Insider's Guide to Energy

68 - A new approach to wind power with Jereme Kent

April 24, 2022 Chris Sass Season 3 Episode 68
Insider's Guide to Energy
68 - A new approach to wind power with Jereme Kent
Show Notes Transcript Chapter Markers

In this week’s episode Chris is joined by Jereme Kent, the CEO of One Energy. One Energy builds and operates on-site wind turbines for industrial energy users. Chris and Jereme discuss the importance of wind energy in the global energy system and its potential as the largest source of renewable power in the United States. Listen in to find out more about how wind power can meet the world’s electricity needs and which challenges the wind resource development faces in the near to long-term. 

One Energy’s Homepage:  
https://oneenergy.com 

Broadcasting from the commodity capital of the world, Zurich, Switzerland, this is ‘Insiders Guide to Energy’. 

This edition to Insiders Guide to Energy is brought to you by Fidectus. Go to www.fidectus.com for more information.

 | Timestamp | Speaker | Transcript

 | 02:53.16 | chrissass | welcome to Insider's guide to energy I'm your host Chris sass and today we have a great show for you I'm here alone I'm solo my copod co-host is off on spring break with his kids but he'll be back soon. But no worries we're gonna have a fantastic show today I have Jeremy Kent, Jeremy welcome to the program.
| 03:43.45 | Jereme Kent | Thanks Chris.
| 03:49.40 | chrissass | I know who you are I always have the advantage because we've invited you to be on the show I've seen a little bit of background and doing the show prep but our guests have no idea who Jeremy Kent is in my guess. So maybe it makes sense to start out by telling us who you are.
| 04:00.27 | Jereme Kent | Yeah, happy to Chris so my name is Jeremy Kent I am the Ceo founder and chief fall guy for one energy enterprises. It's a company I started a little over twelve years ago you know prior to starting this company I spent the time in the construction side of the. Big wind industry. So I was building some of the largest wind projects in the world on the started out on the turbine erection side and ended up you know running entire sites and for the last twelve or thirteen years I've been building this company and trying to do my best to shake up the power grid a little bit.
| 04:32.85 | chrissass | So you started to career building wind and then you went out and said I need to start a win company big leap there. Um, maybe tell us what happened why? why go from construction to where you're at now.
| 04:46.70 | Jereme Kent | I mean like all good stories Chris it involves being drunk at a bar. Um, but I think you know I had helped build a couple construction companies on the windside who then after a year or 2 of me working really hard and being all in decided to do a strategic shift. And all of a sudden decided they didn't want to self-perform construction. So you know do that once shame on them get ready to do it twice and shame on me I guess and so the second time I happened to be sitting at a bar and the bartender said you know dework with the wind farm and my first response was what did my guys do because you know usually when the. Bartender asks me if I work with the wind project I'm in trouble somehow and his response was no I just wanted to know how do I get a wind turbine for the hotel and I said look buddy. Why do you care and he goes well I own the hotel and I said okay you know what? I'm just bored enough and I've had just enough drinks. I will commit to promising to get you an answer and I spent the next you know four or so weeks figuring out how he could get a wind turbine for the hotel. Ironically, the conclusion was he absolutely shouldn't because his price of power was way too low because of where he was located but I realized there may actually be an interesting business model there and so. Said you know what? maybe it's time to give it a shot and just start my own thing and so I actually started the company to try to go out and build small wind turbines for you know businesses and farms and things like that and over the last over the first year we kind of quickly realized that maybe that wasn't the right place to put all of our efforts. And pivoted to doing large wind turbines behind the meter for large factories. So that's how we ended up where we are and have have grown and taken on more sense.
| 06:26.81 | chrissass | Right? So so you said you went from small to large maybe Magnitude would help you know and we Kilowatts or where Mega Huts What are we talking about what what's what.
| 06:37.53 | Jereme Kent | Yep, so the the small turbine industry right? is is typically turbines from 5 to 50 kilowatts usually they're on like hundred foot towers I think we actually built 3 or 4 small turbines before we pivoted as a company. Um, but those were twenty Kilowatt turbines on hundred foot lattice towers when we talk about large turbines what we do now is all you know megawatt class utility scale turbines. So we've installed a whole bunch of one and a half megawatt machines and are gearing up to install some you know two and a half x type machines. So the scale is just different right? The large turbines are. You know, eighty meter hub height two hundred and sixty feet I always on tours say that it's a football field spinning on a 27 story building and that gives some perspective.
| 07:20.24 | chrissass | Right? So so you you build these large wind projects or windmills it doesn't sound like huge projects so these aren't fuel to windmills these are one z 2 wo's one off for a factory or a large commercial enterprise.
| 07:34.42 | Jereme Kent | Yeah, so everything that that we do is behind the meter. So it's directly powering a factory just like if you had a solar panel at your house or a small wind turbine at your house right? It's directly on your side of the meter and so by doing that. It's able to directly offset your load. But. You you know? That's the niche that we found is that you hear a whole lot about behind the meter solar and you don't hear a whole lot about behind the meter wind because there's a whole lot of you know hurdles. You have to get through to get there and then we had to entirely change the way you build a turbine to build 1 or 2 at a time. It's you know. There was a running joke when I was running very large projects that the first twenty turbines didn't matter right? You know you'd you'd spend all kinds of money getting set up that you get your reports back on the first twenty turbines you'd lost a ton of money but over the next 150 or 200 you made all of that up and made all of your money when you have a job that only has three turbines. You can't lose money on the first twenty. So we we had to rethink how you do construction.
| 08:30.70 | chrissass | So do you own these turbines or are you leasing them or do folks own them. So if I buy 3 of these how how do I I mean if I have 150 I can stock and spare and have people the new maintenance and stuff I got 3 of them probably different magnitude of support and service.
| 08:45.75 | Jereme Kent | Yeah, that's exactly it. So nobody really wants to take care of those 3 for you but us I would say that the the big difference is that you know we we let? Yeah, that's exactly it. So so we let customers.
| 08:53.87 | chrissass | Um, so we're in the bar again.
| 09:01.91 | Jereme Kent | You know have the choice if they want to cut us a Check. We're happy to build it and they can own it. We'll still operate it in most cases, you know in all of our recent projects we own and operate the turbines because if you're a large industrial and your business is making dishwashers. You don't particularly want to own and operate a wind turbiner have that risk or even try to quantify that Risk. It's far easier to pass all that risk off to someone like us.
| 09:20.98 | chrissass | So for an industrial player just I Just don't Know. Um, let's say you do a comparison wind or solar So You've got some real estate to do either. Perhaps you're in a location that has wind. Um, how do the economics compare and then how does the predictability of performance. So people always say Renewables are great except it gets dark at night and the wind stops Flowing. So How do they stack up.
| 09:44.12 | Jereme Kent | So I guess it's worth taking a step back and remembering that the solar industry started small the unit of a solar farm is still a panel and so it was the same panels meant to be on your roof that they do more of to get to a larger project. So at the small scale solar has always geared to be cost effective. And as it ramps up. It doesn't necessarily get too much more cost. Effective wind was always big right? or the you know the modern industry was always big and so trying to get small. You know when you look at smaller turbines doesn't work out very well. So if you're talking about that hundred Kilowatt class that Twenty Kilowatt class do solar every single time. Now when you start talking about utility scale size turbines the bigger ones the economics of that get more interesting. The economies of scale kick in and so what we always say is that if wind works wind is usually the cheapest wind doesn't always work right? If you're next to an airport if you don't have a good wind resource if you don't have land right. Can't do wind. But if you have a spot that has a decent wind resource. Usually the economics of wind are significantly better. You know the real key is that almost all behind the meter projects in the country and around the world are still grid connected so you don't have to deal with the stability for that customer because you're still able to pull power from the grid. So. A solar project at night they're sucking power off the grid on a wind project when there's no wind in the middle of July they're able to take power off of the grid but at the same time you know you you can get pretty predictable and you know what that looks like and so on a monthly basis wind is pretty predictable on an annual basis wind is very predictable. And on a day ahead. Basis. You know wind is you know baseload grade predictability. It's it's all of the what's it going to be next Tuesday that makes it a whole lot more challenging when you try to plan a power system does it answer your question Chris.
| 11:31.27 | chrissass | So it does so it asks I envision some sort of software that that now has weather forecasts and and pricing models from um from the markets and things like that so that you can kind of plan for this is that integrated this or how does that work. So. So I know that next Tuesday's not going to be windy for example and I've got a little bit of head headwind I know ahead of time right? Um, is that something you guys help the customer manage then is is to try to get the best price are they just getting whatever the the market prices from the local provider are they is there other strategies there.
| 12:03.80 | Jereme Kent | Yeah, so on the utility scale side when you're bidding into the market. You're absolutely taking a look at that day ahead Two day ahead seven day ahead when you're behind the meter The nice part is that the math is really simple whenever the wind turbine makes power. That's usually the cheapest power you can get take it every other time. Take what you can get on the grid. Um, now what you will see though on on behind the meter projects is okay wind. For example, tends to produce less than the summer and so maybe you have a summer hedge where you're buying a larger block of power from other energy providers in the summer and in winter where wind is performing very well. You're just kind of taking the market when there's a little bit of you know shortfall. And so we don't have to in behindthemeter projects get into all the forward marketing type stuff that you do when you're a you know a traditional megaproject. It makes it simpler for the customer. It makes it simpler for us. Um, you know there's a question about how sustainable that is is you see more of this show up and every customer is doing what's just best for them. But that that becomes the real question for you know the power grid of the future so to speak.
| 13:01.90 | chrissass | Hide so that that would be something I get to so I'm still trying to figure out so you put these in. Um I I believe I'm speaking to you in Ohio right now. So you've got a midwest basically footprint of these so far is that where the company is mostly.
| 13:18.66 | Jereme Kent | Yep, so we're we're headquartered in Finley Ohio most of our all of our operating projects are Ohio we're also building 1 in North Dakota and working on some projects you know in between the Illinois Indiana type areas.
| 13:27.77 | chrissass | And then are you using off the shelf then all the parts is this all Kots type stuff you're basically your role is build manage and design these projects and and taking what's available.
| 13:41.54 | Jereme Kent | Yep, you got it. So It's doing the all the upfront work to figure out where it goes to the engineering the wind resource the procurement to buy the turbines you know, buy the best equipment off the shelf and then install it operate it finance it and deal with all the legal permitting stuff that goes along with that. So. Essentially everything that a a factory plant Manager doesn't want to do other than take the power. We do.
| 14:03.59 | chrissass | And then what kind of community support or against I know here in Switzerland windmills are not particularly popular I think I've heard former president speak about windmills as one of his pet projects that he doesn't care for. Um, what's the. General population. So folks in Ohio. How how do they feel about seeing these windmills around I mean I guess people do like renewable power but do they want it in their backyard.
| 14:26.69 | Jereme Kent | You know that's an interesting question Chris I think the the weird irony of our projects is that they also really don't want factories in their backyard but they really want the factories there for jobs and so what we've seen kind of organically happen is that in most communities. The factories are in an industrial district. Industrial districts kind of off on the side of the city. It's out of the way and not a lot of people live around the industrial district. So our projects tend to be different. Ironically they're both closer to the actual city itself than most big wind farms that you see but they're also in the area that the city kind of goes. Yeah that's the industrial district. Let it happen. So. Ah, project is seen very different by the community when we you know have a company that has 3000 employees in that community who's saying we're going to be here for 20 years and we're doing that with these wind turbines that's great that tends to get a lot of support. Um. As opposed to a you know big wind farm that's going to sell power into the grid that has a bunch of leases. It's not tied to anybody anybody really knows and so we do absolutely get some of the the nimby -ism so to speak but we get far less of it than you'd think and usually we have the the support of the working class and and the. The leadership class in that community to say we want this company here and if this gives that company. You know a global edge. Great. That seems a whole lot better than losing that factory. Um, you know I personally bought the house next to our office next to ten wind turbines and I joked that it's ah in ah in my online dating profile so wind turbines have to be cool right. Um, you know, looking like I'm right outside of the backyard. But um, ah you know I I have been cancer free so far it seems like it ah hasn't been an issue but but.
| 15:59.20 | chrissass | So you're not thinking they cause cancer and live next door to them then.
| 16:07.90 | chrissass | Ah sorry I couldn't help it. It's just too easy.
| 16:12.23 | Jereme Kent | Haven't slept well in six years but I has a lot more to do with entrepreneurship than the turbines.
| 16:14.85 | chrissass | Ah, yeah, so all right? So you got you got these large companies are they using the grid like you described is backup are some of them also investing in storage as well up.
| 16:24.73 | Jereme Kent | So at the scale we're talking about right? These are factories that have a baseload of 4 to 10 megawatts right? The size of battery you need or storage you need is huge. You know to get a day's worth of power could be two hundred and forty Megawatt hours of storage. So it's hard to get that scale about. Once a year. We take a deep dive and try to find a storage solution that pencils we we haven't found it yet at this scale. Um, you know I think there's different markets where the price is a whole lot higher that it maybe makes sense. You know California the cost of energy is 4 or 5 times what it is in Ohio so economics are different but in the you know Heartland type states where. Relatively low cost to power. We just can't make storage pencil.
| 17:06.56 | chrissass | So yeah, I'm just just curious right? I don't know your plan. That's um, asking So So but it sounded like you'd said that anyway that they were using the grid kind of is is the backup plan So when there's when they use wind and when not they they use um the Grid. What. I Guess what I then think of so these projects what kind of lifecycle you you talked about you know the the community development teams not wanting to lose someone So you, you've got a manufacturing facility or I think you know a large large American company names that we may know working in your community support large large part of the community. They don't want it to go. What kind of length the term are the they forecasting for these when when projects.
| 17:43.97 | Jereme Kent | So so far all all we've been able to get out to is 20 years right the the turbines are going to last longer than that I can now buy some turbines with a 20 year warranty on them but from a corporate point of view in many cases that 20 year contract is the longest contract that that company has ever signed. Um, so you know we we joke that we tend to always get to meet the ceo whether or not they want to meet us because they usually have to sign the contract just from corporate governance and approval cycles. So it becomes a long-term view for them. Some of us started to talk about twenty five and thirty years I think Ten years ago if I said thirty years everyone would would have looked at me like I was completely crazy. We now have customers who are saying we'll we'll take a look at 30 years and we'll see so I think there is a whole different wave happening of customers wanting to take long-term control.
| 18:34.38 | chrissass | Now a wind farm would be capital intensive right? So in in some of those you own. So your investors are doing that What what's the shortest kind of term that one of these makes sense that that the performer.
| 18:47.66 | Jereme Kent | Yeah, it's it's hard to make the economics pencil sub fifteen year just to actually be lower than the cost of of power today I mean so the real reality is that most customers you know will or most factories will not put up something that cost them more. So if you can achieve financial parity or some financial you know incentive. Then there's a bunch of great reasons to do it actually looking at spending more is a challenge so most of our customers need that 20 year term to get that cost where it needs to be.
| 19:18.29 | chrissass | Now but do they they realize that when the project kicks off right? So you're taking the risk on it with the twenty year contract but they they realize cheaper energy the moment. The project's up and running.
| 19:28.56 | Jereme Kent | Exactly so most of our customers to date get somewhere between a five and ten percent savings day one with no upfront cost you know and and then we just own and operate it and it's locked in flat for 20 years I have 1 customer Chris that wanted to make a point and so we worked with them and. We actually signed a 20 year contract where the price of power goes down every year so for 20 years you know it goes it's not a lot but there's a percentage decline every year for this customer just so that that customer could turn around and say that is bored or anybody else who gave him a hard time. You know. Look the price of power is guaranteed to go down every year for 20 years why wouldn't we take that deal and it was cheaper than we have today and you know there's no reason that others shouldn't be doing that too. Ah, you know it sure seems like we should be to get the price of power to go down with time. Everything else seems to go down with time but somehow that never seems to happen.
| 20:19.58 | chrissass | So so they've they've got the performant and what makes a good ideal customer for you. I mean you've you've talked about the scale. So that's part of it. What are what are the things that someone should call you if if if I meet these 5 requirements. These 3 things. What what makes a project. At least makes sense. So I think you talked about wind in the area and there there's some other I imagine there's some zoning and some other things of that that that waning but maybe you could tell me.
| 20:42.92 | Jereme Kent | So the ideal customer is at least three miles away from an airport right? because we have all kinds of issues being too close to the airport is a tall structure and these don't do well short they have land around them whether they own it or not they use at least five million Kilowatt hours a year. That's kind of just like the magic number where. It starts becoming effective to be big enough. Um and beyond that the rest you have to work through at a more technical level so that tends to be the screening criteria. We use too. Um, we found that works for about 30% of large industrial facilities. So there are 53000 large industrial facilities in the United States so there are facilities that have more than 100 employees and are likely the the large energy users. Um, and we've done some studies and basically shown that depending on the sub sector of that. Anywhere between 20 and 40% of those are remotely located far enough away from airports and have land around them.
| 21:38.56 | chrissass | And then your your business model right now so you started in the midwest you're you're you're going wider where is where where your ambitions to go are you regional player then are you north America player in the future with what's with your vision.
| 21:50.26 | Jereme Kent | See see now I wish I had my pinky in the brain coffee mug here with me so I could talk about World domination. Um, but I you know the long-term goal for us is to be everywhere right? is if if they're using energy someplace. We want to be there helping the C and I do it and so.
| 21:54.70 | chrissass | Are.
| 22:08.30 | Jereme Kent | We're going to be in the us for a while before we go expand to the rest of the world. But you know the same customers we work with in the Us are some of the largest energy users in other countries around the world and they'd love for us to be there too.
| 22:19.27 | chrissass | And when you say for us to be there that that's a partnership then that you envision working with them. So do you go back then and every time you do one of these projects then you have an investment round type of thing that goes or do you have a pool that you go through how how does that work.
| 22:32.91 | Jereme Kent | Yeah, so the capital's interesting right? So we had to figure out how to do capital for smaller projects because the capital that you want to get to the big energy capital the infrastructure capital doesn't like you know. $5000000 deals. They they want 50 to $500000000 deals. So we've taken a couple different approaches early on. We used some family office money that was more flexible and able to do that as we got into some bigger infrastructure type stuff and some debt stuff. We had a fleet where we could draw down on the fleet. Um. By far the most cost effective thing is to do the fleet on balance sheet and then put it out to the market and that way you just put an operating fleet out to the market and a whole bunch of the upfront risks go away. But we're constantly raising capital from different structures and we're we're seeing that price go down I mean the the first term sheet we got for a project you know. Ten years ago was an 11% cost of capital and we're now talking to guys about you know, five and a half and 6% costs of capital and that's just that's tremendous and what that translates to for this industry so you're seeing the capital markets figure this out and figure out distributed energy more and more.
| 23:41.74 | chrissass | So is there a saturation point or are we just can can you just keep doing this as fast as you could build these how many capable industrial sites are there and you know how quickly do we hit saturation between you and competitors or competing technologies.
| 23:57.29 | Jereme Kent | We have a long long long way to go to get anywhere near saturation right? You know you have retiring large power plants the average age of a power plant on the grid in the United States is still like 45 years old or something as even with as fast as they're shutting down the old ones and so there needs to be new investment. Um. If you think about what a power grid of the future might look like it'd be nice to have a lot of that investment be private and not be you know, big regulated utilities or ipp and so I think you're going to see a whole lot more of this distributed energy behind the meter type stuff with private investment. The other thing that that does is I mean you talked about nimbyism earlier. Think it's hard to build a wind turbine try building like an interstate transmission line and so I think I heard you guys talk about it on the show but building big transmission lines is very difficult if you can build distributed generation especially and you can take down like the 26% of load that large industrials represent. You free up a whole lot of additional capacity for the transmission system to work better for everybody else.
| 24:56.24 | chrissass | So so I get the fraying up and I get get that I guess are there recs or are people getting credits for doing is this part of making these models work is that how the price comes down or is it surely the cost of putting in the infrastructure that that brings the cost down.
| 25:10.30 | Jereme Kent | Um, you know the the the wreck market in Ohio isn't exactly the best rec market in the world. Um, but there is some value to Rex ironically the the green erex i' know if you're familiar with Greeny Rex but essentially the.
| 25:15.18 | chrissass | Um, yeah, so.
| 25:25.79 | Jereme Kent | Just you know open source can from a wood farm in Texas anywhere type rex the price of that's up 3 x from where it was two years ago um the price of state-s specificcific. Rex has not gone up nearly as much so there definitely is a corporate buying frenzy happening right now that's throwing those rec markets in some weird places. But.
| 25:27.71 | chrissass | Yeah, his.
| 25:45.34 | Jereme Kent | Um, in general they don't need to happen for the price to be economical. It helps.
| 25:48.90 | chrissass | Okay, so the it's It's not one of the indicators. It's not one of the criteria of like why someone would do it. They don't They don't need that to happen.
| 25:58.45 | Jereme Kent | That's correct. You know I'd say the the biggest driver is um, you know the federal tax credit that's been phasing out that now is supposed to come back. Um, you know the the interesting part is even for projects that don't need the tax credit. The worst thing possible to have hanging over your head is that it might be 30 % better if you wait just a little bit longer and so that causes a bunch of problems where you go look just make a decision give us a yes or a no but saying that you're working on a 30% extension is about the single worst thing you can do to.
| 26:29.94 | chrissass | Right? So so help me as a neophyte to wind. Um, what is managing let's say have 3 of these behind my plant or some open space I'm three miles from an airport I've met all the criteria. What needs to happen to have consistent good power.
| 26:30.60 | Jereme Kent | To a project anywhere.
| 26:46.20 | Jereme Kent | You really don't have to do much so as long as the grid's operating like it should because the wind turbines will shut down out. The grid has a problem for safety. They keep making power. You'll see that turbine spinning about 93% of the time. It's not making full power all that time and it'll just. Make power the the service schedule for these turbines has gotten much much better from where it used to be um, you know, scheduled maintenance is twice a year so you'll have technicians that come out twice a year and go ping bolts and make sure that you know all the torque specs are right and all the power cables are looked right? but the maintenance isn't anywhere near what it used to be. Um, and then you deal with unscheduled activities that happen or you know most of our events happen to be problems in the power grid right? We we see a flicker in the power grid and actually the way the law works we're required to think that's a bad thing and so we shut down and trip and then we get to notice that the wind turbines tripped we have to check the system and go okay. The power grids are restored to normal, go ahead and turn the turbines back on but you know all in all availability on these systems is ninety seven ninety eight percent so you know as long as it's blowing. They're spinning.
| 27:53.92 | chrissass | And what about Tornado Alley or you know that the the thought that the Midwest may have tornadoes from time to time. Do you? you put your wind turbines next to trailer parks I mean ah.
| 28:04.11 | Jereme Kent | Um, you know the it's all I get it. No so wind turbines actually do very well with high winds. So what most people don't realize is that.
| 28:06.44 | chrissass | Sorry, go help it again. Ah.
| 28:20.30 | Jereme Kent | The design cases they examine for wind turbines are are pretty out there. So the governing case for a lot of turbines is that the wind turbine was pointed the wrong direction then the power grid failed so it couldn't move or protect itself and then the ultimate high wind event came. And so it tries to twist the tower down because you aren't pointed directly into the wind and you have to design for that extreme wind speed in that case. So now if all of a sudden you're pointed directly into the wind. Your blades are where you want them to be everything's working like it should. You can take a much higher wind speed. So you know. Every once in a while a couple times a year you have a tornado that takes a direct hit to a wind turbine and you see problems but it takes pretty much a direct hit to actually take one out and even in those cases most of the time the blades fail so you know have you've seen the pictures of blades of wind turbines are kind of bent over and laying sat yeah laying down on.
| 29:03.62 | chrissass | Okay, you.
| 29:12.00 | chrissass | Okay.
| 29:12.51 | Jereme Kent | But still attached to the turbine. So we we jokingly call that like sad rabbit. But it's actually a design feature. So those blades are designed to fail without falling in a high wind event as one of the primary mechanisms so that that way you can just go replace the rotor and not replace the whole turbine and the turbine doesn't fall over. But the the tower itself can take you know obscene windspeed. So the tornadoes aren't the problem hail can do a lot of damage though you know go go take a whole bunch of one inch hail and throw it a bunch of you know your fiberglass boat type stuff. It's the same material. The blades are made out of so you can get chips from that you know. Hunters who decide to shoot at things is always a fun problem in the wind business. Although not so bad next to factories. But in the middle of nowhere I had a project that had a shooting range in the middle of a wind farm and you just kind of looked at the poor turbines down range and you're like I'm sorry I don't know who put this here. But. Ah, you're going to be getting bullet holes out of your blades for the next twenty years so
| 30:05.40 | chrissass | Okay, so so basically what I heard you say the the maintenance is a couple times a year service crew goes out there. Um just checks all the specs make sure the thing stays within spec they they do whatever preventative maintenance. And then is there a major overallha you know at 10 years at 20 years is you know when is there another big infrastructure investment I mean I know you said that they're they're warranted for 20 years so you're expecting to get more than 20 years but are there some services along the way blades changed. Other things changed are massive during that time.
| 30:41.90 | Jereme Kent | You're starting to sound like my banker Chris asking where the money comes in. Um, you know the the base case is really that you don't have to do a substantial investment during the twenty year life I think there's a lot of question across the industry about what happens after 20 years the main problem being that the wind industry is really barely about 20 years old with the modern you know turbines that we deal with today. So everybody has their opinions and no one has real good data. Um, when you have gearboxes which the turbines that we don't the turbines that we use don't have gearboxes tend to get a major overhaul by 20 years
| 31:10.74 | chrissass | So.
| 31:16.12 | Jereme Kent | Um, the real wear parts are blades and cables in the turbines that we have and so I think you're definitely going to have some major fibergglass repairs at some point whether that's twelve years twenty years thirty years you're going to be doing a lot of fibergglass work and at some point you're dealing with some cables that have been twisting back and forth for 20 years but there isn't a scheduled major overhaul anywhere in there.
| 31:36.73 | chrissass | Got it. That's pretty cool and then do you have responsibility over here. There's some some talk about um disposal of wind blades in Europe that's it's very conscious of if if you're putting these things out you know, recycling them. So how does that work in in the us market.
| 31:52.12 | Jereme Kent | Um, I think we're trying to figure out how that works in the us market again, you haven't had a lot of turbines that have been around long enough that they're getting recycled but you're starting to see it I think you know about once a week we have some company tell us that when were ready to recycle our turbines they have a new better plan for what to do with the fiberglass. Um, but that's the real problem. The the thing that I try to maintain perspective on though is that you know if you take a wind turbine and you've got £800000 of wind turbine sitting above the ground um £600000 of that steel that's easy to recycle. You have a whole bunch of copper that's easy to recycle.
| 32:20.59 | chrissass | Um.
| 32:30.10 | Jereme Kent | Um, you oftentimes have some aluminum or some other metals that are is easier to recycle and then you're left with you know the fiberglass and fiberglass is not toxic it you know is not something's going to seep into the ground It's just a inert trash substance and so that entire turbine may have 50 to £100000 of fiberglass. Right? So that that's 2 semi-trucks that end up going to the landfill now the worst thing that could ever happen to the wind business is that they took some pictures of you know blades just that were cut up and laid in the landfill look like they were filling it before they were all compressed down to a few inches but 1 truckload for a generator. Has been powering 400 homes for 20 years with non-toxic trash sure I hope we get to start recycling that and do a better job with that. But I'll take that almost any day compared to all of the rest of the forms of power.
| 33:18.99 | chrissass | So yeah, it's fair I Just don't know that's one of the things when you hear when at least here when I read articles and stuff. It's talking about recycling blades right? That's one thing I've I've seen quite a bit of of articles on and then um and so I get the model now so you put these projects in they sit for a long time. How big is your company doing I guess you how how? so it sounds like you're in growth mode. Perhaps you you were talking in the pre-call about some new Business. You're you're excited about. Um, how big's a company. Um, what kind of mode is it in right now.
| 33:47.26 | Jereme Kent | Oh we're in why can't we grow faster mode right now. Um, we're we're about 45 people today. We have more work signed or close to being signed than in the next year than we've had in the last ten years so there there is a massive corporate change that's happening that we're seeing companies go from this is something we should look at to something we we have to look at and how fast can we go and I don't know if covid gave everybody some time to sit back and think about what's next, but we've seen a whole lot of companies putting their foot on the gas pedal and there's a whole lot of room for. People to come into this market and help you know help the large industrials we. We definitely see a massive transition and now we're just trying to figure out how to keep up.
| 34:30.84 | chrissass | So are you seeing supply chain issues as post Covid world and and things going on I mean I know in other parts I asked them my solar guest the other day and they they said that they had impacted them directly but spend a lot more time sourcing than they were before is's what they gave me.
| 34:43.63 | Jereme Kent | I will say if you asked that solar guy again today post March Twenty six you'll get the we're completely screwed answer while those tariffs are pending and they're trying to figure out what to do the entire supply chain is on hold in solar wind hasn't been as bad. We do see it a lot though in in big power stuff right um. Something like 20% of the electrical grade metal that's used in transformers comes out of Russia and so we're seeing some very interesting things happen in terms of pricing of parts that you wouldn't think could be the problem but there are definitely supply chain issues for. For all in this business these days.
| 35:21.44 | chrissass | And so you're talking about the metal coming perhaps from a non-friendly market is the manufacturing of your product done in North America I mean turbines are different in North America than perhaps the european model they they don't tend to be the same what? what? I see. Um so what's different is the manufacturing local I guess you're nodding. So.
| 35:41.39 | Jereme Kent | Well so we we brought all the tower manufacturing local. What's the one of the most expensive things to ship. It's the majority of the weight it is far easier to move the towers one hundred miles than it is to move them thirteen Thousand miles across the world. So the tower manufacturing for all of our towers has been local. Um, the blades it depends on the supply chain. We've got them both from you know us plants and from overseas plants and then the turbines themselves the the actual in the cell the top part with the generator. Um, all of that tends to be overseas. We we see almost none of that built in the Us.
| 36:14.54 | chrissass | How how much technology is in their blade I mean it looks like a fairly simple thing I mean you see the pictures when they're apart like if if you watch an Instagram or Facebook you'll see people standing up and where the generator is when they're putting these together and stuff but it it looks fairly simple for the ground. But. How much technology is it like those blades and things like that is.
| 36:31.72 | Jereme Kent | So the the technology is in optimizing the shape to do two things I guess 3 things 1 is last long a long time. 2 is produce as much power as possible and 3 ironically is be quiet. Um, and so where you've seen a lot of the innovation in the last ten or twenty years is how do you eliminate noise and how do you get the full but you know bang for your buck out of that shape of that blade the core. What is it. It's still fiberglass occasionally with some you know, either balsa wood or you know in some cases some composite stiffeners but the majority of it still laid up fiberglass. So. There's not a whole lot of technology. There. The technology's all in with the shape that you're making is.
| 37:13.50 | chrissass | That's pretty cool and then you mentioned balsamwood I remember reading about two years ago there was some shortage of balsawood. There was some environmental concern with the balsawood. So is that still a core that folks used to strengthen it or other synthetics that folks are using now that that eliminate that and and I remember reading there was a. Maybe 2 years or so ago there was a fair amount of articles and and talk about that.
| 37:32.30 | Jereme Kent | I think most of the new stuff has gone away from balsa and is going to more advanced composites and then some of the really big blades. They're building I mean they're they're building blades now that are two and a half times longer than the blades I was building when I started in this whatever 15 something years ago. Um, and so the scale of some of these blades is huge and they have to use you know everything from carbon fiber to more advanced composites.
| 37:54.71 | chrissass | How how long does it take to build one of these projects. So if you got a call today like what's like a sales cycle because you got to go through a permitting and you got engineering work I mean so you said your phone lets up people want to go now but now may not be now how long is now.
| 38:09.69 | Jereme Kent | So so you know like all good responses it depends Chris so there's there's a number of factors 1 is how much data do we have about the wind resource at that site. So if we have no idea what the wind resource of that site is sure I could build you a turban but I have no idea what it's going to produce and. Can't finance it for you. So sometimes we have to do anywhere from three month to twelve month campaigns of onsite data collection. We work very hard to find data that we already that already exists and use that data but there are times when we say look like we just need to have six months of data before we can give you a price and you don't want to do this job without that anyways. Um, you know if you ignore the wind portion of this from a day that customer signs on the dotted line. The permitting can be anywhere from you know we we did 1 job in an unzoned township with no state oversight authority we had to get a driveway permit. It was a 1 page piece of paper. We had the permit in about 45 minutes um and then we were off to construction I also have some that have state level permitmoting where it's a 4 to six month process of going through public hearings and everything else and so the spectrum you know is pretty across the board in terms of that length. Once we have everything in a hand though. Yeah, you can build a job. Um, like this in as little is 3 to five months you know if you kind of stacked all the perfect things together. Um, you can do it in less than 90 days but that almost never happens because it's not that hard right? These are just really big legos once you get to the point of all, you're doing is constructing them. So you know there's a big foundation. There's roads. There's lots of cable but when the turbine parts get there. They're just you know the biggest coolest legos around.
| 39:49.33 | chrissass | So so okay so you got a cool lego set you're building a erectctor set. You're building cool things but you've been doing this thirteen years what kind of unexpected unexpected lessons have you learned along the way because I promise you didn't do it right? The first time. So what have you figured out.
| 40:00.83 | Jereme Kent | Oh yeah, we've learned that when the the towers get hot in the summer for some reason bees really like them and there's a bunch of interesting challenges about how do you get rid of bees from a tower ice is a lot of fun. You know when you build these and there's a two inch sheet of ice on them. That's an interesting challenge that you you get into from how do you safely do that or correct that situation. Um, you know we've dealt with some interesting things with turbines being shot at again surprising how many bullet holes you end up patching from there. Um. You know you get lightning strikes which are fun that you know the turbines are designed to take but every once in a while the the lightning strike does enough damage. You have to go up and repair that blade so you see that we've dealt with a whole lot of interesting trucking incidents. You know it's never great when the truck carrying the tower part doesn't stay in the center lanele. They're supposed to and hits the. Overpass, um, that that makes for a very interesting engineering review. We had one set of towers at 1 point that um, the manufacturer was you know, still working their kinks out shall we say um and when we actually bolted the thing together. Um. And tightened all the bolts and again these bolts are a foot long you know m Forty Two M Forty five bolts Two Inch diameter bolts that you're tightening to like you know thousands of pounds forty five hundred foot pounds of force with a hundred thousand pounds of compressive force the big flanges and they tighten this whole thing up and the guy calls down to me and goes you know, gemy. There's something wrong with the flange. Wrong with the flane. He goes. There's a gap man i' like what do you mean? There's a gap like how big's the gap and he goes bro I can see the fucking corn and so he was actually looking through the the completely compressed flange gap and seeing the farm field and so now all of a sudden you have you know £100000 sections that are bolted together that you have to figure out how to deal with and. Um, we ended up having to take them down and machine them flat on site and put it back together. So you know that's never a fun experience. But um, you know I think I think that's probably the headlines of kind of the the fun stuff that you're just like wait. What just happened that that comes up but. You know every new project seems to bring its own fun challenges. No matter how much we try to standardize.
| 42:10.25 | chrissass | How about on the the other side of the equation so that that's learning to build and and put your erectctor set and your legos together and have them safely operate and get transported what about on the customer side. What what kind of lessons have they learned um in in these projects.
| 42:24.92 | Jereme Kent | Yeah, we've um, we've learned a lot about what it takes to get corporate approval and what it takes to get corporate risk right? So there's a lot of interesting questions from an accounting point of view about when do these contracts become leases. And so if you are a large company and your electricity costs for a factory are are currently an operating expense what you don't want to do is sign a document that takes 20 years of that and capitalizes that as a lease because it makes your financials look pretty weird for a long time and it makes it look like you just lost a whole bunch of money or. Aren't making the money you were making before and that's not a good thing so we do a lot to make sure that these contracts stay operating contracts and don't become leases. We've also seen companies you know, realize that if they want to do more of this. They have to look at their whole plant in their whole power system. Um. So that's the real enemy to adoption right? The real enemy to adoption for this is that you know most factories out there operating today have power systems that are thirty forty fifty years old that were never designed to put a whole bunch of onsite generation in it. So you're doing a whole lot of you know how do you rebuild a 50 year old power system. Um, and customers are realizing that they have to factor that in because you know what worked in 1960 is not what's going to help them go to net zero onsite right now.
| 43:49.92 | chrissass | Okay, so you talk about upgrading legacy Systems. You talked about power plants and all that a little bit long in the tooth perhaps on the grid. What kind of changes need to take place in the Grid. So if if this infrastructure is well Adopted. You've you've talked. About the demand there. So suddenly you offload the grid for part of the time. So Some of the demand is down and so maybe I charge more electric vehicles or fleets or whatever from grid power because I need power elsewhere as everything else electries but at certain time I I'm still needing the base load when I want it? Um, what? what needs to happen to the grid for you to. Live symbiotically together and happily.
| 44:25.90 | Jereme Kent | I think it's ah symbiotically and happily would be a dream I guess the the grid talks so slow. It's hard for us to understand a lot of the grid still communicates through phone lines. Um, a lot of them are working on getting internet to substations. Um the grid schedules power on 15 minute intervals in most cases, right? and a lot happens to power in 15 minutes and so getting to where the grid can talk faster but but the real problem becomes what do you talk about. And what do you talk yeah who do you talk to and so if I'm a factory with a large amount of distributed generation. How can I talk to that substation enough to know you know what? that substation's condition is right now. How close is it to being stressed. Can it take all the power I can produce is it having a problem. And at some point somebody has to get the old legacy grid operators to be able to talk to the new state of the art. You know, generation and figure out how to work together and figure out what's fair can I as a factory just do what's best for me. Or do I have to do? What's best for the grid or is there some in-betwe or do I get paid for doing more than what's best for me and what's helping the grid out and no one's written those rules and no one's really solved that problem and so at some point you know in order to make this work at scale. You're going to need to have the old substations talking to other substations and switching stations talking to large energy users about their loads talking to the generation that those users have and figuring out how to have everybody make a decision that works for them that doesn't completely screw the other guy. And that's the that's the real challenge That's what the next twenty years is about and innovating in a cycle where you know we we're buying some new equipment for our substations that we're building and we're talking about fiber optic integration and if you think about Fiber Optics they've been around for 4050 years right they're in everything we were talking before this call about you know the fiber optic lines coming into this building. Um, they don't use fiber optics for communications inside substations in most cases, right? So they're sitting there having big pieces of equipment talking and they aren't using ethernet. They aren't using fiber optic they're still using you know copper wire and. The idea that that's still the system's being used and so we we asked the suppliers we said look you've got these fiber optic options. Why isn't everybody buying this and they go well the utilities just don't want to change. We go. What do you mean and they said well the utility said we have to retrain our people if we did that so it's easier to stick with what we know and if you think about that cycle that's building the power grid around you.
| 47:14.51 | Jereme Kent | Um, that becomes a very toxic cycle where the utilities are twenty thirty forty years out of spec and that's what creates all the risk we talked about on the grid from a resiliency point of view. It's what creates the exposure for for the power system. It's what makes it harder and challenging to go in there and and be a good actor with behind-themeter stuff. As opposed to just being a self-serving actor.
| 47:33.28 | chrissass | Says does that drive change when when we start having rolllling Blockouts does that change come when so many people start building micro-grids because they don't trust the the grid I mean what?? what's kind of what's the forcing function is it just regulation and say it's It's energy security and it's it's national security kind of stuff and hey. We need to take this and invite bite. The bullet do this? What? what's going to change that.
| 47:59.43 | Jereme Kent | It's it's Texas Chris um, it really is right? Something has to go horribly wrong? Um, unfortunately americans and legislators are pretty stubborn and so they don't take action till a bunch of people die and get hurt. And then at some point someone says we've got to fix this. But even after Texas and ercot happened right? And by the way everybody in the power business knew exactly what happened in Texas because there was a report about how that happened in almost exactly that 10 years before and nobody fixed it and so you know you get two weeks of speeches and then everybody kind of forgets about it again and we'll figure it out later on and so it's going to take some bad stuff to force the change because no one's going to do it on their own and that's the really kind of frustrating part. What I do think you have happening though is you have the mega users right? So we talked about the 53000 large facilities. Are the large energy users they represent only point six percent of the consumers but they're more than a quarter of the energy used. They're starting to take things in their own hands because it makes economic sense for them to do that and as they start taking things in their own hands. They start having more and more generation on site more and more high speed switching power quality type instrumentation. More storage more whatever else that 26% I think is what's going to force everybody else to act if for no other reason than to try to get control of the 26% but the 26% are making changes now because they've realized it to not do that it means to rely on you know. Ah, supplier who just doesn't really care.
| 49:30.51 | chrissass | All right? So you're out there. You've got one section of the country covered. You've got a number of companies stepping up I'm assuming there's competition in your space. How how competitive is the space to do you talked about solar is clear competitor are there other competitors trying to do the same thing in wind.
| 49:47.84 | Jereme Kent | Yeah, so I think you have to be basically clinically insane to start a company that does this behind the meter for wind. Um, it's very challenging to do behind the meter wind projects. It's why you don't see a lot in this space. Um, behind the meter solar is absolutely a competitor that you see a lot of you're starting to see some behind the meter you know hydrogen type activities you're trying to starting to see people trying to do storage and you know it's smaller scale making that work. You know you see some behind the meter geothermal. Um. And then you see a bunch of kind of the fuel cell type behind the meter things too. So everybody's trying to figure out what works. Um, the real reality is that none of those work on their own wind alone does not work right? Solar alone does not work fuel cells alone do not work. You have to find the right way to blend those together. And you blend them together based on your risk appetite your financial appetite and your sustainability appetite I mean you could just every factory could go install. Yeah, a big old cat diesel generator and have all the power they wanted but it would cost too much and have way too high emissions but that's a solution that works tomorrow and so trying to find the right balance of you know risk resiliency. Financial profile is where all the competition is and everyone's selling their part of it and I think what you're going to see a whole lot more of is customers saying look I'm going to do take that 1 take that one and take that one and combine them to get what they want because whirlpool might have a different goal than. Ball and a different goal than a marathon refinery and so they all have to figure out what the appropriate you know goals are for them.
| 51:25.82 | chrissass | So do you see your company 5 years from now being like an integrator where you would have multiple to taking that that wind experience you have and saying okay well if I'm going to go to worldpool or ball or whatever you know whatever of these corporates and and deliver a solution. They're probably going to put one ah rfp out and I'm going to probably need to have. Multiple solutions in in my pocket is that where you see yourself in 5 years
| 51:45.34 | Jereme Kent | I think that's where we see ourselves now Chris I mean it's what we're getting pulled into already I did not plan on starting to build you know just pure power infrastructure but our customers are asking us to so that they can connect other things together. They're saying how if you're going to upgrade me right and you just scolded me for not having an upgraded system. How do you upgrade me in a way that makes me future-proof. How do you upgrade a system where I can plug in the next thing I want the solar thing the ev charging the fleet charging all without taking my other stuff down which is a whole new way of thinking about how do you design an electrical system for a power plant designing it to be constantly expandable. Is an interesting problem and we're we're doing that on a few sites already because our customers have said look we're if we're going to futureproof. We're doing this one time so go futureproof us and so I think you're going to see a whole lot more of that and then a whole lot more of the customers saying great now that you've done that I want to pull this in and pull this in and. Hey someone just invented some magic thing from a unicorn they discovered and figured out how to make you know, whatever else, go plug that into great. But every customer is going to constantly be shopping for themselves instead of sitting around hoping the utilities are taking care of them.
| 52:51.12 | chrissass | Well I think it's been interesting Conversation. We've been a bit all over the place you you don't give me comfort that the grid has got things figured out right now. In fact, you give me a little discomfort that the Us grid is is is really on top of where it needs to be but it's consistent with every other data point I have so you haven't surprised me. Um. I think it's interesting to hear that the types of companies and the types of names that's running around that are are using this kind of wind power for for their plants and their operations and in the scale that it is that the statistic I think you said with the 23% or the the small amount of users that use a fair amount of the power that that to me was pretty Interesting. Um. I Think it's been a great journey I Want to thank you for coming on and sharing your story look forward to hearing more about more projects you win and hearing maybe some some wins in the near future from you guys. Thank you so much for being a guest on the program and our audience. Ah you spend another hour listening to Insider's guide to energy.
| 53:38.80 | Jereme Kent | Um, thanks for having me Chris I appreciate the time.
| 53:47.11 | chrissass | I hope you've enjoyed this content as much as I have if you have don't forget to share it. Don't forget to like it and don't forget to check out the Youtube channel. It's always interesting to see what we look like with the voices and we'll talk to you again next week bye bye

Introduction 
The business model
Challenges of wind power
The long-term future
Investment prospectives
Maintenance of wind turbines
Innovation of technology
Learnings of the journey
Future challenges and developments