CEO & Founder of Paces AI, James McWalter, Shares His Vision for Empowering Green Infrastructure Development EP122

hollowing out of rural America is very similar to the hollowing out of rural Ireland, right? Like our, my national school went from 100, pupils to 36 pupils, like from basically the equivalent kindergarten all the way to sixth grade. Right? I was in a two room national school like so. And then because everybody left a lot of people leave. And I think when you have these separate dynamics, it's not a business decision. It's a very understandably, emotional decision. Right? How do I how am I perceived in my community? What is this land that we have farmed for, you know, sometimes hundreds of years? How is that altering? How does that alter the landscape?

Today on the Clean Power, our software platform for energy developers, my guest today is the CEO and founder of a company called paces Welcome to the show. James McWalter, thank you so much, Tim, it's great to be here. Good to get to know you a little bit and learn about the platform. You're you're making waves in the in the software tools, space for energy developers, your your platform called paces, does more than solar development. But I want to highlight some of the aspects of it for energy developers today. But give our listeners a little background on yourself. James, you're a serial entrepreneur? And how did you get interested in the renewable energy space specifically?

Yeah, absolutely. And shares happy to get into all of us. So yeah, so for me, personally, I'm originally from Ireland, grew up on a little sheep farm in the west coast of Ireland. And then from there, out of university, I got involved in software. So I've worked about 15 years now in software and data solutions, mostly in the b2b side, started on the finance side, worked in London many years and worked in New York City. Then country hopped for a few years ago, while I was sorting out some visa issues, and really got into, I guess, startups and entrepreneurship starting in 2016. So I founded a company at that point, which was more in the fitness space, I learned a lot about what not to do, made a tonne of mistakes, and didn't really have much of a successful outcome from that. But from there was able to leverage that to be the first employee at a machine learning AI startup that was founded in about a year after that. And we worked on that. And we actually had a great outcome there. We were acquired by Google, then in 2018. And at that point, I wasn't the founder of that company, but was working hand in hand with the CEO, and was just really learning a lot. And I also spent time in another company as well, again, the kind of second person, man, our second hand man to the CEO. And I think a lot of the lessons I was kind of trying to pick up and trying to process is how can software and better data analytics, solve business problems? You know, there's been this large talk about software eating a world, generally, that has worked really well in areas where it's just moving bits around right software speaking to other types of software. But what we've really seen over the last two to five years is software starting to impact the built environment, right? So it's affecting atoms. And so this was the kind of like overarching theme, when I was thinking through my next steps at the beginning of COVID, was like, Oh, I actually want to find something, I want to be the person that started. Rather than, you know, the number two at the companies, I've been previous to that. And I really want to have some effect on the built environment, some effect on atoms out there in the world. And I was also becoming ever more concerned about climate change. And so those are the kind of two factors but then it's like, okay, well, how do you go from there to like finding a specific problem and starting to solve in that specific direction?

I like the bits to atoms, which makes me think that there's another line there, which is photons, to electrons to atoms in the clean energy industry, right, we're taking photons, and we're powering our infrastructure with them, which is pretty awesome. And, and seems too good to be true. But trust me, it's real. And so well, I'm really glad that you've found the, you know, the the energy space. There's a tremendous need for continued innovation, and evolution of the tools that we have, we have a good suite of tools, but we don't have what's what I would consider to be a world class or fantastic suite of tools. And so there is room for improvement. And I think you have your finger on the pulse of what's going on in that space. So congratulations for for that for the start, so to speak. And you are going through a an accelerator I guess is the word Ford called Y Combinator. What has that experience been for you?

Yep. So they've been looking to get into that. But I guess one thing before I dive into that, just to your point on, you know, having more world class solutions and energy, you know, what I found is somebody's trying to find pathways and energy about a year or so ago. Is that To energy outsiders, it is quite intimidating, right? You know, what is an ISO? Right? How do what is interconnection Q How does these things interact various ways. And for folks who've been in energy a long time, you know, this is the water that they swim in. But for kind of outsiders coming in, there's a lot of complexity to kind of navigate. On the other hand, because energy is changing so rapidly, right? You know, the experience of being in the energy industry between 1995 and 2000, that experience may not give you the same benefits as if you had the last five years, right, because we're seeing the emergence of different types of energy, how that's affecting the stability of the grid, and all these different aspects. And so I think it's just it's very interesting time for, I guess, more generalist software and data, people to start looking at clean energy, clean transportation, and all these other areas, because when you see very, very large macro level disruptions, things are your new perspectives can be very, very valuable. So yes, on Y Combinator, so I can give you a little bit of the kind of history about previous to kind of Y Combinator as well. But, you know, my co founder, Charles, he's an AI guy out of Facebook, he had a very, very similar story, to me in terms of wanting to affect the built environment with some more advanced software and modelling. We wanted to build something that helped the deployment of renewable energy, you know, and speed that up. And we became obsessed over this kind of pretty low rate of closing of projects that are building a projects that either have an interconnection position in the queue, and or have, you know, some say control. And it's like 17, or 18%, for solar and wind in the United States for plus one megawatt projects. And we need to deploy an awful lot, of course, right, both in terms of the massive business opportunity, but also from a climate perspective. And when you have such a low rate of success, when capital is nearly quite Unlimited, but there's a tonne of capital looking for good projects, this became a kind of really interesting to us, it's like, Okay, is there better data analytics, is there better insights that can be driven, you know, in a slick enough software package to help developers make better decisions move faster. And, you know, and what we're trying to get to is dramatically increase the number of projects that are being attempted that actually get built. So when we started the company in January of this year, so January 2022, we started doing some data collection, we started, we signed some letters of intent with a couple solo developers, we started using design partnerships, because what we wanted to do is build something that was driven by the user, right? We've have a very deep understanding, I think of how to build good software and collect data in interesting ways. But we're not experts on energy, and we're not experts on the problem. And so everything we do when we talk to customers is just listen, so tell us your problems. How are you solving it today? How much does it cost you in last business? How much does it cost you in staffing, all those elements. And then from there, we kind of translate that into a software development process. And you went to Y Combinator, Y Combinator, you know, one of these kind of quite famous incubators, I had actually previously tried to get in three other times and failed every other time with previous ideas over the last few years, so to get in was quite exciting. And the real thing that I guess Y Combinator really drives home to the entrepreneurs that go through the programme, and it's a generalist programme. So there's only a few kind of energy or climate related companies in our cohort over the over the summer. What really drives home is you have to really a listen to your customer and be iterate very, very quickly on your product. And a lot of companies spend weeks, months, year quarters, years to iterate. And yc is all about, can you release it literally tomorrow? What can you do tomorrow, that makes that customer happy and delighted and willing to give their hard earned money to you? And those lessons coupled with our previous experience? Building software's like, okay, you know, you have to move very, very fast to get to a specific amount of value for the customer. And then you just can never let your foot off the gas, right, you basically are foot on the gas to continuously service your customers. And you know, we're, they say it's a marathon, not a sprint, but it's kind of like kind of sprinting a marathon for like the next few years.

Yes, well said. And one of the things that I really appreciate about your approach is that you are in this very intense iterative mode and gathering feedback as fast and furious as you can from your customers. You're still a small company, and really just getting your first traction. Where exactly are you I guess, in your development, and any if customers are looking for a software platform for Project citing, are you taking on customers?

Yeah, absolutely. So we released the v1 of the products end of June, and it wasn't good. It was wasn't great. It was very much a GIS map that we were trying to say last GIS maps out there, why can we could be the best GIS map. And we shipped that we showed it to a few folks who were, you know, our design partner, potential early customers, and nobody wants to buy it. And we're like, oh, that's fascinating, right? Nobody wants to buy it. Because to us, like, you're always iterating. So no is like just as interesting as a yes. Right? Because it's like, okay, and when you've failed a lot, I have failed a lot. You have to kind of have adopt a kind of attitude of curiosity about failure, and noes and rejection. And so when that wasn't working was like, Okay, what do we do next? And so we basically moved from it being another GIS map to something more akin to a search engine for parcels. So a developer can put in their interconnection criteria, their build a little acreage criteria, references, the zoning and permitting and lots of different data that we've collected, you know, even incentives, like what are available in the recently bounced inflation Reduction Act, and then hit a button and then produce the list of parcels and then see that on the map. And it's a very subtle difference from going from focus, looking at maps to try to find parcels to the list of parcels being projected, and then seeing them on a map. But that all of a sudden, like went from us having zero paying customers to we're now adding a customer a week. And, you know, again, having been involved in many startups that never really got to like an interesting growth trajectory. It's kind of been just absolutely amazing. The last three or four weeks in particular, and, you know, we were just at already plus and that was a very exciting time as well.

Yeah, what were your takeaways from Ari plus, that was a huge event 27,000 Plus attendees back face to face for the first time in two years. And I just had a blast geeking out on all the tools and technologies and of course, rubbing shoulders with many dozens of colleagues now in solar wind and battery storage. But what were the takeaways for you? And especially as it relates to paces?

Yeah, first of all, a great it was fast. Yeah, absolutely fantastic event met a tonne of people met some existing customers of ours and plenty of new potential customers. couple thoughts. So one thought is that solar in particular, and renewable generally, is going through this interesting transition from it being the small upstart that has to scrap and fight for every single bit of notice, to with the inflation Reduction Act passing, being like, Oh, we're here, we have the, you know, we have the kind of capital incentives, the capitals there, we have all the various kind of regulatory frameworks that are emerging on a state by state basis, like now's the time. And so just kind of this interesting position where people often would still have this, you know, we're the small guy, this small upstart, and not being as comfortable, the fact that, oh, now we are a major industry, you know, we are going to be driving millions of jobs in the United States over the next decade. And we should act, you know, accordingly, we should act like a big industry that has big elbows, not small elbows. And so it's very interesting hearing different folk have different perspectives on, you know, how mature the industry was, how people should be kind of leveraging, you know, different kind of political levers and that kind of thing. The other piece was, I guess, for me, again, coming, you know, pretty recently in the energy space, is that how small slice of what we're tackling is today, right, because you walk into the big exhibition hall, and there's 10s of 1000s of people, and I think there's 800, exhibition, tables and so on. And there's a huge amount just working on resi, right, we don't do anything on the residential side, there's a huge amount around, you know, massive business, pretty low margin businesses around the panels themselves, you know, big themes around all the supply chain crunches, that all the developers are having, you know, to actually get their their projects built. And which is like, oh, you know, our slice is actually relatively small. And it's like, but it's really exciting to see all the other activity and see how we can basically, you know, be a potential kind of building block to enable all the other things that are happening.

Hey, everybody, thanks for listening to the Clean Power Hour or viewing it on YouTube. We do have a great YouTube channel. If you're not subscribed, please go to clean power dot group, and hit that YouTube icon and subscribe to our channel. Of course, you can find all of our content on your favourite audio platform as well. So please give us a rating and review back to the show. Yeah, I think that's really the crux of it. You're a building block to enable project development. So let's talk about the technology and what separates you from your nearest competition. I'm, I'm an Anderson optimization user on a daily basis. I'm quite happy with that platform. And we've had Jake Anderson on the show. And then I've also had recently go on his Bob with Landgate. So you are you know, you're standing on some some very good and fairly broad shoulders there with just those two companies. There's, you know, a hand I'm full of companies that play in this space. But what? What is different about paces? And what's the feedback I guess that you're getting from your customers that is inspiring them to, you know, stay on with the with paces? Yeah, great

questions. And I will say that, you know, those companies, you mentioned the other competitors in the space like, we love what they do, we think that completely different approaches will bring different skill sets and talents and perspectives to the problem. And so I think, you know, the more that we're very much let 1000 Flowers bloom. And we think that competition drives the best solution for the end customer. So I hope you have other competitors and so on Also on the podcast. In terms of how we think about differentiation, a lot of it comes down to our thesis that velopment is going to continue to get more complicated in terms of what makes a good site. So if you think about historically, what makes a good site, you want it to have a certain amount of buildable acreage, once you consider floodplain wetland trees, you know, forestry, slope, etc, endangered species, you want it to be within a certain distance of an interconnection points. And that's applicable to both on the distribution side or the transmission side. And you want to be able to get it through a county, right, or the HA, you know, whatever the authority that's governing the permitting. So you want to do all those things. And it takes, you know, often years to kind of move a project through all those different steps. What we're finding is, a lot of the best sites have already been picked over the a lot of the H chaise, a lot of the communities are starting to introduce things like solar moratoriums, the queue, I think everybody listening to this knows is goes from being annoying to a literal disaster, depending on where you are in the country. And the incentives that are basically trying to balance some of the issues around citing, like what's an IRA and like what's in various kind of state and local level incentive programmes means that just the complexity of what makes a good parcel may be suitable for a given project. And what why that person will pencil out versus the parcel across the road that's in a different county won't, because there's a sort of moratorium that's kicked in, is becoming ever more complicated. And our core skill set is collecting data very rapidly making sense of it, and then giving those insights to developer as quickly as possible. And so as complexity increases, as more data is needed to understand what makes sense for a given parcel, whether that's a good place to build or not, we think that's like, yeah, that's, that's our thesis, that's where we can kind of really shine. The second piece is everything to do with the advanced modelling that comes from that data. So there's some pretty cool things that, you know, my co founder and I have worked on in previous industries, me on the finance side, and when you know, social media, we're modelling lots of lots of data to have insights. And you know, this is often called AI or machine learning. And so on those insights today, we don't do any of them, right, we are just doing data collection, and we were revealing the data that we've collected to the end developer, because for two reasons, first of all, you'll need a lot of data to start building those models. And second of all, the developer needs to needs to be brought through and see the work, right. Because if we just said, Hey, we've modelled this, and we said, this parcel, it looks unusual, but we actually think this has the greatest likelihood of getting 100 megawatts solar farm built on it, right? If we haven't shown our work to show how our models will actually make that prediction, that love was not gonna believe us, right? So one of the things we need to build up is that trust over time and say, here's all the underlying data, here's how the models as we release them work. And here's why we're making that recommendation. Here's why we think this parcel has a lower likelihood of success, because it's more likely to be blocked by at the public meeting, and so on. And so to US data collection, the speed of data, that's like the key one. And then secondarily, because of our kind of insights from other industries, the ability to build machine learning models on top of that data, we think is going to be a kind of major differentiator going forward.

You've touched on a couple of hot buttons for me, one being h j. So I want to talk about that. That's authorities having jurisdiction, these are county boards, zoning boards of appeal. We call them CBAS. Here in Illinois, zoning boards of appeals. But but also the grid, there's several layers to the grid that are very relevant to energy development. There's, for example, with community solar, we're very keen on the distribution grid, we need three phase power access. We only want to operate in certain jurisdictions like the investor owned utility jurisdictions, comment Amarin MidAmerican. For example, in Illinois. We want to avoid coops and Munis for community solar in Illinois. That's not true. In all states, but it is true in many states. And that's unfortunate because large swath of the of rural America is covered by coops and munis, big cities and big population centres tend to be covered by IOUs. investor owned utilities. And then for more rural parts, it's the coops and Munis and that was, that's a legacy from how the grid was first, you know, developed, incentivized by the government and then ultimately built out. And that was great for farmers, right? Because it gave them access to electricity. You know, starting in the 1920s. And then really, post World War Two was was a major expansion. But when you're developing solar projects, it's, you know, you see power lines on Google Earth, or Google Maps, but you have no idea who, who that is, per se. So tell us a little bit about utility jurisdictions, discerning transmission versus distribution? And then also, how, if at all, do you address the HDA problem, per se? Because that is a very, very nuanced challenge.

Yeah, absolutely. So everything to do with interconnection, as you said, there's there's a lot of different elements of it. So one is just to say, land can be split up in lots of different ways, right? It can be a state, it can be an ISO, it can be, you know, the utility coverage map, it can be all these different ways. For us, it's like, let's add everything that might make sense to the developer in terms of how they want to filter out parcels, right. And so the IOUs, the investor owned utilities, let's have that as a filter, right for Illinois. And so don't show anything that isn't in an IOU. Now, as you said, that dramatically cuts down a lot of agricultural land, you're now mostly in X, urban and urban areas. But there's still parcels of large enough of the community side to still make good projects. The second piece is the lines themselves. So we're possible we work with utilities to get the lines there obviously have quite, they push back a lot around concerns around security and so on, which I think is a longer debate about how have justified some of the push backs on our on for some of these data. But where possible, we will do our own data collection, we are doing our own collection. And using Google's imagery of various types, we also have a few little tricks, mercy that we've used in other contexts, I was helping traders trade Walmart stock on the basis of empty or full parking lot data back in, like 2007. So there's a lot of things you can do with data in this interesting way to identify where those elements are. But as you said, like you need both the is it an IOU? And is the three phase there, what is our confidence that it is three phase, what is the voltage is to distributed, are distinguished between the distribution or the transmission level. So those are all things that either we collect. And if we don't have it, we will be very clear why. And if we do have it, we always put a link back to the source, right, that we collect it from a specific website that we do it ourselves. Here's the little image we used to show how we collected that data, and so on. And then on the HJ side of things. So our view on HBase is that the people working on most HBase are just incredibly overworked and underpaid, if paid at all, and they're trying to do their best for their community. That's one piece of it. The other piece is that the Ha's often, for that very reason, don't want to deal with the hassle of development in many, many contexts. And because there is no visibility on the decision making process, outside of maybe on a random website, it's very, very hard for developers to actually parse together and say, Hey, this is actually a place that's friendly, neutral, positive, negative, towards certain types of development, let's say solar. So our main aim is to collect lots of information to actually reach out to the Ha's as much as possible and start communicating. It's like, do you have anything that that is solar specific zoning in your code? Are you planning to your moratorium is scheduled for November? When Is that likely to finish? And then we're starting to actually do our own ranking of Ha's to say whether it's positive, negative or neutral for development. And then we just say that that is a signal signifier, the developer, some of the best developers who are our customers, they say, even if it's negative, they feel that they have the ability to go in and convince the HA to like, accepted development project. But for us, it's like, can we expose the underlying information, make that a lot more transparent, and remove at least the objection that the decisions are completely opaque, and the developer at least has some kind of guidance? Eventually, we want to get to, you know, things that are a bit more sophisticated and say, hey, if a ha has a sword moratorium, how much more or less likely does that make the border of the next ha? likely to have a solid moratorium? Right? If your county a, let's say DHA is at the county level, and they have a solid moratorium is the county next door and likely to have a solid moratorium or less likely, right? And if you're a developer in the county there, what is the risk of a I saw a moratorium in a county next door to you. These are things that are very hard to, like calculate outside of using things like machine learning. But those are the kinds of insights that we have to bring over the next couple of years.

Yeah, I mean, it does lend itself to artificial intelligence. For example, if you had a, a bot that could skim through all the notes from the zoning meetings, and discern a signal so to speak. But there's a trend over time also, which is quite complicated. And it and it's it's not, it's it's, it doesn't necessarily trend in a single direction. There are counties that are going to be early adopters of moratoriums, but then later become great opportunities for developers. Because once they then get reasonable legislation or guidance codified, then they become more comfortable. The other thing that's going on though, is landowners are getting fatigued because of all the different types of development going on. solar development is one of the lightest types of loads of development on the land, it's good for landowners, they can triple their income. It's very light on the land ecologically, you'll have organic farm ground after 20 years of being a solar farm. If it's treated well. There's no reason why it can't be. You can do dual use. You can do pollinator friendly habitat, you can do sheep grazing, et cetera, et cetera. But then there's all this other stuff going on. There's transmission lines that are coming through using eminent domain, which landowners absolutely do not like, we need a more robust transmission grid, so we're hungry for better transmission. And that is vital. Then there's also pipelines. And there's a history of pipelines in the Midwest, lots of natural gas pipelines. And now, there's a huge wave of co2 pipelines coming through to places like Illinois, where fossil fuel companies want to pump liquefied co2 into the ground, there are 60,000 miles of co2 pipelines planned in the United States. And there are generous incentives from the federal government to develop those pipelines. So while landowners and landowners don't don't necessarily understand all the subtleties and the subtle differences, they just see it as development and all of a sudden, you get put in this basket of change, and they put up the stop sign and want to push back. Meanwhile, you know, it is a very fast growing industry. And there are lots of new companies coming into solar wind and storage. And it's a spectrum of, of good, bad, ugly, some of the developers really know what they're doing and know how to do constituent relations, you have to get out ahead of these things. You have to do boots on the ground, over the kitchen table, talking to landowners about what is this mean for them? And their neighbours? And what does this mean for? What does this mean for the future of their community really, because that so there are many aspects to this. But when you think about, and I want to go back to the utility piece of this, because this is also a big piece. But when you think about H, J's I love it that you're thinking about scoring, you know, counties or different segments of of the landscape, so to speak, I mean, counties are, are the, you know, one of the most vital aspects to rural development, right, you're dealing with county authorities, sometimes you're dealing with the city authority, or village authority as well. But but the county authorities, for the most part is what solar developers are dealing with. And truly, these, I'm also grateful that you pointed out that, you know, these are largely volunteer driven organisations, that of course, there is a small paid staff, but they're under resourced. And then they're getting hit with these waves and waves of applications. And some of these meetings go on for hours and hours. But there is a there is a great spectrum in terms of how different counties deal with these projects. And I've seen some very efficient use of people's times and some very inefficient uses of people's time. And and a very painful process, so to speak. So I Yeah, I'm just curious if you how do you approach that problem? If you can, I know that this is a sensitive topic, because this would be a way for you to really set yourself apart perhaps from other platforms.

Yeah, it is definitely sensitive. It is definitely difficult. The hollowing out of rural America is very similar to the hollowing out of rural Ireland, right like our my national school went from 100 pupils to 36 pupils So like, from basically the kindergarten all the way to sixth grade, right, I was in a two room national school. So and then because everybody left everybody, a lot of people leave. And I think when you have the separate dynamics, it's not a business decision. It's a very understandably, emotional decision. Right? How do I, how am I perceived in my community? What is this land that we have farmed for, you know, sometimes hundreds of years? How is that altering? How does that alter the landscape? You know, I've driven through these, you know, through these backcountry roads for years, and now it's going to be radically different. So all of those things are things that are incredibly important. And the best developers, as you said, they do go and they do listen, they do go to all of the affected not only affected landowners, and the ones next door, but as many members of community as possible, you know, they drive up in their truck, and they sit down and have a chat and they try to learn what the concerns are see if they can be mitigated and so on. Our view, is that, that what we build will never replace that. Right? If there was a world where software could just like solve the issues from a community about a development, that would be built, right? Because there's a lot of upsides to that. But we're talking about human beings and how they react to very, very understandable stressors. And so all we are or our perspective on this is how can we show and highlight to the developer areas where they need to send more attention, more boots on the ground, it's like this community, this Ha, actually looked pretty good, but it's actually are pretty pro solar. But we see a trending in the opposite direction, our recommendation is you need to double the amount of people who are boots on the ground talking to the community, because you don't want to be caught unawares, at the public meeting and three months. Now, you know, it's a very, very well organised anti group just for your project. And just lots of cool things you can do with that, you know, scrape local news, you can, you know, look at the minutes do sentiment analysis, and so on, some of which we're starting to do that scraping. But that's where we definitely kind of want to get to, but we definitely are not going to be able to solve the specific problem of an objection, we just want to help you have to highlight the developer, that the objection is more or less likely to occur. And then they use in their, you know, incredible experience, whether if they are experienced, or if they're new to watch, you know, I think there's gonna be a lot of innovation with people trying to figure out how to navigate those ha and community relationships.

Well, unfortunately, we are out of time, but I look forward to you know, seeing your platform blossom and grow James, and I'm happy to bring you on in two years time and do a check in how can our listeners reach you and sign up for a demonstration?

Absolutely. So if you go to paces.com PAC es.com, you will see a link at the top and you can schedule a meeting with me we are so small team, we do a completely white glove service in terms of trialling onboarding, and so on. But you can book that meeting, have a demo, everything, you know, demonstrate something. Yeah, and it just takes 30 minutes of your time. And that would be amazing. As a next step, if anybody's interested in chatting to us,

well, I'm sure many of our listeners are interested. The tools that are out there are good, but there's plenty of room for improvement, so check out paces.com And please go to clean power hour.com Subscribe to the audio platform on your favourite platform, whether that's Apple, Spotify, Google, whatever. Give us a rating and review on Apple and Spotify that helps others find this content, please subscribe to our YouTube channel. Just click on the YouTube icon at clean power. hour.com I want to thank James McWhorter, the CEO and founder of paces for coming on the show. Thank you so much. Thank you, Tim. It's been great. I'm Tim Montague. Let's grow solar and storage. Have a great day.