Michael Crabb [00:06:26] Welcome to another episode of the Energy Impact Podcast. Our guest today is Ben Baker, the Managing Director at Greenbacker Capital. Ben, great to have you on the show.

Ben Baker [00:06:36] Great to be on. Thanks for having me.

Michael Crabb [00:06:38] Before we hear about all the amazing stuff that you're working on with Greenbacker, tell us a little bit about you. Where are you from?

Ben Baker [00:06:46] Yeah, sure. Nothing too exotic. I'm from Connecticut. I grew up in southern Connecticut, went to public school there and moved to New York City 20 years ago to go to college. And I've been on this island pretty much ever since.

Michael Crabb [00:07:04] I think some New Yorkers might say southern Connecticut's exotic. You could get away without the disclaimer.

Ben Baker [00:07:09] Yeah, I try.

Michael Crabb [00:07:11] And was finance sort of always the path? Was that like from an early age you were trading baseball cards, or what was the impetus?

Ben Baker [00:07:20] No, I wouldn't say that, although I think from an early age I might have exhibited some glimmers of entrepreneurship. My parents tell me that I used to pull weeds out of the ground when I was like four and put them in a Frisbee and then go sell them to people who would buy them for like 25 cents. So, maybe that's where it started. But no, actually, growing up I was really into languages. I was like into Latin and French and German and stuff like that. And it wasn't until later in life that I came around here to what you could say is finance.

Michael Crabb [00:07:59] Fascinating. Yeah, I'm very jealous. I am not good with languages, but I can do the math and science and STEM side. So, is that what you went to school for, for language or language arts of some kind?

Ben Baker [00:08:12] I did. I mean, I went to Columbia and I was a liberal arts major; it's a liberal arts school. I studied French. I mean, I studied all the core stuff that they have you study, but there's no finance, there's no heavy math, anything like that. I think we have had to take econ. Did a lot of French, did a lot of German, Italian. Got to travel, got to study abroad.

Ben Baker [00:08:34] But I do think that everything is a language system, whether it's math or business or whatever. All of that time spent learning different languages and learning different cultures is instructive in how you deal with people. And now having spent 15, 16 years in finance, now every day is just people and relating to people who are different from you and understanding what they're saying, even though they probably say it in a way that's different than you would say it. So, even if I'm talking to a native English speaker, I think that those experiences of relating to different people are helpful. And then of course, we also talk to lots of non-native English speakers. So yeah, that's what I studied.

Michael Crabb [00:09:20] Interesting. Yeah, that's a great take. And it makes sense, right? We're all just figuring out different ways to communicate core concepts to each other.

Ben Baker [00:09:28] Exactly.

Michael Crabb [00:09:29] Well, very cool. Okay, so how did that evolve? So, you graduated with this liberal arts degree. You're like, "Hey, Mom, I'm moving back into the basement?" Or like, what was the, you know...

Ben Baker [00:09:39] No, luckily. So, based on the age that I am, we were all figuring out our lives in like 2006, right at the height of the economy before things started cracking in '07 and '08. So, with a decent diploma, they would hand you out an offer. That was certainly a time where you started thinking, "Well, if I want to defer a true decision on what I'm going to do with my life, one thing that I could do now is banking to get a sense of what goes on in the world and business and all that stuff." So, that's what I and most of my cohort did coming out of school and into the '06-'07 timeframe, using that as an entré into just figuring it out over time.

Michael Crabb [00:10:24] Cool. I mean, what a time to enter. You saw a full market cycle in about 18 months, right?

Ben Baker [00:10:32] I know, and I feel like we're back. It definitely was old school to watch a bank failure or two over the last few days.

Michael Crabb [00:10:39] Yeah, yeah. Even faster, maybe, than what it was in '07, '08.

Ben Baker [00:10:43] Totally. Yeah, I mean, I had friends that worked at Lehman and Bear at that time, so I definitely remember that time vividly. And it's certainly been an interesting time now over the past week or so.

Michael Crabb [00:10:57] Well, yeah. Before we get to some of the froth in the market today, let's talk about the froth in the market then. So, you're in investment banking. Were you in energy or more of a general position?

Ben Baker [00:11:07] Yeah, I mean, that's kind of how all this happened. Life is pretty random, you know. And so, ever since '07, I've been in something touching power, metals and mining, real assets, that sort of thing. And that's how it started in banking. And so then, in '08, '09, 2010, while things were slow, I would say that real asset M&A and real asset development is pretty countercyclical or pretty insulated from broader macroeconomic trends. Growth in population drives growth in electricity needs. Retirements of old plants lead to the buildout of new ones. And we were also just five years or so into the deregulation of the power markets across the US. We were two or three years after a wave of big bankruptcies with companies like Mirant and Reliant and companies that folks today probably haven't even heard of, necessarily. So, it was a pretty exciting and fast moving time in power.

Ben Baker [00:12:14] And at that time, I started working on M&A and project finance advisory for gas plants, coal plants, gas utilities, eventually starting to see the odd wind farm or wind company. But it was definitely just getting into renewables. It was back when people were still naive enough to think that a national cap and trade system was going to happen and stuff like that. And also, so early that folks were still doing the VHS/Betamax kind of thing with solar photovoltaic and solar thermal, and not knowing what the future of solar would hold at that time, which was pretty interesting. So, we were like following parabolic troughs in power towers and all these technologies that did not turn out to be the future of renewables. But it was an interesting time.

Michael Crabb [00:13:09] Yeah, well and pre-shale gas, right? I mean $10/MMBtu gas versus $3/MMBtu gas is a big difference. Well, yeah. Okay, well, very cool. You saw a lot of different things. How did that evolve into the next step? I mean, at some point you said, "Okay, I've got all these tools. This is what I want to do with it." And what was that thing?

Ben Baker [00:13:34] Yeah, so I had those tools, and kind of in the back of my mind was going back to business school and having a bit more of a formal education. Since like I said, I was a French major, I had never even sat in a classroom in higher education with many numbers going on in there.

Michael Crabb [00:13:53] Did you find that gave you somewhat of an advantage? I mean, thinking about an analyst pool where each of them probably had the same sort of econ or finance background, you probably saw things a little bit differently and uniquely that added value?

Ben Baker [00:14:08] I don't know if that was a good thing back then. Over time, I think that's evolved to be helpful. My team makes fun of me that I basically do financial models with crayons because I'm definitely rusty, and back then I was just figuring it all out. So. But again, next to other liberal arts majors who didn't have a finance background, we were kind of in the same boat. You could take econ for four years but not know how to use Excel. But yeah, it was an interesting time.

Ben Baker [00:14:46] So, I was like, "That's something that I think is interesting. But before I do that from banking, I'd like to have a differentiating stop along the way and kind of get a view into something totally different." And so, this was in like 2010 or '11, I was like, "I'm going to go work in kind of the Wild West of solar," which was C&I, sort of rooftop solar, in 2010 and '11. And I went and saw inside of that world for a couple of years. And it was crazy, right? I mean, they had just come out with, in 2008 and '09, the stimulus package that led to the cash grant. Suddenly every roofing company in New Jersey was a solar company. So, it was a pretty wild time. And I got to business school and I was like, "Oh, man, I'm never doing renewables again."

Ben Baker [00:15:41] I had a view to transition towards private equity at that time. And so, I went to GE, to their energy investing business, both with my internship and after business school. I was like, 'Look, just one thing. Please don't put me in the renewables group." And they were like, "All right, we hear you." So, I went to the midstream oil and gas infrastructure side of the business and was working on pipelines and gas utilities and all these things. Ultimately, what happened was in 2015 or so, all the commodity prices crashed, as you were alluding to before. And I was like, "Oh, I guess that's a sign. I've got to go back to the dark side." And have basically been in renewables ever since then.

Ben Baker [00:16:29] But the good thing, as we'll talk about when we talk about what we're doing now, is that I took a lot of the oil and gas infrastructure financing structures and investment structures and brought them here to what we do today, because I think that what we'll talk about is that a lot of the financing structures that are being used, especially for early stage companies, but also for some of the assets, might not be the right financing structures. So, we bring some of those things from the oil and gas market as well.

Michael Crabb [00:16:59] Yeah, fascinating. And interesting, maybe counterintuitive, because in my mind... And I've got a little bit of an econ background... I hear price drop. Well, that would be a tailwind for the industry. But you're really saying that sort of living through that cycle is personally exhausting, and I can attest to that as well.

Ben Baker [00:17:17] Totally. No, it was a rough time in that market. I think at that moment I was like, "All right, maybe I've got to give renewables another chance." And ultimately when I left GE, I went to a private equity fund called Hudson Clean Energy that was totally focused on clean energy, where I also learned a ton. So, that's how that progressed.

Ben Baker [00:17:45] At Hudson, we spent a lot of time working with developers, growth stage businesses, in both climate tech as well as just traditional renewable energy development and operations. And it was really there... It was a very formative time. But I think after my time there, what I realized was that if I wanted to keep investing in developers and partnering with them, I had to actually understand that business from the inside. And so, that was the point, like I said maybe in 2017, where I said, "Okay, I'm going to go and work in development for a period of time so that I understand the nuts and bolts of those business." And so, that's what I went and did.

Ben Baker [00:18:29] And so, prior to my role at Greenbacker... I joined about three years ago to launch the funds that we manage. But prior to my time here, I was on the management team of a solar developer. We were developing greenfield solar farms from scratch all throughout New York State, as far north as Canada and as far west as Buffalo. And that was just really information and really instructive to see how the dirty work of development actually gets polished over time and becomes these investable assets that institutional investors want to invest into and then kind of enjoy the cash flows from for many years to come.

Ben Baker [00:19:13] But by the time they're doing that, months or years of work has gone into just all kinds of stuff. From chasing down landowners for a signature because they don't use email to sitting in front of permitting boards in a small town on a Tuesday night. They've got their pitchforks and they don't know why someone from New York City is trying to build something in their town. What are you going to take from them? And so, it's really interesting to see the different stakeholders and how you have to deal with them, because it's not just the ivory tower kind of work of finance.

Michael Crabb [00:19:47] Yeah, it's certainly unique to have advisory, direct investing, and operating experience. And yeah, the development world is wild. It's so underappreciated, I think, in the broader energy transition space itself, right?

Ben Baker [00:20:04] Totally. But it's coming to be appreciated. But I think when we were launching this strategy three years ago, it was definitely underappreciated. We'll talk about some of the trends that we've seen, but I think we were fairly prescient in the sense that we started investing in sort of growth-stage developers just before a major wave of developer M&A, both at the sort of large cap scale and now just coming down into the lower middle market where we play.

Michael Crabb [00:20:33] Yeah, that makes a lot of sense. Well, yeah, perfect timing. Let's hit that transition. So, you got your hands dirty for two years. Tell us about the move to Greenbacker and what you're building.

Ben Baker [00:20:45] Yeah, sure. I mean, I've known about Greenbacker for a number of years. What I've always liked about the firm is their approach to working directly with regional and smaller businesses that are in the business of developing sustainable infrastructure. Because what we try to explain to folks who invest in the fund or who come work here is that there are billions of dollars being raised into the sustainable infrastructure space and renewable energy. Every year it's setting a new record for just how many dollars are being raised. But also, those dollars tend to be pretty concentrated among the biggest GPs, the biggest fund managers. And funds that were raising a $1 billion dollar fund four or five years ago are raising like a $5 billion or a $17 billion or $20 billion dollar fund.

Ben Baker [00:21:36] And when they're raising funds that big, their equity checks that they're looking to deploy are also growing in tandem. That's sort of in contrast to sort of two things. One, that when you're finally, like I said, investing into a 300 megawatt wind farm or solar farm or what have you, that thing has been in the works for two years or three years or four years. And for many of those years, it was costing hundreds of thousands of dollars or tens of thousands of dollars a year.

Ben Baker [00:22:09] Eventually, that starts getting capital intensive, but for a number of years, it's a pretty small business. Going around and cobbling together land options and dealing with the utility and the local permitting authorities, right? So, there's all this money looking to invest into what is eventually going to be a big thing, but today it's small and today it's not capital intensive. So, who's going to be the one to help bring those things and scale them to be investment opportunities for those bigger funds? That's one piece.

Ben Baker [00:22:37] And then the other dynamic, too, is that while the funds are getting bigger, while the checks are getting bigger, in many cases, the assets are getting smaller. I mean, distributed generation is something that we see as, both in GDEV as well as the broader firm... We've always focused on distributed generation. We think it's efficient. We think that it avoids a lot of the issues we're seeing in the interconnection queues and in the permitting issues that bigger projects might have.

Ben Baker [00:23:08] Some of the things that we've done... I'll just call out a really interesting one because it's kind of the logical extreme of distributed generation. We invested into a company called Swell Energy last year and we co-led that round with SoftBank. And what this company does, the physical thing that it does, is not innovative, right? They are going and originating and installing residential batteries, or batteries and solar. But they're coming and saying, "Look, we're going to put a Tesla Powerwall on your garage. That is a well-understood physical thing. But what they're also doing, their other customer... Not the people, are the utilities. They're working with utilities to say, "Look, if we can enter into a large capacity contract, we can then go aggregate thousands of residential batteries and then use a software layer to turn it into one big thing so that when you need to call on it, it's there for resiliency, for capacity, for energy."

Ben Baker [00:24:07] And so, that's taking the tiniest kind of nodal, little distributed generation thing and bringing it together to be something bigger. And that's something we really like. And as we look out into kind of a future of the same theme... Which again, this is the virtual power plant concept, which is now getting a lot more attention. And I'm seeing the term being thrown around a lot more now. But then you look at vehicle to grid stuff, too, which is one of the next things coming. Like, all of these EVs are power plants. You're getting two or three free Powerwalls laying flat on the bottom of your Tesla. That thing can power your house. And there are a few companies that we know working in that space. So again, this is not the majority of what we do, but it's just an interesting example of what distributed generation is coming to mean at the logical extreme and how different that is than anything that can be invested by a $10 billion dollar fund.

Michael Crabb [00:25:07] Yeah. I mean, in some ways it's a continuation of some of the demand response aggregators from PJM in the mid-teens. That software layer certainly changes the calculus. So, I struggle a little bit... I don't want to actually go too far down this rabbit hole, but I struggle a little bit with equating batteries to power generation because, obviously, they're actually energy destroyers. Now, the time arbitrage, super important. The distributed nature, a ton of value. But I do think there is this fundamental thing that virtual power plants sort of skip over which it works when there's excess supply, but if we're going to get rid of what's providing 80% of our power, we still need to fill that gap in, right?

Ben Baker [00:26:02] Totally. No, I'm with you. I wouldn't say that we view batteries as power plants. Notwithstanding the term virtual power plants that I just threw out there.

Michael Crabb [00:26:14] Coming back to your language background.

Ben Baker [00:26:16] Exactly. When we explain our fund to folks, we have a couple of different buckets. But one of those buckets that we invest into is renewable energy generation. Inside of that is solar, hydro, maybe biomass, things like that. Batteries are not in that bucket. We have a middle bucket that's called Mobility and Grid Services, and that's where batteries are. We see batteries as a grid service. One general example is that something that utilities use batteries for is to defer transmission and distribution spending. So, batteries can make your system more resilient and make them more adaptable, but without saying, "Oh, they're generating electrons." It's not really about that, right?

Ben Baker [00:27:04] And so, one of our businesses that's doing really, really well is a company called Delorean Power. This company works with co-op and muni utilities. And these co-op and muni utilities, they don't own their wires, so they're renting them from a bigger RTO or utility. And they pay for their wires...

Michael Crabb [00:27:25] RTO, regional transmission operator, right?

Ben Baker [00:27:26] Yep, yep. And so, they're paying a demand charge based on their peak demand. And their peak demand is going to happen at like 13 different periods throughout a few months of the year. And so, what one of the main revenue models that our company works on is partnering with these kinds of utilities to install batteries where they can be most valuable in reducing that demand at exactly those moments, so that when you end up tallying their bill, they're shaving a large amount off their peak demand, saving money and then sharing those savings with our company. So again, it has nothing to do with generating electrons or arbitrage, time of use arbitrage or anything. It's about reducing demand, which then for the bigger utility who owns the wires, has more resiliency in their system, has more slack in their system. So, I think we're seeing it the same way.

Michael Crabb [00:28:20] Yeah. No, that makes a lot of sense. Tell us more about these categories. You mentioned two, but you seemed to allude that there were others. I think that's fascinating. Can you walk through that?

Ben Baker [00:28:28] There's only one more, which is kind of the other bucket. But the other bucket, I think, spans a list of things from what we do expect to do, to things that we don't expect to do. There's a whole host of newer-looking technologies, or at least things that we don't know how to invest into yet, like hydrogen and ammonia, like carbon capture, things like that. Whereas, there's also a part of the waste to value world, RNG, landfill gas, and anaerobic digestion that has been around for a while, that we think is an opportunity and where, I think, private equity is starting to focus more and more. So again, the other bucket goes from things I do think are within reach to things that are a bit farther afield, but it contains all of the things that we think we need to be smart about. Maybe it's GDEV III or GDEV IV when we do our first hydrogen investment, but at least we start getting smart today.

Ben Baker [00:29:30] One thing that I remind my team and other people with respect to these newer technologies is... I just have a vivid memory that it was 2016 when we really started talking about batteries all the time and where we were trying... I was at Hudson at the time... Trying to develop a thesis to invest into the battery storage market. That was 2016. The first time I did a battery storage deal was 2021. So I'm probably biased, but based on my tiny data set, there's a five year spread between really the year that you start talking about something and the year that you might do it. And I feel like for hydrogen, that year was maybe last year or this year. So, I still think for us, there's some time. And that's just one example, but it doesn't mean we don't get smart now.

Michael Crabb [00:30:17] Yeah. And there are maybe some corollaries between those two specific examples in that what you think the market is on its surface may not actually be the market when you get to that investment point. To your description of batteries as a grid service, you wouldn't have thought that... Maybe you did. Maybe you were so far ahead, but in 2016 you're thinking about time-arb, right? Time-of-use arbitrage. And I think hydrogen's the same way.

Michael Crabb [00:30:44] I mean, there are just some fundamental flaws in this idea of using electricity to create hydrogen to create electricity. But there are obviously some uses around energy-intensive businesses and sort of high heat points. I am on the fence about ammonia... We don't have to get too deep. You're ahead of me, for sure, on that. I don't know. I don't know what you're seeing.

Ben Baker [00:31:10] No, I'm probably with you. I think I still have to be convinced on green hydrogen. Because I'm still trying to understand... If I had a gas plant that was the most efficient combined cycle in America and that thing was creating the energy to break apart the molecules, is that not as good? Is that not pretty good? Is that not clean? I don't know. So, I'm pretty ignorant on the topic, I have to admit.

Ben Baker [00:31:38] One of the ways that I explain what we do is that we're trying to innovate on business models and not the physical thing. And so, the virtual power plant example I gave you is a good one because putting a Tesla Powerwall in your garage is not a new physical thing, it's a new business model that these guys are doing. Community solar is a really good example. And probably the easiest one, the business that I was involved in prior to Greenbacker, which was called Delaware River Solar. We were doing all community solar. And this is like 2018, 2019, 2020. That was way before you started seeing these big... Partners Group doing Dimension and Apollo doing Summit Ridge and ECP doing Pivot. That was years later, right?

Ben Baker [00:32:23] And so, in 2020, when we were making some of our first investments, we felt that community solar, while it wasn't a new physical thing, it's just a five-megawatt solar farm, it was a business model that we didn't think was understood at that time but we thought would be very well understood and kind of the way that things would be going a few years later, and that has sort of played out. So, I think community solar is a good example of how we try to innovate.

Michael Crabb [00:32:48] Yeah, that's fascinating. It makes all the sense in the world. I think we have a lot of the technologies that we need, it's applying some of these previous business models to those applications. Yeah, we sort of skipped over it. You mentioned some of the different funds. What can you tell us about sort of creating these theses? Like, you sort of started the investment arm of Greenbacker, I think.

Ben Baker [00:33:15] Well, just to give some background on Greenbacker to make sure it's clear, the firm has been around since 2011 and has been very successful, for over a decade, of creating, really, an amazing reputation in sort of the middle market of US renewables. The flagship fund here, which has raised a couple of billion dollars, is a sustainable infrastructure fund. So, the broader firm... You can almost think about it now as a big power company. It's a firm that's structured as a company that owns three or four gigawatts of renewable capacity. It has 185 people across four offices, and just an amazing technical ability to buy, construct, then own and operate renewable energy and sustainable infrastructure facilities.

Ben Baker [00:34:07] So, that's really the backdrop that I came into. And so, when I joined it was to launch our growth equity strategy. Now we're making, under GDEV, corporate investments into developers and operators of sustainable infrastructure. But the broader firm is a big part of that story and really synergistic with us as well. I mean, we have different forms of capital in-house for our companies. We have significant... We have 50 or 60 engineering and technical folks that we can call on to help us when we diligence transactions and when our portfolio companies need support. So, we try to bring all of that to bear to be a bit more of a strategic investor than just financial. And I know that's a little bit of an advertisement there, but that's why it was so attractive for me to come help launch a growth equity strategy against that backdrop.

Michael Crabb [00:35:02] Yeah, really interesting. Okay, I don't know why I thought it was more advisory versus infrafund, but that makes a lot of sense. And they were probably seeing a lot of the same themes you just articulated around check size and fund size versus capital needs. Okay, so you joined the team. Were they already raising? Like, did they have LPs that were like, "Hey, we want to do this?" Or, you came in with a blank sheet of paper and built it up?

Ben Baker [00:35:31] Blank sheet. Blank sheet in the middle of COVID lockdown. So, that was an interesting and fun time. It was a blessing and a curse probably, because at that time, 2020 into '21, because roadshows weren't physical, you could get a lot more meetings in, but you also couldn't create that personal connection. Which I'd much rather have fewer meetings in person and get to look somebody in the eye and shake their hand. But yeah, it was a complete blank slate. And what we were trying to figure out was... Because again, the firm's historical capital raising strategy was actually retail. So, in the infrastructure fund, that's a retail fund with thousands and thousands of individual investors. It's very different from the institutional nature of the growth equity strategy, which is more tailored to institutional capital. And so, our biggest investors are pension funds and that sort of thing, insurance companies and the like.

Ben Baker [00:36:32] But at that time, it was a blank slate. And so, we had to go and sort of think about how do you get this thing off the ground? Who can be your partners? What is that mix of getting some early deals done to show that you can get deals done? To get capital in the door so that you can do more deals. It's a hard cycle to get on. And thankfully, after three years of being at it, we're, I think, more now in the groove. But it was an interesting time to be starting, for sure.

Ben Baker [00:37:03] You know, the good thing was there are enough folks out there who, when they really listen, they understand the story. And that's what it takes, just a couple of those to really get it. And so, we're pleased that we found those people, really, through 2021. But I think the story is good because we were starting to invest in these developers, like I said, just at the end of 2020. And then, when you started to see '21 into '22, just this page we have in our deck of like the dozens of major developer announcements, big funds taking over these developers. And where it started was the biggest national developers, the Cypress Creeks of the world, the Apex Energies of the world.

Ben Baker [00:37:48] But over time, as every one of those previously independent companies has now become backed, the search goes lower and lower into smaller enterprise values down towards, not necessarily where we enter our investments, but certainly where we're trying to exit them. And so, we're really seeing the path there and we're seeing the demand, I think, for the platforms that we're scaling now.

Michael Crabb [00:38:17] Yeah. It's your traditional P/E story, but instead even a multiple, it's like a pipeline. It's like capacity multiple ARB, right?

Ben Baker [00:38:25] Well, I mean, you nailed it. I mean, a lot of our companies are pre-EBITDA and pre-revenue. Sorry, I'll say they're almost all pre-EBITDA. Many are pre-revenue, but they're not pre-value creation. And that's the story you've had to tell. People say, "Well, what is your entry multiple?" Like, "Well, it's divided by zero. But they have 242 megawatts of pipeline. And here's the deep diligence we did on the unit economics of it and the permitting status of those assets. That's the value." So, that is what we're investing into, you're absolutely right.

Michael Crabb [00:39:00] Yeah, fascinating. Well, very cool. Yeah, we went really deep. I appreciate all that color. I didn't give you a lot of time on sort of what you're looking at in the future. I guess we talked a little bit with your other bucket. But yeah, how does Greenbacker... What did you call it, GDEV?

Ben Baker [00:39:18] GDEV, yeah.

Michael Crabb [00:39:18] Yeah. How does this growth bucket grow over time? More funds, larger funds, different pockets? What are you thinking?

Ben Baker [00:39:28] Yeah, it's interesting. We don't aim to be a megafund. We want to stay pretty true to what we've set out to do, which is invest in the middle market and lower middle market and really scale growth-stage companies into being an attractive target for much bigger funds than us. So, I don't see us having multibillion dollar funds. Then again, I say that now, but...

Michael Crabb [00:39:55] It's hard to maintain that discipline.

Ben Baker [00:39:57] Yeah. But I do think when we think about the size of new funds, we think about how many deals do we want to do a year? What is the right size of a deal? And we kind of do it from the bottom up rather than saying, "Well, we want this much AUM to generate this much in fees." We try to stay out of that game, and it ends up aligning us nicely with our investors because they know how important the incentive economics are to us because we're smaller funds. And so, that has played well.

Ben Baker [00:40:26] I think the future is not necessarily much bigger deals. Certainly, we've grown the team over the years to account for the growing size of the portfolio and all that, but I think we'll try to stay true to it because what we see is just a constant regeneration of our pipeline. Because, as every company gets really, really big, the management teams or the senior folks at that company say, "Well, I want to go do this for myself." And then they go and they restart the whole cycle. And we find them when they're a couple of years in. They've raised and scraped together a couple of million dollars of seed capital. They've built a pipeline, and what started as a really capital-light business is about to be really capital-intensive because they did a good job. And that's where we find them. And so, whether it's solar or hydro or batteries or whatever in the future, the stage of our businesses and the quality of the people are constant across them.

Michael Crabb [00:41:23] Yeah. And it's a great point about the people... Again, it's like a clear corollary with other businesses. Some people are really good at growth, some people are really good at seed, some people are... And those people generally know that and like that aspect of it, right? Because I've seen folks that should be on their own or are that developer mindset and they get in a big system and it's like cats and dogs.

Ben Baker [00:41:48] Totally.

Michael Crabb [00:41:49] Yeah, that's fascinating. Well, very cool. What have we not talked about that we should have talked about?

Ben Baker [00:41:59] Honestly, I mean, if the question is sort of where are things headed, I'll just say two trends that I see happening are one, solar is becoming very well-understood. And that also makes solar assets very expensive because they've become a fixed-income product. It makes investing into solar companies harder too, because there's a lot of interest in a simple solar company, but it also makes a solar company harder to differentiate its offering to its customers.

Ben Baker [00:42:32] So, I think what we're seeing is good for both us and the industry in the sense that more and more companies are going to broaden their offerings. You might not have a solar developer, but you have someone who comes and offers a more holistic sort of package that might include EV charging and batteries and solar and other things. And that will help differentiate those businesses. It will help complicate them... Which we think is good, because that's, for some, a barrier to entry that we think protects our ability to invest into the most complex businesses. So, I think things are going to get more complex because the simpler you are, the harder it's going to be to differentiate.

Ben Baker [00:43:10] And then the other trend that we like... And the virtual power plant one was a good example of this too, is... We don't really invest in software companies. Like, we're not a tech investor in that sense. But we do see more and more companies who use software as a way to enhance and enable the physical offering that they're bringing. So, I think that's something where the more complicated this stuff gets and the more you have to optimize it, whether it's batteries or EV charging and fleets and all that, the more it's going to require some kind of technology and software layer. But again, what we look for is a company that's using a software layer to enable the physical thing, rather than building the software layer for that as the end.

Michael Crabb [00:43:59] Yeah. I think that narrative is certainly becoming a little more prevalent. Because in this space, you don't have anything without hardware, but you also want to optimize the operations with software. That is really cool. Yeah, I could see you kind of creating another bucket of sort of software enablement as it's sort of standalone category, and then creating some value with connecting your existing platforms given the operational focus.

Ben Baker [00:44:30] I mean, you're definitely hearing the story. I love it. Because what we're trying to do here is create an ecosystem so that growth-stage renewables or sustainable infrastructure businesses come and there's growth capital, there's technical support, there's infrastructure capital, there's this, there's that. So, you're right. The more we can expand this ecosystem over time, the stronger we'll get. And the ways in which we do that, I think some are still are unknown.

Michael Crabb [00:44:59] Yeah, amazing. I can't wait to see how you do it. I'm excited to watch that all come together.

Ben Baker [00:45:06] Awesome.

Michael Crabb [00:45:07] Thanks so much for being on.

Ben Baker [00:45:08] Yeah, thanks for having me.