Episode 121: Bryce Smith, LevelTen Energy
Today's guest is Bryce Smith, Founder & CEO at LevelTen Energy.
Described as a “Zillow for energy contracts,” LevelTen Energy provides a renewable energy procurement platform that connects corporations that have renewable energy goals with developers that want to build solar, wind and energy storage projects. LevelTen provides access to all the planned projects in the market as well as sophisticated data analysis to help corporations understand, compare, and select the best overall project for them. In addition, the company offers a team of industry experts and a range of software tools to manage the process from beginning to end, helping corporations achieve their goals faster and at less risk.
We have a great discussion in this episode about Bryce's career and experience, what brought him into the energy world, and what led him to founding LevelTen. We talk about the vision of LevelTen, the company’s origin story, the products they've had to date, and what types of things are coming next. And we have a great discussion about the energy marketplace and how the projects LevelTen facilitates are helping to usher the transition to renewable energy. Enjoy the show!
You can find me on Twitter @jjacobs22 (me), @mcjpod (podcast) or @mcjcollective (company). You can reach us via email at info@mcjcollective.com, where we encourage you to share your feedback on episodes and suggestions for future topics or guests.
In today's episode, we cover:
What is LevelTen Energy and its mission?
The pain point of the renewable energy developers LevelTen serves.
What is a PPA and why it’s sought by energy developers?
The role of the utility companies in renewable energy development.
Why the analogy of the “Zillow for energy contracts” is apt.
LevelTen’s value proposition for energy developers and energy-seeking companies.
Why it matters what type of energy is entered into the electricity grid.
How Bryce thinks of carbon reduction in the electricity grid.
What has motivate the corporate shift to renewable energy.
The technical and political challenges to growing renewable energy adoption.
The role carbon pricing might play in driving renewable energy innovation
What Bryce sees as the future prospects of renewable energy.
The NIMBY-ism that developers have had to contend with.
The varied landscape of the renewable energy developer market.
How the next movement in climate tech will be in carbon capture.
How support from policy and government is critical to advance renewable energy.
Links to topics discussed in this episode:
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Hello everyone. This is Jason Jacobs, and welcome to My Climate Journey. This show follows my journey interview a wide range of guests to better understand and make sense of the formidable problem of climate change and try to figure out how people like you and I can help. Today's guest is Bryce Smith, founder and CEO of LevelTen Energy. LevelTen Energy provides a renewable energy procurement platform that connects corporations that have renewable energy goals with developers that want to build solar, wind and energy storage projects that can help them achieve those goals. LevelTen provides access to all the planned projects in the market as well as sophisticated data analysis to help corporations understand, compare, and select the best overall project for them. In addition, the company offers a team of industry experts and a range of software tools to manage the process from beginning to end, helping corporations achieve their goals faster and at less risk.
We have a great discussion in this episode about Bryce's career and experience, what brought him into the energy world, and what led him to founding LevelTen. We talk about the vision of LevelTen, the origin story for the company, the products they've had to date, and what types of things are coming next. And we have a great discussion about the energy marketplace and these types of projects, how they work, where they are in their evolution, how they fit into the climate puzzle, how much traction they've got to date, what's some of the barriers are, and what some things are that can change that would unlock this transition happening faster. Without further ado, Bryce Smith, welcome to the show.
Bryce Smith: Hello, thank you. Nice to be here. Thanks for having, Jason.
Jason Jacobs: Where does this find you today geographically in pandemic land?
Bryce Smith: Home today in Seattle, Washington. We've got a beautiful day outside. So things are looking up, I'll say. Glass is half full.
Jason Jacobs: Well, good. I'm here in Boston, and somewhere I just got back from a long run, and now ready to dig in and talk about LevelTen Energy.
Bryce Smith: I've got my coffee, so let's do it.
Jason Jacobs: I already had two, so I'm, I'm already at my quota. I wish I had my coffee. It, uh, feels weird to do this without a coffee in my hand, but for the sake of you and, and the listeners, it's better if I don't have it. Anyone that's worked with me knows that past a certain threshold, it's just not good for anybody.
Bryce Smith: Yeah. I understand.
Jason Jacobs: Yeah. So what's LevelTen Energy?
Bryce Smith: Yeah, so LevelTen is a market place and a platform that provides companies with better ways to procure new renewable energy. So we were tired of seeing companies get into risky power purchase agreements and deals that, that would fall apart at the eleventh hour. So we essentially created a Zillow for renewable energy projects where buyers can see all their options and really understand what they're buying. So practically speaking, the market place has 300 developers. You know, nearly every developer in the U.S. and Europe-
Jason Jacobs: Developer meaning, uh, uh solar project developers?
Bryce Smith: Yeah. Probably at this point, we're 95 percent solar and wind. There's some biomass, small hydro, some geothermal, but for the most part, it's wind and solar. And these project developers need to sell their power in order for the projects to get financed and built. They need a guaranteed revenue stream. The other side of the market-
Jason Jacobs: So they sell it upfront?
Bryce Smith: Yeah. They really need to have a guaranteed revenue stream in order to get financed at a reasonable rate. No one is gonna finance, well, large wind farm when the revenue stream isn't known, or the interest rate would just be through the roof. So in order to get these projects done, they essentially need a sponsor. They need someone that is willing to buy their power for 10, 12, 15, 20 years. That's where the companies step in, and the companies really make these projects happen by guaranteeing to buy all the power. And in exchange for buying the power, they not only get the potential economic benefits of owning that power, but more importantly, they get the renewable energy certificates and, uh, and get to claim that carbon, that carbon reduction, which is key to their sustainability goals.
Jason Jacobs: Uh-huh [affirmative]. But it's not a mandate. It's just more, like, from a branding standpoint. They want to be able to say that they're carbon neutral.
Bryce Smith: Yeah. That's right. You know, now utilities that have kind of renewable portfolio standard compliance obligations typically are satisfying them in, in the same way, but most of these corporate procurements, or all of these corporate procurements are purely voluntary trying to execute on their sustainability and, and their carbon goals.
Jason Jacobs: Okay. So this is good. There's some terms here I've heard a lot about, but I haven't really dug into. So for me or for anyone else that might not be too familiar, what is a PPA?
Bryce Smith: Yeah. It's a great question. It's funny, we spend all day thinking about this stuff, and sometimes it's hard to decipher what is common knowledge and, and what is super geeky in the weed stuff. So yeah, let's start with what a power purchase agreement is. Essentially, it is a commitment from a company, from a utility to buy the power from a project for a predetermined amount of time. As I said, from a new project, it is typically, it's no less than 10 years, sometimes as long as 25 years. And it's really-
Jason Jacobs: So this is the agreement up front to get the financing. When they sell the power, they're doing it through a PPA.
Bryce Smith: The PPA is a guaranteed revenue stream. So a company says to a project, "Every megawatt hour of electricity you produce, we will pay you $32 dollars," whatever the price is. That is the revenue stream that the company uses to get financed and built. Right? If it's with a credit-worthy entity, let's say it's with Starbucks, the company, the project developer and more importantly, its financing partner has enough confidence that Starbucks will be around to send it $32 dollars for every megawatt hour that the project produces. That's what allows it to get financed and built.
The nuance here is, is that then once that project is built and operational, it has to sell its power into the wholesale market. That's the only mechanism to actually generate revenue. So it sells power into the wholesale market, it receives whatever the price for power is at that particular moment in time. And sometimes it's gonna be more than the $32 dollar PPA price. You know, sometimes it might be $50. Sometimes it might be $20. The challenge is that uncertainty and that volatility is not sufficient for a financier to be willing to finance that project.
So it's the guarantee of the revenue from a corporate that allows the financier to get comfortable with that. So in practice, what happens is, you know, the company will send $32 dollars to the project for every megawatt hour generated. The project sells power back into the wholesale market, and if it generates $32 dollars, uh, s- $33 dollars in revenue, which is one dollar extra, it... So it will send all of that wholesale revenue back to the corporate customer. So if it generates $33 dollars in revenue, it send that check back to the corporate buyer. So you can think of it as, as two checks. Uh, corporate sends a $32 dollar check, the project sends a $33 dollar check back to the company. So the company has procured this energy, and they're also in the money by one dollar.
Jason Jacobs: But what if it was $29 dollars that they could sell it for in the wholesale market? Then what happens?
Bryce Smith: Then the project sends the $29 dollar check back to the company, and the company is out of the money by three bucks. So the company takes that uncertainty.
Jason Jacobs: Is it one to one? Like, if I wanna build a renewable project, whether it's wind or solar or biomass, or whatever it is, is it just one guaranteer, and then I'm selling them all the power, or is it many to one, or does it just depend?
Bryce Smith: Historically, it's been one to one just because it can become hard to wrangle, you know, to herd a bunch of corporate cats and get them into a project under the same contract and the same terms. There's been a lot of work on that front, and we do a lot of that work as well where we try to organize smaller buyers to come together. We aggregate them.
eWe did a deal last year with Cox, Scat, Bloomberg, Salesforce, Workday, and some other customers where they aggregated all of their load and took down a much larger project. So that's really interesting and doable. It can be logistically more challenging, but I think that certainly is where the industry is headed; more sophisticated aggregation techniques. So, you know, what we don't want is an industry, is, is for Google, Microsoft, Amazon, Apple to be the only buyers of utility-scale green power. We want to empower smaller companies to be able to make new projects happen an- as well. And that aggregation, that aggregation model is, should be really important going forward.
Jason Jacobs: In the cases where these developers are [inaudible 00:10:20] up the projects, do they own the land or do they lease the land?
Bryce Smith: Typically, what happens is a developer will go out. They will scout different sites. They will shake hands with a land owner, try to come to a deal on site control. If they get site control, they will then work on permitting and interconnections. So applying to the grid operator so they can, they can actually get their power onto the grid. Those are three vital things that a developer does; site control, permitting and interconnection. And typically, the last really important big piece is getting a customer for your power. Those are the four vital things to get a project ready for financing.
And so what we have now is corporate stepping in and playing a really important role in buying that power.
Jason Jacobs: So are the utilities not developing these projects themselves?
Bryce Smith: Well, utility is a bit of a catch all term, right? So it depends on which market we're talking. Are we talking about a utility in a vertically integrated market where it owns the generation and the transmission and the distribution and the retail relationships with the customers?
Typically, we are doing these transactions in centralized markets, in wholesale markets where there is some degree of retail choice. Most importantly, we need a wholesale market that gives a price signal so a project can sell its power into that market and receive some revenue, what, whatever the revenue is at the time.
Jason Jacobs: And these are called deregulated markets?
Bryce Smith: Yeah. There are different terms. You know, deregulated's a little funny because they're super regulated markets, but they're still sometimes referred to as deregulated. Centralized wholesale markets is maybe a more accurate term. The real distinction, though, is that there is a wholesale market that's organized, that is organized by the ISO, you know, the grid organizer, the non-profit that manages the grid. They send out price signals at every location on the grid, and every five minutes, there's a new price for power at this node or that node, thousands of nodes on the grid. And, you know, essentially, it's a price signal that the grid organizer sends out that says, “We are willing to pay X dollars for the marginal megawatt hour of electricity added to the grid at this point.” That's really interesting and obviously really helpful, because it indicates where power is needed the most.
If you're a developer, where might you earn the most money by locating a, a project on the grid. And really vitally to these corporate transactions, these are fixed for floating swaps. Technically, where the corporate is delivering a fixed revenue stream to the project in exchange for receiving the floating revenue, the variable revenue that the project receives in the wholesale market, but at least the project is receiving some revenue. We d- we don't exactly know what it is, but the fact that it receives anything is what allows us to put this fixed for floating swap together.
Jason Jacobs: So there's the developers, and there's these PPAs, and there's the corporate buyers. What's the piece that LevelTen Energy is providing in all this?
Bryce Smith: So we provide, you know, if you think of Zillow as the analog, you're a home buyer, you've got a couple options. Maybe, uh, you used to walk around your neighborhood and see if you saw any for sale signs, then maybe you got a little more sophisticated and hired a broker, and the had 12 houses to show you. But now with Zillow, you can log on and you can see every house in your town, in your state, wherever you're looking, every house for sale.
LevelTen's market place is very similar to that in that buyers can log on and see every PPA opportunity out there. You're a corporate, you sell soap, or make bicycles, or whatever you do, you are not necessarily an energy market expert. How do you choose from a thousand different projects, right? That's a monumental task. So we make that task easier by showing them every project under development, showing them deep analytics on risk and value. If you were to buy into this power purchase agreement, what might those cash flows be? What's the probability of a cash flow at different levels?
One of the main problems in the market over the past, let's say, five years is buyers have gotten into some things that they haven't exactly understood, and you really have to give those corporates credit. They are stepping up and performing a vital function in making these new projects happen. And i- as they do that, I thin it's really important that they understand what they're getting into, because if not, as some point, those buyers will probably stop buying if they're getting into things that are riskier than they think they are if they're not truly understanding them.
So that's really the, the service we provide; showing them everything. Helping them understand what they're buying, and then providing standard contracts and documentation to get those transactions closed more quickly and more easily.
Jason Jacobs: And who are typically the buyers in these corporations?
Bryce Smith: So we, we now see more than half of the Fortune 500 companies with renewable energy. Targets and that group of entities are really on the forefront here, but, you know, we have universities, the o- hospital systems, you know, all kinds of large power buyers that are really looking to execute on their sustainability and carbon targets. So, you know, we've seen the corporate titans really lead the way. Microsoft and Amazon and Apple and Google and s- and so forth, but now a lot of the activity is from much more traditional industry, right? You've manu- manufacturing and healthcare, pharma and really all swaths of the Fortune 500, Fortune 1,000.
Jason Jacobs: And then what about within those organizations? I mean, is it a sustainability group, or functionally, who's typically the decision maker?
Bryce Smith: Yeah. It really varies quite a bit where it's still a little bit wild West. If you are a large tech company and you own server farms, and electricity is, is a really big input into your business, you may have 20 people thinking about this issue. If you make cars, you may have one or two people thinking about this issue. So the staff time devoted to this and the internal expertise varies kind of widely a- across buyers, which is one of the reasons that technology can be so important in helping those buys get into, get into the right thing, because most companies don't have this expertise internally.
Jason Jacobs: Are some of these companies actually rolling their own and, like, developing their own projects internally, or is that not an option?
Bryce Smith: No. No, no one's really doing that. You know, we've seen a few companies attempt to do that or ask the question, "Is it more efficient for us to go out and do this whole process from start to finish?" And the answer is almost certainly, "No." As a project developer, I was a project developer not that long ago, and a lot of folks at LevelTen were project developers. Project developers are generally risk takers, and you're gonna hit a lot of dry holes before you find a great project. It's certainly not 100 percent success rate. So most project developers have a lot of different projects under development. Sometimes those projects fall through, often they fall through. You know, maybe they don't get the permit they need or we ran into Native American burial ground. All these historical artifacts, all kinds of challenges that you would never think of.
So the success rate for a developer is sometimes one or two out of 10. That is not, that's not a function that a corporate is really ready to handle.
Jason Jacobs: Now, does this function like an offset where you're offsetting things you're doing through natural gas or coal, or is it actually a replacement?
Bryce Smith: Yeah, that's a really good question. It's really important that people understand how the grid operates to understand why these power purchase agreements are meaningful and legitimate from a carbon perspective. So I- let's talk briefly about the grid.
So, you know, electrons move at the speed of light. They go ever, wherever they feel like going. You can't direct them. They follow the path of least resistance. So it's easiest to think of it like a pool. Large power plants dump in electrons with big pipes, and then consumers, residences, businesses, you know, companies are essentially sucking off those electrons with small straws. And some have bigger straws than others, but really, it's the level of the water in the pool that matters. It's the composition of the water in the pool. You can't track the molecules of water. You can't really track the electrons. It's not important.
A couple things are important, though. You know, first, like, with the pool or a bathtub, you can't overflow it, right, or else that causes problems. On the electrical grid, supply has to equal demand, or else we have blackouts. And the other thing that matters from a carbon standpoint, and really the only thing is it matters what you dump into the grid.
What we're trying to do is green the power pool, and what companies are doing with these power purchase agreements is making sure that it is a renewable source that's dumping electrons into the grid rather than whatever else would have come on at the margin; gas, coal, let's say. And we can calculate, we know what would have come on at the margin. We know what that carbon impact would have been. So every megawatt hour of solar that you pay to have dumped into the grid is going to necessarily back out what would have come on at the margin. Because supply always has to equal demand, so if you dump in one megawatt hour of solar, you are, by definition, preventing one megawatt hour of something else from coming onto the grid. That is how we quantify the carbon reduction. Does that make sense?
Jason Jacobs: It does, but one point of clarification, though. You mentioned initially that through these PPAs, these big companies are purchasing the energy from these projects before the project gets developed or, or committing to, but then you mention that the energy from these projects, once they're developed, gets sold wholesale, and then money gets sent to the person, to the company that committed to procure the energy in the first place. So what doesn't the energy from the project go to the company that committed to purchase it?
Bryce Smith: Well, again, if we think about this pool analogy, dumping a lot of water into the pool at one end and kind of sipping off water with a straw at the other end, you don't know which molecules you're getting. Microsoft doesn't know which electrons its getting when it consumes power to run one of its data centers. No one knows exactly where the electrons came from. You don't know which electrons are coming into your house, and it, it doesn't matter which electrons. What-
Jason Jacobs: Well, when you use the grid, right? But increasingly, companies are, are peeling off, and they're building micro grids, for example. And in that case, do you have more control?
Bryce Smith: Well, I mean, they're not doing that in any kind of scale. All of these companies really heavily on the grid and the incredible flexibility that it provides. It's an incredibly complicated machine that we've built, and it's incredibly valuable. And certainly, micro grids are interesting and will hold a lot of promise, but the grid is the tool right now that allows companies to buy massive amounts of renewable energy.
Jason Jacobs: So what is the clean energy future that you are betting on and advocating for?
Bryce Smith: It's funny. Back when I started thinking about this stuff in the late '90s and in the early 2000s, there was this adage in the sustainability world that you would sometimes hear, and it, it was business, is the only institution that's powerful enough to make real change. I don't fully buy that. I certainly think there's something to it, but back then, it was, it was really just a slogan. It is really impressive, and I, I think exciting to look at how far we've come. Going from that adage to today when companies are buying nearly half of all the new renewable energy generated or coming online last year was through a corporate PPA.
Jason Jacobs: Where's the other half coming from or getting purchased by?
Bryce Smith: Mandates, uh, renewable portfolio standards, state governments requiring utilities to hit a certain renewable energy target.
Jason Jacobs: And those are required, because otherwise if they just went by what was most cost effective, they would be putting their dollars in other energy sources?
Bryce Smith: Yeah. I mean, in- increasingly, renewables are cost effective, and often, they are the most economic resource. I mean, that's been a massive change. I remember installing solar projects for $14 dollars a watt, and now we're below a dollar a watt installed. So the economics get better every day. Economics wouldn't have gotten nearly as good nearly as quickly without those mandates. You know, I, I think the renewable energy industry is a fantastic example of policy and technology and R and D working really well in harmony, where mandates got volume to the point that manufacturers got really good at producing that scale, and that drove cost down in this really nice cycle.
A couple obvious things have happened over the last decade or more. You know, one is costs have come down astronomically, and two, companies have really, genuinely put their mouths where their, put their money where their mouths are and have made serious commitments to massive amounts of renewable energy in a way that actually moves the market. That was a bit of a fantasy 15 years ago, but it actually happened.
Jason Jacobs: And what's driving that?
Bryce Smith: I think there is significant pressure from stakeholders on these companies to do the right things.
Jason Jacobs: Stakeholders being, like, CalPERS and BlackRock and employees and customers?
Bryce Smith: That's right. I think stakeholders in a broad sense from employees, or if you look at some of the things that have been happening at Amazon, you've seen employees all over the high-tech sector saying, "We really want our companies to be buying renewables," and companies have responded to that really positively.
Yes, shareholders and investors and employees and the non-profit advocacy world has certainly put pressure on corporates to move this direction, but it's also the executives themselves most of the time that think this is the right thing to do. They want to be in business 20 years from now. They know that without a healthy climate, the business is gonna be really hard to do. So I think they have really woken up to the urgent nature of climate change and are doing really innovative things to combat it.
And that's the other thing here, that this is an unnatural act for a company to perform. It is not natural for a company to buy electricity for 15 years. They typically don't buy anything for 15 years. It is unnatural for them to buy electricity, to participate in these wholesale markets and not simply buy from their ele- their utility, their electricity provider. But they have gone above and beyond being creative to buy a product they wanted when their electricity provider would not offer it to them. And now they have put so much, they've made so progress here that, you know, those traditional utilities and retail energy providers are now moving quite rapidly to offer really interesting products that those companies actually want.
So companies have been, I think, quite successful in getting those retail energy providers to wake up to this new world and offer them the product that they really want. So in five years, I think the products that'll be offered to the market will be different, more customer friendly. The stuff changes pretty rapidly.
Jason Jacobs: So I'll make a statement. I'd love to know if you agree or disagree. 100 percent, renewables is the future that we need, and anything that gets in the way of fulfilling that is a distraction.
Bryce Smith: I think 100 percent certainly should be the target. And how close we get, I don't know. If you look at the cost curve for wind started to drop first. And then if you look at the cost curve for solar, looks kinda like the cost curve for wind. It just, just happened a, a few years later. Look at the cost curve for storage. Kind of looks the same, and I predict that we're gonna, we're gonna see that for storage, and we're also gonna see that for carbon.
Carbon capture, those newer technologies, storage for instance, will certainly help us get closer and closer to 100 percent renewable. Do we get 82 percent or 91 percent or 100, I don't know. Not sure it exactly matters. I think the intention put our nose to the grindstone and trying to get there is probably what really matters.
Jason Jacobs: So where are we today, and what are the biggest barriers inhibiting us from getting to where we need to go?
Bryce Smith: Oh, boy. That's a really good one. I mean, we have political barriers, and we have technical barriers and some economic barriers. So technically, at some point, we will require more significant storage on the grid in order for the, for the grid to accept additional renewables, right, in order-
Jason Jacobs: If we double click on that, do you mean lithium ion? Do you mean, you know, long duration seasonal storage? Do you mean some mix? Does it not matter?
Bryce Smith: Yeah, I, I mean I surmise that it's a mix of four hour, kind of, shorter duration stuff where we're shifting renewable generation to there hours of the day. Two longer duration and seasonal type of storage, there's a lot of fascinating work being done in that long duration, on that long duration problem.
I am generally very optimistic when it comes to our technical capabilities. When we direct money at a problem and expertise at a problem, we're pretty darn good at figuring out interesting and, and viable solutions. I think we will see really fascinating storage solutions emerge in the next five years, and I'm nearly positive that that will happen a lot faster than most people recognize. And that will allow us to get much closer to 100 percent renewable over time.
Jason Jacobs: So that's one element that it sounds like you think we need a storage. What else?
Bryce Smith: Energy is on-... This is a multi-faceted problem, right, and fossil fuel generation is a significant component of that problem. But it's more than that, right? It's transportation, you know, it's, it's methane emissions. I feel confident that we're on a really solid track on the renewable front, but that alone is insufficient to get us to where we need to be. From a carbon perspective, I think that carbon capture will have to play a very important role in our future, and not in a way that distracts us from getting towards 100 percent renewable, or that they, we have to do them in tandem. But I think carbon capture has to be a part of that, and-
Jason Jacobs: And if you double click on that, are you talking about at point of emission? Are you talking about direct air capture?
Bryce Smith: Direct air capture is, I think, the piece. And mind you, I'm no expert on direct air capture. So I'll get too far out o- over my skis here pretty quickly, but my understanding is that direct air capture is gonna have to b be a vital part of what we do.
Jason Jacobs: But you're as bullish on us cracking that code economically as you are on us cracking that code with storage economically?
Bryce Smith: I am, because if, you know, no one thought... Well, I'm sure somebody did. But few people thought that wind was going to be as competitive as it became, as quickly. And few people thought that solar was going to be competitive. I remember very clearly when I was back in business school, wireless was the rage. All my classmates was wireless this and wireless that. And I was headed into renewables, and everybody thought that was cute. It was like a toy. It was not a serious industry to them or to most people.
The cost reductions in solar have been so dramatic, and the, the technology advancements and the manufacturing advancements have been so dramatic. I think we can do almost anything when we put our mind to it, when we make it a priority. Obviously, we need basic R and D. We need universities to be working on the stuff. We need, you know, venture capital to be directed, but I think when we put our mind to it, I'm very optimistic that we can figure out the technical solutions. It's the political will is vital to make that happen.
Jason Jacobs: Where do the government fit into all of this?
Bryce Smith: As I was mentioning before, I think renewables are a really excellent example of this nexus between public policy and, and technology development. The renewable portfolio standards that 29 states and D.C. have adopted, and lot of countries, governments in, in Europe have, had implemented standards prior to that. They were so vital in driving up demand for renewables and allowing technology companies to manufacture at scale to really start to drive down that cost curve. That synergy between government policy and the underlying economics is, you know, so interesting, and it's, it's just so complimentary. And I think that has, that has actually been done quite well government policy matters a lot.
Jason Jacobs: And where does a price on carbon fit into all of those? Do you think that we need one?
Bryce Smith: I do. I think that is probably the most efficient way to drive innovation. That's probably the most efficient way to send a price signal, and we know the price signals work really well. They work really well for customers. They work really, really well for, to drive R and D and to drive innovation. I hope we develop the political will to implement that carbon tax. And I think it's a matter of when, not if. But we shall see.
Jason Jacobs: And bringing this back around to a LevelTen Energy context, maybe if you can, talk about a bit about your traction to date and your long vision and, and what's coming next.
Bryce Smith: I think we are at, we're really on the, on the vanguard of some interesting changes in the industry. I th- I believe that renewables will, will become the heart of the power industry, not a fringe player. I think, you know, 100 percent renewable will be, will be the standard for most Fortune 1,000 companies, most universities, mast large procurement entities. I think those renewable contracts will evolve in really significant ways so they're less risky for the buyers. They may have insurance products attached to them. I think storage is gonna develop, as we said. The electrification of everything as a trend I think will continue.
So y- you have all these moving parts all pointing to, to this future where this, the generation and, and the sale and purchase of power will be different than it is today, and there will need to be a market place that facilitates those transactions and all the ancillary transactions and services that go into that renewable procurement. There will need to be a marketplace that facilitates those transactions efficiently. And that is where we're headed. We're striving to be the entity that sits in the middle of all of those transactions and makes them easier for all of the different participants.
Jason Jacobs: Uh-huh [affirmative]. And are there any companies that are vying for, uh, that similar position?
Bryce Smith: I don't know. None that we know of that kind of directly have that vision. We have all kinds of different partners and different types of competition, and sometimes our competitors and sometimes their collaborators, we like to think five or seven years out into the future. I, you know, I think Jeff Bezos kind of famously, I'm sure I'll, I'll misquote him here, but kind of, I'll paraphrase said, "You know, look. W- we like to think seven years out, because nobody else is really thinking that seven years out." We like to emulate that mindset and really skate to where the puck is going. We find that to be the most fruitful way to think about strategy. And the exciting part is we discovered that we can not only skate to where the puck is going, but have a real influence on, on where the puck is going, right? We can actually move the market where we think it should go, and that's probably the most rewarding thing about having a company is you can actually help shape the future, which is really e- kind of...
For a lot of entrepreneurs, I think it's surprising that, you know, you were five people and, you know, now you're 40, but, you know, you're not 50,000. You can have as much or more of an influence on the direction of the market than a 40,000 person company.
Jason Jacobs: If there is kind of an alpha when you look at the supply and demand side of, of the market place that you're building, where are you guys heavier today?
Bryce Smith: Heavier in terms of?
Jason Jacobs: In terms of I guess inventory. Is there more demand than this, and supply can't keep up, or is there more supply and it's about convincing more companies to get on board and buy this stuff?
Bryce Smith: Yeah. It, it's really interesting how things ebb and flow in the industry. For a while, there was more good supply than demand. And we have now recently seen a shift where there is more good demand than supply. And it, it, you know, it takes a while for supply to catch up with demand in this market. It takes a couple years to develop projects. So companies have... Yeah, and this something that's really developed in the last one to two quarters, let's say. Companies have traditionally thought we have plenty of time. We have lots of good choices, and now they are finding it harder and harder to find great projects because all of their peers are trying to do the same thing, which, I mean, that's a tremendously good thing for the industry in that more companies are getting on board, more companies have renewable energy targets, and, you know, it's 2020 now. When, when you came up with your sustainability in 2017, 2022 seemed like a long time away, but it's right around the corner.
so we're seeing lots of companies kind of coming to market quickly and, and needing to procure. Uh, that's a great demand signal for developers to start developing new and better projects. And, and I think we're gonna see renewable procurement explode in the next couple years.
Jason Jacobs: So if you could change one thing to unlock more high quality projects existing, what would that be?
Bryce Smith: You know, we, we are almost 50 countries in some ways. We have numerous... You know, we have a couple different electricity grades. We've got a bunch of different electricity markets, ISOs, independent system operators, and then we have 50 states. As a developer, it can be hard to navigate the requirements of those different markets and those different states and counties. So I think the permitting aspect of this, the permitting and, and interconnection aspect of this presently is, is one of the most pressing and challenging issues. We see a fair bit of, of nimbyism, a fair bit of mis-education about what these projects actually mean, you know, and no, your solar project isn't gonna take up all of the sun in this town, and no, the solar panels don't cause cancer.
There's some kind of odd nimbyism stuff that, that has popped up that has made permitting challenging around the country. So hopefully we can work through that. Demand signal is really strong, and developers are a very creative bunch, and sure they will figure out how to overcome those obstacles.
Jason Jacobs: Would you guys ever develop your own projects in the future?
Bryce Smith: If you look at market places, successful ones, often, they're bringing people together. They're bringing groups together, not necessarily reinventing every single wheel. So I don't, I think that LevelTen is an agnostic impartial intermediary as a technology platform is, is the best role for us to play. We try to treat power buyers and project developers as customers and get both sides the best information that we can. So I think we would never want to become a developer ourselves and interfere with that process. We want to allow developers to go out and create the best assets that they can.
Jason Jacobs: It sounds like, and correct me if I'm wrong, that the developer market is quite fragmented today. One, is that true? And two, if it is, do you think that is by necessity given the landscape that you were just describing, or do you think there's an opportunity to go through some time of consolidation and have some big unified players emerge, if they don't exist already?
Bryce Smith: Yeah. It's a really interesting market. You have, uh, very big, well-known, mature development shops than you have a lot of small, independent companies that are just a few people, and they may be developing one or two projects. Or, you know, sometimes it's even a land owner that is trying to develop a project on their property. So it's super fragmented. There are hundreds of developers, and that's an ecosystem that's evolving as well. The larger developers have capital and expertise. They need feed stock, and they're green field developing some of their own, uh, projects, but they also are buying up the partially developed projects from the small mom and pop type development shops. That's another really interesting area where information sharing between those groups has been really difficult, and we are facilitating that information sharing, as well.
Jason Jacobs: Which groups again?
Bryce Smith: Smaller developers, less well-capitalized, you know, maybe a couple of people, maybe the developing one or two or three projects.
Jason Jacobs: And who?
Bryce Smith: And the much larger, very sophisticated well-capitalized project developers. You know, sPower, Enel, NextEra, these massive entities.
Jason Jacobs: And that collaboration is required when it comes to certain projects, they need to work together?
Bryce Smith: I think in order to improve this market, to bring more projects to fruition more quickly, we will need better collaboration between those smaller developers and those bigger developers. They're some small developers that are great at doing early stage development work, but honestly, they're never going to get a project all the way through financing. There are great, well-capitalized, big developers. Their time is probably not best spent tromping around in the field with a land owner.
So there are certainly some competitive intentions there, but a lot of area for collaboration between early stage developers and, and later stage developers.
Jason Jacobs: That makes sense. So it, it's like the industry needs more connective tissue, and by you not just connecting, I mean, a transaction away, but kind of building bridges between and facilitating transparency and knowledge sharing, collaboration, et cetera, it leads to more transactions, which is good for you and good for the industry.
Bryce Smith: Yeah. Th- that's exactly right. And I think the thing that was the most surprising to me as a developer... So I started a project development shop, Company called OneEnergy, still here in Seattle, in 2009, and we were really shocked by the lack of quality information in this space. We were shocked by the lack of software. And energy is such an old school industry. And, you know, we were sitting here in Seattle kind of surrounded by technology, and it became clear to us as a developer back then that, okay, we need much better information technology to help inform our siting decisions, help us understand what the economics of this project is likely to be. Then I had this realization that the entire industry needs much better technology to share information and, and be more efficient. There just wasn't really an- any of that. And getting project developers good information, getting power buyers good information, helping them meet each other more effectively, it's all about transparency, right? It's about using information technology to bring transparency.
There is no good market place that functions without transparency, right? The more everybody knows, the more they are willing to contract with each other. The more everybody knows, the better they're gonna be at their jobs. So a- as to the platform as a market place, our main job is to disseminate correct information as freely and as quickly as possible to all parties. That makes more transactions happen.
Jason Jacobs: Got it. So couple final questions. One, and these are ones that I ask every guest. One is just if you had a $100 billion dollars, and you could allocate it towards anything to accelerate the clean energy transition that we've been discussing today, where would you put that money, and how would you allocate it?
Bryce Smith: Man, hardball. As we were saying before, this is a multi-faceted problem with multi-faceted solutions. I think all of these pieces are important. Demand side management, renewable procurement, storage carbon capture. I would deploy it to long duration storage and carbon capture if it were me.
Jason Jacobs: And when you say deploy it towards long duration storage and carbon capture, are you talking about through government R and D, through investment in startups, through making changes on the policy side, or I guess if I could double click on that, how would you bring that about?
Bryce Smith: I think every technology, there's this technology lifecycle, and starts on the bench, and kind of moves through the R and D process. And at some point, you need to get to the demonstration, the demonstration project. And, you know, kind of not bench-level demonstration, but at-scale demonstration. I think that's where the carbon capture industry is at the moment. The technology is ready for at-scale demonstration. In order to one, demonstrate its effectiveness, but two, learn from the construction of those projects to make, create a better project the next time, and, and drive the cost down, and drive the manufacturing cost down.
So, you know, Microsoft announced just a couple of months ago that not only are they going to be 100 percent renewable, but they're going to go back in time and pull out everything that they have gener- all the emissions that they have, that they have created over the past 40 years or so. I think that's fascinating, and I think that is 100 percent where this industry will go.
Jason Jacobs: I'm dying to get Lucas on the show by the way, the chief environmental officer at Microsoft. That would be a great one, 'cause I love what they're doing.
Bryce Smith: Yeah. Super bold and really interesting. I don't think they would have probably committed to that if, unless they felt quite confident that was achievable. I think the new new thing in the corporate sustainability world, you know, a- after 100 percent renewable will be going back and pulling everything out of the atmosphere that you dumped into it. And that starts with at-scale carbon capture demonstration projects. And I'm pretty confident we'll see those emerge over the next couple years.
Jason Jacobs: And what about on the storage side?
Bryce Smith: Storage has, we will have some, we will have some very cool storage announcements here hopefully in the next couple of weeks with a high profile customer. But the cool thing about-
Jason Jacobs: Which, by the way, will be, um, before this is published in case you want to talk about it here.
Bryce Smith: I would love to talk about it here. Unfortunately, it is not in my privy to publicly talk about it yet. The, uh, we have a great corporate partner who just executed a really, really interesting storage and renewable contract. And we are hoping they r- they release that information soon, and knock on wood that they do. The, the covid crisis kind of set their PR team aback a bit as you might imagine.
The great thing about short, you know, let's say four hour storage, is that it is very complimentary to a power purchase agreement. If you think about... So we talked about the PPA as a fixed for floating swap, where the company delivers a fixed guaranteed revenue stream to the project, the project sells its power, earns whatever revenue it gets in the market, and sends that floating amount, that variable amount back to the company. That is technically a hedge.
The cool thing about storage contracts is that you can, they're also, they can be constructed as fixed for floating swaps as well, but every time the storage project is performing well economically, so let's say a wholesale market prices drop, you're able to store more cheaply, and then, you know, you can sell back later when power's more expensive. Every time your storage project looks good, your PPA looks bad, and every time your PPA looks good, your storage project looks bad. So the storage contracts are essentially a hedge on a hedge, and they're very complimentary, and they can reduce the volatility of your green power purchase.
We are seeing a lot of this storage procurement activity from utilities, from community choice aggregators in California. California's a particularly hot storage market. We are seeing utilities choose storage over new peaking plant, new peaking generation. I think that's a trend that will continue, overtime will spill out from California to other markets, too.
Jason Jacobs: So where would you put the money to help facilitate that?
Bryce Smith: I think the train has left the station on, you know, on, on the shorter duration stuff, on the four hour stuff. I would put money into the seasonal and longer duration storage, which is probably inherently a different chemistry than the shorter duration stuff. That's a really interesting nut to crack.
Jason Jacobs: Last question. So a bunch of MCJ listeners, they tend to be people who, and there's a very wide range to be clear, but I'll just give you some hypotheticals that maybe you could address. It's like people who they've had a career, they had some success, they wanna make the next chapter about purpose, they care a lot and are very concerned about climate change. I mean, they ask what they can do and how they can help. People say, "Vote," or, "Fly less," or, "Use paper straws," or, and it's not, you know, that one shouldn't do these things, but, like, they're ambitious. They wanna seek, sink their teeth in and do something more meaningful, but they haven't spent their whole career bringing renewables projects to bear or things like that. They're coming from somewhere else. So I guess speaking of them, what advice do you have as they're trying to navigate where to anchor and what to do?
Bryce Smith: That is a tough question, because honestly the politics matter tremendously. The composition of [inaudible 00:52:15] really matters, and the influence that politics has on the economics of renewables is real. To me at an individual level, there's not a lot that's more important than organizing and advocating. These really shouldn't be red blue issues. You know, it's funny. We generate most of this renewable power in red counties and most of it's consumed in blue counties, but it's very, it's very complimentary. And obviously there are partisan issues here, but I think there shouldn't be. I just don't know anything that's more important right now than the political dynamic. I mean, I would like to say everybody should go out and start a company, but what matters now more than anything is policy and policy support. We probably can't go another, another four years without, uh... We probably can't have another four years of trying to prop up coal and undermine renewables.
Jason Jacobs: I like how you did that. You said, "We can't have another four years of tr..." You started with T-R, and then you went to trying something. But I know what you really meant.
Bryce Smith: Yeah. You know what I really meant. I'm trying to be sensitive here. But truly, the politics matter a lot. It's not a technology issue. We have very smart people doing tremendous things. It's the political will. So I would say organizing is the most important thing that people can do.
Jason Jacobs: Awesome. Well, we covered so much ground, Bryce. I learned a ton. Thanks for being so patient with a newbie like me, and thanks for everything you do. You do great work, and I wish you every success.
Bryce Smith: Thank you, Jason. It was a pleasure. And for energy geeks like me, I could talk about this stuff all day. So it was a pleasure.
Jason Jacobs: Hey everyone. Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey, you can visit us at myclimatejourney.co. Note, that is dot C-O, not dot com. Someday, we'll get the dot com, but right now, dot C-O. You can also find me on Twitter at JJacobs22 where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear. And, before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes. The lawyers made me say that. Thank you.
