Summary In this final installment of the 3-part series, Ben, Jack, and Charles wrap up their exploration of virtual power plants (VPPs) with a deep dive into development strategies. They bring their coffee shop-focused VPP concept to life, tackling questions like: How do you stack revenue streams? How do policy incentives like the IRA shape the economics? And how do you overcome the challenges of site control, permitting, and community buy-in? Turns out, the answer sometimes lies within a bite of mincemeat. Episode chapters: * (1:07): Intro to guests * (3:55): VPP hackathon catchup * (5:12): Policy influences on project feasibility * (16:38): De-risking projects * (23:49): People are key * (30:23): Project finance * (41:25): Making money on projects * (59:10): Resources to go deeper Help us out! * Subscribe, share and rate the show wherever you’re finding this podcast! * Apple podcasts * Spotify * Give us feedback: We’d love to hear from you via email, inDERmediate@gmail.com * Follow us on social media * inDERmediate on Twitter / X * James Gordey * Ben Hillborn * Wyatt Makedonski * Charles Jurczynski Music Our incredible intro/outro music is the song Ticking, by artist TINYou can stream the whole song and the rest of their catalog here: Episode transcript Well welcome back everybody to this next episode of the intermediate podcast. today we're talking about project development and all the, all the ins and outs of it. we're going to do our best to frame this as a bit of a follow on to our, coffee shop that we, that we talked about in the, in the previous two episodes. but if we stream, of course, we'll still try to make it, fun and entertaining. And, today we have with us, my co-host, Charles Shensky and our guest, Jack Kirby Miller. Jack, I have to say, do you want to say a quick hello? Hi, everybody. yeah. Excited to be on. And, I get to spend a lot of time with Ben and excited to spend some time with Charles as well. Yeah, likewise. Thanks, for coordinating. It's been good to be here with you and and with Jack. And I'll just, like, super brief background. I think a lot of people know generate, as an investor, operator and owner, distributed generation assets, we do so much more than that. And, a big part of my day to day role is in what we refer to as delivery, encompassing development and construction of assets. so any portfolio that generate buys from a developer, where there's still leftover construction or development work to do comes through our team. So hopefully I have a little bit of experience in that space that I can I can speak to. Amazing. And, Jack, you've got, you've got a good amount of background in the space as well. Do you want to give a quick primer on yourself? Yeah. So I spent my early career working in the built environment, developing energy efficiency projects. decided that looking at first cost and the decisions that are made around it, we need a better financial tools and, spend some time in finance, all in, early stage clean technologies and, managed, spend some time, at Swell Energy, the distributed energy storage developer, which, you know, operating across the US, and their structured finance team. And that's really sort of informed my opinion on, what it takes to get lots of little assets out there, really quickly. And I think hopefully I can bring a bit of a different perspective if you're thinking about development from, you know, the the extremely distributed versus, you know, 1 to 5, ten, 20 megawatt scale. so, yeah, I work, Ben and I work together at Pearl Street, and, I wish I had been at your VP. VP coffee shop because, I work a lot with our, VP programs. so. Yeah, happy to happy to be here and excited to dig in. Amazing, amazing. Well, a quick recap. So in our, in our VP episodes, we, we kind of dove into, finding a niche in the, in building a BPP. And we came up with the idea of a, a virtual power plant, specifically designing a program for coffee shops. And the, the outcome of that was that we wanted to deploy solar and batteries to coffee shops, around, around certain metros in the US that aligned with, you know, a high solar generation potential, you know, high density of coffee shops and, and, you know, friendly, friendly environments for, for actually deploying VPCs. And so now that now that our motley crew has decided that this is our niche, this is where we're going to go now, we have to figure out how are we actually going to build this thing, where's where's the money going to come from? How do we structure projects? and how do we go from this idea of a virtual power plant to a physical operating virtual power plant? and we we do talk a lot about policy, here on intermediate. And that's possibly one of the, probably a good place to start. And I'm wondering if either of you guys want to, want to talk about a little bit about what you've seen around policy that influences the feasibility of, of putting together a project like a, like distributed assets in a BPP. I'd like to give people a framework first for when we talk about development and demystifying. I think sometimes this is even lost in project finance, community and people who are quite adjacent. Really, development is everything that comes before you start construction, and that's a lot. There's a lot, a lot of paperwork that you have to do, and you're really dealing with people and you're dealing with communities and neighborhoods. And so where we start is land. You want to get site control. You want to know where are you going to put your project. And we have the right to to rent that land out or own it. You want your permitting to make sure that you are allowed to put it there. According to the local zoning and bylaws and things, and there's a lot of work that goes into that. And then you want your interconnections. So you want to know that if you're building a power project or if you have a connection to the grid that you're able to to give electricity or take electricity back, assuming it's a power project. The fourth one, and this is where I just wanted to jump into this, into what Ben was talking about is your revenue. And this is going to be really key when you want to go get financing someone to give you millions and millions of dollars for your coffee, VP, coffee shop, PPV, revenue is going to be different for every project. It could be a PPA, which is perhaps the simplest approach. I'm. I'm looking at you. this could, but it could be multiple different layers. Right. And one of the big layers in this, particularly if you're using newer technologies that can sometimes be a bit more expensive, for example, batteries or EV chargers, if you're incorporating them into your VPP. There is so much incentive money to defray the upfront costs of the equipment, and that is a big part of what makes the economics of this project pencil. And it'll be different at different places. To bring this full circle back to Ben's point, is getting there, is that a lot of this is policy and regulatory driven? Well, policy driven, regulatory, not so much. it is the I.R.A., the Inflation Reduction Act of 2022. It is the IJA, the infrastructure, infrastructure investment and jobs Act of 2021. And together, these account for over $1.5 trillion into infrastructure in the US built environment. And probably more because a big chunk of these, these policies were to extend tax credits, which are a financing mechanism that form the basis of building these projects as well. And it's a real expansion that people say could go much further beyond the I think its budget is $369,000,000,000 billion. the industry expects it to generate a lot more than just 369 billion. And these are, our tax credits. So we can go into that later on. But there is a lot of policy that drives the revenue for, these projects. And I skipped over it a little bit, but on the local level, you've got municipal considerations. So there is policy at the state and local level that can drive where we might choose to site of VPI as well. I actually yeah, I would definitely put a lot of emphasis on that local level. development is almost always except for the of skills where I have worked. Right? Development is almost always a ground game. Right? for those like if you're building, VPI, you need to concentrate enough distributed assets in a concentrated geographic area to be able to provide meaningful load to utility that's working in a much higher level. And so paying attention to the friendliness of that local geography, the utility service area, that's really important. A lot of the work that we do right is identifying where you can, pull different. Right. You're obviously going to be using, you know. Yeah, there's there's some flavors to this as well. Right? A lot of VPNs, specifically are not owned assets. Right. So you have a contract with an asset that was already installed. So, to operate it and provide energy services to the grid. if you're looking at trying to bridge the gap to close the financing, where you can have a VPI that's owning its batteries is a, third party that provides services, you're going to need to be able to stack a number of those different revenue streams, right? Obviously, the, tax benefits, state level incentives and then hopefully incentives, or, revenue streams from the utility service service area you're inside of. so there's this idea of like, you know, multiple overlapping geographies that that are going to have an impact on what, what policy environment you're in. And I just want to tie this back as well to the, the coffee shop VP is that you'll think of maybe the coffee shop or the coffee shop owner. The person who owns the building is being your host, who you're renting land from. Effectively, you're putting all your equipment onto their site. but then they're also you're kind of like your base customer. You're trying to do something that gives them value. You're trying to lower the cost of, running air conditioning or
