Podcasting for a Brighter Future, with Nico Johnson, Founder of SunCast Media
Podcasting for a Brighter Future.
Welcome to another episode of The Solar Podcast. Today Dave is talking with the one and only Nico Johnson, accomplished producer, podcaster and founder of SunCast Media. Join us as they discuss the world of solar entrepreneurship and explore topics such as the Inflation Reduction Act's impact and Nico's journey of growing SunCast Media into a platform with over 600 episodes, and three quarters of a million downloads. Let's get right into it on The Solar Podcast.
Dave (00:36):
All right, welcome back. We're thrilled to welcome Nico Johnson to this episode of The Solar Podcast. Nico Johnson, I'm thrilled to have you on. Most people that listen to the podcast are going to know who you are and have consumed some amount of your content, but he's a business coach. He's the owner of SunCast Media. He's a producer. He is obviously a, I would call it world famous podcaster. He's putting out two podcasts every week. He has thousands of listeners, with close to half a million downloads. He's also an entrepreneur himself, something that I'm actually passionate about, and obviously we're going to talk about that, starting his own solar startup back in 2006.
(01:13):
He's got over two decades of experience in renewables, specifically in solar, broad experience across solar PV landscape. So we're going to talk about all these things. It's your involvement, certainly as a content creator. That's one of the things that I'm passionate about. Obviously here we are on a podcast doing this, but I also want to talk to you about your experience both on the entrepreneurial side as well as on the business side. Nico, there's any number of things. I'm sure I'd left out. Anything that you think our listeners need to know about you before we get started?
Nico Johnson (01:37):
Well, in a recent few years, I am also an investor. I wouldn't have called myself an investor, but I was invited along by my friend Kyle Sherik, to be a venture partner in a syndicate and now rolling fund called Climate Avengers, which we've, as I was telling you a little bit earlier, has now become a product inside of our Resource Labs Network as a podcast. But before all of that, and there are many things that we could talk about. I want to say kudos. It's so hard to start a podcast, and to keep it going, and to bring on guests like I know are coming onto your podcast right now.
(02:16):
I won't ruin it for anybody, but the guests that are coming after me are actual legit industry investors and luminaries. So my hat's off to you being a successful CEO, running, merging companies that are meaningful, recognizable companies, and scaling a business that is addressing climate change in specific ways with domestic manufacturing. All of the things that like the IRA wants to see are part of what Complete Solar is. And The Solar Project as an extension of that is a brilliant move by you to do what is not an explicitly branded podcast, but a place where you can share with your friends, advisors and colleagues and peers and other aspirational peers, thoughts about how we do this together. So I genuinely want to say, as someone who's done this for seven years, this is hard work. My hat's off to you, man.
Dave (03:13):
Well, thank you. That's high praise coming from you. I appreciate that. And also unsolicited, so thank you. It's very flattering to hear you say those things, and we hope that they're all true. We're hoping to bring all of those things to pass, certainly, so thanks Nico. But the hour is about you, Nico. So please help our listeners understand who you are outside of being an investor, entrepreneur, producer of FinTech, fantastic content, all these sorts of things?
Nico Johnson (03:42):
The question that I avoid most, and that for what it's worth, I think is the worst question to be asked when you don't know what to say and you're at a dinner party, but everybody inevitably says it is, "Well, what do you do?" And I ask that question in the way that, so I always want the answer to my response to be one thing, three words, "Tell me more." And I would advise everyone, your goal in a conversation is not to tell everyone everything you do upfront. That's poor storytelling. You don't get that in Hollywood. You shouldn't get that in a conversation. Your goal is to get them to say, "Tell me more." So when someone comes up to me and eventually inevitably say, "Well, what do you do?" I say, "I'm a professional question asker."
Dave (04:28):
Wow. Yeah.
Nico Johnson (04:30):
You have to ask a question after that, right?
Dave (04:32):
Absolutely.
Nico Johnson (04:33):
It's like, "Well, what do you mean? Tell me more." And I'll usually follow it with something like, "Well, I have the privilege of running my own independent podcast, and I have become a bit of a thought leader in a very small niche that is growing called solar energy. Have you heard of it?"
Dave (04:49):
Yeah. Right.
Nico Johnson (04:51):
And it's just finding those little pauses in conversations that are really important. And what I've learned over seven years of podcasting is not to own the mic, have presence and poise, but to let your guest unfold, leave moments of awkward silence if you need. And I genuinely love, I have an insatiable curiosity about people and their path, and where they have questioned and doubted themselves, where that has led their curiosity, and how that has brought them to success, how success is defined. So I'd say the seven years of almost 600 episodes, and actually three quarter million downloads of the podcast are a testament to how to help people be vulnerable, and open up, and tell their story.
Dave (05:47):
Shame on my research team by the way, for underselling you in terms of your-
Nico Johnson (05:51):
It's okay. My LinkedIn title image still says a half a million, so it was to be expected, and I didn't send anything over to your team.
Dave (05:59):
Well, as a content creator, you have to be fantastic at self-promotion. So that's one of the things that you need to immediately go change as soon as this test recording's over.
Nico Johnson (06:06):
Yeah, thank you. We have a campaign internally called 750, and it is because we're going to hit 750,000 downloads on... Right now, it is targeted at May 8th, and we're going to hit episode 600 on May 18th. And I have said to my team, "Guys, I've been asking for this since 600,000 downloads, can we please just update the image so I can throw it into LinkedIn? Or do I have to go to Canva and do it myself?" Sometimes the latter answer is the best option.
Dave (06:33):
Yeah, I agree completely. I am not, and I like to create content of the spoken variety, but when it comes to creating digital assets, I certainly lean on my team for those things. Well, so asking a question here, one of the things people maybe don't know about you, maybe they do, is that you also are a polyglot, so a man of international mystery, and someone that speaks multiple languages. So maybe mystery's not the right way to say that, but certainly one of international appeals. So have you done any recordings in languages other than English?
Nico Johnson (07:04):
I have.
Dave (07:05):
Have you?
Nico Johnson (07:05):
Yeah, I was Spanish Language Student of the Year, my senior year of high school, which among my group of friends elicited riotous laughter from the stage, as I walked over and grabbed my perhaps hard-earned award and plaque. Opted out, actually tested out of Spanish as an engineering undergrad, and was like, "I'll never use that ever again. Why did I take two years of Spanish?" And then as so often happens, a girl entered the picture, my sophomore year I was sitting in a marketing class and I look over and this lady Danielle, who I hadn't seen in a couple of semesters appeared and I said, "Where have you been?" And she said, "Monaco," and I said, "Are you rich?" And she said, "No, I did this study abroad thing," which led me down the path of returning to language.
(07:56):
And the first time I got my passport, believe it or not, was at the ripe old age of 21, to go take my last semester of college, having prepared for three semesters in the language of Spanish to get to an intermediate level, to move to Spain for one semester and study Spanish. I fast-forward, ended up going to the Peace Corps, living in a very rural village in Guatemala for two and a half years, and fluent in Spanish. Early on SunCast Podcast was the LatAm Solar Report. No kidding. That was what I had. I have SolarPodcast.co as a website that we own, and we also own LatAm Solar something. I never used them, but the podcast was dedicated to the Latam market because it was the fastest growing solar region in the world. And I was going to have a co-host, Adam James at Greentech Media, who wrote the Latam Solar Report. I always say that I'm a better curator than creator. I borrow people's ideas because imitation is the highest form of flattery.
(08:53):
And Adam said he was totally fine with me naming the podcast the LAD Am Soldier Report because that sort of edified his work. And I interviewed a handful of LatAm founders. Our earliest sponsor was Enphase in 2016. We did the LatAm Pioneer series, which we had done a pioneer series, and we did the LatAm Pioneer series where I think a couple of those were in Spanish. I particularly remember our friends from Puerto Rico, Algavier Perez. And then most recently, I'm embarrassed to say, recorded a handful of episodes in Spanish last April that I never published because I couldn't find an editor that could do it justice. I'm sure they're out there, I just didn't have the time and effort to do it. And so I apologize here publicly if any one of those guests is listening. I was at the Bloomberg New Energy Finance Conference in New York, and I will at some point publish them, but I have moderated stage at Spanish language conferences, as a moderator for live panels, and I have recorded probably a dozen or more podcast episodes.
(10:01):
We ran an entire online summit in Spanish. In 2020 when the pandemic shut everything down, I ran the SunCast Summit around Earth Day, and we had an entire day of Spanish language content as a part of our three day online event. Man, we've tried everything to see what hooks, and what ultimately we realized is that we just weren't getting a lot of traction from Spanish language content. So I redoubled efforts focused on the US market, and on English language content for now. Because what you and I both know is you don't have to speak Spanish or Portuguese, you don't have to speak Chinese, you don't have to speak Arabic, to do business in other languages. A lot of folks do business in English. Yeah. So yes, thank you for pointing out that I'm a polyglot. I hope that story wasn't too rambling for you.
Dave (10:52):
No, I love it. In fact, so when did the LatAm get dropped, and SunCast get picked up, was it a transition from LatAm straight to SunCast?
Nico Johnson (11:00):
Episode two, man. Yeah. I had all the assets already created for SunCast, and I had recorded episode one with Adam, and if you listen to episode one, I say it's the LatAm Solar podcast. And by the time we published episode one, I had already rebranded to SunCast. And by the time I got to interview Dan Sugar, episode 38, I think, I had realized pretty clearly I need to focus on the US market. That's what a lot of my LatAm friends were interested in, a lot of the market that was following me from Latin America. And I'll tell you, you mentioned man of mystery, two things are true about that. One is that I was known as the LatAm guy for a long time. So much so that a good friend of mine still to this day, Lamberto Camacho, he called me in 2013, I was at Conergy, and he called me out of the blue on my cell phone phone.
(11:53):
And I said, "How'd you get my number?" And he said, "Oh, Jigger gave it to me." I was like, "Jigger Shaw?" And he's like, "Yeah." And I'm like, "Well, why did Jigger give you my number?" And he goes, "Because he said you're the LatAm guy." And so I have had many opportunities to thank Jigger profusely for that. But the other, which is funny, is a lot of folks still consider that I'm the LatAm guy. Because all of my consulting is focused on finding your signature client, or coaching companies into how to work in Latin America. And so the most common question I get, if it's not how are things going, are you still in Mexico, which is where I used to live. Are you still in Mexico? The other is, "How do you make money?" So I like the man of mystery thing because I never really answer that question for anyone.
Dave (12:41):
Yeah, I suppose there's a lot of people that listen to podcasts that they hear about Joe Rogan getting a pretty decent payday, but maybe don't fully appreciate how that's possible.
Nico Johnson (12:50):
It's like the 100th of 1%.
Dave (12:53):
Yeah, yeah. Well, I'm sure a lot of people think that you and Joe Rogan are the same persons.
Nico Johnson (12:56):
They do. I've been called the Joe Rogan of Solar, which I'm not particularly sure I like. I like more the Charlie Rose of Solar, honestly, both having their own unfortunate misogynist forays that...
Dave (13:10):
Yeah, I think the connection is probably a lot more just based on, I think you have the biggest listenership, and a lot less about your specific views, but I would take it as a compliment.
Nico Johnson (13:18):
I do indeed. Thank you. And I think that the thing people, I had somebody recently say to me, and they were dead serious, they looked me in the eye, and as somebody I've known for a long time, he goes, "You mean you're not making millions?" And he was dead serious. I thought he was joking. We're just having tacos in Austin. And I'm like, "Really?" He was like, "Yeah, I totally thought you were killing it." And I'm like, I mean, perception is reality. So to your point, I tell people that podcasts is a hard road, but I do not measure wealth by the money that is in my bank account.
(14:00):
My inevitable financial riches are coming, inevitably, because I've done the work and the body of the work is what points to the direction of the creator. And everything else that I've gotten from the podcast is an indestructible network, and your network is your net worth. And my network of over 600 founders, executives, and intrapreneurs and entrepreneurs in the clean energy sector, is indestructible. No one can take it away from me. That's the power of creating your own platform, Dave. It's indestructible, your personal brand, and if you care for it and curate it properly, it will carry you the rest of your career.
Dave (14:42):
Well, that's a nugget any professional can take away from The Solar Podcast here. I mean, we obviously talked a lot about solar and renewable energy, but I think that's just a life lesson generally, so absolutely. Thanks for sharing that. So one of the things that I would love to dive into with you is obviously you talk with industry experts, CEOs, entrepreneurs, intrapreneurs, you talk to investors, impact investors, people that are not impact investors, just people that are greedy capitalists.
(15:08):
You talk to the whole gamut, and one of the things that has widely been talked about, and we've talked a lot about it here on The Solar Podcast, is the IRA, the Inflation Reduction Act. And so I would love to get the perspective of someone who has been able to glean expertise from so many people about why you think that this is either important, timely, or terrible. Just help us understand what your perspective is based on all of the fantastic nuggets of information that have been shared to you by the many professionals with whom you've had the opportunity to interact with and create content.
Nico Johnson (15:39):
Dave, what you and I know is true, as industry insiders, is that this is the most significant climate legislation in our lifetime, probably in history. I'll give you a couple of quick facts. The IEA, the International Energy Association website, and the agency that many of us go to for statistics, they had a Renewables 2022 report. They forecasted global renewable power capacity for 2020 to grow globally between 2022 and 2027 by 2.4 terawatts. That's 2,400 gigawatts. The cumulative solar PV capacity is going to nearly triple to almost that same number, 2.4 terawatts by 2027, which by the way is going to surpass hydropower in the next 36 months. It's going to surpass natural gas in the next 48 months. It's going to surpass coal in the next three years, and become the largest installed electricity capacity worldwide. I had a guest in our media zone at RE Plus, our biggest industry trade show, who said...
(16:51):
His name's Andy. He's so funny. He said, "This is like throwing gasoline on a bonfire." It is literally, especially for the utility scale solar sector, there's no problem building utility scale solar in the United States right now, except that which exists in our ports and our trade disputes that limits us from being able to really scale. The only other thing, and this is something we'll talk about that the IRA brings in, is human capital. So we've got all the financial capital we need, but the incentives are going to allow us to unlock domestic manufacturing, apprenticeships and some other, I'll call it grid edge technologies like batteries. Energy storage is the key to take us past, we'll say 50%, but certainly to go past 80% penetration of renewable electricity on the grid, and really totally do with all coal plants, and use natural gas as peakers, not as primary sources of power.
(17:50):
We need energy storage. Wood McKenzie paints a great picture for... I did an interview with their head of US research for utility scale, as well as the head of EDPR's team at the beginning of the year, on the outlook for 2023. All sectors in the US solar industry are going to grow in 2023. In 2023 alone, we're going to see an 84% increase in utility scale installs. A 17% increase in C&I. C&I is the harbinger of hope and has been for the last 15 years. It's almost like the nuclear industry. It's that sector that we always think will grow but never does. 17% is a giant leap forward for commercial solar. Residential, as you well know, is doing a half a gig a quarter right now, in the US alone. And the beautiful thing, here's the core of what sits inside of the IRA that makes it so powerful for the solar industry. We're The Solar Podcast, we focus on that a lot, and on solar and storage in SunCast as well.
(18:53):
It's a 10 year extension of a legislation called the investment tax credit, and it also creates a production tax credit, something that Jigger and many others had postulated. We should take that idea of production credit tax credits and PPAs from the wind industry, that really created the renewable sector for us all, and borrow that, and apply it to solar energy. He called that Sun Edison. That 10 year exemption or extension of a 30% investment tax credit, off the installed cost of the equipment, is the gasoline on the bonfire. It's not going to fall back to the level it was at the end of last year, which is 26%, till it's 2033. That's a 10 year runway, and even still in 2034, it's at 22%. It is a 10 year extension on funneling capital into the sector to increase infrastructure, increase jobs through things like prevailing wage and apprenticeships, increase domestic manufacturing like Solaria, increase grid edge technologies like standalone energy storage, companies from...
(20:06):
Well, there are numerous, we don't need to name them specifically here, but we've had numerous guests on the show that are developing standalone energy storage. I mean, name one, Strategist purchased another company that is focused on energy storage and hydrogen, which I think is the third big winner. Hydrogen, it's going to make it virtually free to put the electrolyzers in, because the value of the hydrogen, the incentive for green hydrogen is so lucrative. I mean we could go on and on, Dave, but the IRA is the incentive program, the incentive package, the clean energy sector has always wanted, that the energy one, or the fossil fuel sector, has always appreciated. So it's our turn.
Dave (20:52):
Yeah, I don't think there's any question that it's the biggest legislation that's ever... The biggest piece of legislation that's ever existed worldwide, globally, in terms of being able to advance the ball on the renewable energy sector. For some reason we still encounter headwinds as well. I mean, as miraculous as those numbers are, the truth of the matter is that they could be even more spectacular. And what are some of the headwinds that you hear about that maybe even frustrate you as a champion of this renewable energy?
Nico Johnson (21:23):
There are. When I started in the solar industry in 2006, there were no less than five manufacturing plants here in the United States. I can think of a number of them off the top of my head. Shell still had one. BP had one, believe it or not, Bosch Solar had a plant in the United States. Solar World famously had their plant up in Portland. Sharpe still was manufacturing stateside. And we had a number of others like the Twin Creeks facility down in Mississippi. So we see announcements almost every day now that people are bringing manufacturing to the US. But you may know this, what do you think is the timeline that one would have to wait if they don't buy a facility that is move-in ready right now for, oh, by the way, a massive electrical consumption machine called a manufacturing facility for solar panels. What do you think the timeline is to wait for interconnection held up by what piece of equipment?
Dave (22:31):
You're talking on the commercial side, the industrial side?
Nico Johnson (22:35):
The C&I side of just setting up your own plant, right? So Qcells is going to set up a new plant, Seraphim is setting up a new plant. We've got new-
Dave (22:41):
Yeah, well, I know what the timelines are that they've announced. I don't know if those are internal decisions and discussions, or if there's some practical reasons holding them up. But I know that to stand up a line here in the United States, if all of it's going to do is assembly, if you're not doing everything cradle to grave, meaning everything from cell manufacturing all the way through, if you're just doing assembly, it's probably a year to set one up.
Nico Johnson (23:03):
Yep. And that's the setup. And now you need to interconnect that to the local grid, because you need to pull some power into the facility. And if it is anything above... So the answer to my question is interconnection and a transformer. So there's this thing called interconnection, which is approval by the local utility, and in some cases the grid operator, that says, "This generating plant of no matter the size, five megawatts to 500 megawatts, has approval to interconnect at a specific node and inject a specific amount of power." And the limiter in most cases to being able to actually interconnect at that point is having a transformer. The world supply of transformers through the pandemic has massively constrained, and you are talking minimum, new order right now, 18 months before you get a transformer. So you have everything lined up. You've got investors, you've got mayors, you've got announcements, and you've got your plant ready to operate.
(24:07):
If you don't have a transformer that was ordered 18 months ago, you don't have a plant. Now we can extrapolate that from a manufacturing facility like Qcells and Seraphim who have been doing this for two years, lining up their investment and their facilities, and are ready to turn plant the plant on by Q3, Q4, Q1 '23/'24. You can extrapolate that out to utility scale solar. We don't have this problem in residential solar, right? This isn't a constraint on residential solar, but the two things that constrain utility solar are the ability to interconnect, for the same reason, and because the queue is forever long, the queue is how many people have applied for interconnection at a specific node for a big utility scale project. This happens in most often in public RFPs, or public processes to solicit power plants, but you also have this issue of the... You guys are going to have to edit this out. I'm trying to think. I blanked on the second piece of it. So that's interconnection. I totally blanked on the second piece. It'll come to me. At the utility... Yeah, at the utility scale side.
(25:27):
I was on a roll, so you got... Oh, so that's interconnection, right? And then where does all that power go? I had John Belizaire on recently from Soluna Power who I would highly recommend that you interview him. He's super, super smart about not only entrepreneurship, but how to deal with curtailment. And what is curtailment? Curtailment is anytime the power that you generate from your power plant can't go onto the grid for one of two reasons. Either there isn't sufficient demand, or there isn't sufficient transmission capacity. The latter being probably the single biggest defining factor of whether or not we can scale at the rate that we actually physically, functionally can scale. Bill Gates has said the number one inhibitor of solar expanding, and climate tech generally, and so wind, solar, et cetera, and replacing fossil fuels, the number one constraint is transmission.
Dave (26:29):
Without a doubt. And obviously the transmission side of things and what they used to call famously or infamously the duck curve from the residential side, when you were putting too much power onto the grid at certain hours, Hawaii started to deal with that. They were the first state to deal with that in the United States. And we started having to add batteries to limit the amount of, or to increase self-consumption and limit the amount of export or discharge into the grid. And we're dealing with that now. We're dealing with that now in California, California's a little bit more proactive about it, so we haven't had those situations where you have that duck curve, or that period of time where you're actually putting more power onto the grid than is being consumed from the solar. But we're dealing with that, and obviously the batteries are something that's really important. On the residential side, it's a little bit harder on the C&I side or specifically on the utility side to sort of solve for that. But the fact that we can solve for it at the residential macro/micro level I think is really important as well.
(27:28):
Well, on the resi side, it still remains very small, but obviously in Hawaii it's 100%. In California, it's to be determined. But with NEM 3.0 coming out, some people speculate it'll be 70, 80%. There are others, and I know this firsthand, there are many sales organizations that are out there, and they're basically going to market with a PV only strategy, and they're skipping the batteries. And the reason that they're doing that is you can always come back and add the batteries on and I think that they just feel like, "Hey, the industry's not ready to start attaching batteries to 80% of the sales that we make here, and it's something that we can add on in the future." And for the most part, homeowners, it still pencils for them, in a market like California where energy rates are so high, to go PV only and still find a measure of savings. We've actually been doing a lot of the modeling, and helping sales organizations understand what the true value proposition is. But yeah, the attachment rates is TBD.
Nico Johnson (28:22):
So you said something there. You said the industry's not ready, and what I hear underlying that is the sales organizations that you mentioned, afraid that the additional cost of storage, even though we know it pencils, complicates the sale. So how do we overcome that, Dave? That for me is a major inhibitor, because places like Hawaii and Puerto Rico, and increasingly Texas and Florida, have attachment rates over 50%, nearing 100%. And I see that there's this dichotomy in the solar industry, where there are the people who built it and the people who sell it. And there aren't...
(29:03):
When I started my solar company in 2006, there were the people who sold it and built it, and I would subcontract occasionally electrical labor, and I ended up... I saw the industry evolve, and really big companies like Vivint and Blue Raven and Solar City, as those salespeople were downsized or disenfranchised, started building their own, taking their processes and sales teams, and saying, "We can do this." This is Cut Co. Knives all over again. Let's just go knock doors. It's been a very successful proliferation strategy, but it creates this dichotomy, this dyssynchronous philosophy in the industry, doesn't it?
Dave (29:40):
Yeah. I think we've actually started having these conversations with people back when Solar City was really ruling the world on the residential side, about whether or not it was a vertical or a horizontal model that was going to be more successful in solar. And I still think that's somewhat trying to resolve itself right now, but obviously right now it has certainly seen some fragmentation, and some of the growth has been as a result of that, as these disenfranchised sales organizations you talked about started to go out and create their own businesses, and started brokering their own deals with the many... Well, with the few, but the increasingly many EPCs that are out there, the engineering procurement and construction companies that are out there helping them to get jobs built.
Nico Johnson (30:19):
If anybody doesn't understand what we're talking about, go listen to the episode I did with Alex Williams from Solar Power Partners, I think, Solar Power something, Solar Power Group. I don't remember, Alex Williams if you search it in the Suncast feed. He explains it in depth. He was one of the guys who basically helped proliferate Vivint's regional offices, and his brother started the organization they have now. But it's a real separation of church and state in many ways. And you're right, it's an experiment that we're going to see play out over the coming few years, to what is the right model? You guys are in a position that you get to have a frontline view on how the solar industry evolves. It's very compelling to watch.
Dave (31:06):
Well, before we move on from the IRA, I just wanted to ask one other question. So not everyone is as bullish or excited about it, and so if I were to ask you what are the opponents of the IRA, what are they usually saying? If you were going to steel man the Inflation Reduction Act, in terms of whether or not it should ever be put into place, what are the talking points that you hear most often?
Nico Johnson (31:29):
Oh, that is really interesting. I haven't had anybody ask me that question before. If I pause in any way, it's because I'm going to think through it. I don't have any prepared talking points on it for sure. What comes to mind for me, and what I see in reading, I certainly don't have guest who pooh-pooh it, is having spent a week in Houston back in March at Sero Week, which is the Davos of energy. It's the global gathering of the energy sector in the United States. Everyone talks about the energy transition. Why? Because it's an easy word to... The idea of transition suggests slow, gradual, attainable. So I would say that the fossil sector, who have appreciated trillions of dollars of subsidies, are doing their fair share of saying, "Oh, renewables only survive because of subsidies, and this IRA is a sham. It's just propping up more eventual failures like Solyndra."
(32:41):
Except they forget that one of the most successful companies who paid back their loan early from the same organization is a little company called Tesla, now the largest company in the world, and one of the most profitable. And Jigger Shaw goes on and on and does a great job of refuting the myth bearers, about how the Department of Energy and our US government subsidy programs for renewables is wasting time and money, and we'll never be able to operate without natural gas and fossil fuels. But I would say that the biggest argument is that it is incentivizing something that they'll say, "Well, it doesn't need incentives. They don't have incentives in Chile. Why do we need them here? They don't have incentives in these other markets. Why do we need them here?" That's one talking point. The other is this, that if it needed incentives to survive, then it shouldn't exist.
(33:36):
Which is an easily refutable counterpoint to say, "Well, you're probably right. We should probably have thought about that back when we incentivized the building out of the Great Northern Railroad, or the building out of all of our highway infrastructure, or our water, and oh, by the way, natural gas infrastructure. Because you didn't pay for the gas pipelines that came to my home, but you use them now to provide me with clean natural gas." I think that it's really still the traditional energy industry, the fossil fuel industry, who wants to put up walls and say, "This IRA is a misappropriation of tax dollars." Whereas we look at it and say, "No, it is time to build infrastructure that is durable and sustainable for future generations. We need to upgrade our grid. We need to modernize all of our electrical infrastructure, and we need to electrify the world." How are we going to do that if we hold on to 21st century thinking?
Dave (34:44):
Both a great steel man as well as a great counterpoint to your own points, and those are the things that I hear as well. There are a few things that I might add and get your hopefully insight on. One of those would be, one of the things it potentially does is when there's a lot of fat, it doesn't force innovation to occur as quickly as we'd need or would like it to happen. What I mean by that is, take a market like Australia, for example, where they're selling residential turnkey prices in the slightly over a dollar per watt range, versus California, which is the most expensive market in the country, or excuse me, in the world, at close to $4 a watt. And so when you look at those things you think, how is it possible that on the one hand, California, which is our flagship market in the United States, is the most expensive solar in the world? Does the Inflation Reduction Act, does the investment tax credit... Is it at least partly the reason, not to blame, but the reason for that?
Nico Johnson (35:49):
I would say the ITC is, and unfortunately, as I said earlier, we're going to make some people mad here, but I have been saying this for a couple of years now. It's not coincidental. Let's look at end of 2022, before IRA was passed and it stepped back up to 30%, it was 26%. Do you know, or do your listeners know, what the average sales commission is on a solar array in California?
Dave (36:20):
Certainly not disclosed by this host, but...
Nico Johnson (36:23):
As a percentage of sales, coincidentally, it is 26%. I would agree with whoever said the IRA is going to stymie innovation, if we're talking about how do we actually reduce the overall cost to the homeowner, I would agree with you because we still have a fundamental reckoning to happen in the way we sell this product. We don't sell it the same in the United States as they sell it in Australia. The reason that I don't think it's within the scope of this conversation to unpack for everyone how and why a salesperson is making 26%, literally we're passing through the ITC, and I would argue that it's probably going to go to 30%.
(37:09):
Why? Because salespeople typically, if uncapped or unbridled, will charge what the market can bear, right? Adam Smith, capitalism at its best. So in a world that fosters entrepreneurship, a world that fosters capitalism, everyone along the value chain is going to try to extract the highest profit margin they can. There's no constraint, but there's also zero accreditation required. You can broker a solar project and require no legal accreditation or transparency across the value chain for what's charged where, but you can't broker a house that way.
(37:48):
Except a solar project is right now, as a percentage, one of the greatest value ads you can do for your house. To get a mortgage or to sell the home, each person in that pay stream is required on the HUD to disclose what they made. You don't have to do that in solar. Why? Because if you did, a lot of folks in the finance sector, we won't name names, and in the sales sector, would have to start reducing their fees. We'll call them fees. They would have to start reducing their fees lest the homeowner say, "What do you mean I'm paying for X, Y, Z that's not a part of the solar project, and I'm mortgaging that?" The only reason we're able to do it is because in the United States we have these things called loans. And over the last eight years we've had the best financial tailwind of history, and everyone was able to say the same as they do when they go pick up a car.
(38:43):
"Well, what do you want your monthly electricity rate to be, and we'll solve for X." Didn't matter what the project costs, didn't matter what the car costs. You want to pay 250 a month, I can give you 250 a month. You want to drive that Lexus? Great. That's the problem fundamentally, right now, in the sales cycle of solar in the United States. We don't have an awareness issue as much as we did when I started my solar company in 2006. We still brag about how wonderful we're doing at selling, and we're less than 3% penetration rate, which is paltry, right? That's embarrassing that we're less than 3% success rate in product adoption. But we're still just at that point of crossing the chasm. We did a whole series on what is it like to cross the chasm. And in that early mass adoption phase, we need to be more transparent with homeowners about what they're paying for. Right now, you and I would agree, we are not transparent with homeowners about what they're paying for.
Dave (39:37):
Yeah, no, it's certainly a black box for most homeowners, and they certainly think about it in the context of, "If I'm a saving money relative to the utility company," a lot more than, "What should my solar actually cost me?" And I'm not in any way trying to say that there are a bunch of sales organizations out there, or companies out there, that are intentionally or doing anything unethically in terms of taking advantage of customers. I would say, however, that a critical piece to the evolution of the industry is that we see customer acquisition costs come down, and who eats and takes that, it's to be determined in terms of the loss of margin, but the customer acquisition costs have to come down, and come more in line with what you'd see in other established markets where solar has gotten 30% or 40% market penetration, like what we talk about in Australia, for example.
Nico Johnson (40:29):
On being very fair and politically correct, I have seen, I mentioned Alex as one, I've seen organizations that do a wonderful job of actually trying to educate the homeowner. And they lift the burden for the long tail of installers who could never afford to hire an A player to be their closer and their salesperson. They could never afford it. They've done a tremendous benefit to the overall growth of solar. Without a doubt, the armies of salespeople that are out there selling right now have lifted us to the penetration rates we're at right now. I do think that we need to reconsider how do we provide the lowest possible cost to the homeowner. The lowest possible cost to the homeowner.
Dave (41:16):
Yeah, and you and I are both aligned on that one for sure, to say the least. And I think one last point, just to try to maybe put a period at the end of it, is when we talk about whether or not the Inflation Reduction Act or other subsidies might be able to cause inefficiencies to exist in the marketplace, really what we're talking... or excuse me lack of innovation... really what we're talking about is inefficiencies. So companies that have many inefficiencies within their businesses are able to survive because of the margin that exists being propped up, at least in part by that.
Nico Johnson (41:50):
Yeah, I'm glad you highlighted that, because that's not something that most folks think about. It's a non-obvious corollary, and it's true. It exists in every subsidized market, and we can look at this, it's we are not going to be able to do do away with that until we get past early mass adoption. Look at the telecom industry. The same existed. We subsidized the mass expansion of the telecom industry, and then we privatized it through private equity, or privatized it, but expanded it through private equity. We're at that phase right now with solar, where joining government incentives and private equity is going to get the equivalent of a cell phone in every hand, right?
Dave (42:29):
Yeah, without a doubt. Yeah. So I mean so much more we could talk about, but I do have to ask the question. So obviously someone that's a lifelong entrepreneur, constantly trying to be innovative and make changes to this industry, and to drive renewables forward, SunCast has been a huge part of that. Obviously you're part, starting out as an entrepreneur, just first of all with your own solar company, and the many different things that you've done to help coach, and inspire, and to be a thought leader in this space. But I got to ask, what's next for Nico? What are the things that you're really excited about and passionate about that you're working on right now? Some that maybe have come to fruition and delight, and others that maybe are in the back pocket that you can share, maybe not for the first time here, but certainly things that our listeners can hear about.
Nico Johnson (43:10):
Yeah, Dave, I really appreciate this question and I was afraid that you were going to ask, "Do I have solar on my home?"
Dave (43:19):
Well, I do.
Nico Johnson (43:21):
Yeah. Well, I'm waiting for Complete to come install a Solaria system on my roof.
Dave (43:25):
We're on our way.
Nico Johnson (43:27):
Fantastic. The last few years, I realized that the thing that I'd shied away from because I didn't have a rich father, to quote Robert Kiyosaki, I didn't have good mentors, and good financial education as a boy growing up in rural South Carolina. And I didn't consider myself particularly financially savvy. I didn't go through the finance track of my undergraduate or MBA program with five stars, and I shied away from building financial models. So I wasn't really that savvy in investing, in how the money flows. I understood how money flows to solar projects specifically, but not how the global economy was marshaling resources around climate tech and clean tech 2.0, climate tech investment. And we've seen in the last, since 2018, over a quarter billion dollars invested in climate tech. We're going to see a massive push into climate tech moving forward. It's the darling of venture capital right now, at least before ChatGPT and AI took over again.
(44:33):
So I've spent a lot of time thinking about climate tech investing, trying to define what is climate tech. Just did an episode with our host Alina Folks for one of our podcasts, I'll talk about in a minute, on what is climate tech. But over the last maybe year and a half, two years, I've done a bunch of interviews. I mean, I'm a curator. My go-to method for learning is invite smart people onto my podcast, ask them all the questions I can. I'm on the board of a company called energea.com, that is run by a guy named Mike Silvestrini. He's been a guest four times on this show. First was when he sold Green Skies. People might recognize Green Skies because it's the Morgan Stanley, distributed generation arm of solar development. He sold that business back in 2018, I think, and started Energea shortly thereafter, to create an online platform for retail investing into solar projects.
(45:29):
And we have renewable projects, we have hydro projects down in Brazil. We have a big solar portfolio in Africa that we put together with my friend Abe, who runs the Sun Exchange. He was a guest on the show, and Mike came to me and said, "Can we get Abe?" And now all of a sudden we have all of the Sun Exchange's projects on our platform, energea.com. Super proud of that business, because we now have over $100 million in assets under management. And a lot of folks look at it and they go, "Oh, this is what Wonder and Mosaic tried to do. Why'd you do it? Why were you able to succeed?" And the answer is because it was run from the very beginning with shareholder money who understands project development, core infrastructure planning and development. And put a really good portfolio together, partnered with people, with great investors like Brookfield and Victory Hill, to build investible assets down in Brazil.
(46:20):
And then I started thinking, how do I put my money to work outside of Energea? So I looked around at Climatize, and Finite, and Raise Green, and my friend Kyle Cherrick started this syndicate called Climate Avengers, and it allows folks to invest as small as $2,500 out of their pocket into a climate company, a climate tech startup. We invested most recently in some food companies. We invested in mass reforestation, which is formerly called Drone Seed. We've invested in Aether Diamonds, we invested in Yotta Energy, for those who were big on distributed C&I storage. We invested in N Zinc, basically reinventing how lead acid batteries can be rechargeable. And I'm really leaning in heavily. I mean, I've invested a lot of my time, effort, and money into investing in climate tech startups so that I can see how this ecosystem is building. And as a result, Kyle came, and I became a venture partner in Climate Avengers and as a syndicate.
(47:22):
And he came to me and he said, "What if we did a podcast?" And I go, "I've been thinking about starting a podcast network." Because the biggest problem that you and I have, Dave, and our colleagues like Mike Casey and Tim Montague and Amy Simpkins, somebody who starts a podcast like the Earthlings Podcast by Lisa Ann over at Technica, you're starved for listeners, and discovery is very difficult, and there's not a site that just curates this content focused on our sector. But now there is, it's called resourcelabs.co, and I've been incubating this inside of SunCast for a few years. And we started a community in a discord, and we thought about NFTs and all the stuff, and it came back down to, how do we actually create tools and a platform that empower creators in our sector? Because I believe that the greatest tool that we have to fight climate change is our voice, and how we use it is important.
(48:15):
It could be through writing, it could be through what we are doing with our actual voice. It could be through video. But creative art, creative content gets eyeballs, earballs, and attention on the plight of climate change. And we need more content creators. And candidly, there's just nowhere to find yours and my podcast if you're not just actively searching inside of Apple Podcasts or Spotify, and hoping that you get a good recommendation from their search engine. So we're in, at the end of April, beginning of May, we're launching the Climate of Interest podcast as the first internal podcast of the Resource Labs Network. And the Resource Labs website, which is resourcelabs.co, is going to curate a directory of the podcasts that serve our sector, energy, climate, electrification of the home, and is a place where people who want to get into this industry can get coaching from me, and from others who are hosts on podcasts, and others who are practitioners in the sector.
(49:15):
And they can get education in the form of courses that will help them both come up the learning curve so that a company like Complete is ready to hire them, but also really get clear on their transferrable skills. Maybe they're coming from oil and gas, maybe they're coming from government work, and they really want to lean in, put their shoulder in, their talent, to climate action. I say there are three ways you can contribute time, talent, and treasure. So we talked about treasure, which is climate investing. I'm really excited about that. Talent, which is how do we find all those people that are going to be apprentices so that people can get that 15% bump in the IRA when they put these people to work? Because they're not going to find those jobs themselves. We need to recruit them, and one of the best ways is through media.
(50:00):
And then time. How do you save time by going to a place like Resource Labs, and being able to find The Solar Podcast alongside Clean Power Hour and SunCast, and curate your own knowledge transfer right there, instead of having to do it inside of Spotify or iTunes. The discovery process is broken for us, and I want to help more creators like you, Dave, and others who are listening to this that want to start their own mini media company. We're in an age of disaggregated resources in that way, and people work from home and they've got multiple projects. The average, Tim Montague told me, he said, the average person these days get has seven careers, seven careers, Dave, in their lifetime. So I want to help someone who is looking for that next career, and I want to help them listen to TJ Rogers talk to Dave Anderson about why he's investing in solar.
Dave (50:57):
Yeah. Well, I got to tell you, Nico, I'm so thrilled that we've finally been able to make this happen. Obviously, I've been a fan from the sideline of, obviously, all the work that you've done. So I don't want to limit it obviously just to your podcast, but frankly, it's just all the work you've done. And thrilled to hear about all of the great things that are just on the horizon in terms of things that you're going to be doing to be able to advance the ball on renewable energy, and the things that are important to both of us, and to so many other people. And whether they want to admit it or not, important to them. And so this is exciting. So there are so many things that I'd love to unpack that we've just talked about right now. And the truth of the matter is that we've never had a repeat guest, but I just want to make a formal invitation. Nico, I'd love to have you come back and chat a lot about a lot of the things I'm particularly interested in.
(51:42):
And obviously you can go check out SunCast podcast to be able to understand and listen to the... I mean, you're doing two episodes every single week. There's a wealth of information there. I would encourage all of our listeners to go check it out. Listen to the many different podcasts that are available. You had mentioned and joked around about that you don't necessarily consume solar content because you're creating so much solar content. I actually am a consumer of the product and of the content that's on your website, and so I would encourage others to do the same thing. Things that we'll definitely talk about, and this is a teaser for the next time you come on Nico, but I'd love to talk about what it really means to be an impact investor. You're talking about close to a billion people that don't have access to electricity and how impactful it is as we establish and build a grid system here that works on an infrastructure of solar, renewable energy, and then being able to take and translate that to the Third World, or to the underdeveloped world, I really should say.
Nico Johnson (52:38):
Man, you really know how to push my buttons, Dave. I welcome the opportunity, my friend. As a Peace Corps volunteer and as a board member for We Ilum, which is specifically building projects in developing nations, having just interviewed Bill Jordan from Jordan Energy, who is building projects down in Puerto Rico as we speak, man, there's so much that we are obligated to do to pay it forward. Send the elevator back down, help others have access to clean, free electricity, and not be choking their children on kerosene and wood burning stoves, and limiting their education by the number of hours they have daylight.
Dave (53:22):
Access to being able to have refrigerated food, and being able to store food. These things are all important things, and change the quality of life for literally millions, hundreds of millions of people. So things that I'm actually excited about. And one of the things that I love to see happening here in the United States is the global expansion and access to renewable energy, and the costs of electricity going down. Anyway, Nico, I'd love to talk about all of these things. So again, this is a formal invitation for you to come back on the show, and talk about these and many other things that you're both knowledgeable about, but also that are in involved in at the ground level. So Nico, thank you so much for coming on the podcast with us today.
Nico Johnson (54:01):
Oh, it was my pleasure, man, and I wish you all the success in the world. And I want to reiterate, I'm really honored to have had a chance to come on. I'm proud of the work that you guys are doing at Complete Solaria, and how you are showing what is possible with innovation at the ground level. And that you've created a vehicle in The Solar Podcast to give voice, honestly, to folks that even I can't access. So I'm eagerly, I will be, you'll be queuing up. Believe me, The Solar Podcast will be queuing up for me, because you've got some people coming on that are on my bucket list to get on SunCast. Kudos to you, my friend and anytime you're out in Durham, please let me know, and I will definitely take you up on another opportunity to dig deep into a topic that we're both passionate about.
Dave (54:49):
Well, if I invited you on there, you were obligated to say yes. So that was a strategic invite. So again, thanks so much, Nico.
Nico Johnson (54:56):
Good to see you, my friend.