Green Giants – Episode 8

Cagen (01:54.126)

Yeah. So it was a very small company, and that’s putting it lightly. Effectively, it was two families who worked together in the Northwest Florida area. Predominantly, we worked on Eglin Air Force Base. So our roots are deeply established in the federal sector, which has served us well. Kind of the rigidity that comes with that helped a lot. We start working for some of the larger developers – it makes a difference from document control and all that stuff, but that’s where we started and we were two families. We were out there, right, working with our tools on. That’s what we did. And then around 2018, we got approached by Bristol Bay Native Corporation and they acquired us about a year later, which has been an awesome experience. We’re about six years in now since that. And, you know, it’s one of the acquisitions that actually went well.

Wes Ashworth (02:51.207)

Yeah, absolutely. Always great when those go well. It’s not always the case, but certainly something to celebrate. So you mentioned, obviously starting as a really, really smart, small company and the acquisition, and there has been significant growth over that time and over those years – can you tell us a little bit more about those early days and just some of the things like what it took to get to where you are now?

Cagen (03:16.174)

Yeah, I’d like to say that we have this beautiful roadmap and we would grow the business and get to a point where it was ready to sell, but that would be an absolute falsity. So, we had participated in the 8A market for a long time. So we had worked with a lot of 8As and if people aren’t familiar with that, it’s a minority designation that individuals can receive, or, in our case, as an Alaska Native corporation now, it’s a different type of 8A with some nuanced differences. But we were in that market for a long time and as the privatization started hitting the military installations, our market changed. We had done a lot of medium voltage and high voltage work. We’ve worked on airfields and pretty much anything that the government would ask us to do. And as privatization came along, that work was slowing down. And about that time, we were doing an airfield lighting project and we were also replacing some emergency power equipment for Bristol Bay Native Corporation, one of their subsidiary companies. And one morning, a guy walked in the office about 6 AM and said, “Hey, we’d like to acquire you guys.”

And so then I spent the next hour pretending that we had thought about that before. And when we embarked on about a year long due diligence, BBNC was great. They were gracious. They knew they were acquiring a smaller business, but we had a really good foothold in the market that they wanted. And after we got acquired, our aperture opened up. Dramatically being able to travel, being able to take on more risk, you know, all the concerns you have as a small business owner – in some ways you want to keep those as you leave. You don’t want to lose the tenacity. It’s a thing that we talk about a lot, but it does allow you to loosen the reins up and grow, far beyond what we probably could have ever imagined just five years ago. BBNC is a great ecosystem to be a part of. It’s incredibly diverse. We have affiliate companies who are 117 years old, electrical entities out of Chicago, and we’ll cover the map this year. I mean, we’ll work in Guam and New York. So a long way from where we were just a few years ago and it’s been a lot of fun.

Wes Ashworth (05:45.351)

Yeah. So with the acquisition by BBNC, what are some other kind of unique advantages that that partnership brings to PPS?

Cagen (05:59.31)

Yeah, I refer to it a lot as the ecosystem, right? We were doing a project up in New York. It was way upstate, which is one of the muddiest places you can work if you’ve never been there. We were doing a battery project and literally couldn’t get the battery containers down the road. It was an existing solar site. And so we picked up the phone and we call our civil partner that’s within the ecosystem and, hey, can you come cut this road and get this ready for a pad, for a crane? And there you have it. And being able to reach into that ecosystem is amazing. And then on the federal side, some of the unique attributes of being an Alaska Native corporation can go a long way. There’s opportunities where our sister companies are able to bring us in, where we add a value proposition to them and the client because we self-perform. And that just, it helps to save lives.

Wes Ashworth (06:58.855)

Yeah, no question. And then the other thing you hit on, it was the shift from federal contracts to renewable energy. I guess, could you tell us more about what prompted that shift? And then you mentioned too, the advantages of having that background. So how has your federal experience benefited those renewable projects now?

Cagen (07:19.15)

Yeah. So about the time that the privatization was kind of affecting our market, specifically there in the Northwest kind of Florida region, we started getting these drawings from some of our other clients who were outside of the gate, if you will. And I remember looking at them, and you’re looking at these battery storage projects and you’re going, well, which way does the power go? It was really unique and we got to be early on some of those projects and we’ve gotten to touch a lot of different technology. And what we brought for them was, we had experience in the medium voltage. We used to, we do our own concrete work, but we could go far into the facility to right where if we needed to go change a switch gear on a C$I installation, we could do it.

But the documentation control from a QC perspective and now with the IRA apprenticeship requirements, we’ve been doing certified payroll forever. Some of the controls that you have to have on the federal side have done very well for us as we’ve transitioned into the renewables. It’s just, it requires a lot of structure. It requires patience on the federal side. Sometimes the renewable sector is a little short on the patience. There’s a slow period and then you get to the field and everything compresses. But I’ll say it’s certainly benefited us.

Wes Ashworth (08:40.295)

Yeah. And the other thing I wanted to spend some time on, so during the COVID -19 pandemic, there were a lot of displaced folks, including some of these industrial electricians from various industries. And you saw that as an opportunity of bringing those folks in, helping advance the renewable projects, and also benefiting them and those communities as well.

Can you dig into that, like discuss that strategy and what went into that and then the impact that’s had on your company’s growth?

Cagen (09:15.182)

Yeah, you know, COVID-19 obviously was tragic for a lot of folks. And we, at the time, it was 2020, right? Had an unbelievable need, specifically in Texas and in New York as well, for a lot of very qualified electricians who could deal with a very rigorous environment, right? From a safety, from a quality perspective. And what we found is when some of the plants or factories, refineries were slowing down, specifically in Southern Louisiana, those folks were looking for jobs and they are used to traveling 100% of the time, right? And we needed that nomadic workforce. So what we found is when we got the first, like, kind of the first couple guys came over, they realized it was a little different environment. The industrial setting is tough.

It pays well, it can be very rewarding. You can have a very long career, but it is a tough environment. And what they found with us was an organization that wants to keep them. We want them to grow and we want to keep them busy for very long periods of time. There’s a skill set that’s incredibly fungible. As they came over and we needed individuals who are used to proofing conduits and getting all the documentation just right and who weren’t averse to having these, kind of lengthy safety meetings, right? We needed a workforce with a high degree of diligence. And when they came, what we offered them was, “Hey, we want to give you a forever home if we can.” And that’s all responsibility. And so then you pick one up, and then three and five, and it grew really quickly. And most of those folks are still here today, and some of them in leadership positions.

So very thankful. To me, I think one of the things we talked about on the Hill was that transition from the, we’ll call it legacy industries into the clean tech, those skills are highly fungible. And there’s a personal story to that, that really these folks can grow personally and professionally beyond what they may have thought to imagine.

Wes Ashworth (11:43.399)

Yeah, no question. And I would imagine too, it’s almost like a referral based thing, right? If you get one really good one and they’re just happy and loving life and life is good on the other side. And then they’re like, I’ve found those folks are very well connected and usually like, “Hey, I’ve got a few other people that I know. You should talk to them.” Is that how it’s been? Like what’s driven, I guess that taking even more form?

Cagen (12:07.662)

Absolutely. Yeah, absolutely. I think not always, but I think there’s definitely a subset of projects that are, I finish this project and I go home until someone calls me again. And then I go to the next project. This is a little different where we’re much more proactive in their placement. You know, before the project finishes, we understand the need to communicate very clearly to them,

“You have a future or you have a direction. Here’s where you’re going.” What’s been great for us is because we do work all over the country, their willingness to travel has made us, it’s helped us get to a place that we wouldn’t have otherwise been able to. And with the federal side of the business, which, you know, is a little different than the renewable side, they get to come in and out of that world too. and with some of the lumpiness in the renewable sector, the federal work we do kind of smooths out their work.

Wes Ashworth (13:12.807)

Yeah, that makes a lot of sense. And just staying on this “people” topic, so we talked previously and you mentioned just the importance of that people-centric story, creating a great place to work. How has focusing on just the well-being and growth of the workforce contributed to your success?

Cagen (13:32.174)

Immensely. And it’s not without cost, right? But the other cost is much more expensive. One of the things that came out of the Inflation Reduction Act was the need for a certain percentage of apprentices. And with that, we read that language and we knew right away, if we’re going to stay in that sector, we’ve got to do something. So we offer, through independent electrical contractors, we run our apprenticeship program. It’s streamed virtually across the country. This summer, hopefully some people will be watching it in Guam while we have some of our workforce there. And those are paid hours, right? That’s paid training. And outside of kind of a union environment, which we have sister companies who are union in Seattle and Chicago, and they’re awesome, right? But we’re the nomads. We have to be able to send people everywhere and have those apprentices. That was one of the ways that we answered that. It’s specifically for the individuals who’ve been transitioning out of the industrial sector. I think a lot of them would tell you that having an organization who’s actively looking for your growth and what’s your kind of personal development plan and where are you going after this is different. We’re probably more concerned about it than they are because they have such an incredible skill set. If they lose a job on Friday, it’s likely they could have one by Monday, right? But we like keeping them, right? We invest a lot and we don’t want to lose those folks. So we are proactive about it. And we have a large kind of, if someone’s coming out of the field into, say, a project management role, we have, like, a couple-of-month course where they’ll go through all these modules. And I’ll say this, the kind of proudest part for us is if you walk around our office, the Destin office, you’ll see a lot of pictures, you know, the folks working, right? And then you’ll see now that those folks are in there in leadership positions. And that’s kind of the marker, right, for success to us as an organization.

Wes Ashworth (15:36.007)

Yeah. And you mentioned it in something I wanted to dig into, because I do, I think it is an incredibly innovative strategy and approach and not an easy thing. I think getting it up to speed and all that, but this training and apprentice program that’s remote, it’s spread out. You’re leveraging other things out there. You know, I think a lot of people would look at it and go like, it’s just impossible or too many challenges there, but you’ve made this work, particularly in response to the IRA provisions.

Can you explain that a little more in terms of how the apprenticeship programs work and their significance, as you said, for that nomadic workforce?

Cagen (16:19.95)

Yeah, you know, when I first read the language, I can’t recall, just before it was coming out, it was very apparent, right? If you weren’t union, or you didn’t have an apprenticeship in place, those benchmarks could be difficult to achieve. So we were already working with IEC, which is a great organization. They have chapters all over the country. And we said, hey, we need to bring this in-house because we’re going to need to do it on our own time. We might have to run the year-one apprenticeship class two times a week in order to get everyone that we want online, right? We have to balance a lot of schedules and, you know, we can’t ask these guys to do it after hours. We need to do it during the day. It needs to be paid time. For us, that’s a marketable thing as well. “Come with us. We’re going to train you. We want you to leave here better than you started.” And we mean that. If we’re your up-and-out organization, we’re happy for that too. But IEC worked with us. We have a whole, you know, it’s funny that we’ve got like, the Tim the Toolman Taylor kind of set, you know, that we record from, and they log on typically Friday. It’s six hours and they’ll go through their training, whether it’s year one, two, three, or four. They’ll do their testing on site, have someone who’s qualified and a journey worker’s license who can verify, kind of their on-the-job training as well. And if you’re going to stay in the renewable market and you want to be able to hit those benchmarks, you have to be able to answer that. And for us,  this was our way to do it. Self -performing is very meaningful for us. We are an EPC, but we are an EPC who self-performs our electrical and sometimes structural concrete work. So we didn’t want to lose that piece of us.

Wes Ashworth (18:20.815)

Sure. Yeah, that’s incredible. Just innovative and simple in a lot of ways. But to be able to really pull it off and make it work and bring that to life in the midst of, kind of like a challenging situation, like how do we make this work? You’ve done an incredible job with that. So I love that story and love to hear you talk about it.

Switching over to the legislative landscape side, I know you recently met with congressional members during Clean Power on the Hill. Talk to me a little bit about, from your perspective, what legislative changes do you think are most crucial for advancing the renewable energy sector and what are some things that need to happen?

Cagen (19:01.486)

I’ll tell you, when we went, there were all the big names you can think of, right? And the topic that keeps coming up is, the interconnection queue and the uncertainty, especially as it involves NEPA and how hard it is to deploy capital when you just don’t have certainty. What does the pipeline look like? Where am I at in the pipeline? Can I anticipate how long it’s going to take for interconnection?

We’re not one of the offshore wind developers by any means, but you could see the pain where they’re trying to deploy capital and it’s difficult. We see what some of that uncertainty manifests in at the ground level. And it’s an anxious job site in a lot of ways, you have, I kind of call it anxious capital, right? They do finally get to the point where they’re over-permitting hurdles. They have interconnection figured out and now everything is compressed beyond belief because COD date still hasn’t moved, right? You still need to turn on at a certain date. And that just creates kind of waves throughout the entire cycle, right? You’ve got the owner’s side, they’re stressed. They’re trying to get capital moved. And the field folks are trying to make a schedule work that  is sometimes very, very difficult. I mean, we have plenty of projects where we’ve worked 24-hour shifts, where we pull out the light stands and we’re working all night, to try to hit these schedules. So, you know, legislatively, I think what people want more than anything is certainty, around permitting timelines. And then, you know, some of the stuff that is great, I mean, what the IRA has done has been unbelievable. I mean, I will say I thought when the IRA was passed, we thought we would see a little pricing relief, right? From an EPC standpoint, with some of the incentives, but at the same time, the cost of capital went up. And so there was a little bit of compression. And I’ll tell you, if you talk to many other EPCs, I think they’d probably say something similar. So it’s been great.

But I think one of the items, and I think we addressed it earlier with the IRA was that apprenticeship requirement. and there was a lot of uncertainty. You go to any kind of renewable convention, and McGuireWoods or whoever would be there. And everybody has their white papers on how they’re viewing this. What is our interpretation? Because it’s pretty unclear. And that goes back to, coming from the federal side, we were used to documenting what we call certified payroll. So we were a little more well-prepared, but still difficult.

Wes Ashworth (22:03.751)

Sure. Yeah, no, absolutely. Any other kind of key takeaways from your time on the Hill, during the clean power event?

Cagen (22:16.174)

Yeah, I think there’s a lot of excitement, right? So the IRA was passed. It was a very partisan bill when it was passed. But I think at this point, so much of the benefit has gone to states that were red, or are red, and not to get into politics necessarily, but the benefits have been seen across the country. And so if there’s fear of an unwinding. Maybe there’ll be a few items that get targeted if anything were to change, but I think generally everyone remained very excited. Congressional staff, congressional members understand the importance and there is the real aspect that this has changed a lot of people’s lives for the better and will continue to do so. If you can look beyond all the other aspects of it, there’s a great people’s story at the end. And predominantly, that’s what we wanted to share.

Wes Ashworth (23:15.815)

Yeah, I agree completely. Shifting over to another topic I wanted to make sure we spend a little time on, so the Department of Energy’s Tribal Loan Program, there’s been significant opportunities out there and we were talking about it. But can you elaborate on how BBNC is positioned to leverage the program and the potential benefits for tribal entities? And I think it’s just not common knowledge out there. So a little education and insight would be very valuable to the listeners out there.

Cagen (23:49.134)

Yeah. So it’s one of those things that we want to make more aware. There’s $20 billion that sits with the Department of Energy right now, and their loan program office set aside for tribal entities. That includes Alaska Native corporations and villages. And I believe 70 million of the 20 billion has been used to date in the form of a loan guarantee for a microgrid project in California. But it’s an absolutely amazing opportunity. And one of the ways I like to kind of categorize it from an awareness standpoint is, and I think it’s kind of a funny metric, but it’s meaningful. You go find, I guess it’s X now, right? The Department of Energy has like 824,000 followers. The Department of Energy, in the end has 600, not 600,000, but just six zero zero. Tribal organizations are, I would think, uniquely situated in our current environment to take advantage of the public private collaboration. I think a lot of the ways that the loan program office is being looked at as it regards the tribal funds is only for use on tribal lands. And I would recommend that people dig deeper into the language because it’s clear this can be used off of tribal lands. And I think to deploy that kind of capital, some of it will need to be. There’s the Alliance for Tribal Clean Energy, which is a 501C3. They have an amazing, tremendous amount of information regarding this program and other grants. And they exist to help organizations kind of navigate this because it is complex. But there are some unique ways that this can be utilized. And I don’t know that tribes are really digging into it from that angle.

Wes Ashworth (25:59.303)

Yeah, I would say not, just when you look at that funding available and what’s been utilized, it’s like a drop in the bucket or less than, so I think it’s a huge opportunity out there. But as we were talking through that, I just couldn’t believe, you know, the little bits that have been used. And I think the lack of awareness out there, and as you said, I think there’s some complications and things you have to figure out. But if you dig in deep, and some of these other organizations that help you do it, why not go after that if you’re set up to do so?

Cagen (26:33.262)

Absolutely. I think there’s opportunity for kind of the world’s most credit worthy off takers who would ideally love to work with a tribal or native entity to pair these two things. And a lot of those off takers have a little more patience, right? And so to get a good PPA in place with a credit worthy entity where there is a tribal aspect, where the tribal entity is the energy provider, I think is a unique opportunity that should be explored much further. And one of the most salient points is, there’s a direct loan and then there’s a loan guarantee. And I’m certainly not an expert on the DOE’s loan program, but effectively if the Department of Energy is guaranteeing your loan, wherever you go get that loan, it’s going to come at a lower rate. And the direct loan that they offer is whatever, like the corresponding treasury is plus, I think, 38 basis points at that point. So lower cost of capital, a really good benefit.

And if you don’t mind Wes, I’ll say kind of one other thing. People aren’t familiar with tribes. There’s not a single beneficiary like you have in some other types of small businesses. You know, for instance, BBNC, we have over 10,000 shareholders. And so our proceeds, whatever we generate, that goes out and it’s distributed in dividends to their shareholders. And I think that’s very unique and it gives tribal or Alaska Native corporations very long investment horizons. So they’re good folks to work with. It’s just, we need to see these two worlds come together.

Wes Ashworth (28:18.439)

Absolutely, absolutely. Kind of transitioning to that and maybe it’s a part of it, but looking ahead, what’s your long term vision for PPS and its role in the renewable energy industry?

Cagen (28:35.15)

You know, we love being that self-performing APC. And we’ve gotten to build a lot of batteries. We’ve done a good bit of solar, utility scale. And as a lot of this tribal funding does get obligated and utilized, we like the idea of elongating that narrative of being that tribal EPC for other tribes. And there’s an added benefit, and we can offer kind of that similar long-term investment horizon, that partnership take, where some of the much, much larger contractors just may not be interested or they don’t want to go deal with what it’s going to be like to build on tribal land or deal with a tribal organization, which, they’re great by the way. And we should debunk that myth. But that’s definitely a place that we’re going to.

And then as the federal sector, right? So our DOD clients take larger adoption of clean energy. We want to be standing right at the center of that. And there’s a lot of great companies that do that. But we’re unique in having started in the federal market. We’re still in the federal market heavily and having the clean energy experience. We want to be there at the confluence of those two things. So that’s what we’re excited about today.

Wes Ashworth (30:01.127)

Yeah. Absolutely. A lot to be excited about there. So we’re coming up on time and I’ll put this out there, just more closing questions and anything else you want to add. So any other thoughts, insights, things that you would just like to get out there and share with our listeners about PPS or the renewable energy industry or really anything else?

Cagen (30:26.286)

Yeah, I’ll say this. I think there’s an opportunity for people in the construction industry, in the renewable industry. and it’s understated in a lot of cases. You know, we see a lot of folks who are just starting college or just out of college and it’s hard to know where they’re going for them. If they can’t see the opportunity, and we’ve seen what we do on the federal and the renewable side, remarkably change people’s lives personally and professionally. And we’re okay with being your up-and-out place. We’d love to keep you forever. But if you come here and then you leap to go to another larger firm or take a bigger position, we’re equally as happy about that. But from a very people-centric message. It shouldn’t be understated what this industry offers for people to grow. And this transition is going to take decades and then we’re going to be maintaining and repairing it. And it’s just a good opportunity.

Wes Ashworth (31:34.567)

It’s the truth. Yeah, we need a lot of people from a lot of different industries and all different skill sets as well. And I think there is a, I see young professionals that are in a different industry that are interested and want to explore switching to the renewable energy space and companies that are going, “Man, we’d love to attract some talent from other industries.” But neither side really knows what to do. It’s like the person transitioning, “How do I get to a renewable energy company?” The renewable energy company is going, “How do I attract these people from other industries?” You’ve done a little bit of that. So kind of parting words of wisdom, I guess, what advice could you offer to both of those groups?

Cagen (32:23.854)

You know, it’s funny, I’m here in DC. So, we know people who work at McKinsey and Bain and all those, and when they come in, they invest in those folks knowing that they’re going to leave in a couple of years, but they invest heavily and then they go out into the market. And at some point in the future, they end up interacting with them again, but you’ve got to have a training pipeline that gets people excited. And there’s a latency in the construction industry when it comes to kind of sophisticated, you know, very, people who leave BCG aren’t necessarily coming to us, but why not? Because their skillset could help us, right? And they could learn an industry that’s emerging. And so we lean in on that narrative, and we try to get some of those folks when we can.

Wes Ashworth (33:18.023)

Yeah, no, absolutely. As you should. And I think everybody’s going to have to write. You look at, it’s only going to increase in terms of workload and projects and as you said, then maintenance and kind of all those other things that go into it. So it’s going to take a lot of a lot of talented folks to make it happen. And, as you said, sometimes it’s, you have them for a couple of years and you get a couple of great years out of somebody and they go on to do different things. I would say the other hand of that is you treat them really well.

They go off and develop their skill set even further. Some of those folks end up coming back. You look down the road, and I’ve had the privilege of seeing that. You fast forward ten years or five years or what, even longer, and all of a sudden those folks are coming back to you in different roles or different positions too. So treat people well, do the right things, and that’ll always pay dividends in the end.

Cagen (34:10.606)

It will. And, you know, a lot of the baby boomers, we see this, because we see some acquisition opportunities. They’re obviously transitioning out and being able to bring a new level of sophistication, and pairing it with a lot of that institutional historical knowledge is a huge opportunity. And I think there’s just a narrative that needs to be bolstered that this is an exciting industry. Even at the ground level, we’re, like I said, we’re proud we go out there and build things and it can be fun to be a part of. So.

Wes Ashworth (34:48.615)

Agreed. Well with that, we will wrap up. Cagen, thank you so much for your time. This is such an incredible episode and I’m sure so many listeners will get a lot out of and great insights that you’ve shared. So for the audience out there, thank you for listening. Our next episode will be coming soon. So remember to listen to this episode, share it with a friend, share it with a colleague and coworker. You can subscribe, rate and review. Also check out Cagen and PPS and give them a follow as well. And if you enjoyed the conversation, as I mentioned, please share it with a colleague, help us get the word out and continue to share these messages out there. So with that, we will conclude, but we will see you next time.