Green Giants – Episode 52

Lee Keshishian (01:37)

Yeah, I guess I started my career officially in 2007. I had been in home building for the previous almost decade and was really at the front end of a large home builder, PulteGroup, and how they were looking at building communities of the future, particularly on the East Coast. Based in the Washington, D.C. area, we did projects from New England down to Richmond, and many of them were in these kinds of multi-step projects. So, there’d be retail, there’d be obviously residential, and there may be some industrial or office space. And I was really trying to think about how all the pieces come together. And so, in that regard, we started looking at LEED and Energy Star, different sorts of ways of building a more efficient footprint.

And through that process, through LEED, really was introduced both to my co-founders as well as kind of to the idea of really building high-performance buildings and energy efficient buildings and renewable energy being really a big part of the scorecard, literally that is part of LEED.

From some of our early conversations, both internal and external, we were doing some moonlighting with some apartment developers as a kind of side business. The folks that we presented to were seeing the return on investment of solar and saying, This makes total sense. Great. When can you start? And so, from going from a concept really in the first months or two to saying, we can totally do this.

We launched initially as a consulting and energy services business brokering electric power in the recently deregulated markets up and down the East Coast, primarily the PJM utility area, to started some of the earliest SREC trading platforms. We actually started a small division, got an agreement with Exelon’s Pepco Group, and eventually sold that off to Sol Systems, which is one of the larger players now in the SREC business.

We got the first contract, I think we did 40 recs in the first year, it was nothing, and decided we’re not gonna focus on this. But those early stages of trying to figure out how the pieces fit together, which really came down to how do you tell somebody about the economics of solar, how do you get them to understand the long-term value that it provides, and not just be focused on selling a bunch of panels and some equipment and hoping.

It wasn’t just about doing something that was maybe good from an environmental standpoint, but it was something that was good from an economic one. And I think that was the thing that got us started, and I think got me on the journey, getting excited to ultimately leave the home builder that I was at, to do it full time, and then obviously try and accelerate it through our own work, and then working with SolarCity, where really we were able to actually start doing it in scale as opposed to trying to play it one step at a time.

Wes Ashworth (04:33)

Right, absolutely. And kind of thinking that from Clean Currents to SolarCity to Tesla to where you are now, how did each chapter shape your view of what the industry needed the most? And tell us a little bit about that.

Lee Keshishian (04:47)

Boy, I think it’s probably something that could be mapped out in a business case standpoint that you’d see in any business school, and where we are in the life cycle of solar. The early days were the original pioneers who were just trying to figure out how to get the products built, to find the equipment, and to understand what was possible. I was not in that first round.

I got to sit at the table with some of them who had already been doing it for a decade, and really, frankly, humbled by their focus and dedication in those early stages. But really, in conversations like I just started, I am trying to have an understanding of what the economics are, and why would the average consumer would want to do this. That was like the first step. And once you could play out the return on investment.

Building out a spreadsheet like I had to when I was in the home building, to say what’s the ROI on deciding what we’re going to do from a construction standpoint for this publicly traded company. That wasn’t something that I saw from any of my peer group in the market with the exception of Jigar Shah, who had started Sun Edison around the same time, and here in the DC area, and seeing what he was able to do with a power purchase agreement.

That to me was the big, big aha movement that changed everything for us, and being able to say, putting these pieces together, makes the economics work. The next thing I’d say was, once that was in place, was, well, who’s going to do all this work? And so, think the next challenge was, well, the solar industry, as I saw it, particularly again here on the East Coast, saw it from a distance on the West Coast, was made up of a bunch of long-lasting companies who had been very local, who understood maybe their local marketplace, were not looking to do large volume, or if they were, was maybe not as maybe well thought of for the long term. And here comes along a company like Solar City that’s saying, hey, we can go and do this on a scale. And the challenge, though, was who’s going to do the work.

So, as they said, we’re gonna start selling systems and ultimately be acquired, and starting to do it on the East Coast, there weren’t enough installers out there. So, the next kind of level was just getting people adopted into this industry and finding them from far in the field. ⁓ They were typical construction backgrounds, but there were also people coming to the door who were Ivy Leaguers and asking the question, what are you doing here? And they’re like, hey, I just want to make a difference.

I don’t feel like I can do it, working in a bank or working in an office of some sort. And by the way, I love to hike. I love to rock climb. love to do snowboarding, whatever. They liked being outdoors, and they had a belief system, and they had frankly an ability to learn that became really the basis of how this next generation was built upon.

So, we started bringing now more of an academic approach to operations, logistics, and sales, to try and build a company that could ultimately go public. A lot of lessons learned, I’d say, in those early stages. We were focused on building a good mousetrap, so to speak, making sure the product was installed correctly, and that we were making the economics work for the homeowner as best as the systems would allow. Obviously, thinking that there was this ability to grow something special on a national level. But as we started going from these regional kinds of locales to really truly becoming this national company and putting the infrastructure in place, it became more difficult to set common standards.

The labor force in one market was different than another, but also the rules, the AHJs, the permitting authorities, the utility requirements, they differed so dramatically depending upon where you were that you couldn’t bring one kind of size fits all to the sale, the design, the installation. And where we were able to continue our scale was having that recognition of allowing that local knowledge to persist, to really foster it so that we could work with it in a national platform. But we understood that we still had to be tied and let the local people have a lot of decision-making in the process. To do that, the thought was, well, we need to set up the efficiencies, and we’re gonna set up a national kind of back office, so SolarCity did that.

I think between kind of going today, between what’s happened with COVID, and technology improvements. A lot of that doesn’t have to be literally under one roof. I think that the ability to decentralize the entire workflow and employee base can remain. And I think as I kind of go into this next chapter in my life, I think that’s kind of what I’m trying to tap into.

But yeah, the roller coaster, seems like in some ways because of technology and because of where we are, we’re somewhat going full circle, but just with a whole lot of knowledge to a place where we can go back to having local companies that operate efficiently and do good work for the consumer without having to be a large vertical integrated national company, which is what we had to in the middle stages.

Wes Ashworth (10:02)

Right, absolutely. And as you’ve outlined, your path ultimately led you to launch Civic Renewables, where you are today, which is a fresh take on an old challenge. How to scale solar while staying close to the communities being served. So, let’s get into what makes Civic’s model different. And take me back to kind of like the birth of Civic Renewables. What was the problem you were trying to solve when you launched it? And what’s the model that sets you apart?

Lee Keshishian (10:39)

Yeah, so I’d say the birth of it actually in some regards happened at Palmetto ⁓ as the other side of a problem solution. Palmetto, the idea was, this next chapter after SolarCity is that you can have a breaking of the service plans, if you will. So, you can have local operations, and you can have a back office in a centralized way. You can have financing through a third party. You could have design through third party. What happened at the end of solar city were things like Aurora and other sorts of design software to really take hold. Third party financing companies, Mosaic probably being the first good leap others. And so, all of a sudden that you had to be vertically integrated as a Sun Run or Solar City or Vivint, you now could break apart and basically tap into the same kind of caliber of resources that the verticals had. And so, in that thought process, at Palmetto, we thought, we could have some sales enablement tools that sales organizations could operate off of. That was the Alchemy platform. We would, at that time, partner with the best-in-class finance products.

Now, obviously, Palmetto has its own internal product. And then we could set the scopes of work and partner with local solar companies to actually do the installation. I think the reality of that, as that continues to grow, is that not all groups are equal. In terms of the kind of financial, I’d say even on a business standpoint, the financial acumen to understand how they’re doing operationally speaking, the ability to hire, train, and just kind of the general kind of administrative side of running construction varies by market, by company within market.

And so, there were companies that I saw that did certain things really well and ones that didn’t. And so as, I got back into solar after taking a couple of years of hiatus. I thought, here’s the flip side of what Palmetto we were trying to do back then, which is that there are well-run local solar companies that can do good work. They may sell their own systems, but the reality of the marketplace with EPC and other sorts of constructs is, there’s no reason why they can’t grow their own footprint or their ability within their own backyard by partnering with other organizations, which is what we are doing.

But would a platform group want to work with 100 companies, or would they rather work with a handful of companies that are in multiple markets? And the attitude that I had is, there’s this debate and if it could be a number of companies, but they’re all under one umbrella, now that platform is dealing with purchasing and invoicing, accounting, insurance, all these things under one relationship. But they have the power of that company that’s well known in that local marketplace that has relationships with the AHJs, with the utility, with the various inspectors, of being a company that’s known for doing high-quality work. So, they get kind of the best of both worlds where they’re able to tap into a number of partners, but having this kind of one-stop shop approach to the engagement.

And that could be across an EPC relationship. That could be with just a subcontractor where they’re doing everything, but they’ve decided, they’re selling in their own systems in New Jersey and New York, and they would like to sell in Ohio, but they don’t want to go and develop a platform in Ohio because they know how hard it is, and they’d rather find a good partner to work with.

If they can and it’s with us, then obviously it makes it easier for them to go and expand their sales footprint and or even their back-office footprint. But the hardest thing is going to be the person who’s actually doing the install, and they’d rather have somebody who’s doing that of high quality.

So that’s kind of how the initial ideas of this came to be, which is, can we put together a handful of well-run companies that know their marketplace? And by doing so, relationships that they have in their markets could only improve because they’ve got the backing of a company like Civic with our resources. They can do a better job of how they market, invoice, and a number of the basic elements. And people feel more confident because there’s a larger parent that’s supporting it financially. But knowing that they pick up the phone and they can still talk to a person who’s in that local office who lives and breathes the customer experience at that local level. They know that the traffic on this freeway is bad because they live in that community, as opposed to being a thousand miles away in a call center.

And then the other side of it is that these relationships have a synergistic thing. So, Florida Power Management, for example, had great relationships with a handful of financiers who were essentially doing cleanup work for out-of-business solar companies. So, not going into the specifics, but there are a couple of large financial services companies that had well-known bankruptcies happen. They asked Florida Power Management to help these customers because of the real reputation they have to go in and, in many cases, just rebuild the systems because of how poorly they were installed in the first place. Well, upon the acquisition, that spawned work in two other states because they’re like, you guys do such great work. We like working with you. Great, you can work in these other markets where we have the same issues. And that’s now more work.

Similarly, with subcontracting work, where large regional companies are working in multiple states where we’re working with them in one state. Now they’re saying, maybe you can work with us in two or three other states. And sales organizations where there are people who are like, I’d love selling in Ohio, just not in February. I’d love to sell in Florida and so on and so forth.

So, we’re getting some obvious benefits of more of a national company, but when we’re dealing with the consumer, their relationship is with GreenRack of Pittsburgh and Ohio, of Ipsen, of Northern Virginia, Maryland, DC, Florida Power Management of Orlando. And they’re talking to people who are on the ground in those markets who really are critical to the success of those companies as being part of the community, as opposed to talking to a company based in California or New York or whatever that happens to have a division or a solid office in that market. So, it just means we’re a little bit more invested in the long-term of being in that marketplace.

Wes Ashworth (17:09)

Yeah, I love it. I think it makes so much sense, as you’ve outlined it, and you covered it pretty well there. Just the kind of like what’s in it for each party, what are the benefits, why it makes sense, and it’s such a cool solution. I know through that and some of the other things you’ve emphasized that solar isn’t just about panels or hardware. It’s a service business at its core. Let’s unpack that a little bit. How that mindset changes, how we build and operate companies in the space. And just firstly, so why do you believe solar should be treated as a service industry and what changes when we take that view seriously?

Lee Keshishian (17:57)

Well, I go back to the very beginning. Coming out of more of a construction, home-building mindset, I looked at the vendors that we had, the HVAC companies, the plumbers, what have you. those aren’t, they’re very important businesses, but they’re not sexy businesses. We’re not selling, we’re not trying to sell the future in a way that I got to do in, maybe at least one of the companies has definitely built their reputation on sending a person to Mars. ⁓ This is about basic home services and taking the next step. I kind of always said this when I was in the home building, but who is the person, or what happened, that made us all want to have stainless steel appliances? I remember as a kid, I don’t it was like a white stove.

And somebody said, I’ve got to have stainless steel. It’s the exact same oven or stove or whatever, just with a different format or saying you have to have granite countertops. There were these evolutions that occurred, and I saw that in home building. And in some regards, I’m like, look, there’s the next thing. But it’s just like, so you’re going to partner with an HVAC company that’s going to get you the better-rated HVAC system.

And certainly there’s that product aspect, but when it comes time to actually buy, you’re tending to pick the one that your friends use, that you see their truck in your neighborhood, they’ve got a great reputation, they maybe sponsor the little league team that your kid is there playing soccer or whatever. They’re just part of the community.

And it’s not like they’re touting their space-age technology. mean, yeah, they are selling maybe something that is the latest and greatest, but in the end, it’s about the service. And invariably in those businesses, it’s about the longevity. So, you almost care more about the service contract than you do the equipment because you want to make sure that it’s working. Now there are moving parts. There are a number of things that happen with hot water heaters and heat pumps, and all of them have more of a service maintenance aspect to them. But I think the biggest disservice we’ve done to ourselves in solar is saying that it’s maintenance-free. There are no moving parts. It does last for 25 years or more on a panel, and inverters last 10, 15 years. The equipment has a lot of positives to its longevity, and the economics prove itself out.

But to me, the biggest challenge has gone from the third party ownership ramp up that I saw at SolarCity, Sunrun, to the loan offering business, which I think is what’s caused a lot of the problems that we’re in, is that people didn’t really sell or explain probably as well what was going on in the service side.

When you buy a TPO product or even companies, you have a SunPower TPO. They’re no longer in business, but there are requirements in that agreement that somebody is managing, whoever has bought that system ⁓ has money built into the economics, your monthly bill. You’re paying $100 a month. There’s probably $10, $20 a month across 100,000 systems that are going into a pool to service those systems.

So, there’s an aspect that was always there around maintenance, and that got lost. So, as we go into this next chapter, I think there’s gotta be more of a clear understanding that this is a services business. It’s a construction services business. And so, you need to have people who are well trained, know how to do the work the right time, the first time, the right time.

But then, understanding that things can go wrong. And there is the manufacturer’s warranty, and then there’s the workmanship warranty. They’re not the same thing. So, if we installed it correctly and something goes wrong, that’s a warranty on the manufacturer, not on the service provider. So, you buy an HVAC system, and in year three, something goes wrong.

And they’re like, your condenser shot, that’ll be $2,000. You pay $2,000. We don’t have this whole thing. Wait a minute, you promised me this for the next 20 years. Yeah, there’s a warranty for whatever, 10 years on your HVAC system, but stuff goes wrong. And if it’s in warranty, it’s a manufacturing issue. I will install that, but somebody has to pay me for my time, whether it’s the manufacturer or it’s you, the homeowner.

So, I think there’s more delineation of like what is covered, what is in there, which is gonna line up more and more to the sales experience and the consumer expectations that you see in the services business. And as we enter, there are systems that I sold, and how many years ago is this? 15 years ago. Those are coming up on the date when the inverter’s going bad. There’s probably other equipment that’s been out in the elements that’s failing. It’s a 150-watt panel that can be replaced by something that’s 3X, its performance, that there’s gonna be these opportunities to go and replace, retrofit, replace, what have you, a system.

And as we think about where we are and all the accolades, I guess we give ourselves about how much solar we’ve brought to market, that is assuming that everything that was installed before is still operational. And so, we’re hitting these milestones from systems that were installed at the height of 2015. In my region, we did 450 megawatts of solar on the East Coast for Solar City. Well, that was 10 years ago. And so those systems are failing. Some of them need to be replaced. And so, we will have these stair steps that will need somebody to be in the middle of. So, that services aspect has to be part of our thought process and equation. And I think the people who are gonna end up getting a bunch of this work are gonna be the same thing, the folks who are in your community who have a good reputation. You may be living in a home that has a solar array that was installed by somebody else, a previous owner. You may not know who the company is that did the install or the sticker. You call that 1-800 number, and that company’s out of business. ⁓ You’re gonna need somebody to step in and do the work, and that’s where it’s gonna be a local company that has the reputation that you’re gonna tap into.

Or, some bank now owns this system, like in the case of SunPower, and they’re bankers. So, they’re going to need to have party partners that they work with, whether it be on an attempted national scale or regional scale, they’re going to want to have a few people that they tap into. So, with all that being said, that’s something that we’re trying to tap into here with Civic, which is finding those local companies that do good work in their market, but figure out how we can bring some national scale, to economies of scale, as well as relationships that we can get across multiple markets.

Wes Ashworth (25:23)

Absolutely. And as someone shaped the past and present of solar and taken companies through growth and seen a lot in that time, I’m curious to hear what you see as coming next. I’d love to talk about what excites you most about where the industry is headed and the key shifts on the horizon. So, thinking about that and just the space you’re focused on, what excites you the most about where the residential solar space is heading currently?

Lee Keshishian (25:47)

So, I’m going to, I guess, not hit on the 800-pound gorilla in the room, which is where are we with the IRA, ITC tariffs? As we’re on this conversation this morning, there was a 180-degree flip, which I was spending most of the morning trying to figure out what this means. So, let’s just assume somewhat normal sailing for the foreseeable future.

We still have a lot of opportunities to install solar in many places where the penetration is very low. I certainly am in these areas of California and whatnot, where they’ve got different sorts of things that they’re contending with. And I do believe that the evolution of battery storage to the market is going to become that much more important, in some cases more important than solar, because it really is the regulating aspect of kind of grid continuity that it provides. But there’s a lot of opportunity to think about solar in a general sense. I mean, we have so much new demand coming on us, not just at our homes. We have more devices; we’re seeing more movement towards heat pumps away from other sources, in places like the Northeast, where they’re on heating oil, things of that nature. But I’m in Northern Virginia right now, and down the street, there are 50 of these Equinix data centers, and there’s more going up. There literally are boycotts right now because they’re taking over whole tracts of land here west of Washington, D.C.

But this is gonna continue to happen where there’s gonna be more and more demands on the grid and the infrastructure. And the question is, how does the grid manage that at one level? And then you as a consumer, how do you protect yourself against swings? And so, I think all these pieces kind of will have a confluence of saying, it makes sense for me to think about having solar and energy storage on my home to deal with not just spikes in pricing or blackouts, but frankly, the brownouts that happen that we may or may not be fully appreciating in our current status, in certain markets, other places are already living it right now, parts of California for sure. But I think, generally speaking, more of that movement.

As I was hinting at before, there’s this wave of legacy systems that are going to need to be supported and changed out with newer technology. And again, just like other home services, my first home, built in 1942, had this big oil heater that took up like a whole room. And then it got replaced by a box like this. After I bought it, I could basically put a gym in there because the space was cleared out. So, I think, we have a lot of things that are lagging, and that’s gonna just create opportunities for upgrades. And you’re gonna see solar arrays that need to be upgraded. You’re gonna see, home systems that need to be upgraded.

So, in all those respects, I still feel like this is a great industry to be part of. I think we’re going through a lot of growing pains, a lot of things that weren’t done well. I think there’s a lot of misunderstanding in the general population about how all these pieces come together. And those are challenges that we face as an industry to educate our peers, our consumers, to truly understand their friends and neighbors, and frankly, some of the people who are opposing what we’re doing. Because I think at some level, long term, what we’re saying actually does help the utilities and other stakeholders because we bring some grid normalcy. And there’s gonna be partnerships. There’s gotta be, it can’t be us, them. There’s gotta be ways where we see the advantage. I think VPPs offer that window into that opportunity with who owns what assets, who controls what assets. That’s gonna shape maybe some differences in how we all operate within the community.

But, one of the things I got thinking about as well at back to this, is I’ve got, I’ve got kids who are, in their teens, twenties, and I think about like what their future is going to look like. And I don’t mean this like on the environmental standpoint, but frankly, from a job standpoint, where does the job pool exist 10, 20 years from now? And the one thing that feels like it’s not going away,

I’d say there are dentists, that’s not getting replaced anytime soon. Electricians, carpenters, there’s gonna be these service trades, even, obviously dentists are getting a lot more education, but in the end, I mean, there are people who are working with their hands. There are people who are having to deal one-on-one. They are not like scalable in a factory things, not yet at least, that are going to be really critical. And so, as part of this, my hope is that we’ll be able to engage with this next generation and say, hey, there is an education track that’s exciting that you can have a great quality of life and be part of this greater industry, particularly on the residential side that will span multiple products and services that these things will kind of come together around.

So, on a little sidetrack, Green Rack was the first company acquired, and we had our first meeting, and they had their proverbial Facebook, right? They had their pictures on the wall of all their installs. I’m like, tell me about these guys. And he pointed to, he’s like, this guy is one of our best guys. He just started six months ago, and he’s excelled. He’s like, he was in a coal mine, you know? And then he came in here and he’s making twice the money. And obviously in much better circumstances than his parents, grandparents, et cetera. And this is a guy who was in West Virginia, the Ohio borderland.

And I’m like, how do we find 10 more of those? Like that’s like, if we can tap into this type of workforce and give them a way forward, in a career track that is better for them long-term in so many different aspects of it, can’t we like get people to say, this is something that we should be supportive of rather than saying it’s taking away jobs, it’s creating better jobs that are more long lasting than maybe what they in before. There’s a little bit of like, all this comes back around to creating an ecosystem in a local community, supporting local jobs in the community by people who care about the work that they do because they’re part of that community.

Wes Ashworth (32:08)

Yeah, yeah. And that segues perfectly. So, I know one of the things you’ve done is invest in building a hands-on training center. And I love that idea. What’s the thinking behind that? How’s it going? Tell us a little bit about that as well.

Lee Keshishian (32:31)

Yeah. Well, so the thinking really goes back to 2011, 2012, when again, we were scaling so quickly at SolarCity, and we were bringing in 10 people, like twice a week, for interviews to try and hire. And okay, we’re hiring people, many of them had no solar experience, and actually they were more preferable because they came and we could mold them into what we needed.

They didn’t bring habits, maybe from hearing about it secondhand from somebody else. And so, in Beltsville, Maryland, which was essentially the offshoot of the first company, the Clean Currents Office moved to a bigger space in Beltsville, and we built out a training area. It wasn’t all that elaborate, but it was enough to start this out, where we would teach people about safety, and put their harnesses on, know how to tie in, how do you go and make sure that you install correctly on a roof, the, you know, the L feet, the rail, whatever we were, we were working on relative to the systems. How do you do electricity correctly? We had a wall.

So, these are things that many solar companies have. I think the next step, though, with the experiences we took another space in Beltsville. We actually built mock houses. So now we’re talking one and two-story roofs with like a mock basement, a mock garage where we tried to make it experiential as much as having the space where we could try on new products and services. And so, bringing a new person into that environment kind of gave you a hands-on experience, specifically to what our scopes were that we needed for the products that we were installing.

So, we had essentially a classroom, and we had this. So that’s all I’ve kind of copied. The smaller the scale is, we are to a space that’s literally down the street from the Green Racks main office that’s got space. We can bring in 20 people into a classroom environment on one side, and you go in the back, and there are three mock rooms. We’ve used it for our employees. We’ve used it for some salespeople.

We’ve actually had some governmental agency people come in, and they got all excited because, like, hey, I’ve never actually been on a roof before, and in a safe way. So, I think that tactile experience has benefits beyond the person who’s actually being taught how to do solar, but people who are ancillary to it have an appreciation for this in construction. There is danger. There are things we need to be cognizant of. And as a salesperson, to respect the limitations of what’s possible.

A permitting coordinator needs to understand why we ran something a certain way in terms of our conduit and why the electrical was placed on a wall in such a location. Frankly, even seeing the equipment. There are secondary individuals, certainly sales, that haven’t seen the full array of how many boxes are all on a wall in somebody’s basement, finished basement, or in their garage where they’re parking their car. They’re getting a battery backup system, and they’re like, wait a minute, I thought I just had this one box. No, it’s like, there are four or five boxes that take the entire wall.

So, all of this is again just around creating an environment for education. And even some of our vendors have said, hey, could we use this? And I’m like, yeah, no problem. Just throw a couple of dollars into the cookie jar to help us pay the rent. But like, if this helps a third-party solar company do better work, then, hey, that’s great. It helps the mission.

Wes Ashworth (36:02)

I love that. So, as we get closer to the time, I’ll ask a few more questions. So, with your vantage point from a startup founder, operator, and advisor, what lessons do you think the solar industry still hasn’t fully learned, and where do you see quiet innovations starting to take hold?

Lee Keshishian (36:19)

Lots of thoughts. I’d say we’re all grappling with how to drive to a cost-effective solution. Whatever happens with the IRA and ITC, the reality of it is we are developing systems that produce electricity that have to produce it at a rate that is comparable lower than utility rates. Like that’s the conundrum, and also like the backup and all the other elements.

And so, how do you do that? And there are so many different ways that we constantly debate about, how do you set up sales? Who can be selling for you? How do you regulate that? How do you design the right way? There are a lot of pieces that fall together. There isn’t one right answer. like, everybody has to be local in that community 100 % of the time. No, I’m not saying that. I’m not saying that at all. I think frankly, technology is going to drive a lot of innovation around how a system is designed, and what the consumer’s ability to transact in a more simplified way. And we have to move in these directions. It’s just not quite there yet for the average consumer. I think there’s a tolerance level, like in the early days of solar, we’d go out to the system and look at it, and like, I don’t know if we can do that and go back and, it took us four days to do an install. Now you’re doing an install in four hours, its very different world, but I don’t know if all of those pieces are in alignment.

So, we do have questions about how we best educate a consumer to want to go solar? That is our biggest challenge, generically speaking. When you look at solar and the cost of solar, the materials, the panels, and the equipment are like a third of it, right? So, you’ve got a third roughly in that side, you’ve got a third roughly in the labor, and some of the direct stuff, the direct project management, and you’ve got a third that’s cost of acquisition and your profit.

And that’s actually probably a little bit more weighted. So, it’s probably more like a third 20%. And then the rest is the cost of acquisition and profit. And that’s what’s kind of like the part that there’s got to be some movement around. We can only do so much with materials. I mean, even as much as tariffs have an impact and they are going to have a big impact if they do go through, I mean, the price of a battery product went up substantially, because if we don’t get it in on Friday, it was going up by $2,500 to the consumer today, Monday, and I don’t even know what’s happened as of this afternoon with that price.

So that’s real money. having kind of looked at all the cost stacks, that $2,000 is a subsection of the soft costs at the top. And so that’s what’s going to be attacked, by all of us in the industry, to have a viable industry going forward. Innovation around streamlining steps, using technology to maybe limit some of the inefficiencies of the touch points, all those are gonna be the things that are gonna help us get to a future where all this stuff works. And then again, I think the partnerships that have to exist between us and utilities, there’s just no getting around it. And I think, I think that’s the one that’s hard, one is to see how we can be successful and how they can be successful by partnering with us. There’s still a Delta there. ⁓ And the reality of it is that the challenges are they being in, generally, investor-owned entities have a very different calculus of how things are going versus us. And I think we just have to figure out how we can coexist with each other. When that’s solved, I think you’ll see solar only go faster, frankly.

Wes Ashworth (39:58)

Yeah, absolutely, great points there. And I wanna just kind of wrap up, close out with a little bit of reflection. So, you’ve been on the front lines of solar for nearly 20 years, front row seat to solar’ evolution. You’ve also been in the trenches. I guess when it’s all said and done, what do you hope your legacy will be in space?

Lee Keshishian (40:20)

I think in some ways I already see it, which is the talented people that I got to work with along the way. There are people who may be listening to this that not want to throw their names out, but were there with me in some of the early days, and they’re leaders as some of the top solar companies in the industry right now. And I go back to those early stages, we’re all literally sitting at a whiteboard trying to figure out how we’re gonna make something go? And ultimately, I think in some ways, all I was, was a conduit to their talent. That they saw things in ways that I couldn’t and they’ve propelled solar in many ways to heights that I couldn’t do. And so, in some ways, I guess the legacy is seeing those people that maybe I was a mentor to, now I’m trying to learn from them.

It’s kind of a cool dynamic. I’ve got a couple of kids at this stage, and I’m seeing that dynamic as a parent. And it’s kind of almost the fulfillment of that. So, if there’s any legacy, I guess it’ll be told through the successes of some of these folks in what they’re working on today and what they work on in the next step. And hopefully, they do the same thing that I did, where there’s some young crop that’s coming in and taking it to yet another level.

Wes Ashworth (41:38)

Absolutely, no, I love that. It’s so well said and such a cool sentiment. And I agree, I mean, we need it, right? You need to sort of mentor that next generation of leaders and have others who are doing the same. So, I love, that’s perfect, perfect in terms of legacy. Final question closing out, and I’ll kind of open it up. So, whether it’s a piece of advice you’d like to give, something you didn’t get to share, something you want to part with, words of wisdom, the floor is yours, I’ll let you take it. Anything else you want to share with the audience?

Lee Keshishian (42:04)

I think we covered a lot of great topics today. The world that we’re living in is so interconnected. And I think, back to some of the conversations, we’ve got to figure out ways that we can work better, obviously with each other within the solar space, and I say the residential solar space, but understanding how these other parts of it work, the community solar, commercial utility scale, because we’re pulling from the same talent pools, the same cost of money or the same sources of money. And that’s getting more and more, I guess, spread out.

So, I think of this like there’s going to be more efficiency in how all this works by us all being better aligned and communicating. Because you see wider ranges of the cost of capital, the ability to deploy capital is. And if we’re all going at this in the right way, we should be looking across the spectrum and saying, hey, let’s do what’s the best thing. And how do we drive that?

And so that may be situations where it’s not going to work for me in the short term, but it’s gonna be better for solar and better for the grid and our economic security long-term. So those are hard things that are even for me to swallow, but I think that’s something that we all have to take a step and look at. Hopefully, understanding where the other side is coming from from this vantage point.

Yes, everybody’s trying to protect their turf, and some, maybe the other side’s a little better, better organized in some ways. But there are reasons for wanting them to still be in the mix. I think all the above kinds of approaches are truly what we have to be thinking about. And, we’re not going to be successful if we try and jam one way down, you know, the throat of the politicians or consumers alike. So, I think that’s just a big one, just generally speaking, saying at this point, how do I see solar going forward? It’s gotta be in some concert as part of a bigger effort.

And I just think like, in the end, this is a people business. And so, how do we make sure that we’re supporting our teams and developing ways for people to grow and feel like this is a career that they want to be part of because right now there are a number of people leaving solar because of the ups and downs and the turmoil and they don’t know where to go. But there gotta be other ancillary ways to keep people engaged, whether it be, okay, you’re no longer installing, you’re doing O&M and service, you start offering other complimentary products that feed off of it, HVAC products, things of that nature.

There are going to be these elements that we have to think about how to bring underneath our own umbrellas, as well as give people training so that they can participate in this energy services business.

Wes Ashworth (44:52)

Yeah, good stuff there, and great way to just wrap it up and conclude, great words of wisdom there. So that brings us to the end of our conversation with Lee Keshishian, and I could probably do this for another hour. So, we’ll have to do it again sometime soon. But he’s the CEO of Civic Renewables, as we mentioned. Lee, thank you so much for bringing such a grounded visionary perspective to this episode. It really is clear how you’re helping reshape how we think about solar, both in terms of scale and how it’s delivered.

And to our listeners out there, if you enjoyed this episode, make sure to subscribe, leave a review, share it with someone who’s working in or exploring clean energy space. And thank you for listening and we will see you next time.