This is Dana Perkins and you're listening to Switched on the BNAF podcast. Today we have an interview recorded at the BNAF New York Summit with Jiggershaw. He's an entrepreneur that founded sun Edison, a pioneer in building clean energy projects for large companies. He later went on to found the Carbon war Room with Richard Branson, and most recently he was the co founder and former president at Generate Capital,
involved in financing sustainable infrastructure projects. But away from business, he's also an author and a podcaster, and for the US government, he worked for the Department of Energy before being appointed the Director of the Loan Program's Office in twenty twenty one, which is what he's doing now. Senior editor at bn EF, Van de Na Goombar sat down for a chat with Jigger. Together, they discuss the current DOE programs and loans that are available to help companies
with their clean energy transition. They also discussed the application process and what's expected of applicants regardless of the size of their company, and they debate whether or not the utilities company's rate or customers should front the costs for the new transmission capacity that's required. If you like this podcast, make sure to subscribe to receive updates for future episodes, and if you're listening to us on Apple Podcasts or Spotify,
consider giving us a review. For more information about BNF's summit like the one that this episode was recorded at, head to about dot bn ef dot com forward slash Summit. There you're going to be able to see the agendas and also videos from this event and other previous events. Please note, bn EF does not provide investment or strategy advice, and we've got a complete disclaimer that can be found at the very end of the show. But right now we're going to get to vandanas chat with Jiggershaw.
Okay, so let me just get the headline numbers out of the way first before I ask you the other questions. How much do you have available to land today?
It's upwards of four hundred billion dollars that we have to learn today across our three original programs. So that's the Innovative Clean Energy program that we did, solar and wind in geothermalt of the Advanced Technology Vehicle Manufacturing program, which is the one they got Tesla for Nissan, and then we have the Tribal Energy Loan Program. So across those three programs we have about one hundred and sixty
billion dollars and those are our three oldest programs. Then we have a new program called the Energy Infrastructure Reinvestment Program. Really helped to design to help like utility companies and other owners of existing assets make the transition from coal to nuclear, coal to soil plus storage, or we do some pipelines that are currently natural gas and converting it to CO two or hydrogen. So we're very excited about
those programs. And then we also have the SOFIA program, which is CO two trunk lines.
So what part of this was the IRA jump?
Yeah, so we had about forty four billion dollars of total loan authority before the IRA, and then we got one hundred plus two fifty in the IRA. In the omnibus bill for twenty twenty three, we got an additional fifteen billion for the Innovative Clean Energy Program.
Brilliant. So the last time you spoke, the last time we spoke, Yeah, you were talking about amplifying the message that here is a part of money, come and take it, and you were talking to a lot of people who would be eligible a lot of prospects who would be eligible, and I guess that was phase one of your programmer. Are you still doing that amplification process or is that done? Everyone knows what the DOELPO does.
Yeah, you would think so.
I mean, we've done a lot of interviews and a lot of podcasts other things. But I would say that we're continuing to meet people every day who don't know about the Loan Program's office but are perfect candidates for our program. And so I think, you know, we've hired an additional forty people or so into our outreaching business development group, and now we're covering way more conferences in sectors,
which is wonderful. And you know, we're talking to probably about a how for trillion dollars worth of projects today. That number probably needs to get closer to a trillion dollars with the projects over the next year or so. So we're constantly pounding the pavement. But the other piece I would say is that what's happened since we last talked was that we've gotten a lot of these conditional
commitments out the door and then we've closed loans. Right, So, there were a lot of people who were just very conservative and saying until you've closed more of these loans, we're just not going to lean in with your office. And now that we've closed loans and we've gotten a lot more visibility around the process, I think people are feeling far more comfortable expending.
Resources to go through our office. So that's also very validating.
Are you happy with the pace of approvals, because that was also something that you mentioned that you want the office to be like more agile and track the time it takes between an application and approval, and that was one of the things that you yeh, trying to address.
I mean, I'm never happy, right, I mean, that's that's part of my personality. So I always think we can do better, and I think my team thinks it can do better, and we can continue to keep trying to find ways to improve. But I do think that at this point we have hit an absolute standard, which is
about in line with the commercial sector. So in general, these really complicated technology heavy loans take sort of six to nine months to get through the private sector, and I'd say we do them in like eight to ten months, which is right around the same amount of time. So I think in general we're quite proud of that I think there's lots of ways we can improve and get even more efficient. The other challenge I would say is
that our ecosystem continues to be weak. And so if you're an applicant who's just raised four her million dollars and you want to pay someone to help you get through the office, those teams are not very well set up at PwC or Deloitte or you know, KPMG or some of the law firms or other places like they just they atrophied over ten years of dormancy for our program, and they've started the process of ramping back up over
the last two years, but they're not there yet. And so for many of our ecosystem partners, they're overwhelmed with business, and so we need ten or twenty more firms to set up an LPO division to help applicants get through our office. Because for some of these applicants, they're experts at raising equity and they have an equity forward CFO, but that equity forward CFO has never raised this much
commercial debt. They've never put together a data room, they've never answered questions from a debt perspective, and so for some of those applicants, it's taking them a lot longer than it should because they're just not used to the process.
My understanding was the kind of support that you provide loans and loan guarantees, it's kind of not available in the private sector space. But it's interesting that you're comparing your timelines to the private sector players.
I agree with you that in general they're not comparable per se. They're not really competing with us, and we would never want to compete with the commercial sector. But when you look at like Centender and their leading of the Vineyard wind proposal, that deal took over a year to close, and so I do think there are some of these complicated deals that the bank does when they've got very high profile clients that force them to do the deal, and those deals are complicated and they take
a long time to close. I'm comparing us to those deals. But for many of the companies that use our office, these are growth companies who don't have some sort of like inside guy at a bank. We become their inside guy. Like we The goal for us is to try to make this a more fair process so that everybody can take.
Advantage of this.
You've often spoken about I don't know if you've spoken about it or write wait about it. Bridge to bankability, that's the that's the gap that you fail. I wanted to ask you, which are the sectors where you feel that the requirement of this bridge to bankability is more sturgent.
Well, I'd say it's all of them. The goal here is for this to be a principle that really applies across all of the sectors where the International Energy Agency and others have highlighted sectors that are required to meet our decarbonization goals by twenty thirty five and twenty fifty. So when you think about the four reports that we've issued recently, right you have the Carbon Management Report, the Hydrogen Liftoff Report, Long grain energy storage, and nuclear those
four definitely need it. The next set of reports that are coming out with or in the industrial decarb space, the virtual power plant space, they definitely need it. And in general, what you find is that we have a slightly different way of doing things than the Europeans do, but in general it requires roughly one hundred billion dollars of private sector experience to cross the bridge to bankability,
no matter what the sector is. That's when you go through all four pillars, which is first of a kind deployment, and then engineering excellence, and then you've got the learning curve which we all rediscovered from nineteen thirties. And then this Wall Street acceptance and the one hundred billion dollars doesn't save you a gig a ton of carbon, but it does get you across the bridge to bankability, and then now you're available to save a gig a ton of carbon.
I recently had a chat with the Hydrocobec team and they planned to start exporting clean power to New York by twenty twenty six the reison and they just got approval for the second line, which was held up in Cootes. So it took them fifteen years to get all the approvals for the transmission line which we'll carry that power. We heard about permitting issues at the summit at various
panels this morning. So as you look at the project proposals that LPO gets and track their progress, which are the systemic weaknesses that stand out for you?
Well, I mean weaknesses are a strong word in general. The federal government wasn't the reason why those projects were slow. The reason the projects are slow is because the New York ISO and then Nyserta and all these other players are like, do we want this line, don't we want this line. Here's like sixteen different political factions who have a role to play and have a voice they want to give, And so like, I'm happy for permitting reform
to occur, and I think it's clearly needed. And even Bill mckibbon like wrote about how we need to build again. But I do want people to recognize that for all of these long transmission lines, whether it's trans West out of Wyoming or whether it's Sunsea New Mexico or Grain Belt that Inventergy's building, there's a lot of competing interests for these lines, right, And the way that the US economy is structured, each state makes the decisions for electric
utility work. And so I understand that people want the federal government to step in and say we will just force everyone to do these things, but that is not the democracy that we live in. And so I just want to make sure that people understand what they're really asking us to do and what limits they want to
put on us. Now, the other way to solve this problem is through technology, which is where we come in, and we have the technology to reconductor all of the existing transmission lines and three x the capacity of them. But that requires the electric utilities that own the lines to want to do that and so, and it also requires the renewable energy companies who currently get all that
access capacity for free, to pay for it. Right now, they're saying, we'd like to build our projects at twenty nine dollars a megoat hour, and we'd like to socialize the cost of transmission amongst all ratepairs. Well, guess what that business model is over And so if you want to continue to build eighty gigawatts one hundred gigawatts a year of renewable energy, well you have to pay for
the transmission required to do that. And guess what that increases the cost of that power from twenty nine hours a MEGO hour to almost sixty nine hours in MEGO what hour?
And they don't want to do that. So then we're in an impasse. So I'm happy to.
Take full blame for all of the things that's wrong with the entire innovation economy. My shoulders are broad enough to do that. But it doesn't solve the problem for me taking the blame. What solves the problem is people recognizing what the actual problems are, not what they pitch to the press, and then figure out how they work through them. These are real cost allocation issues. Do you want rape payers to pay for them? Or do the customers who want that new transmission capacity have to pay
for them? And there's arguments on both sides. I understand it, but let's not trivialize these conversations and say it's just permitting.
So since we out talking about increasing the transmission capacity, that's part of the plan. Biden has spoken about it. What's the way out? This debate can go on for a long time, But what's your recommended solution.
Well, it's not my recommended solution. We have ten reports we've written on this solution, and the answer is cost allocation, Like someone has to pay for this new capacity. What the utilities are saying is we don't need this new capacity. We can use cold and natural gas and potentially nuclear in the future within our existing transmission And there are others that are saying, no, we need a three XR capacity so we can build a lot more solar and wind. Great, okay, Well,
then then who pays for all that extra capacity? You can't just socialize it when the utilities are saying we don't need it. So then the question becomes who pays, and so we have to decide who pays, and then maybe they pay for fifty percent of the cost, maybe
they pay for one hundred percent of the cost. But like it can't be well, we want it for free because that's what we're used to and we're just going to stand in the queue, in the interconnection queue for seven years, okay, But like I just feel like sometimes we try to like say these things are simple to solve, and they could be simple to solve. It's like a straightforward answer.
But it's not. It's not easy.
When they say it's it's simple, not easy, and that's true. We know what the answer is, but it's not easy to implement it.
Do you have any projects in queue that are impacted by the interconnection queue?
Not really.
I mean the loan Program's office in general doesn't do established technologies, right, so solar and wind, so we don't
have a lot of impact there. And frankly, most of the rest of our projects, whether it's the nuclear plants or the geothermal facilities or hydro facilities, they actually have access to interconnection, so that hasn't been a challenge, But I do think we have a really big problem around like figuring out how we do big thing right and how we give people certainty around how to do it. But I do think that we can actually perform NEPA
in a very efficient way. Our office runs NEPA for projects on private land and we're able to do it in less than eighteen months usually, So I think we can be very efficient about things. I think there are ways for us to work with tribes and local communities to make sure that their.
Voice is heard.
But I do think that we allow for properly permitting projects to continue to be sued and sometimes you get more delays there, and so we should figure out how we prevent these projects who don't like the answer that comes out of the process from continuously delayed from lawsuits.
So shifting the focus back to LPO, I had like one question trying to understand what has changed in the last twelve to eighteen months. If Elon Musk was starting his business today and came to you for an ev loan, what would be his chances of success and how soon would he get the money?
Well, it depends on how prepared he is to get through the office. So we have of the one hundred and thirty four our application applications that we've received, I think I've said in the past, about thirty five of them are prepared to get through the office in sixty six to eight months. And those we can get through they have professional representation, they not answer our questions with
twenty four hour response time all that stuff. And then we have almost one hundred applicants who probably can't get through the office in that amount of time, and they need to hire professional representation, They need to upgrade some of their staff to be able to like do commercial debt. They're experts in raising equity, which is great, but that's
not the same as us. Right, So in general, I'd say, you know, like I think Syrah Resources got through the office in four months because they were really well prepared. And then there are others that I think were borderlined two years. I think if you talked to Rob Hanson, a model of materials, he'll say that with borderline two years and he wasn't ready when he first came into the office, And we help his organization take a more professional approach to under the underlying risks of his project.
And his company is better for it, and we're equally excited about both types of applicants. So I don't mind spending twenty four months with somebody, but I don't want their expectations to be they can come with less preparation and then get through the office in six months.
So that was one of the things that I wanted to ask you. Are you getting like is the percentage of applications that are more complete? Has that increased over the last few months or no?
I mean, I mean, certainly with the seventeen oh six program, we have more electric utilities coming in and other more established players coming in, and they have the staff to be able to do a lot of this stuff. So those are higher quality applications. But there's still a huge number of extraordinary entrepreneurs and innovators in our country who don't have the ecosystem support that they need to be
able to get through our office efficiently. And so we continue to work on the big accounting firms and the big services companies and others to try to get them to set up an LBO specific division to help those companies. But we can't lower our standards to rush them through a process. Right our standards are set by Congress, and so we have to get everyone up to those standards. And we think that all of these people can. If we don't think they can, we tell them that and
we encourage them not to apply. But for all the one hundred and thirty four applications we have now, we believe that they can hit our standards, but they still.
Have to do it.
You said, it's not easy to make you happy, but I was. I really wanted to ask you in terms of pace of applications. I just looked at some data. So March twenty twenty two you had seventy seven applications and seventy six billion dollars in loans requested. And the latest update, it is, the one I have is March twenty twenty three is one thirty applications and one hundred
and eighteen billion in loans requested. And of course you have the sectors that keep going up and down, and the last time business mostly up in terms of like the number one sector.
So yeah, that's true on a relative basis.
Yeah, so that is not a pace you're happy with, Like where would you like it to be?
Well, I mean, we have four hundred and twelve billion or so to put out the door. And so in order to put that much money out the door, we're going to need at least that much in loan applications, and probably more than that because some people fall through. And so I think that the US has the ability to do big things. I think we have a tremendous number of entrepreneurs and innovators here that need us to
do big things for their companies to be successful. But also we have a number of foreign companies who want to come to the United States for their technology to be commercialized, and so we want them to come here as well. And so I have a lot more work to do. Look, I mean we have. We have been given these resources by congres I don't think that they
chose these numbers randomly. They believe that in order to unlock ten trillion dollars worth of investment, we have to do this first four hundred billion to unlock folks across the bridge to bankability. And we've used these lift off reports to help understand where we are on that continuum. So I'm very happy with my team. I think they do an extraordinary job and they work really hard, but we have to continue to do better. To hit these absolute targets.
How big is your team now?
We're up to about two hundred.
And fifty people, so it's pretty exciting. And we have about one hundred new FED positions that'll be posted over the next few months, and so we're excited about the long term prospects of how we're building this place up as an institution.
In terms of choosing projects, is kaling up a big part of the decision, the potential to scale up.
I mean to be clear, we don't choose any projects. What we do is say to people, do you have a project that fits within the four milestones on the bridge to bankability? And then they submit a Part one application, and then we say do you meet the statutory required of the Loan Program's Office, And if they do, we
are now equally excited about every project. So I don't care whether it's carbon sequestration or nuclear or hydrogen or long dration energy storage, renewables, and I don't care whether it's one hundred million dollar loan application or a six point five million dollar load application. We care about both
of them equally. Everybody who uses a Loan Program's Office should believe and we are certainly trying to make it so that they will get a uniform experience no matter what sector they do or how big their loan application is, as long as they meet our criteria. And I do think it's important for us to be viewed as an independent arbiter of the statute. So if you qualify, we will prioritize you.
That's really interesting. I thought there was some intervention on your behalf. You're just saying you meet the eligibility criteria, and whether it's five million dollars or five billion dollars, you're kind of treated equal.
Yeah, I mean five million is more difficult. So we're doing the small deals like that in the Tribal Energy Loan program, but I'd say the vast majority of the other programs and applications that we have started roughly one hundred million. There's no statutory minimum, so they can certainly come in for five, but there's like three to four million dollars of cost associated to go through our program.
So it's hard to bear three to four.
Million dollars of cost and a five million dollar loan.
And in terms of what has been approved, I just have a few headlines. Do you have a number or can you just share the headlines. As far as I know, it's probably three or four large projects which are approved.
Well, there are three projects that have closed their loans and started drawing on the capitol. There's a number of additional projects where we've done a conditional commitment, things like lie cycle or redwood or model of the materials where they haven't closed the loan yet but they're expecting to
and so we're excited about that. And then we have many more applicants, mainly these thirty five I was talking about that are fully prepared to get through the office that I can confidently say they're going to get through
the office over the next twelve months. There remaining one hundred depends on whether they can get the right representation to really fill out our paperwork preper like I said, like we equally are enthusiastic for all of them to get across the finish line, but they have to meet our absolute standards, like we're just not allowed to drop our standards to push them through.
I was speaking to some bankers and they were talking about actually at the summit, and they were talking about how supply chain stress is still visible in terms of lower disbursements, is that. Something that you're also noticing is the pace of the actual money out go there than it needs to be.
The deals that we're doing have a lot less impact from supply chains because they're first of a kind deployments or something.
It's right.
You have much more supply chain impacts on solar panels or wind turbines or cable or some of those things. And so I'd say our projects are far less susceptible to supply chain delays because we're doing like the first six deployments and some of that stuff.
So how would you sum up your Like, it's two years at the ESPO. Now, did they pan out as they as you expected them to? And how you know? You've told me you're never happy, So I'm going to put that into every question. What has been the biggest challenge for you?
Yeah, maybe I should correct that I'm always happy, but I've never satisfied.
That sounds better, Yeah.
I mean, look, I think the first two years was about proving to the marketplace that we were capable of returning this program to its prominent place within commercialization. I think when we first came into office, there was a lot of high hopes, but we hadn't really.
Proven to people that were able to do it today.
I think when you look at the diversity of projects that have gone through the office, whether it's manufacturing loans or project loans model for materials as natural gas as an input. So people were worried that we'd be anti fossil fuels or whatever. I think people recognize now that we really are taking a very agnostic, dispassionate view of technology. They have to reduce greenhouse gas emissions, and that is
something that we do care deeply about. But they don't have to be from one tribe or another tribe, like we're open to all great ideas, and then they do need to meet certain absolute standards, and we're happy to keep working on improving our ecosystem and all these things.
But I think that ultimately where we are now is that the marketplace has still not figured out how to efficiently go through our process, and so they believe in us, they believe that they'll be treated fairly by us, but they don't believe that they actually know exactly how to get through our process efficiently, and so we have a lot more work to do to help them understand how to do that. And most of their friends are not helpful.
They're venture capitalists, their board members, their bankers, like, none of them are actually helpful. They're wishing them well, but they're not actually able to help them. And so that falls on us because we believe very strongly that this is the future of American success, and so we have a veested interest in their success and we want them to be successful.
Is there a personal Is there a challenge that was more personal that you may like to share? What were these two years?
Well, in general, I'd say that I make commitments to people to get them to invest their time and ultimately money into getting through our office. And so it's at least four hundred hours worth of work to get an application put together. Then there's staff time involved, and sometimes they have to pay third parties to get through this.
And there have been times where they have not received what I believe to be a five star experience through our office, and that bothers me because this is America's best and brightest, and I made personal commitments to them that they'd be treated fairly by the office, and some of them have experienced hurdles that I wasn't expecting, or
delays that I didn't expect. And I just think that in general, the US government in this program have to become a more predictable place for them to do business, and we're striving to get that done every day. But it is a personal failing that I feel, you know, emotionally, personally, because I'm making personal commitments to people that they're going to be treated fairly and I want to make sure we honor those commitments.
And I did not know that an application, a complete application, would take about four hundred hours of preparation time.
I mean, it's no different than a commercial bank, as someone who's closed over one hundred billion dollars of commercial debt. It's a lot of work to put together at data room with three hundred files and all the work that goes into putting those together and all that stuff. But our average loan size is nine hundred million dollars, Like four hundred dollars is not a lot of time takeet a nine million dollar loan.
That it's a good ratio. So just to wrap up any headlines that we can expect from you in twenty twenty three that go beyond what you've already told me, you know you're expecting these thirty five applications to be through in the next twelve months or so.
Yeah.
Well, we have our first applications that have come in for the seventeen oh six program, and we have our first applications that we feel really good about in the Tribal Energy program, and so we're hoping that those two programs really come into their own this year.
So we're excited about that.
But we also have I think over seventy billion dollars worth of innovative clean energy loans in here and over twenty six billion dollars worth of ATV Advanced Technology Vehicle manufacturing loans to get through.
So we're busy.
Thank you very much for your time and it was a pleasure to hear your thoughts and all the best to the Department of Energies LPR.
Well, thanks for your continuing interest. It's really important.
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