awed and impressed when you made the move to government in the LPO. We’re all thankful that you’re there. And there was a million questions I wanted to ask you, but I’m going to distill it at this point down to just one. You’ve been there about a year now. So what surprises you the most about working for the government and leading the LPO?
Jigar Shah:
Well, I mean, my whole career has been spent in infrastructure, right? So I think the vast majority of people I talk to will say things like, “Wow, it must be really bureaucratic there and really hard to do things, right?” But I mean, my whole life has been things that are hard to do. Right? I think it took me four and a half years to convince UPS to put solar on its distribution centers or Walmart to put solar on in stores or getting permission out of 12 different groups to build my first utility scale plant in Alamosa, Colorado.
Jigar Shah:
And so the actual form of going through checklists and doing all those things is actually not the part that I’m afraid of. Right? I’ve done that my whole career. Right? I think the part that you worry about when you enter a job like this is what is going to be the quality of the talent, right? I mean, what is the quality of the institution you’re inheriting? Even there, I’d say that I was just amazed. I don’t know why, because my wife has been a senior executive service for a long time in the State Department, and there’s extraordinary people. But I mean, I was just amazed at how extraordinary everybody that I interacted with was.
Jigar Shah:
I think the real challenge is the DOE, as an institution, doesn’t really coordinate with the private sector, right? It does a lot more of the science work than it does business model innovation and some of those things. When you look at the solar SunShot Program, for instance, and where solar is today, DOE played an essential role in the technology side of trackers and the technology side of inverters and the technology side of bifacial panels, et cetera. Right?
Jigar Shah:
But when you think about where DOE played a big role around learning curve and around the scale up and some of those other pieces, it was less involved, right? And when you talk to many of the CEOs and you say to them, “Hey, where is DOE’s role in achieving your commercial goals?” And they don’t think about DOE as their first port of call. And so I think the thing that I’ve been so proud of in the first year is we’ve gotten over a thousand entrepreneurs to engage actively with DOE, right? I mean, from the best entrepreneurs in hydrogen to carbon concentration and storage, to sustainable aviation fuels and others, and on the business model side of things, right? Because some of them had already interacted with DOE on the grant side of things for research grants, right? And that part’s great.
Jigar Shah:
But in terms of sharing their business model and going even deeper than that, things like, “Hey, wouldn’t it be great in sustainable aviation fuels to have a buying pool, right, where the airlines could work together as opposed to each airline picking a plant and becoming the offtake agreement, right?” I think that for a long time the private sector had never felt comfortable sharing those thoughts with the government because they didn’t really know that the government was going to turn around and have a productive role in solving those issues. Right?
Jigar Shah:
And so I think a large part of what we’ve been able to do, obviously through the secretary’s leadership, she’s the one who says deploy, deploy, deploy on a regular basis, is to get the entrepreneurs to actually vocalize what their biggest challenges are so that we at least know about them and we can restructure some of our programs to try to solve them. And at the very least we can organize the markets to at least have a useful conversation about how these things could be solved.
Bill Nussey:
In my book I make a clear pitch for the Department of Energy to the entrepreneurs who read the book because, to your point exactly, I think the role of the government has shifted in the last couple of years. At least they have started to look for new ways beyond just the university and large company engagement. I have a startup that I’m very proud to say was the first winner of the American-Made Solar Prize.
Bill Nussey:
And when I was first told that this prize program existed, I was skeptical, and I haven’t been nearly as close to the government as you have. But my interactions with folks there just blew me away. And the degree to which they were willing to work with my startup was just amazing. And that’s a story that I hope everybody takes away from this podcast today because we really do have a lot of entrepreneurs and innovators in our audience. And the DOE is playing a much bigger, more impactful role than I think it gets credit for. And you’re doing a good job of helping people see the broader picture.
Bill Nussey:
And to that point, you took over the LPO office about a year or so ago, and you have recently made national global news because you have started doing some deals. You have started guaranteeing some loans, supporting some companies. Can you tell us a little bit about what’s going on in the LPO? What are the trends that those of us just looking at spot press releases don’t quite see? Where is it going? And what excites you about the upcoming pipeline?
Jigar Shah:
No, it’s a great question. I mean, I think when the secretary came to the Department of Energy and then brought me in, we probably had $3 or $4 billion of active applications, and today we’ve got $75.9 billion of active applications. And when I say active, I mean there are actual people working on those applications. We have 20 or so more that are actually inactive because they’re waiting for the applicant to fill out a bunch of long dated information requests we have. But those are 77 applications that are truly active. Someone’s working on them, and it’s an amazing difference.
Jigar Shah:
I would say that in the first six to nine months a lot of what we were doing was building trust, right? I mean, you got to go to people, and they weren’t sure that they were going to get a fair shake out of Loan Programs Office. They weren’t sure that their applications were going to get expedited through the office, that there wasn’t going to be some sort of non-linear change that occurred that would surprise them. And it’s not for the faint of heart. I mean, you really do have to put several hundred hours worth of work into putting these applications together. Right? I mean, but our average loan size is 900 and some million dollars. And our median loan size is 500 and some million dollars. And so these are really big loans, right?
Jigar Shah:
And we started with the December Monolith Materials deal, which is first of a kind facility that featured natural gas as a feed stock, but use methane pyrolysis to create carbon black, which Russia is today the largest exporter of carbon black. And so the US is now going to give Russia a run for its money here, and the byproduct was clean hydrogen. And so now they’re making fertilizer from that clean hydrogen, which is another big thing that everyone’s got on their mind because fertilizer prices have gone up because a lot of the incremental fertilizer that we import comes using Russian gas made in Ukraine and shipped to Tampa.
Jigar Shah:
So when you think about just how much of an impact you can have, it’s pretty substantial. The second conditional commitment we provided was for the Vidalia facility in Louisiana that’s going to process graphite ore from Mozambique. And it’ll provide roughly a quarter of all the graphite that we need in this country to meet the president’s goals by 2030 in terms of 50% of all electric vehicles sold being electric. And so we’re excited about that in the critical mineral space.
Jigar Shah:
And then the most recent one was the world’s largest hydrogen storage facility, 150 gigawatt hours worth of storage in a salt dome under an 1800 megawatt coal plant that’s going to be retired and with a 220 megawatt electrolyzer. And so it’s pretty heady days, frankly, when you think about what we’ve already accomplished with the first three, and then we’ve got some big announcements coming in the Advanced Technology Vehicle Manufacturing Program. We’ve got some big announcements in the renewable energy and efficient energy from Title 17. And so we’re excited about where things are headed. And frankly, what we’re most excited about is just the quality deal flow that we’re bringing in. I mean, I’d say America’s best entrepreneurs and innovators are using this office again.
Bill Nussey:
Well, let’s switch gears and talk about the topic for what free energy’s all about, the one that our audience comes to listen here and hear, which is local energy, electric vehicles, V2G, all those things. What’s exciting you right now? And what’s got you talking more about it in the last month or two than maybe before?
Jigar Shah:
Yeah. No, it’s a great question and one that you’ve obviously spent a lot of time thinking about, and I certainly have as well. I think that one of the unique things that the Department of Energy can do is really take a long view on these sectors, right? I mean, there’s clearly a lot of interest from residential solar installers, and you’ve got folks who’ve got DER and DERMS technology, so they can control your smart panels in your garage and smart electrical strips, and you’ve got smart thermostats and connected water heaters and all sorts of stuff that’s happening, bidirectional charging for electric vehicles.
Jigar Shah:
But when you think about the actual role that the Department of Energy can play here, there’s a couple things that we’ve done uniquely. So one is we’ve started talking a lot about this, right? I would say the DERs and DERMS have been around forever and ever and ever, right? But I don’t think utility companies really thought about how central they would be in the operation of their grid until we started talking about it practically every week for the last 18 months. Right?
Jigar Shah:
So when you think about how often we talk about this, and what we say is the data is very clear that it’s physically impossible to interconnect the number of electric vehicles that we want to interconnect cost effectively without controlling loads. It’s just like full stop, right? So everybody was like, “Oh no, we’re just going to triple the size of the transmission and distribution grid.” Yes, we need to increase the size of the transmission grid. But the distribution grid is already at all-time low utilization. We’re less than 40% utilization for most of our distribution grid.
Jigar Shah:
And so that is not cost effective, and dropping that to 20% for the odd chance that 12 people plug in their electric vehicle at the same time is ridiculous. And so we are now at a place where the Department of Energy is forcing people to think about what the smartest ways of integrating all this stuff is. The second thing we’ve done is we have collated all of the data from NYSERDA, from the Connecticut Green Bank, from Michigan Saves, from others, and found that the losses in unsecured loans for energy efficiency and solar have been half of what S&P, Moody’s and Kroll thought they would be, half, right?
Jigar Shah:
And there’s actually 15 years of academic literature predicting that would be the case, right? But we have validated it today, right? And that’s sending shock waves through the market. So when you think about the big residential finTech companies, they have just lived with the fact that S&P, Moody’s, and Kroll was just calculating the loss rates incorrectly because they were just using the broadest possible indices and including healthcare receivables and credit card receivables. And now we’ve said, “No, there’s actually enough data for you to really be informed about this.”
Jigar Shah:
And I would say that the amount of movement that those rating agencies have made in the last nine months because of the monthly conversations that we’re having with them is extraordinary. And as a result, even without us providing a loan guarantee, they’re starting to agree to drop the FICO scores. It used to be that the minimum FICO score for a solar loan was 680. You couldn’t go below that. Now they’re going down to 650, and they’re thinking about going down to 640. And with our loan guarantees, they might be able to go down further.
Jigar Shah:
But more importantly, many utility companies have started to recognize that with our loan guarantees, they’re feeling comfortable about billion dollar integrations of DERs and DERMS into their mainstream grid operations networks, which are now creating a new revenue source for the people who are participating in these programs, which is great, which is reducing the energy burden for people even further. Right? And so I think when you think about all of this technology that’s been around for a long time, right? You have internet of things and all these other things. And now that you’re seeing a pathway to integration into the grid, now a lot of appliance manufacturers are saying, “Oh, we always had the ability to add these features for five bucks to our appliances, but we never thought to do it because we didn’t think there’d be pull through.”
Jigar Shah:
Well, now that these announcements from these utilities are coming out, we actually are going to add these as standard features. And now you see Energy Star and others starting to pay attention. And they’re thinking about how to modify energy star standards to include connected devices. And so now the entire ecosystem is coming around local energy. When I’d say before this administration came in, local energy was like this side show over here that like, “Oh, it’s growing. It’s great. And we’re glad all this job creation’s happening,” but this is not part of the integrated resource plan. Well, it is part of the integrated resource plan now.
Speaker 1:
Our guest, Jigar Shah, points out in the next segment that there are thousands of communities across the US that have local control over their electric utilities. Shah points out that by taking control and implementing clean local energy strategies, communities can cut their electricity cost and save significant amounts of money. You don’t have to look very far for the real examples of just how effective this is. One of the first Freeing Energy Podcast back in January of 2019 covered the stunning success of the Kit Carson Electric Cooperative in Taos, New Mexico.
Speaker 1:
Kit Carson’s leadership wrestled their way out from under a long-term costly and burdensome contract with their primary electricity generation resource and set in motion a plan to provide co-op members with much less expensive, much cleaner renewable energy generated from within the co-op territory. How is the plan coming along? According to recent announcements from Kit Carson as of this summer, the 29,000 plus members of Kit Carson Electric Cooperative in Taos will receive all their daytime power from the sun, contributing to a drop in customer rates of up to 25%. And they are just getting started.
Speaker 1:
The technologies are here, the business models are sound, the savings are real. And for those leaders who choose to pick up the mantle of clean local energy, the resources are available to help with the journey. Shah and his LPO are just one example. Speaking of which, let’s get back to Bill and Jigar to learn even more.
Jigar Shah:
So right now we’re building about 25 gigawatts of solar a year in this country, right? So we could meet 100% of that every year through local solar. That’s how big the potential is.
Bill Nussey:
And there’s some recent research that you and I were sharing on email, but one of the really cool areas is for superstores. We’ve got the big box retailers who have very large flat roofs and often have, at least out in the suburbs where I live, lots and lots of parking lots. What do you think about that?
Jigar Shah:
Well, there’s a couple of angles to this, right? One is they’ve got really large flat roofs, whether it’s Amazon distribution centers to Walmart distribution centers, where you have 28 acres under one roof, or whether you’re talking about superstores or malls or whatnot. I think the other piece of it, though, is that now that you are able to install solar on those roofs for less than $1.50 a watt, right, you’re now producing power at less than seven cents a kilowatt-hour. And so that’s fully integrated with half an hour or so of battery storage to avoid the demand charges, right? The people we want to avoid.
Jigar Shah:
And so when you get to that level, you now basically have this ability to expand the infrastructure on site. So if you wanted to, for instance, provide EV charging to a lot of your customers. A lot of customers spend a full hour when they go to Walmart or a Costco or some of these places. Right? And so now if you put in the 50 kilowatt DC fast chargers, not the 350 kilowatt ones, which are essential for the rest stops and highway refueling. But if you’re talking about the superstores, if you want to put 50 kilowatt DC fast chargers, you can largely fill up your car in the hour that you’re running into the store and shopping, right? Or the hour that you’re spending for at dinner at a restaurant, right? Or the hour that you’re spending at a movie, right? Or whatever it is, right?
Jigar Shah:
These fairly low 50 kilowatt DC fast chargers can actually recharge most of your car from 20% up to 80% in that one hour period of time. Right? And so now when you think about people who live in apartments or park on the street and don’t have a dedicated place to charge their car, you now have an alternative route by which to do this. And it’s enabled because you can put solar on the roof and battery storage in those super centers so that the grid infrastructure doesn’t have to be upgraded. Right? I mean, that’s the real problem, right? Is if you have to up upgrade that grid infrastructure first, you could be waiting two and a half years for that upgrade to occur, right? And second, you could be talking about another $5, $8 million worth of rate basing that would have to happen to do that. This is far cheaper just to have on-site power generation.
Bill Nussey:
And if people are skeptical that this is going to become ubiquitous, you only have to think back 10, 15 years when you would stay in a hotel and you paid extra for wifi and you’d go to a restaurant or a coffee shop and charge will be limited or ineffective and wifi networks existed. It was just a hassle. And today, if you go into a place and they don’t have wifi for you, you feel like you’re back in the neolithic days. What was once a premium service that you could charge for that seemed unavailable is now ubiquitous. And I would posit that we will see a similar trend in EV charging. And I think it’s when you talk about locally generating the power, storing it, the intermittency of solar in some local batteries and not having to upgrade the grid, that’s a heck of a vision and one that I think can’t come soon enough, but unequivocally think it’s coming.
Jigar Shah:
Well, and it starts to look and feel a lot like a microgrid. And so a lot of the research that the Department of Energy has done with the HOMER software and all the other stuff on microgrids are being deployed into these situations. So even if some of these places are not truly off-grid, we are in instituting R&D programs that allow them to island if they need to during emergencies or disasters or other things. And so I just think the level of sophistication that we’re talking about here is really high. And the technology has been around for over 10 years, but I think the business models are now really making a lot of financial sense.
Bill Nussey:
The opportunity is incredible for the whole range of these local energy systems: EV charging, solar, and battery, microgrids, et cetera. You are in such a unique position now to see the landscape in front of us. What would you recommend to policy makers and also to entrepreneurs and technologists? What can we do to speed up the adoption of the availability of the vision you’ve just crafted?
Jigar Shah:
Well, look, I think that we all have to be slightly less judgemental. Right? I mean, I think that everyone in the chain is today doing the best job they can do within the rules that they’re constrained by. Right? And I don’t know that that was always true. There are probably people that were sabotaging things in the past, but today I think people genuinely understand that this is the largest wealth creation opportunity of our lifetime. And everybody wants to try to figure out a way to get a piece of that, but they still have rules. So for instance, we have four major areas where we support entrepreneurs, right? And so we call it the bridge to bankability, right? So on the left side of the bridge you’ve got technologies that are proven by DOE scientists and grants.
Jigar Shah:
The first rung of that is first of a kind deployment, right? Whether it’s a microgrid or whether it’s a brand new piece of technology around realtime DERs and DERMS at smart panels or brand new battery chemistries or whatnot. Right? So we have a role to play there. The second piece of this is the engineering excellence, figuring how to engineer 25% of the cost out of these things just by doing things smarter in a more repeatable, standardized fashion. The third is then the learning curve, right? So this is where DOE really shines where we provide incremental improvements like we did in solar and trackers, bifacial panels, PERC cells, all these things that really brought the cost of solar down because we got the efficiency or the conversion efficiency from 12% up to 19%.
Jigar Shah:
And then the fourth piece is securitization, which is the part that we were talking about with virtual power plants and some of these things. Right? And so part of, I think, what I would say is whether it’s the companies that are sponsoring these solutions, the ESCOs like Honeywell, Johnson Controls, Ameresco or others, or whether it’s some of the banks that have traditionally been very conservative, right? Whether it’s the big money center banks or your local large banks. Right? I think a lot of them are struggling with how do we work with our OCC commissioners and making sure that they believe that these loans are valid and that they don’t have to put up as much primary level bank capital to back the loans, right? And how do I securitize these loans and so that I can get them off my books, right? And you’re starting to see securitization models.
Jigar Shah:
And so a lot of what Department of Energy has expanded into is the secretary has done this realignment within DOE that’s created this office of infrastructure, right? And entrepreneurs, banks, venture capitalists, all sorts of folks are coming in now. And the Loan Program’s Office is the most fully formed part of this office of infrastructure just because we’ve been around for a while, but you’re starting to see a real scale up of the weatherization office, the Office of Clean Energy Demonstrations and state local and others. And there’s six to 800 open positions. So if you want a job, tell me. We’re hiring a lot of great private sector folks.
Jigar Shah:
But a lot of what we’re doing is creating this level of coordination, which frankly has never really been done before at DOE where people come to us and say, “Here is exactly what my business model challenges are, right?” And then the banks will come to us and say, “Look, Jigar. I’m not a Neanderthal. I really want to do this, but here are the three challenges I have with my OCC regulator or my board or my person, right?” And so we’re starting to weave a lot of this stuff together. And some of it is nonsense as usual. Some of it’s just in the head of the person who’s telling us.
Jigar Shah:
And when we do investigations, it’s not a real impediment. And some of it’s a real impediment at which then we go across government to try to find ways in which we might soften some of those issues. Right? And then some of them we have to solve by providing a loan from the Loan Program’s Office because people want to see three of them get deployed first before they want to do the fourth one. And some of them just want a guarantee from our office. So the bank will do it, but they want to limit their exposure on their balance sheet, so they want to guarantee from us. Right?
Jigar Shah:
So I think we’re trying to make sure that we’re not being judgemental, but instead we’re just being a great place for people to come and tell us what they believe the biggest impediments are to trillion dollar scale. Right? Because that’s the only thing that matter is when you think about gigaton-scale climate reductions. And I think we’re getting better and better every day at listening.
Bill Nussey:
Well, pull the aperture back much further than even the massive DOE and to think about clean energy adoption, or I should say local energy adoption. Are there technologies that you think that are missing or could be substantially better? Is it costs? Is it finance? Is it policies that could be in place? I’m just curious given all your years of experience where you see the impediments and opportunities sitting.
Jigar Shah:
Well, I think the biggest challenge, honestly, is you have this mistaken notion from people that all things can be solved by the federal government. And I’m proud of what DOE has done. We’ve helped create this solar app, which the secretary has been pushing, which dramatically reduces the cost of permitting solar. But we’ve got only a couple hundred communities that have implemented it, right? And we’ve got 19,500 cities and towns that are incorporated in this country. Right? So we need all of them to use it. But I would say the other big challenge is that the number one cost that we need to reduce from new solar projects is customer acquisition costs, right? They can easily get to $5,000 per customer, which is crazy. That’s a lot of money, right? And so what can you do?
Jigar Shah:
Well, Google has this sunroof technology where they can tell every single roof that’s got a good solar exposure, and while they don’t want to sell that information for-profit solar installers because they don’t want people pinging these poor unsuspecting homeowners, but they’re happy to share those lists with mayors and have the mayor actually write a letter to those homeowners on the letterhead of the city saying, “Hey, we’ve investigated this. This is not a scam. No one’s actually trying to figure out a way to cheat you. This genuinely can save you money, right? And here’s our local green bank and our local bank partner that is partnered with the DOE through the virtual power plant stuff that we’re doing that can provide you affordable financing, right?”
Jigar Shah:
And they might be able to greatly reduce the cost of customer acquisition going through some sort of website, which the SunShot Program had funded grants to in the past where you created a lending tree for solar loans, so you can get five competitive bids. And then the other thing is when you think about building codes, right? I mean, we’ve been able to build net zero homes since the 1970s using passive solar design, right? It’s crazy that today all homes are not built net zero. It literally costs you an extra two and a half percent to the CapEx of the home, depending on where you live. Maybe it’s 5%. And if you finance it over 30 year mortgage, right, you’re saving 50% on your bills. I mean, come on. Right? But a lot of that’s going to be done through building codes, right?
Jigar Shah:
And having the federal government mandate this from on high is never sustainable. We need 19,500 volunteers across the country, which exists to go to their local mayor and city council and others, attend meetings and say, “Look, this stuff saves people money, right? We need to start doing this. And we have all of the support mechanisms you would need here at the Department of Energy to help you get street lights converted to LED, get police cars switched over to electric vehicles.” That’s a two and a half year payback, by the way, to do that. Right? Figuring out how to put solar on roofs, figuring out how to … For instance, these new smart panels, you don’t have to improve service anymore to houses from 100 amps to 200 amps services. You can actually just manage the loads at the service panel and keep people at 100 amps, which save $7,000 per [inaudible 00:40:29].
Bill Nussey:
I heard that. So I love what you’re saying. And I got to tell you, the punchline of your story there is let’s not look to the federal government for everything is really near and dear to my own journey because early into this space I got despondent realizing that we were just absolutely wrapped around the axle of waiting on the federal government to make broad changes and small changes. And it caused me to pivot where I was going, and all the work in the Freeing Energy, the book, the podcast is really about what individuals can do. It’s exactly what you said, Jigar. It’s what can individuals do as advocates in their communities and the 19,000 towns in cities. What can they do as entrepreneurs? And I think that’s a message that has never resonated more and never been heard more loudly than in 2022. And we’re just getting started.
Jigar Shah:
Well, no, that’s exactly right. And I do think the Department of Energy should do better. Right? And so I do think people should demand that we do better to support your local efforts. Right? And I think we do a pretty good job of it already, but you should demand that we do better and give us the data points necessary to do better. But I think you’re absolutely right. I mean, I think that it’s neighbors helping neighbors, which is really going to make things better.
Bill Nussey:
Yes. Well, listen, this has been a lot of fun, and I’ve made some great notes. I learned a lot. Thank you. We like to wrap up all of our esteem guests with four lightning round questions, just quick answers to get your perspectives. And so I’m just going to hit you with these things and love to get your quick thoughts. What excites you most about being in the clean energy business?
Jigar Shah:
Honestly, it’s how accessible it is to every American, right? I mean, I don’t think we did a great job, frankly, in the early days that I joined. You had to be an engineer, as we talked about before, to even let you in. But today I think when you think about the number of women, people of color, folks who are poor, folks who are rich, I mean, folks who are immigrants, I mean, I think over 18% of the solar industry employees that have joined in the last seven years are veterans. It’s just amazing how inclusive it’s become, and that brings me great joy.
Bill Nussey:
Thank you. Second question. If you could wave a magic wand and change a single thing to move us forward more quickly, what would it be?
Jigar Shah:
Honestly, I mean, the thing that I find to be the most frustrating is that every single town sets up their own building codes and permits. It’s so much work. I mean, at the very least we can move it to the county level, if not the state level. But I think that when you think about just how complex these issues are and just the level of training that we’re going to need to do to make sure that every single county and every single town really understands all of these nuances and complexities, the American system certainly makes it more difficult than most.
Bill Nussey:
I like to tell people that the satellite industry managed to convince the federal government to mandate the allowance of satellite dishes in all American homes. And if we could just do something like that for solar, we’d be off to a good start. Third question. What do you think will be the single most important change in how we generate, store and distribute electricity in the next five years?
Jigar Shah:
Well, I mean, I do think it’s going to be electric vehicles, right? When you think about the F-150 Lightning, they just negotiated a deal. I think they announced with Sunrun-
Bill Nussey:
So cool.
Jigar Shah:
… where they could back up your house for 3,800 bucks. I mean, it’s just shocking when you think about … Right now it’s a six month waiting list in California to get a backup natural gas generator, and it often costs you $15 to $20,000 to do it. Practically, I would say every single electric vehicle sold in 2023 I think will have this feature, vehicle to home. Right? I don’t know that everyone’s going to move all the way to vehicle to grid where you can pull power out of your battery every day to help level the grid. But I do think the vehicle to home and V1G, which is really just turning on and off your charger to help level the grid, is going to be commonplace in 2023. And that’ll mean that net metering no longer becomes that important, right? Because you could actually just use the battery in your car as the storage for your solar.
Bill Nussey:
One of my favorite ideas in my book, crazy ideas was the mobile battery to home where the pizza deliveries and Amazon trucks are all coming to bring some electricity. And while they’re dropping off your packages, give you a quick charge on your residential battery, and just creating an entire new industry that doesn’t exist today via those mobile batteries. Final question for our great conversation today. I bet you could ask this more than anybody I know. When people come to you and say, “Jigar, what can I do? I want to get into this industry. I want to make a difference. How can I help make the transition faster?” What do you answer?
Jigar Shah:
Well, in general, the way I think about this is in spheres of influence. I mean, every single person I know has a sphere of influence. You have high school buddies, you’ve got folks that you grew up with in your local town. If you were in Scouts, if you were in the swim team, there are people that you know that happen to actually be decision makers on lots of things. You remember 2,000 of our 19,500 towns in this country have local control over their electric utility, right?
Bill Nussey:
That’s right.
Jigar Shah:
Have local control over their electric utility. Every one of them could cut their electricity cost by 20% by promoting local energy. And so I think when you think about the potential that every day Americans have to make a difference in their neighborhood, I mean, it’s just amazing how many people don’t take advantage of it. I mean, I’ve obviously had a charmed life having immigrated here when I was a couple years old and growing up in rural Illinois. But even then, I spend a lot of time in Montgomery County, Maryland where I live to make sure that we go with electric school buses at Montgomery County schools, right? That we upgrade the building codes here to make sure that folks save money, right?
Jigar Shah:
If all these things require local participation, and the original local participant was about stopping things from happening, “We don’t want that particular piece of infrastructure in our community.” But adding things … in Montgomery County, we have a policy which makes land use really difficult, and getting people to free up those land use requirements so that we can build more solar in the county has been an uphill battle. And so I think getting good stuff built also requires the same level of local advocacy. And so I recommend people really figure out who their elected officials are and start calling them.
Bill Nussey:
There you go. Thanks again for being a part of this today, Jigar.
Jigar Shah:
Well, thanks for all of your hard work and leadership in the area. I mean, writing that book was no small feat, and I think it served as a real blueprint for folks who really believe in local energy.
One Response
Just amazing- The future is upon us and the prospects are bright.