Green Giants – Episode 7

Kevin Smith (02:15)

Sure. So, I mean, I got my engineering degree from Purdue University and during some internships, I ended up getting involved in the power industry and so kind of specialized on power engineering with my engineering degree. So right out of college, I was working on, worked at Sergeant Lundy at a big architectural engineering firm in Chicago that did large scale power plants for utilities, conventional power plants, natural gas fired, I worked on nuclear design, designed nuclear facilities for a number of years at Sargent Lundy. I then moved more onto the development side and the project management side. A lot of natural gas projects around the US and essentially worldwide. I was six years in London heading up development for a group called Rolls-Royce Power Ventures utilizing Rolls-Royce gas turbines on international projects. And then came back to the US and moved over to Invenergy and headed up their development side in the early years, which was that first transition into wind energy in 2004. Invenergy was basically a startup back then, half a dozen people. And we made that decision that the wind side, most of the team had a lot of natural gas experience, so we made that decision to move on to the wind side of the business. And pretty much when I moved into renewable energy, I never looked back.

Wes Ashworth (03:48)

Yeah, was there a key moment or some pivotal moment that just sort of spurred you on to make that transition into the renewable side or did it just kind of happen or come together?

Kevin Smith (04:00)

Well, it was really that concept, that all of a sudden you went from on one day working on a natural gas fired project that the biggest discussion was about emissions and pollution and those kinds of activities, then all of a sudden, the next day, I mean, literally, because we were doing both kinds of projects at Invenergy, literally the next day you’re in a public hearing and you have a power generation facility that has zero emissions. That whole concept, and even back then wind was price competitive. So you had something that was price competitive and had zero emissions that was providing large scale electricity to the grid. That whole concept was just, at the time, like I said, 2004 was 20 years ago, was pretty groundbreaking that you could build large scale facilities, zero emissions.

Wes Ashworth (04:57)

Yeah, absolutely. Now thinking about where that’s come to today and thinking about your experience in, you know, now solar and battery storage and some of these other pieces, what do you see? What are some of the most promising technological advancements you see on the horizon that you think could significantly impact the renewable energy market?

Kevin Smith (05:18)

Well, I mean, my, you know, there’s a lot of different technologies that people are looking at, obviously solar and battery storage and wind and carbon capture and green hydrogen and those kinds of activities. I mean, I see, you know, some of those other technologies, you know, say green hydrogen or carbon capture, you know, picking up some speed, but my view is really the biggest areas where we’re going to see the biggest growth is going to continue to be in the solar and battery storage. Clearly, battery storage is starting to make a difference in some markets. We’ve got a lot of projects in the California market, and we’re looking at some across the country. But certainly, the California market has taken advantage of the battery storage side. So I think we’re going to see a huge amount of advancement on the energy storage side, whether that’s, you know, better, cheaper batteries or whether it’s different technologies on longer storage. And certainly when we look on the solar side, there are certainly technologies on their panel, different panel technologies that are advancing and really just the overall reduction in potential costs, both on the solar panel side and on battery storage. I think from my perspective, that’s where we’re going to continue to see a fair amount of technology advancements. Certainly you’ll see some on carbon capture and green hydrogen, some of the others, but I actually think the key ones, the ones that are gonna dominate the market are gonna be as solar continues to be more and more cost competitive and you start putting in more storage associated with that.

Wes Ashworth (07:02)

Yeah. Is there any recent advancement, whether it’s in storage or solar that you’re particularly like, tracking or excited about?

Kevin Smith (07:11)

I’m not sure I would say that there’s any kind of groundbreaking recent advancement, I think what’s interesting is you’re now seeing, you know, battery storage costs go down pretty substantially. And I think that’s you know, probably over the last 18, well, 12 months maybe we’ve seen lithium prices go down fairly substantially. That’s making battery storage that much more competitive. So I think it’s probably the biggest issue has been more, some of the cost issues. The US has to deal with other issues, you know, tariff issues and some of the other, you know, import issues. I think the probably a significant issue is going to be that increase in manufacturing in the US as well will be pretty instrumental in the industry in the US.

Wes Ashworth (08:04)

Yeah, which good segue, just thinking about the IRA and the impact that that’s had. How do you think, you know, recent policies like the IRA, like others have come out, will just reshape the landscape of renewable energies, particularly in the US, which you just alluded to there?

Kevin Smith (08:20)

Yeah, I mean, the IRA is huge groundbreaking legislation, you know, across a lot of different industries, including electric vehicles and utility scale renewable energy projects. I think on the utility scale energy projects, I think there’s a few very fundamental issues that the IRA brought in. One is it brings in that kind of long term, you know, kind of 10 years-ish, you know, tax credit plus 10 years plus kind of tax credit structure, which provides a lot of stability for developers, for manufacturers, for financing sides, for all kinds of it. So I think that long-term nature is a big part of it. I think introduction of transfer credits for the tax equity side is huge and growing. I mean, it started off, you know, when it first came out that it was, oh it’s going to be kind of a slow road going forward on transfer credits. I mean, we’re seeing 5 to $10 billion of investments on tax on transfer credits. And that’s going to continue to increase. We’re taking advantage of that on a number of projects. And I think that’s going to be a couple of years down the road, it’s going to dominate the industry with transfer credits. And then probably the third side, you know, the long-term nature of the IRA, the transfer credit market is fundamentally, a fundamental change that will improve the financing structures. I think the third one is manufacturing. With the manufacturing credits as the IRA, we’ve seen a lot of announcements. Some of them are happening, some of them are not, but certainly a substantial amount of manufacturing activities with panel manufacturing in the US is going to kind of fundamentally change the industry as well. So I think the IRA has some very significant issues that will continue to shape the industries we go forward.

Wes Ashworth (10:20)

Yeah, I love hearing all that perspective just from you, that first hand being in it and being involved in it and seeing it live out. You mentioned some of these manufacturing projects that have been announced, some have come to fruition and are happening and going through, some are not. Is there anything you’re seeing personally in terms of what’s driving the success versus some of the ones that are struggling?

Kevin Smith (10:42)

Well, I don’t know if there’s any, you know, certainly manufacturers like First Solar who already have a presence here and have manufacturing in the US, for them to expand and do new facilities, you know, it’s a bit of an easier road for them to, you know, to expand their facilities or build new facilities with the experience base that they have. There are some new players that are trying to get into the new US market. That’s a little bit more difficult for somebody that hasn’t previously built manufacturing in the US. Some of those are partnering up with local, with US companies. And I think that’s making that manufacturing, that permitting and establishment of manufacturing facilities a little bit more easy for them. But it’s a little bit like everything. I mean, it’s the same with developing projects. Everybody announces all kinds of projects on the wind and the solar side, not all of them come to fruition. You know, economics, funding structures, land issues, you know, access to electricity, you know, low cost electricity, all of that affects manufacturing facilities and some of them are moving forward and some of them are probably not going to move forward. So I think that’s an inevitability of developing projects.

Wes Ashworth (12:02)

Yeah. And something we had talked about prior to this conversation, just the community side of the equation. And that’s something I really want to get out there and hear your insights. And I know the listeners will gain a lot from, because I think that’s coming up over and over again, just the community acceptance piece and bringing the community in and having that be, I guess, not so much of a barrier. And I know you’ve had success in some communities that aren’t as receptive to that. And so I’d love to hear just from your experience and perspective, one, how important is it to have the community engagement and the success of these projects? And then, you know, what innovative approaches or what approaches have you used that have effectively addressed those community concerns and interests overall?

Kevin Smith (12:52)

Yeah, you know, obviously the community pushback over the last several years has gotten a bit more intense. You know, you have, you know, frankly, the fossil fuel industry has gotten involved in supporting some of that pushback. And so the community outreach is a fundamental part of the project development activities. You know, you’re no longer just building projects in California and some of the friendlier areas for renewable energy, although you’re even getting pushback in some of those markets as well. I mean, we’re building projects in Arkansas and Indiana and Illinois and Missouri at Arevon. I mean, we’ve got 1,500 megawatts in construction right now and about three and a half gigawatts in operation and a big development pipeline. And you’re going to see projects in markets that didn’t normally take to renewable energy projects. They were more of an oil and gas market. And so those markets are really critical to go in early with a community outreach program. Get to know the local politicians, get to know the local community groups, get to know the adjoining landowners that aren’t participating, making sure you’re putting in programs so that everybody benefits from that program, not just the landowners that are involved that you put in, you know, neighboring landowner agreements, so that they’re participating in the upside on the project as well. And also working with the community to see, you know, you’re building what could be a three or four or $500 million facility. You need to make sure you’re investing a portion of that in the local community and you’re coming to them with some proposals on what you can do, whether it’s putting solar on a local school or a computer lab for a local school or participating in some of the other charities around the community so they become a member of the community, not just upfront, but also on a long-term basis. So that’s a really critical part. We’re ramping up at Arevon, we’re ramping up our activities on community engagement. And I think the industry as a whole needs to ramp up their activities and make sure that we’re properly participating in the community activities early and often as we enter into the community on a development basis.

Wes Ashworth (15:33)

Yeah, I guess my thought goes, why doesn’t everyone do that? Is it a matter of, it’s difficult and time consuming? What are the things that hold people back from really getting involved in that roadmap that you just outlined?

Kevin Smith (15:47)

Yeah, it’s a bit of an expertise that a lot of companies don’t necessarily, you know, it’s one thing to send your land people in and deal with land issues and interconnection and some of those, but the community issues, it’s a little bit more understanding the politics and understanding the community needs, which is a little bit, you know, we’re a bit more technical driven and financial driven and that touch into the community sometimes is a little bit foreign to some companies. So it’s actually bringing on experts into the company in community engagement, not just trying to hand it off to somebody that is more of a technical person, but really increasing our expertise on community engagement so that we really interface with the community leaders to understand, where the community, what are the concerns of the community? What are the benefits that we can bring? Obviously there’s jobs that we’re bringing. We’re bringing in most cases potentially over the lifetime of the project, tens of millions of tax benefits. But we also need to make sure that we’re providing the details on that properly and also where we can insert ourselves into the community to help some of the priorities of the community as we engage in a fairly significant investment in the area.

Wes Ashworth (17:15)

Yeah, I love that. And I think the importance of even hiring someone that has that experience and expertise and knows how to get into the community and do those sort of things. What sort of profile is that? If you’re hiring that position, maybe you have or if you were, what are you looking for?

Kevin Smith (17:33)

I mean, we have community affairs individuals within the organization. It is a different background than if you were hiring somebody to develop a project or project management or build a project. They really, they need to have, like I said, a bit more of a softer touch. And some of it is understanding the politics, some understanding the region, understanding how people think about new projects in the area, the fears that they might have, the concerns that they might have, what are the important issues for them? So it’s really finding somebody, obviously across the power industry and across really all industries, whether you’re going to build a new auto manufacturing facility or a new natural gas fired facility, those companies or whether you work for a utility, those companies have people that are engaging in the community. And that’s the kind of experience that we’re looking for, is they’ve actually done this at other companies. It could be a completely different industry, but they have that skillset that gives them the ability to kind of understand what the key issues are for the community and allows us to come up with some proposals and engage at the proper levels and with the proper messaging so that they understand what we have to offer to the community.

Wes Ashworth (19:05)

Yeah, fantastic. And getting in on to a different piece of what you shared there, just with the economic impacts, benefits to the community. And I think those are some of the things that need to be put out there just from an education standpoint, that we go a lot off of misinformation or what we don’t know, sort of, alarm bells go off and you get defensive or what have you. But I’d love to hear if you can elaborate on some of those economic impacts from some of these large scale projects in local communities, especially in terms of job creation and the economic development side.

Kevin Smith (19:40)

Yeah, I mean, let’s take a typical project. If you’re building say, a $200 million or $300 million project, solar project, into a rural community, during that construction period, which could be, 12 to 18 months, you’re probably bringing in three or four hundred construction workers, hopefully largely from the surrounding area. Most of the contractors have training programs, and so they’ll want to bring in local people into that construction activity. Some people may be moving from other industries and learning the kind of solar installation market. So I think the initial part of it is really that those construction jobs that go on for 12 to 18 months bring in a lot of investment into the industry and also trains people in the local markets that they can then work on projects across the state or in other states or down the road. So I think making sure that you’ve got a contractor that is focused on utilizing local labor as much as possible and providing training programs for those new workers, that’s probably one of the big buckets. Unfortunately, solar projects are relatively low maintenance and low-operational issues. So the number of workers that you have on site during the operations period is relatively low, but you’re still spending money in the surrounding market. You’ve got maintenance issues, you’ve got vegetation control, depending on where you’re located, you could have snow removal. We’ll spend millions of dollars in the local area on an annual basis just maintaining that facility, even though maybe the labor force to operate that facility may be just a few people for a large scale facility. But it does throw off a lot of tax benefits. You know, as I said, depending on how those benefits are structured with the community, sometimes they like to put in place pilot programs that change the structure. So a little bit more of that money flows really locally as opposed to the county and the state. But we’ll roll with the punches as far as what the community would prefer, but typically you’re looking at, over the lifetime of a project, you’re throwing off tens of millions of dollars into the local community. And that can help fund expansions of the fire department. It can help local schools. It can help hospitals and government buildings, all kinds of things. So that’s a pretty significant part of it. I watched a video a couple of weeks ago about a, they called it, I think, “a tale of two counties,” and this was on a wind project. One county decided they didn’t want a wind project, so they moved it to another, they moved their project to another county. And then they talked about the financial benefits that was lost in one county and was gained by another, and they’re substantial. Like I said, potentially tens of millions of dollars over the life of the project.

Additionally, then, as the developer and as the investor in that project, what can we then do in addition to the tax benefits? Putting in a community fund, half a million dollars or a million dollar community fund where we’ll work with the local community leaders to see, where is there an investment that you can’t fund out of tax dollars that needs to be funded? Whether it’s, like I said, putting solar on the local high school or investing in a computer lab or in some areas we put in some work with some of the local schools on training programs for people that want to enter into the, leaving high school, want to enter into the solar industry on the construction or the trade side. So there’s really all kinds of things that we can do as an organization.

And all of that impacts the broader community in a positive way. You do have the, I’ll say, misinformation out there of some of the risks. And I think that’s also key to our community engagement program, is make sure we’re addressing the concerns that come up, which quite frankly, it’s relatively easy to have the answers for those because the risks are very limited. It’s the, how do we get that message out to make sure that people aren’t listening to some of the things that they see online that quite frankly are misinformation on solar projects and battery projects to make sure that they’re getting the correct information from the industry?

Wes Ashworth (24:46)

Yeah, I think that piece is so critical, just telling the right stories, getting the right information out there, really investing in the educational piece of it and involving those communities and just making sure it’s, it’s kind of like I’ve always said, you make decisions, you just want to make decisions based on accurate information. So it’s, I think our responsibility in the industry to make sure that’s happening, which you’re doing, which is fantastic. And I love the story, comparing the town that didn’t go through with it. And the one that did, I think that’s a very powerful story and viewing that comparison.

Switching to the other side of the equation, just within career paths and job creation, things like that, as someone who transitioned from the traditional energy sector to renewable energy, there are plenty of folks out there that are contemplating that, debating that, thinking about that. What advice would you give them and maybe some of the best ways to go about that?

Kevin Smith (25:41)

Well, there’s a significant demand in the renewable energy industry. We’re continuing to experience significant growth, and that growth is really fueled by bringing in additional labor, additional experienced professionals into the market. And in some cases, not so experienced professionals, but people that have a willingness to learn. So the skill set that probably pulled me from conventional into renewable energy was a technical degree. I had an understanding of development activities because I was developing conventional power projects, natural gas fired projects. So land issues and transmission and all those things are very applicable as our contract issues, power contracts, partnership agreements, all of those are applicable in many, many industries.

The finance side, similarly, I mean, renewable energy has a few specifics. You know, the tax equity side is relatively unique to renewable energy, but the project financing side and finance and accounting. So there’s really just so many areas that are applicable when you move from, say, if you’re working on the oil and gas side and you want to move into solar, likely 80% of the things that you’re doing are very applicable.

So I think it’s recognizing that you have that applicable skill set and then really search the market to see who are the successful companies in your city or the region you want to live, and then spending some time looking at those companies and seeing what their needs are. But if you’re coming out of the oil and gas sector, there’s a pretty good chance that you’ve got a pretty good skill set that’s applicable. You know, 80, 90% of those skills are likely applicable over.

Wes Ashworth (27:37)

No, definitely. And so thinking again, different topic, but your shift from traditional energy to renewable energy. And you said to you, like, once you made that shift, never look back, which I love to hear that. But what continues to drive your passion in renewable energy? How do you stay motivated in the face of industry challenges? It’s not an easy industry. There’s a lot of different factors and hurdles and obstacles that you deal with and face every day. But what continues to drive the passion for you?

Kevin Smith (28:09)

Well, I think it’s pretty clear that we’re experiencing some significant climate shifts in the world and certainly in the US. So recognizing that it’s not something that’s off in the future, we’re experiencing those things right now. And I think that’s something that we see on a day-to-day basis. So that means we’re running out of time.

When those climate issues are starting to catch up with us, we see flooding right now as we speak, we’re seeing flooding in Texas and flooding in Florida and other parts of the world. So I think that’s probably driving, certainly my passion is recognizing that I want to make sure that we’re focusing on those issues right now while we have a chance to kind of catch up. I’ve got children and a grandson on the way. And I think that’s something that drives my passion as we go forward is we are experiencing climate change. We’re seeing expansion of electricity demands, data centers, all kinds of things. So we’re going to have to address those energy needs. And we’ve got opportunities right here in the solar industry and in the renewable energy industry to address those on a clean energy basis. And we need to take advantage of those.

Wes Ashworth (29:39)

Absolutely. So thinking about that future, you know, the future of your kids, grandkids as well, what is your vision for the future of energy? And what steps do we need to take today to start aligning with that vision?

Kevin Smith (29:54)

I think it’s, my view is it’s going to be a pretty solar world going forward. Solar is very cost competitive right now. It’s a worldwide market. We’re building manufacturing in the US. Battery storage is now starting to supplement that in a number of markets. It’ll continue to supplement that in a number of markets. So I think as we look into the future, there will be, you know, there’ll be a diversified approach.

It’s going to take a while to phase out some of the fossil fuel requirements and demand because right now we don’t have 24 hours solar on a large scale basis. But I think you’re going to see solar continue to dominate the future going forward for the near term, shortly the next decade or so.

It’s a large, you’re going to be dominated by increasing solar and increasing solar technologies, along with energy storage. You’ll get supplements. Certainly the wind industry has been very successful and will continue to have some success. Some of those other, you know, green hydrogen and carbon capture. I think those are a little bit off into the future right now. It’s certainly in the U S market. So, that’s why we’re focusing on that solar battery storage, energy storage side of the business as we look forward over the next decade.

Wes Ashworth (30:25)

Yeah, I love that. And again, thinking about your legacy and impact and maybe a good place to start closing out this interview, but what legacy would you like to leave in the renewable energy industry? And what do you hope future generations will say about your efforts today, looking back at some of the things you were able to do and accomplish with, with the teams you’ve been on and companies you’ve led?

Kevin Smith (31:49)

Let’s see, you know, my legacy probably is the legacy I want to leave for my children. You know, I’m in my sixties, we’ll say, and still working 70 hours a week. And I expect I’m going to do that for the foreseeable future as long as people continue to hire me to do what I think I do best, which is develop renewable energy projects. I’m going to continue at that pace because I think we have to.

Now is the time to address it. We should have been addressing it 10 years ago and 20 years ago, but we now have the capabilities in place to kind of accelerate through this problem that we’re dealing with. And so I think the legacy I want to leave for my children is that I did everything I could.

Wes Ashworth (32:37)

Yeah, I love that. It reminds me of the saying, the best time to plant a tree was 20 years ago. Second best time is today. So it’s about what we do today with what we have. So that’s fantastic. Any kind of closing parts of wisdom, insight, advice, things you would like to put out there in closing?

Kevin Smith (33:00)

Well, I think, like I said, we’re running out of time. And I think we need to act like we’re running out of time. We need to work like we’re running out of time. We need to come up with solutions. We need to work closely with communities to help them understand the benefits of energy, whether you’re building a project in California or Arkansas or Indiana or Illinois or wherever. I think it’s, you know, we have to make an impact on our energy future and we’ve got to make that impact now. And I think that’s, if everybody acts like we’re running out of time, then that can raise that whole industry so that we can address the issues going forward. We have the tools at our fingertips. We have the technologies, those technologies continue to improve. We just need to implement those and work with governments to make sure that they’re supporting those activities as well.

Wes Ashworth (33:55)

Yeah, that’s so encouraging and I get inspired just hearing you say that too, but it’s, you know, start today. We are, we are running out of time. Like it’s no longer something that’s speculation or anything of that sort. Like we each have to do our part, whatever that might be. So I think whatever that next right step is for each individual person, you take that step because again, the timing is tight and we should have done it a long time ago, but all we have is today and we got to start there.

Kevin Smith (33:26)

Exactly.

Wes Ashworth (34:02.664)

Yeah. Well, Kevin, thank you so much for joining. This is such a valuable episode, and so many great insights there. So I can’t thank you enough for your time and coming on the show. Thank you to the audience out there for listening. Make sure you stay tuned. New episodes are coming soon, and remind you to listen, rate, subscribe, review, share, and get the word out. So, if you liked it, share it with a colleague, share it with a friend, and don’t forget to follow us on our social channels and also look up Kevin, see what he’s doing as well and follow him. But stay tuned and until that, we will see you next time.