The One Stop Shop for Clean Energy Solutions with Russ Bates, CEO of NXTGEN Clean Energy Solutions Ep 134

What we found is, there's a lot of developers out there that can do those utility scale projects. They can bring the funding, they love doing the interconnection were procuring the land, getting everything set up there, but they don't really like the EPC. And the construction part of it as far as putting that request for proposal out evaluating new proposals, managing the project, somebody on site to make sure that project goes the right way. That's what that's what we've been doing for a long, long time. You know, 20 something years. Me personally and

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Today on the Clean Power Hour, the easy button for clean energy and sustainability. My guest today is Russ Bates. He is the CEO and founder of next gen clean energy solutions. Welcome to the show, Russ.

Hey, thanks for having me, Tim. I'm really excited to be here.

It's been great getting to know you a little bit over the last couple of years. And you are up to a lot of things in solar and battery micro grids. But give our listeners a little background on yourself. You're an electrician by training, and which I just love and and then how you got interested in starting your own solar company?

Yeah, sure. Great question, Tim. So again, thanks for having me. Yeah, I started out in the electrical industry by getting into an apprenticeship programme with the IBEW out of Southern Indiana. And if you're familiar with that area of the state, at least years ago, there were quite a few coal fired power plants. And that's what I got into it. In fact, I grew up on an abandoned coal mine. My both my grand great grandfather's were coal miners. My best friend to this day, he is still a coal miner still goes underground from time to time, mostly management, but he's, you know, working for a coal company. So I spent a lot of time in fossil fuel power Gen, primarily coal, transitioned into natural gas, worked with a company called Bechtel, probably a lot of people have heard of them. The the company I was working for at the time, we did a joint venture with them and built a 750 megawatt combined cycle plant. And that's what brought me to Ohio, where I live now. I was the vice president of that joint manager, great experience, a lot of really talented people got to work with and, and learn from, and that was in 2015. After that project, I started paying a lot more attention to the clean energy to renewables. I always thought there's a lot of promise, but being in the fossil fuels side of the power Gen industry, it's not really, it's not really cool to say, oh, yeah, I like solar wind. That's, that's a little bit taboo, I guess. But I recognise there was a lot of potential and started transitioning into to clean energy. I did notice to him that you have small residential projects, somebody's putting, you know, a 10 kW of solar on their house. And then you have a great big projects. And that's what I had got involved with was utility scale projects. And from there, I started looking around at a lot of rooftops, commercial industrial types of scenarios where nobody was, was really looking at that, at least in my experience in the areas I was at. And I just thought that was a shame. I thought the small medium and even some of the larger companies are a big part of the economy, obviously, and thought there was a way to help. Long story short, after looking around, I couldn't find anyone that really jumped into that. And so I decided, hey, I'm going to take a chance I see an opportunity here, and that's where next gen Clean Energy Solutions came from. So we're one stop shop, concept of completion single point of contact company, for clean energy, where we consult, develop, and then project manage. So all the way from the start to the finish.

And what year did you establish nection

January 1 of 2021. We want to get 2020. Behind us that was a bit of a rough year for a lot of people obviously with COVID and pandemic and so January 1, that's when we filed paperwork. So we just had our second anniversary going into year three.

Awesome. Well congratulations. I didn't realise you were a Hoosier. I was born in Bloomington, Indiana myself. And my family also has a history in the coal industry, my grandpa ran a magazine called The Black Diamond in Chicago, dedicated to the to the coal industry. And of course, Illinois is a major coal state, I think we're still in the top five in the US for coal production. Of course, coal production globally is is starting to wane, and especially here in the United States, mostly because of natural gas prices dropping right and just just beating cold out economically. And then there is the environmental regulations that have been stepping up. And that also contributes. And now you know, the vast majority of our coal assets are scheduled to be sunsetted. And you know, the major coal plant owners and operators are all looking to migrate their fleets to wind, solar and battery storage, mostly for economic reasons, as much as they will tout the environmental benefits of doing that. A lot of these are economic decisions. And, and that is, you know, why you and I work in the solar industry, the cost of solar power, or solar, wind and storage, is the most competitive of any new source of power on the grid. Right. And so it's, it's, it's just a really good time to be in clean energy. And it's a feel good, right? Because we are going to save lives, we are going to reduce the risks of climate change. And we're going to create a lot of jobs in the process. So it's really a win win win. So, so Ross, tell us a little more, though, about your company. What is a? I mean, I know you have a couple of lines of business, you're a developer, you're an EPC. And you're an owner's rep. And you mentioned, you know, you come from the utility side of the business working on big power plants. I mean, when you when you say Bechtel I think big power plants, right? They're a big infrastructure company. And, but what what is your sweet spot for size and scope of project?

Really, the reason I started next gen was for that, that commercial industrial sector. So I say even the mom and pop store owners who want to save some dollars, because you hit on it very clearly there, Tim, economics is a major factor in making these these decisions on on transitioning. So we look out for the dollars first, the sweet spot for us is probably these these commercial and industrial projects. So I'd say sweet, bought anything five megawatts and under. But it really, to me a five megawatt project and a 50 megawatt project, there's not a whole lot of difference. From our perspective, as far as the work that you have to do, I would, I would move that up even into the utility grade. Some can be a little bit more cumbersome, of course, depending on what's going on. But for the most part, a project is a project. And, you know, a client is a client, and we want to look out for their best interest. We put that owners hat on, and we tried to sit in their shoes, sit in their seat, put our feet in their shoes, so to speak. And understand, what's it going to look like, five years from now 10 years from now? Is it going to still be a good decision? If not, you know, that's where we're kind of scratching our heads a little bit and saying, is this the right mover? Or should we look a little bit of a different direction? And with what we're able to do? I mean, solar is big, that's, that's the number one thing for sure. But sometimes when makes a lot of sense, micro wind turbines, battery storage, does that make sense? Or not? You know, we look at all those scenarios, Evie, charging stations, that's a part of our business. And it all comes down to consultation and talking with that client and seeing what, what's their wants, and what's their needs, and seeing how we accommodate.

Yeah, well, that is a lot to unpack. And you know, it's noteworthy that you're, you're there in Ohio, in the heartland, but working nationally, going after work on the west coast in the southwest. And, you know, for for a relatively new company. That is a very bold move, I have to say so kudos to you. The world is our oyster. But you can also get out over your skis so you have to be careful and know what kind of work you can you know, successfully win and perform at a profit. I'm, I'm curious what your take on the CNI industry though is you know, in CNI solar, we're, we're a late comer to the solar party. There's more residential solar happening in the US than there is rooftop commercial industrial solar. There's about five gigawatts of residential solar per year now, in the So out of out of 20 gigawatts of solar, and CNI is is around three, you know, three to four. Of course, there are many corporates that are doing large power purchase agreements, but those are utility scale projects right that are then selling the power via virtual PPA or some form of contracted energy to those apples and Facebooks and, and Amazons of the world. The CNI market is a, an obvious opportunity, right? Whenever you fly over a major US city, you see all these large factories and warehouses and commercial buildings just begging for a solar array, or, or now a solar array, a battery, and some Evie charging infrastructure, right. And maybe a turbine here and there, I did have a guest on the show. One energy that does industrial scale, wind turbines, these are two megawatt wind turbines. Here in the Midwest. I tried to find a wind turbine for one of my industrial customers a couple years ago, and I gave up because it was just the supply chain is is is very, very challenging. Two megawatt turbines, you know, are also used in utility scale wind. And so they were, they were all getting bought up by the utility developers but but when you think about the CNI industry, and what a great opportunity it is, and at face value, and yet, it is a, you know, a slower developing segment of the solar and storage industry, what are your What are your thoughts about that?

I think you're exactly right, Tim, there's such a tremendous opportunity. And it really comes down to decision making. You can go through and give the preliminary designs and budgetary financials, they all go through what the ROI is, and all that good stuff. But someone actually has to commit and want to do it. So who owns these facilities? When you're dealing with corporations, it's similar to dealing with the government, right? There's a lot of red tape that has to be on through the initiatives help. Certainly what the SEC is talking about when we're talking about the commercial and industrial falls into that too. But what the SEC is talking about as far as disclosures and how that's going to, you know, flow up and down the supply chain. As far as clean energy transition, that helps, but what we're seeing is a lot of call it can kicking. People are talking about it, but they're not moving on CNI, as fast as I would like to see them, I'm sure. So that's, that's one take that I see. Another is you'll have an owner of a building, let's say, warehouse facility, big distribution centre type of a building. And usually, a lot of times someone's leasing that building, right. So they really have no say over what they can do to that building as far as changing things, putting a solar array up on top of the roof or something. And I think that's a bit of a problem. Because if I'm the the building owner, what's in it for me, you know, it gets back to the economics we were talking about earlier. If they feel good about it, sure. But it's hard to get through the door and talk to that decision maker and let them understand. Here's the tax incentives, you know, you can actually increase your revenue from that tenant, by selling them clean energy, they're going to be happy, you're gonna make more money. That's, that's a win all the way around. But it's hard for everybody to understand that and getting to the right people. And with so much misinformation out there. In my opinion, anyway, about clean energy and the benefits and the cost and all that kind of stuff. It does create some barriers. So that's what I see from, from our experience with a lot of the CNI opportunity that's out there. It's coming. But it's it's slower than than what I think it should be.

Yeah, you put your finger on one of the fundamentals. That is that 90% of commercial real estate is third party owned, meaning the owner is not the tenant, and it's not owner occupied. I'm a CNI solar developer, I'm always looking for owner occupied facilities for the most part, because it's just a quicker decision making process. The owner is incentivized to reduce the power bill because they're paying the power bill and they own the building. And so they can decide what happens with that, you know, solar arrays is a permanent upgrade to a building or a battery for that matter or wind turbine. You are you're upgrading the facility and it does improve the value of the building. And that's true for these third party owned facilities also, it's just the you have to work out the incentive structure and there are a growing cadre of companies excuse me that specialises in in this. We had a company called capitalise on the show that does pretty much nothing but and and it's not tripartite though of solar battery and Evie infrastructure that they're very focused on to make the real estate more valuable to tenants and then and thereby reduce turnover, improve the occupancy rate and, and create more valuable real estate. It's it's, you know, it's coming right the Evie, the Evie transition is now I think we hit 20% in California of new car sales being EVs or battery electrics. And, and that's right on par with the average in Europe, even though some northern European countries are much higher, like Norway is 80%. But the the iceberg is melting in the US and and the writing is on the wall that in you know, in five, five to 10 years, the majority of new cars will be EVs and and then you need a lot of charging infrastructure. And, and we have to start installing that infrastructure today. Right, because it takes time, you can't just flip a switch and all of a sudden have the the entire US highway network with good charging infrastructure. So it's a good thing that we have that the IRA legislation, of course, which has some incentives in it for electrification. And, and we're going to electrify heavy industry to so we're going to need a lot more electricity. And then the other good news is that, you know, landowners and rural communities can relax a little bit about this wave of clean infrastructure, we're not going to pave over the breadbasket. We just need one to 2% of the landscape, to put those fields into solar farms. And of course, there's many existing rooftops that we can solarizing. And you and I are all about that. And it's a both and though, we want we want solar fields, and we want solar solar rooftop arrays. So tell us a little more, though about a, you know, a project or a case study if you would about, you know, like what's a really good customer for you? And how does a solar or solar and battery micro grid really impact the bottom line of a facility? Owner?

Yeah, it the economics? Wow, we keep going back to that. But it's, it's really where the rubber meets the road, so to speak. With these projects, it has to pencil out the right way. So that's whenever we talk to our clients. That's what we're really looking at first and foremost is, you know, what's, what's the return on investment, what's the savings, projection, things like that. So whenever we go through a project, we'll develop it well, let's say it's a solar project, we'll put together a preliminary design and budgetary financial proposal, go through it with them, if they like that, that moves us into limited notice to proceed. And from there, we go out for competitive bids. So I think it's important for everybody to understand next year, and we're not self performing these things, we don't do the installations, we don't do that detail, the design and engineering. Sometimes we'll help with procurement, if it makes sense. But we put these things out for competitive bid. So the Bechtel is what we were talking about earlier, the the BMW fives lawyers who I know you're familiar with that company, and then a growing number of, we've got so many providers in our network, both big and small, that we can reach out to and put these, these RFPs out to, and then we'll manage those projects. So the ROI has to match up with what that customers expectations are. And a big part of that I know you're very familiar with this, Tim is with the investment tax credits that are available, and making sure you put that project in, that's going to match up and they can that client can actually get those those investments returns back. So that's something we make sure is going to be part of that because you know, the IRA changes a lot of things, right? domestic content, that's going to be a big deal. It's already turned into a big deal. And I think everybody's still waiting to see what the IRS says as far as guidelines on the the IRA, that's, that's come out. So it really has to match up. Everybody's a little bit different. The driver for some is going to be Hey, we want to have clean energy. And as long as it doesn't cost us any more money than what we're paying the utility. That's great. That's it's more important for him to get that that sustainability box check. And for others, it's all about the dollar. Hey, If this makes us enough money, that's what we'll do, especially when you're talking about third party investors and PPAs Of course, so real Wait, there's no cookie cutter, I guess. But it's got to make sense pencilling out one way or the other.

Yeah, I'm glad you, you mentioned this, about sustainability versus bottom dollar. And only about 10% of company owners really care about the environment. And in a way, rightfully so it's not easy to run a business, whether it's slow growing or fast growing, there's just different challenges in and surviving is, is what they're most about right, surviving and thriving. So I almost never lead with the sustainability aspects of of solar. Now, if I know that they have a significant, you know, ESG component, and are really concerned about sustainability, then fine, we'll talk about that. And of course, you know, solar and battery are a great way to decarbonize their, their local grid, and reduce our carbon footprint. Let's talk a little bit about your company specifically. You know, you've got up you've got a good group of staff under your belt now, you're working in several markets. What is the what is the Russ Bates approach to becoming a successful developer?

Oh, wow. That's, that's a great question, Tim, I'd have to think about that a little bit. But off the top of my head, I'd say it's, it's understanding the market and what that client wants. You know, we're, we're all the way south in Texas. We're in Florida, over on the east coast. I was in Connecticut a few weeks ago, and in Boston, I guess, two weeks ago, talking with folks. And it just, I'd say the biggest thing is understanding what's what's the goal of that client? Because it does vary, you know, kind of talking about the driver. I think there are a lot of business leaders that really, really want to do the right thing, so to speak, and, and healthy environment. But to your point, it's not that easy. There's there's dollars that have to be spent to an invested in this movement. And what's that return gonna be? Because a lot of people are looking quarter to quarter. And I tell folks, whenever you're making the investment in clean energy, remember, it is an investment. It's, you don't have to be Warren Buffett is one of the things I say, but you can't be a day trader. So whenever you're asking, What do I look for, whenever we're out developing projects, really listening to what the client is, is hoping to accomplish. And then again, sitting in the seat of that, that client, that owner and driving towards that and being realistic with them, if they're looking for something, that's, that's not going to happen? We just tell them, hey, this, this is not going to work. Or we've told people you shouldn't do this project today. If there's a big rooftop, and you know, in five years, you're gonna have to be a replacement. Alright guys, this as much as we would love to do this. If I was you, I wouldn't do it because of this. And let's wait and let's plan and maybe we can get this route done a little bit quicker, blah, blah, blah, type of thing. But yeah, I guess the biggest thing, Tim, long winded answer to your pretty easy question is listening to to the client, whoever that may be.

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specialty, right, whatever their line of business and, you know, this is our specialty, and being able to explain it, which is why they call us in your you're spot on is all fees, they need some help, they want to talk to the experts that can can do this. And something I've seen is, even if a company has sustainability professionals, a chief sustainability officer or what have you, they're still looking at stuff from about 50,000 foot, because that's their job. How do they turn these these goals and ambitions and projects into a reality that's going to save them money and return on that investment? Most of the time, they're not sure. And that's where, you know, folks like us can come in and say, Well, hey, you could do this, or you could do this or a combination of things. Yeah, that's, that's a really good point, Tim.

So as you as you grow next in clean energy, what do you see for the future of your company, in terms of, you know, the solutions you're providing? And, and the markets that you're most interested in, if, you know, if you're a facility owner listening to this podcast, whose ears should pick up about Ross Bates, and next gen clean energy,

really anybody that can make decisions on on the facility, and whether it's a PPA, or they're going to own it themselves, whether it's solar, which is again, the number one, but maybe some micro when maybe you combine those, those two generation sources, and you do have a battery storage system. That's part of it. And Evie charging. Really anybody that's this needs some help with clean energy and in sustainability, we're able to bring some solutions. And, as I've said many times, I do not know everything. But I've got a great network of professionals, people like UTM people all across the nation, actually across the globe, that are happy to help and really believe in doing the right thing. So we have access to those those folks in those relationships, but really happy to jump in and help. You know, we do free consultations, initial consultation doesn't cost a thing. We'll take a look and see what makes sense. And if something doesn't make sense today, maybe it does tomorrow. And we'll tell you that.

So, you know, I'm also curious about the utility market, you're doing some work with some very sizable utility scale projects. How do you approach that? And what is the what are the services that you're providing on these utility scale projects?

No, I'm glad you asked that. So we, whenever I started a company the very very first year I was approached, just my name kind of got out and and being in the the PowerGen industry, people knew who I was a little bit so I was asked to, to bring our company in and help on on like a basically an owner's rep type of role. I was a project in Texas, the first one that was over 400 megawatts. And I thought, Wow, that's a great opportunity. Wouldn't that be really cool to do? But I had to stop myself because you didn't we weren't set up right? We didn't have the right infrastructure in place brand new company. So we turn that down. otherwise, I was gonna be down there doing it myself and growing the company. But since then we've been able to grow. And what we found is, there's a lot of developers out there that can do those utility scale projects, they can bring the funding, they love doing the interconnection work, procuring the land, getting everything set up there, but they don't really like the EPC. And the construction part of it as far as putting that request for proposal out evaluating the proposals, managing the project, somebody on site to make sure that project goes the right way. That's what that's what we've been doing for a long, long time, you know, 20, something years, me personally, and then we've got to get a lot of folks that they can come in and help. So that's, that's something we're seeing on the utility scale projects. We've got a 305 megawatt in Texas, that's going to start later this year. That's exactly what happened. Somebody heard our names, developed a relationship and decided, hey, we think you'd be perfect to do this, check this out, obviously, but you know, sign the agreement, where we're in, in business to work with them on that and some other projects out in California to

very cool. So if you're an EPC, you want to know Ross Bates, because he's looking for EPCs to fulfil his and his customers, projects, construction needs. You know, I also was thinking about resiliency. And, you know, the grid outage, of course, a couple of years ago now in Texas, was was a major wake up call. But we have wind storms and fire in California that's causing blackouts. We have winter storms that caused blackouts here in the Midwest this year. What do you say? And how? How do you frame resiliency for your customers? Because sometimes it's very difficult to put a price tag on resiliency. Every business is different, right? And the value of having uptime during a grid outage is is different for everyone.

Yeah, that's that's a really good question. Tamp. It doesn't matter to to the person who's who's going to be shelling out the dollars. What's, what's it going to save me. And again, I don't think whenever we're talking about that, not too many people are thinking environment on that. You and I are, but that's not, you know, front of mind for a lot of business owners whenever they're considering this. So it really depends I I can think of one client that they would have at least once to twice a year, they would have an outage at their facility where it would just shut everything down. They lost power, is a manufacturing facility is a manufacturing facility, and couldn't do anything. So we started talking, I asked them how much money does that cost you when you have to shut down? And they said, Oh, it's easy. 100 something $1,000 A day that costs us? Like, wow, and you'd have that twice a year? Oh, yeah, at least twice a year, we have that. So there's 200 grand. Yeah, that into what they're going to be saving from a clean energy system with battery storage. And it pays for itself really, really quick. And that's just what they lose in in wages and stuff like that. That doesn't count supply chain. And if there's any liquidated damages, because they're not getting a product to a site whenever it needs to be out. So they actually make electrical equipment. So it's not you can relate to there. But yeah, it varies. It really does vary.

Everybody wants a you know, everyone wants to be able to operate off grid. The question is, you know, what is your appetite because it, it can get expensive to instal a big enough battery to have true 24/7 operation from solar and battery or solar, wind and battery for that matter. It is totally doable. You just have to scale up the project. And then different manufacturers, for example, it's more costly when there's a brownout or a blackout. We found for example, injection moulding is one where brownouts even, are quite expensive. And they have an uncontrolled shutdown. And then they have to clean out all the equipment. And you can avoid that with a battery right gives you ride through and do what we would call a controlled shutdown. If you're anticipating that the grid is going to be down for a little while. And then there are local incentives right? You know, here in Illinois, we have a $250 per kWh incentive now on batteries, and so that that means the battery is cash positive in two years with the combination of the ITC, the investment tax credit, and this cash incentive for kWh of the battery so well what else should Our listeners know about you and next gen Clean Energy Solutions Ross.

Um, while you're getting some good questions Damn, I guess I think we've hit on a lot of them. But you know, really, we tried to say where the the easy button for clean energy sustainability so if you need something in let's say you've got a project you can talk to a solar a wind, Evie charging, battery storage, solar lighting we do that as well as far as a street and parking lot lighting. That's a lot of people to talk to, especially if you're going out for competitive bids, that's well a lot to digest. And we're able to take care of that, again, we put that owners hat on, that's very important to us. Our core values include quality customer service and long term relationships. So we live it, we breathe it everybody as part of the the organisation, that's that's their values as well. So whenever you're you're talking to a next gen employee or representative. That's a top of their mind, really, I guess short and sweet. That's what we're about.

Wonderful. We'll check out all of our content at Clean Power hour.com. Please give us a rating and a review on Apple and Spotify. And don't forget to subscribe to our YouTube channel. I love to hear from my listeners. I get lots of great ideas about technologies and companies that we should cover on the clean our Clean Power Hour. I want you to know that we're doubling down on the solar industry this year in 2023 and 2024. We're telling the stories of installers, EPCs and developers. So reach out to me if you have a good story to tell. Thank you Russ Bates, CEO and founder of next gen clean energy solutions for coming on the Clean Power Hour. How can our listeners find you Ross?

Easy way to find me is on LinkedIn. Ross Bates I should pop up pretty easily there. You can also email me Ross at next gen clean energy NXT GE and energy clean energy.com

Awesome. Well, as I like to say let's grow solar and storage. I'm Tim Montague. Thank you so much for us.