ETF Expert Corner

Transcript

You can listen to our interview with Troy Helming by using the above media player or enjoy a full transcription of the interview below.

Nate Geraci: Our first guest today is Troy Helming, Founder and CEO of Pristine Sun. Pristine Sun is a leading developer of small utility scale solar power plants. They're actually currently working on the largest floating solar project in North America and the largest community solar projects in both Vermont and Wisconsin. Troy has an extensive background. He's a self-described “planet saver”. Before founding Pristine Sun, he founded TradeWind Energy, which focuses on wind projects. He's authored a book, titled “The Clean Power Revolution”. He's co-inventor of the FloatoRack, which is an innovative floating solar system. He's also consulted on solar and wind systems for companies like Goldman Sachs, Citigroup, Bank of America and he's currently involved in a clean energy fund as well, which helps develop solar and clean energy projects. Troy is joining us via phone today from the San Francisco Bay area. Troy, our pleasure to have you on the program.

Troy Helming: Thanks so much for inviting me. It's an honor to be here.

Nate Geraci: Troy, first, how did you get involved in the clean energy space? What's the back story here? Was this something that you were always interested in?

Troy Helming: Well, I guess growing up in Kansas City I can thank my father for that. In 1980, he built his dream home out in Shawnee, Kansas near Shawnee Mission Park, and about a 7,500 square foot house, and he put solar heating panels on a shed outside our home. Again, in 1980, so I think it was the first system of its kind, and so it was my job in junior high and high school to maintain the solar system. It heated our water in the house, of course, but it also heated our pool and our hot tub. In the winter time, we would shut the pool down and it would heat the air in the home. It would pre-heat all the air in these copper coils that were in each of the four furnace zones, so our natural gas bill was extremely low, and my Dad's a die-hard conservative, has always been, but he did it for economic reasons. I grew up being kind of exposed to that, but there were really no career opportunities when I got out of college at the University of Kansas. I got into telecommunications, but in 1998 I read an article on AOL back when that was a great place to get your news, and it said that Kansas, Texas and North Dakota had enough wind potential to power the entire country. And so I was like, whoa, we should be doing more of that. I sold my telecommunications business and started a wind company.

Nate Geraci: Alright, now you founded Pristine Sun in 2009 after TradeWind Energy. Walk us through that. What led to the founding of Pristine Sun, and then explain for us what Pristine Sun does?

Troy Helming: In the wind business, we did develop a number of sites including the Smoky Hills wind farm along I-70 there, which was the largest wind farm in Kansas for a number of years, but in that industry those projects are so large, hundreds of millions of dollars, it's very difficult to retain ownership of those as a small business. I sold the company. It was re-capitalized by Enel, the Italian utility, and they've put something like three billion dollars worth of projects in the ground ever since. So it's done well and I'm really proud of that, but in the solar business the main reason I got into that is, well, I guess there were two. The first one is I wanted to own and operate projects, and I felt like since they were smaller, that would be possible, and turns out that's true. And the second reason is, again, economics. The cost of solar back in 2004 and 5 was still quite high, but it was low enough to where in certain niche markets you could actually make an economic case that it could work. And then, of course, there were a number of states, like Arizona and California and others that have some incentives. So, I felt like that could be kind of a new thing. And it's a technology business, and most technologies follow the S curve in the adoption, and I felt like eventually the cost would come down. But I have to say, even when I wrote my book in 2005, my most optimistic projections of the reduction of cost of both wind and solar power have been blown away, if you'll excuse the pun. The capex and the opex have dropped so much faster than just about any estimate that I have read out there over the last decade.

Nate Geraci: So give us an idea, what are some of the types of solar projects that Pristine Sun works on?

Troy Helming: We mostly do kind of community solar, like one to five megawatt projects, which in terms of scale, that's like 20 acres to maybe 100 acres of land. So we'll go out and we'll lease land from a farmer or a rancher, and the land needs to be near either a transmission line or a medium voltage line, like the wooden power poles you see all over the place, and within usually two miles of a substation. And the land has to have some other attributes we look for. There's a whole screening process that we do, and don't have time to get into that obviously, but we will lease the land and then we own and operate the project and we sell the electricity to the utility on a wholesale basis, generally on a long term, like 15, 20, 25 year contract. And the utilities like that because they get a fixed price for say 20 years on the contract, meaning there's no volatility in the fuel price for solar. Until somebody figures out how to tax sunshine, there's no fuel cost at all. And so it's really about what's the capital expense to get it built and the operating cost to maintain it. And with solar, there are very few moving parts. We almost always put trackers in that move the solar panels to follow the sun as it moves across the sky, so that's really the only moving part, very little maintenance. Maybe two or three visits per year in maintenance. And so that's essentially what we do and we've developed projects in 22 states. We have the leading market share in central California and northern California. In fact, we have more contracts with Pacific Gas and Electric, the largest utility in California, than everybody else combined. So we've expanded that model in a variety of other states.

Jason Lank: Troy, this is Jason Lank. Great to have you on the show. My understanding is that while Pristine Sun has a tremendous corporate presence, you're not necessarily in residential solar. Is my understanding correct, and if so, is that a different space? Is that a place for a different company? What's the distinction?

Troy Helming: Yeah, that is correct, Jason. So there's really kind of three markets in solar. You have utility scale, which is full sale, and that's what we do, where you build essentially a power plant and you're selling power on a wholesale basis to a utility and then they buy it, mark it up, sell it to the customers. So that's our space, and then there's sub-sectors within it. And ours is kind of the small utility scale, not the massive plants. Then you have residential solar, as you mentioned, so that's rooftop residential, which is a very large industry and very large market, and growing at a compound annual growth rate of I think 30 to 35% per year. And then the third and final part of the solar industry would be your C & I, which stands for commercial and industrial. So that would be, as you mentioned, Amazon earlier in the show. Amazon is putting solar on their rooftops. Walmart's been doing that for years. In fact, I think they lead the nation in terms of having solar installations. Kohls department store, a lot of other companies, Ikea, are doing that. And some are even putting solar on say their parking lots, and then connecting EV chargers for electric vehicles underneath the parking lots. So you have a shade structure to protect the vehicles from the hot sun or inclement weather, and it's a great use of space. We do play, as I think you mentioned in the intro, with have floating solar. So there's some water agencies throughout California and other states in the west who are quite keen to put solar floating on their ponds, like wastewater treatment ponds, or ponds that don't have a recreational use. So that is kind of a hybrid, kind of falls within the commercial space or the utility scale space, but we're doing that as well.

Jason Lank: Troy, you mentioned floating solar. I'm really intrigued about this. I don't think many of our listeners are familiar with this concept. My guess is there's some benefits that go beyond just the power generation, but in any project, in any industry, water's a huge variable and there better be some added benefits to that when you take on another variable like that. Walk us through what this does, how you thought of it, and really what are some of the benefits?

Troy Helming: Well, quite frankly, we can't take credit for coming up with the idea. That credit goes to a very progressive water agency in California called the Sonoma Water Power Agency. Or Sonoma County Water Agency, excuse me. And they, as the name implies, are based in Sonoma County in wine country. They issued an RFP roughly four years ago, and they wanted to cover seven of their wastewater ponds with floating solar. The idea originally came from a group in Napa County who put some floating solar on a winery there, and that company then went out of business. In any new industry, there's a lot of turmoil. But the idea kind of stuck and so we were fortunate to win that RFP. It's the largest floating solar project in North America at this moment, still is. And so when we won it, there was a lot of competition, so we were for fortunate to win, we looked around the industry and tried to figure out, "Okay well, solar panels are a well-understood technology. Most of the rest of the equipment, inverters and so forth, are well understood. But how do we put it on the water?" And there really weren't any products out there that we felt were going to last for the 25 year contract that we were awarded with the water agency. So we essentially were forced to develop our own, and so over the last three and a half years, we've spent quite a bit of time and money. We were awarded a grant from the US Department of Energy in collaboration with the Israeli Department of Water and Energy. So there's an Israeli company we're partnered with and we're splitting the grant proceeds, and it's a matching program. We have to put equity in and then we get some grant funds once we demonstrate the equity on a one for one match. But anyway, long story short, our four prototypes were all developed. We did wind tunnel testing and our patents are pending. We have 11 patents pending now, and I'm a co-inventor on the patents. But the benefit for the water agency, I should say benefits, there are two primary benefits that I was surprised to learn. The first one that's most important is it reduces algae growth. You think about it, if you're covering a body of water with solar panels, there's less sunlight striking the water, hence less photosynthesis is occurring, and so lower algae growth. And algae is a big problem for water agencies. It clogs up their filters and their pumps. The second benefit is reduce evaporation. As you mentioned, Jason, water's a precious resource, so in a state like California where there's drought on a regular basis, there's states like Texas and others where they also deal with drought issues, this can be a huge benefit. And frankly, a lot of these bodies of water, if they're not being used for recreation, are underutilized assets. So you can kind of double dip on the benefits there.

Nate Geraci: Our guest is Troy Helming, Founder and CEO of Pristine Sun. Troy, this is more of a layman's question, but for someone outside of this industry, you might look at these solar panels, whether they're on a roof, or floating, or whatever the case may be, and they seem fragile. They look like glass. I'm curious, what are these made out of and how durable are they? I think about golf ball sized hail here in Kansas.

Troy Helming: Yeah, for sure. So there's two different types of solar. There's thin film, flexible solar. Companies like First Solar and others, Solar Frontier out of Japan make those. And those are made out of different types of materials. That's about 8 to 10% of the market. The vast majority, obviously 90% plus, is what's called silicon solar. And so silicon is basically a semiconductor, just like you have in your mobile phone or your laptop or your tablet. And silicon is made from sand. Obviously sand is abundant, and so the materials that they're made with are sand, usually some either silver paste as a connector, and they're put on a metal backing. It's usually a sheet of strong aluminum. Sometimes it's copper. And then it's coated with a polymer after the glass is put on there. The polymer is usually from 3M or a company like that. And so these things are quite durable. So durable in fact that virtually every manufacturer of solar panels around the world puts a 25 year warranty and performance guarantee on the panels. And what I mean by performance guarantee is they say, "Okay, well in year 25, if it's say a 100 watt panel," and that's just an example, most of them are 300 watts plus. But to make the math easy let's say it's a 100 watt panel, in year 25 it will still be producing at least, depending on the manufacturer, at least 80%, maybe 70, 75% of that output. So 25 years later, that 100 watt panel will still be producing 70 or 80 watts of energy. It's expected useful life is about 50 years, 5-0. And so they're quite durable. I've stood on them. We've had projects operating since 2010. You can walk on these solar panels. It's not necessarily recommended, but you can. They're quite strong. Most of them can withstand hailstorms and windstorms of up to 120, 120 miles per hour, and hails up to about what you mentioned, golf ball sized. Although, the panels themselves, if a part of it is damaged, it doesn't take the entire panel out of production necessarily. There's bypass diodes on there, so it may still produce at partial output, even if it's been damaged.

Jason Lank: Troy, solar sounds almost too good to be true, but nothing in life is that simple. There must have been a city council somewhere who wasn't too keen to a project you had in mind or perhaps you found a piece of dirt that was ideal, but the neighbors around weren't keen on having a solar array next to their piece of property. What are some of the challenges that go into developing and taking a project, a commercial project array, to fruition?

Troy Helming: Yeah, you're right. I've developed both wind and solar, and I've heard some crazy objections over the years, over the last 20 years that I've been doing this. I've even gotten death threats. Of course, that was closer to 20 years ago developing wind projects in the Midwest. But the solar objections that we hear most often revolve around aesthetics. People just frankly don't want to see their neighbor put up a big what they might call industrial or commercial project on the farm land. They moved out to the country to have space and see a lot of green. And so that's the most common objection. Sometimes people say, "Oh, it's going to blind my kids. Or blind me when I drive by." And solar's been put up on US Air Force bases for crying out loud. I mean there's glare studies that have been done by third party engineers and solar panels are not mirrors. They're designed to absorb light, not reflect light. And so the albedo of solar panels, or the reflectivity, is generally similar to a dark pond in terms of some water that's dark, so the reflectivity is something similar to that. But so often we'll put, whether it's required by the city or the county, we'll often put up vegetative screening, landscaping along the fence, so that when people are driving by, they don't see it. And that we'll do. Even if it's not required, we pretty much always do that on a voluntary basis. But that's really about it. There's really no noise, there's obviously no pollution or emissions that come from this kind of a power plant. Certainly better than some of the other things that could be developed in the area. I mean, I remember just last year, a project in North Carolina, some of the neighbors were saying, "Well, it's a lot better than the hog farm that's going in three miles away.

Jason Lank: Right. So what you're saying, solar arrays don't smell?

Troy Helming: They don't smell apparently.

Nate Geraci: Again, we're visiting with Troy Helming, Founder and CEO of Pristine Sun. Troy, we have just a couple of minutes left here. On more of a personal note, I'm very curious, do you practice what you preach? Do you have solar panels on your house? Do you drive an electric car or those sorts of things?

Troy Helming: Yes and yes. In fact, the lesson I learned from my dad in Kansas where he put solar on his property, I've done that on I think the last three homes we've been in, including the one we're in now in the Oakland hills. My wife and I each drive Teslas. I have an electric motorcycle as well. We've been all electric for gosh, almost four and a half years now.

Nate Geraci: Lastly, I have to ask you, I know you're currently training to be on American Ninja Warrior next year. You've got to tell us more about that.

Troy Helming: It's so much fun. I’ve got to say, working out is never boring these days because I'm training for Ninja Warrior. But yeah, my son saw the show, he got hooked on it, got me hooked on it about ... Well it was last summer, year and a half ago. And they said on one of the episodes, "So and so was working out at a ninja gym." So I was like, "Oh wow, that's a thing." So I looked up and sure enough there was a ninja gym in the Bay Area here. So I started training almost exactly a year ago, and I've been pretty dedicated, so I was invited this last year to be an official course tester. So you may have seen me in the background if you watch some of the reruns of season nine. So I tested the course in LA, in Kansas City, and in Las Vegas. So yeah, I'll be making a video and submitting it to NBC. So fingers crossed I get on the show this year. But yeah, I've been a rock climber for 20 years, amateur rock climber. I've been a yogi for 26 years, and I was a gymnast in high school and college. So I think I've got some of the skills to do it at 50. I have to work harder than ... Quite a bit harder I think than most other people to keep up with these 20 and 30 year olds. But I'm going to try to give them a run for their money.

Nate Geraci: Well, Troy, with that, we'll have to leave it there. Greatly appreciate your time today. Fantastic insight into the solar energy space, and we certainly wish you continued success and best of luck with American Ninja Warrior. Thank you.

Troy Helming: Thanks guys. My pleasure.

Nate Geraci: That was Troy Helming, Founder and CEO of Pristine Sun.