Michael's experience in the industry spans a couple decades, so we also talk about what has changed during that time ... what has remained the same ... and how he sees things taking shape in the future.
PODBRIEF: A look at recently released reports that paint a clear picture of how much work the US needs to do to fulfill the potential of a successful energy transition.
US Department of Energy: "Solar Futures Study"
Lium: "Biden’s Solar 40% By 2035 Already Falling Short"
GWEC: "Global Offshore Wind Report"
Sean McMahon 00:08
What's up everyone and welcome to the renewable energy smart pod. I'm your host Sean McMahon, and my guest today is Michael Rucker, the founder and CEO of Scout Clean Energy. Michael has been in the renewables industry for a long time, so we're gonna chat about what has changed over the years, what has remained the same, and how Michael sees the industry evolving in the years to come.
Stay tuned for the PodBrief segment towards the end of today's show, where I'll discuss some reports and studies that have been released recently, that paint an interesting picture about the growth the wind and solar industries will have to exhibit to maximize the potential those two sectors have to help power the energy transition.
And remember, if you're looking to stay informed about all things renewable energy, head on over to SmartBrief.com and sign up for our daily newsletter, the Renewable Energy SmartBrief before we kick off my conversation with Michael Rucker from Scout Clean Energy, I want to say a quick thank you to the exclusive sponsor of today's episode, Mitsubishi Heavy Industries,
Mitsubishi Heavy Industries is committed to realizing a carbon neutral future through its new equity interest in the Brighter Future Solar Farm. MHI continues to identify investment opportunities in carbon reduction projects to accelerate its energy transition activities. MHI - Move the World Forward.
Sean McMahon 01:31
Thank you, everyone for joining me today. My guest is Michael Rucker, the founder and CEO of Scout Clean Energy, Michael, how you doing today?
Michael Rucker 01:39
I'm doing great. Thank you, Sean. It's really a pleasure to be with you.
Sean McMahon 01:42
It's great to have you. I see out the window there. It looks like a nice day in Boulder, Colorado, where you guys are headquartered. What's life, like in the Rockies these days?
Michael Rucker 01:49
Well, we're known for sunny weather. And it's not letting us down a little bit on the hot side. But I think the biggest issue we've had this summer smoke from California, from the huge fires that we've seen on the west coast, which is disappointing, but also in a sense inspiring too. Because what we do here, we're trying to address climate change, which is one of the big drivers of the wildfires, ultimately.
Sean McMahon 02:11
Yeah, we've had a little bit of that. I'm up in Portland, Oregon. And we thought a little bit about this summer, a lot worse last summer. But you're right. It's something we're all trying to kind of tackle in our own way through the work we do. So let me start off by just kind of asking you to tell me a little about your background in the industry, you know how you got started in renewables. And then tell me a little bit about the origins of skout clean energy.
Michael Rucker 02:29
Yeah, I got started in the renewables business, right when it really commercialized on a large scale in the United States. So when GE wind energy entered the business, prior to that I actually had worked for nonprofits initially. And then, after graduate school, became an economist, and worked at the International Energy Agency. So I follow the climate change negotiations from the Kyoto Protocol through the first five years of the COP, academically interesting. And of course, I'm really motivated by the challenges of addressing climate change, but it just wasn't hands on enough for me. I want it to actually build things get ironed into the ground, as they say. So eventually, that led me to switch over to the private sector.
I started out, really working in power marketing, trading, renewable energy certificate trading, and then was lucky enough to come to GE right after the acquisition of Enron and worked at General Electric for a number of years. At that time, it was mostly wind power, but also natural gas and hydro sales. And then I got a call back to go to the former team that had put together as on the predecessor of GE, and became a developer clipper wind power, and I've been in development ever since.
Now, I'm in Boulder, Colorado, and started two companies here, which Scout is one of them. Scout was a spinoff from an operations maintenance company called harvest energy services that I initially founded in 2014. was able to bring our team together and form Scout. You know, Scout’s grown quite a bit since its founding in 2016. It kind of parallels the long term extension of the production tax credit for wind, we started out really focused as a wind company, which was my background. Since then, we've grown to be about $1.2 billion in market capitalization. We have about 1200 megawatts of projects in operation. We're an owner operator. That's all wind at this point. We have about five gigawatts of total development in 14 different states. That's wind, solar and a few storage projects. So we've diversified quite a bit.
Sean McMahon 04:35
Yeah. Talk to me a little bit about the project footprint. You have a Scout, where are some of your projects located with the big ones and the stuff that's coming down the pipeline? Yeah, we have operating
Michael Rucker 04:42
projects in a number of states. In Texas, Oklahoma. We have Indiana as well for wind. We have wind in Pennsylvania, West Virginia, California development projects, basically in all those regions added a few states, in the Midwest and in the Pacific Northwest, where we're reaching out basically to diversify in as many markets as we can participate in. We're in every major power market at this date, other than New England, New York.
Sean McMahon 05:16
Okay, sounds like you're everywhere. And it also sounds like you've been in the industry for quite a while. So what are some of the biggest trends that you're seeing right now that are shaping the renewables, you know, the energy transition, you know, both from a positive and maybe any headwinds, you're noticing.
Michael Rucker 05:30
On the positive side, really, what we've seen is decades of improvements, in efficiency of the technologies we use, you know, solar PV costs have dropped about 90%. In the last decade wind about 70%. That delivered cost of energy for most of these technologies are really the most competitive on the grid. For the first time last year, we, we really saw renewables consistently below the long term cost of energy for coal, which is a significant milestone. Also, we've seen a rise in storage technology. And we'll only see that continue as we try to integrate more of these renewables into the grid. on the market side, corporate interest has been a major trend. A lot of our marketing efforts are really targeted towards corporates these days, when traditionally, when I started in the industry was primarily all utility market. So those are the positives that are really driving a lot of growth. negatives. We're seeing oversubscribed transmission queues throughout the United States. So the grid is basically just bloated with interconnection requests, I understand that about 750 gigawatts of projects seeking to interconnect at some place on our grid. And what we're seeing are long queues, very expensive cost allocations for interconnections. And really the threat of slowing down the growth that we've seen in renewable deployment, unless it's addressed.
Sean McMahon 06:58
So what are some of the solutions you're hoping to see to kind of clear out that interconnection queue?
Michael Rucker 07:03
Well, I'm pretty excited about a few of the policy initiatives that we're seeing coming up. Maybe the most significant one is the infrastructure package, which the bipartisan one, which should pass later this year, that has about $73 billion in federal funds targeted for investment in the transmission grid. And that's significant. But you know, the truth is, we've had no lack of capital in the industry, that would be excited to invest in a transmission project. It's really about transmission planning and cost allocation. And part of that bill is actually creating what's going to be called a grid deployment offices and DLP, which isn't heavily well defined right now. But you know, could evolve into something that would help us permit and site transmission across the United States, and also integrate that long term planning into the planning process between the various independent system operators in us, which notoriously aren't very good at planning across the seams across their borders. So that's a big positive. And also firk itself, is working on a new rulemaking that is promising to just overhaul the transmission planning and cost allocation process. It's called an A no pert, which is a very, very wonky term, but it's basically the process of getting a rule in place that would, hopefully accelerate that United States that should be very significant one,
Sean McMahon 08:22
That sounds good. Sounds like some good ideas. Now, so we're about, you know, 18 months or so, into the pandemic. And I mean, you know, as well as I do that when this thing first hit, there was a lot of trepidation within the renewables industry of where projects going to get built, you know, what kind of supply chain hit where we're going to take. So what have you learned from that? What have you seen in the last 18 months, you know, anything both operationally and Scout or industry wide that they were kind of some of the lessons you've learned?
Michael Rucker 08:47
Yeah, you know, the pandemic unfolded almost the opposite of what I was expecting when I was sitting at this desk in 2019. What we really saw, ultimately, were construction projects. We had two major ones going on, I anticipated that those would just come to a dead stop, that we would have infections, quarantines, supply chain issues, what actually unfolded is the construction projects actually, were relatively close to being on time we had a few supply chain disruptions, beginning but once all the equipment was developed, people in that outdoor environment were able to, you know, pursue construction of two major wind projects without a major hiccup. What did surprise me though, is that development work, which is a very much kind of upfront and personal business, you have to get landowners on board with making the commitment for leases for energy installations, you have to be dealing with permitting authorities, local stakeholders, that was disrupted, more significant than I thought. It took a while for these processes to kind of move over to zoom and Google and it was very difficult to kind of sit at the kitchen table with landowners in the height of the pandemic. I can have a comfortable conversation about participating in one of our projects. So that's slowed down quite a bit. industry wide. We definitely saw demand destruction, which is basically reduction in energy demand, as a lot of our manufacturing, heavy load use, and even office use of energy declined over that period. So that led to declining pricing for operating projects. But I think we're right now seeing that come back pretty quickly, along with the economy.
Sean McMahon 10:28
Speaking of the supply chain, so what are your thoughts on some of the issues that have arisen when it comes to solar? Talk about the tariffs and stuff coming out of China? It's a hot topic right now. And obviously, you're you're standing up a lot of solar all over the country. So what's your viewpoint on that and and how you hope it shakes out?
Michael Rucker 10:44
Some of the trends we've seen, obviously are tariffs, and countervailing duties. Really, these are policy measures that the government's been taking, to try to encourage manufacturing United States, and I can't say it's been terribly successful policy over time, I think we've adapted to it. But we have to realize that most of the employment, particularly in solar is really installation. It's not the commodity panels that we use to build projects, it's really about the people who plan, build, construct the projects and operate them ultimately, nonetheless, you know, we follow it carefully. And we have to abide by those rules. You know, some of the tariffs that we thought may have been relaxed seem to be continuing, particularly the 201 tariff, which I think applies to modules from all over the world, the 232 tariff applies to steel that's affecting wind, as well as solar. And then you have the anti dumping countervailing duties, which look like they might be expanding, actually, just in the last few days, we've seen that potentially start to move to encompass Southeast Asia as well. And that's trying to catch what are suspected to be Chinese companies, which are trying to basically launder panels through those countries. You know, it's it's something we have to live with, I might not agree with it as a policy. What I can say is definitely adds to cost for US consumers. tariffs are effectively a calf attacks on consumers in the US, it doesn't really fall on the importers. So we're effectively making our solar industry less competitive at the expense, probably of, you know, local employment in the US in the big picture. But that being said, I'm still a big proponent of us manufacturing, and I hope we can have a strong manufacturing sector, we just have to figure out where's the best value at what do we what do we build here versus what we buy? And, you know, international markets?
Sean McMahon 12:37
Yeah, I guess kind of bringing some of that manufacturing home is what the, you know, the jobs, jobs, jobs is all about, right. So it's an important piece to get figured out. I'd like to pivot for a second and just hear more about a couple of specific projects that you and the team at Scout Clean Energy have been putting together. listeners will know this. But the reason you and I first got in contact was because the project by the name of Horse Heaven and Washington State. What can you tell me about that?
Michael Rucker 12:59
Yeah, Horse Heaven is one of my favorite developments. It is 1000 megawatt wind solar storage hybrid project. So it incorporates all of the principal renewable and storage technologies in one project. And by doing that, you can provide a very consistent delivery in shape up delivered energy to an ultimate customer that utilizes transmission more effectively, it covers utilities load, throughout more hours of the day, it's basically a better fit for everybody, if we can get closer to around the clock energy production. And one of our facilities. This one is large scale office, LEED 1000 megawatts, but it really seems to fit what the needs are for the region. Washington State works located as a 100% clean energy standard that is trying to meet over the years. So it's going to be heavily focused on renewables. This is one of the largest projects really in the region that can help to supply that demand. And we're really proud that four seven could be delivered in the next few years. And I hope that we can find utilities participate in the project so we can get financed and built. Looking forward to it.
Sean McMahon 14:15
One other project I want to ask you about Sun Chief Solar and Bitter Ridge Wind in Indiana. Now, did those start out as a hybrid project or how did that evolve?
Michael Rucker 14:23
Yeah, we actually started Bitter Ridge as a wind farm back in 2016. It's an area where I've been working years ago and first time I looked at the bitter edge locations. The technology just wasn't there for when it wasn't efficient enough. But over time, that changed and we were able to get a project developed, financed and constructed the wind into commercial operation in 2020. The Bitter Ridge wind farm is in Jay County, Indiana. We've since come and began development work to integrate a solar project with the wind farm. And this one is unique in our portfolio least the solar farm itself the panel's the modules are going to share the same footprint roughly as the wind farm. So from a technology perspective, it's truly a hybrid project, generating wind power, more weighted towards the shoulder, evening and night hours and solar power during the peak of the day.
We'll be right back.
Mitsubishi Heavy Industries is building an innovative solutions ecosystem to realize a carbon neutral future through investment in renewable projects. Recently, MHI announced a joint partnership with Osaka Gas USA to purchase the equity interest in the Brighter Future Solar Farm from project developer, Oriden. The project will provide a local generation source and allow Blue Ridge Energy to work towards its goal of a low cost, low carbon future. MHI aims to help Blue Ridge Energy achieve 50 percent reduction
in carbon emissions from 2005 levels in the next decade, and to achieve net
zero carbon emissions by 2050. MHI - Move the World Forward
Sean McMahon 16:17
And now back to my conversation with Michael Rucker, the founder and CEO of Scout Clean Energy. And when we were talking about the pandemic earlier, you mentioned that one of the things that was difficult was in the early development phase, you know, getting landowners to sign on for leases and things like that. So what are some of the things that your team or what are some of the tactics, I should say your team utilizes to do that, again, when we first got in contact about horse heaven. That was kind of the story I was reading was that the unique strategy your team used to? To engage local stakeholders? So what approaches do you take?
Michael Rucker 16:49
Well, to start with landowners, generally landowners in most of the country are very open to wind and solar energy. Wind in particular, is very compatible use with the traditional land use that they've had on the sites over the years. So that could be ranching or farming, we use a very, very small footprint of the land that's dedicated to the wind farm, actually, and the rest can just kind of go on as it was before. So landowners really appreciate the revenues from that, over time, stakeholders, likewise, in the community, in many places where we arrive, we become one of the largest taxpayers in a county initially from when we installed the plant. And that money flows down, you know, typically to schools, to counties to hospitals, which creates, you know, a higher standard of living, potentially, in the places where wind energy and solar energy has been deployed. So, stakeholder relations become most difficult when we get into the permitting process. And ultimately, you know, we do see opposition projects, when more than solar typically. And we try to address that by really pointing to these positive aspects that I'm describing. But also just trying to get in front of it and communicate with the communities so that people understand our plans, understand the benefits, the local benefits for the project and, and really try to have a conversation around the facts as opposed to the hype. And we try to keep that as nonpartisan as we can definitely, although, you know, we have a polarized society. And, you know, that can create automatic opposition, just due to political beliefs. But once you drill it down to the facts, I think we usually get the majority of folks in these communities supporting projects. And certainly, once they're built, they very quickly fit into the landscape and into the local economy.
Sean McMahon 18:47
So let me pull on that thread a little bit about politics and things like that. So obviously, there are some areas where you probably get a more welcome reception than others. So what are some of the things that can be done at the local state or federal level for that matter, to help smooth out some of the process of getting new renewables projects up and running?
Michael Rucker 19:04
Well, we try to communicate early and often we try to focus on the positives, we address in a factual manner, the challenges the negatives, we spent a lot of time on environmental and wind avian issues. We spend a lot on visual impact and sighting as well. Just really make sure that members of the community know exactly what we're proposing know, the benefits for the community and also identify and respond to the issues that opponents bring up. And, you know, typically, those are what's called NIMBY issues, you know, not in my backyard. And, you know, most of that can be addressed just with facts, frankly.
Sean McMahon 19:49
And then on the federal level, so a lot of the proposals we're seeing around Capitol Hill right now, having to do with tax credits. So obviously that's a key component of developing projects like the ones that Scott gets up and running. Where do you see all that headed?
Michael Rucker 20:03
Well, we had a little bit of help recently, I think June, the early summer, they revised or called the Safe Harbor guidelines for renewable energy projects that gave us basically an extra two years to get major projects in the ground, addressing the delays that we saw during COVID. So that was very helpful. But really, the big change could come with the upcoming human infrastructure bill, which is often called also the reconciliation bill, if that were to pass a word that would potentially extend the tax credits for wind and solar by about 10 years in a phase down. And this is specifically to address climate change. I'm not a big fan of tax credits, I'll say right now, particularly the production tax credit, and wind has a distorting effect on power markets. It drives pricing very low. But it can even drive pricing negative and a lot of hours, which obviously makes it difficult for us, as an operator to generate cash flows to keep projects operating. That wouldn't be how power markets would naturally evolve without the cut tax credits. So maybe not the most efficient and best policy measure, but it's the one that we're familiar with. And it's the one that Congress can get done. So given the gravity of the issues associated with climate challenge, we'll take it. And we'd like to see the bill go forward. And if its goal is to roughly double the pace of installations of renewables in the next decade, I think it has a good chance of of doing that, ultimately.
Sean McMahon 21:41
Okay, well, let me pick your brain a little bit on that, then, in a perfect world, you know, let's just pretend that everything was smooth sailing on Capitol Hill, and the best idea is always won out. What would you prefer over tax credits as a mechanism to kind of spur the growth of renewables,
Michael Rucker 21:55
I'm more of a fan. To the extent you can be a fan of such a thing. I'm more of a fan of a carbon tax, basically, of monetizing the price of carbon, which would be technology neutral, and also create a durable incentive. That's market based over time. So it will build efficiency into that equation. And the most efficient technologies would be deployed in most instances. And as technologies ebb and flow, we'll have new entrance, more efficient technologies applied. And the carbon tax would also encompass things like renewable and not only renewable energy, but energy efficiency, which I think is a very important, and maybe the lowest cost option, we have to reduce emissions in the short term. So I'm more focused on our carbon tax from a purely economic perspective, but there are a lot of challenges and instituting that nationwide. Yeah, for sure. Like I said, In a perfect world, we can maybe get there. One thing I'd add is the reconciliation, human interest bill does have the potential bringing a clean energy standard, into effect across the United States. And this is a really a new concept. We have 32 states that actually have what we call renewable portfolio standards, which are just focused on renewable energy. We have eight states that already have 100%, like zero carbon reduction goals, in the form of clean energy standards. So eight states have already kind of taken that leap. There are about 13, others that have 100%, zero carbon goals, not necessarily enforceable standards, but they're definitely trending that direction. And they're about six more that are considering it. So but if this were able to come about through the reconciliation bill, you know, the potential of very quickly on the demand side, starting to build demand in areas of country where we haven't necessarily seen strong incentives for utilities and retail buyers to, to invest in renewable purchases. So that would be a big positive. And that I think, is really ultimately a more efficient policy measure than tax credits, ultimately, as well.
Sean McMahon 24:03
Yeah, we've been here for a long time about how much of a game changer federal clean energy standard could be. So it'd be nice to see if that works its way through and like you said, the long term effect in in regions of the country where there's not so abundant supply of renewables. When we open this podcast, I asked you about your background in renewables and how long you been doing it. And so I want to ask you, and you're using the industry, what have you seen changed the most? And maybe what hasn't changed?
Michael Rucker 24:29
Well, I think what's changed his renewable technologies have become the most predominant new generation source plant in the United States. When I started the industry, it was a niche. And my first year at Ge energy, I think we sold roughly 45 wind turbines, as I recall, right in that transition period. And of course, they'll probably sell 1000s this year. So the scale of the and those turbans are about five times larger than the ones we worked at them to potentially. So we've seen a massive increase in Gail. And with that, a massive increase in investment in the industry. Also, there's more capital available in the industry than I've seen in my whole career as well in terms of investors that are excited about fueling energy transition by investing in companies like mine and, and projects have. So that's very exciting. What hasn't changed is when it gets down to it, like I mentioned before, it's it's a people business, no project, everyone forward without a landowner supporting it, we need to make sure we don't get ahead of ourselves, just we have to make sure that we bring these communities along with us. And they buy into this. So they can be part of the energy transition, and they see how it benefits them, and their children and future generations. And I think as we install more renewable energy around the US, I think that's becoming clearer and clearer in a lot of communities. But that's a process that we haven't completed. There's a lot left to do there.
Sean McMahon 25:56
Okay, great. Michael, thank you very much for your time. I really appreciate it. Really enjoyed this conversation.
Michael Rucker 26:02
Thank you very much on.
Sean McMahon 26:12
Now it's time for the PodBrief segment of the show. And as I mentioned at the top of this episode, I want to talk for a few moments about some reports that have been released recently.
FIrst, the US Department of energy made some big headlines with its Solar Futures Study. I’m including a link to the study in today’s show notes so you can read it for yourself, but the upshot is that the Biden administration is setting some lofty goals for the solar industry. The study suggests solar could provide 40% of the energy supply in the US by 2035. As with other goals set by the administration, this one relies on a whole lot of things going right. For an expert analysis of the Solar Futures Study, check out the research note from Lium that I am also including in the show notes. The team at Lium makes it clear that the US is ALREADY behind on meeting Biden’s goal for solar. However, that Lium note also outlines some of buttons the administration can push to get things back on track.
Also in the news is the 2021
edition of the Global Offshore Wind Report from GWEC -- the Global Wind Energy
Council. This report provides a global snapshot of how the wind industry has
grown in the last 12 months … and China looms large. But what’s equally
noticeable is that North America does not. I know there are projects on the way
in the waters off the US, but this report makes clear how offshore wind might
linger as a missed opportunity in the US for years to come. The US has the
workforce … but much of that workforce has been hamstrung by political and
regulatory hurdles. Take for example, the Jones Act. Should offshore wind
installation workers in the US really be forced to sit idle while they await
the construction of more installation vessels that are Jones Act compliant? Or
should the administration issue a moratorium on Jones Act enforcement that will
allow those offshore workers to get to work while the shipyard workers are busy
building more vessels. If Team Biden is REALLY all about a “whole of
government” approach, it’s time to tear down policy hurdles and get EVERYONE to
work putting more turbines in the water.
That's it for today's show. Before
we go, I'd like to say one more ginormous thank you to the exclusive sponsor of
this episode, Mitsubishi Heavy Industries.
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NOTE: This transcript was created via artificial intelligence. It has not been edited.