Podcast Transcript: Solar for Everyone with Nathan Jovanelly

Speaker 1 (00:00:03):

Welcome to another episode of The Solar Podcast. Today David is talking with Nathan Jovanelly, head of business development at Enerflo, who also has a long history in renewable energy. They talk about the future of solar sales, debate PPAs and leases for panels, and discuss the recent Inflation Reduction Act of 2022, which entails tax co provisions that will be huge for the solar industry. Let's get right into it on The Solar Podcast.

Dave Anderson (00:00:31):

Well, Nate, want to welcome you to this episode of The Solar Podcast. We're thrilled to have you on today. Today my guest is Nate Jovanelly, and he's coming with us, most recently he's working with Enerflo, but he has a long history of working in the renewable space. And given some of the information that's come down, probably those that watch this episode or watch this podcast have been following some of the ITC. And I guess, what's the new tax code called that they're, what are they calling it? The anti inflation bill? Is that what they're calling it?

Nathan Jovanelly (00:00:59):

The Inflation Reduction Act of 2022.

Dave Anderson (00:01:05):

So formally it's a lot of the same things that would've been in the Build Back Better program, or a few other programs that have existed. We're obviously not going to dive into all of the intricacies of it, but certainly we're going to be talking a lot about that today, but again, thrilled to have you on the podcast today, Nate, and I'd love for our listeners to get a little bit more of a background on you. Not just the time that you've had, short time you've had with Enerflo the software company, but your previous experience working within the renewable space as well.

Nathan Jovanelly (00:01:32):

So my background is, I got started in renewables, it's been a little over nine years ago now. So I don't know if that puts me quite in like the super old school status. I started my career in, actually doing consulting. I was a chemical engineer by trade and always interested in the environmental piece. In fact, I was able to take a few graduate level environmental courses as part of my chemical engineering degree, did a report actually on the use for solar thermal back before really solar PV had any traction at all as a college thesis. And again, it was something I was always interested in. I wanted to do environmental engineering and my brother actually talked me into chemical. So when I graduated, I consulted for companies like Leidos and had clients for everything from NASA to like Harley Davidson, Mott's Applesauce, Utz Potato Chips was an awesome client, Pfizer.

So I did a lot of things in the environmental realm and eventually went and worked and led a team of engineers for water and sewer infrastructure throughout the country. It was a large publicly traded company and it was a great job, but the travel was killer, I had three kids so it was time to move on. And I had an awesome opportunity to come work for IGS Energy, which is the largest privately held energy company in the country. So they're a retailer of gas and electric. It's owned by Scott White in the White family, multi-billion dollar company. I think they're the third largest residential supplier in the country. So a lot like an NRG or Constellation. And what I got hired to do actually was combine heat and power, as a gas supplier that made a lot of sense on a lot of levels. And I think there is a real need for that technology.

For just a super high level for those that don't know, it's basically a boat engine. It literally is a boat engine, in most cases, or a turbine that you would put in somewhere that has a high heat load, like a hospital. And the number one byproduct of making electricity, running natural gas through an engine or a turbine is heat. So if you can capture that heat and recycle it at a high level, you can get super high efficiency and lower your overall cost. And also have the ability to island, if you're, again, if you're a hospital and everyone loses power, you could still have power at your facility. So we got into that. There was four of us that started that group. And I think we were maybe three, four months in and we went to PV America at the time up in Boston. And we had our little combined heat and power booth, you know, talking about natural gas and everyone else is talking about solar.

And they're like, "You guys, are you at the right show? You're in the wrong spot." We quickly realized that there was a huge opportunity, especially for a privately held company to get into solar in a big way. So we started doing that mid-market stuff less than 500 KW and started quick aggregating assets, buying distress assets, working with companies like SunEdison that weren't financing those, doing nonprofits that aren't credit rated. And we would run them through a moody shadow rating to get them so we could actually put them on balance sheet and if we ever wanted to sell those portfolios, we could. And that was a great success. We did that for a long time, taking those projects, getting our foot in the door. And then when SunEdison imploded, we had some opportunities to do some of the first Amazon projects and ended up being the largest client or customer of IGS. So we own over a hundred megawatts or did own over a hundred megawatts of Amazon projects.

I've done projects for Unilever, FedEx, but as we got bigger and bigger, I realized my passion was really more in the residential space. I liked the small stuff. I've been trying to figure out LMI personally for a long time. So ended up pivoting and ultimately running all business development for IGS in the residential space, where we deployed well over a billion dollars. We had worked with many of the largest turnkey installers and turnkey, I mean, we seemed to have more success with those that had their own sales team. So fully integrated, little bit different than your model, Dave, and there's reasons for that we can get into if you're interested, but we had great success there and we just built portfolios over time, ended up deploying about seven funds.

And I think the key to our success was that we didn't have the front end, that a lot of the other large TPO or third party owner providers have, when I say TPO, I mean a lease or a power purchase agreement. So a lot of the big publicly traded guys kind of have that box that you have to play in. And a lot of the larger mega regional solar installers wanted to use their own proposal. They wanted to use their own design, and we enabled them to do that. But as we grew, we knew we needed a front end, but we also knew if we build it that we weren't going to build the best design tool that no, you're never going to get consensus from everyone on the best CRM, and design tool, and scheduling tool. Go down the line, bring in Enerflo. So I met Enerflo in March of last year and started talking about them to have a really awesome integration for a TPO product, where these installers could bring any tool they wanted and Enerflo is the platform that since underneath.

So if you think about the average installer has eight to 12 pieces of software they use, again, I just named a bunch of them. And a lot of times they don't talk to each other. So Enerflo goes very wide at the bottom. Think of it instead of like one giant Lego or one closed ecosystem, like maybe a Salesforce, it's made up of a bunch of small Legos and you can customize your own configuration. And if you want to change your design tool, you don't have to change your whole process because you can just swap one out for another. So that's what attracted me to Enerflo and why I wanted to use it during my time at IGS. And ultimately after getting to know the two co-founders Pat and Spencer, whom I know you know, I just found that we were very aligned missionally, and that is to lower the cost of solar for everyone on the planet. So I made the very tough decision in December to resign from IGS. I started Jovanelly LLC, and of that I lead business development for Enerflo. So that's what got me here today.

Dave Anderson (00:07:51):

Well, that was a pretty concise nine years of your career summed up there. So that was a nice job. We should jump into a few of those components though. So IGS, truth is you guys have been, or IGS have been players in the PPA market for a long time. Have had some really, I think fantastic partnerships, have deployed a lot of PPAs currently. IGS, their strategy was to own all of those, own all of the paper internally, correct?

Nathan Jovanelly (00:08:20):

Correct. Yeah.

Dave Anderson (00:08:21):

And so your funds were a lot simpler, which created some pricing advantages as well. Right? So you were your own tax equity, you were your own equity capital. I mean you could obviously leverage and go out and get debt, but the funds were exclusively IGS funds, correct? Or were you guys raising tax equity as part of those funds as well?

Nathan Jovanelly (00:08:40):

Yeah, so actually all seven were a little different with different tax equity structures, different cash equity structures, but all of them basically had the same debt. So we did get debt against them all. And there were times where we used our own tax, which is a huge advantage in some ways, I don't know how technical you want to get on the finance side, but because if you sell the tax to like a Bank of America or U.S. Bank, big banks and big tax players out there, you can step up the cost of that system. So if I pay Complete $3 to build the system, but my independent au