Adam Zuckerman
Welcome to today's episode of the Energy Impact Podcast. I am your host Adam Zuckerman and we have a wonderful guest today: John Powers, Vice President, Global Clean Tech and Renewables at Schneider Electric. John, it's great to have you today.

John Powers
Thanks for having me, Adam.

Adam Zuckerman
Let's hop right in. You're a LEED accredited professional. You have a BSc in mechanical engineering from Duke. I don't know if that's okay, because I grew up in Maryland, but we can talk about that later. You are an expert - and when I say expert, I mean globally renowned - in renewable energy and power purchase agreements, which are PPAs, markets across the world, US, European, Australian, Indian, Mexican, you name it. How the heck did you get to where you are today?

John Powers
Well, it was a journey of passion, really. I think I figured out shortly after graduating from college that I wanted to work in renewable energy, cared deeply about sustainability. And the energy system was a place where there was a lot of transition that needed to happen, especially as I was starting out in 2002, 2003. Once I knew I wanted to work in renewable energy, it became easy, you just focus on that, you go after those types of jobs. I found a cool little startup company called Renewable Choice Energy out of Boulder, Colorado, joined on with them. And 18 years later, acquired by Schneider Electric four and a half years ago, and here we are. It's been an awesome journey, but really, I knew it was what I wanted to do, where I wanted to contribute to the planet and put all those working hours you put in towards something positive. That was really the driver.

Adam Zuckerman
So you're a mission driven individual. And it's interesting that big companies in the world can attract and hold on to talent like yourself. Schneider Electric, for people that aren't familiar is a fairly sizable company. It's a $90 billion market cap. It's 140,000 employees, you're operating more than 100 companies, but there are levels to it. Can you take us to the top of how Schneider Electric then has the Energy and Sustainable Services Division, then below that the division that you're currently running?

John Powers
Happy to, for sure. A lot of people, a lot of listeners, will know Schneider Electric as a global leader in digitization, the energy space, technology, software solutions for the energy market, globally, as you say. I think we've got employees in 120 plus countries around the world. Within that, where I sit is within the Energy and Sustainability Services Division within Schneider. And so our mission is to help advise corporate and industrial clients as an independent third party adviser on all things energy and sustainability related. We're actually the largest company in the world doing this. We manage about 30 billion euros in annual electricity and gas spend on behalf of our customers. And then within that organization, something that's been growing, as we all know, for the last decade, plus is interested in renewable energy, sustainability, decarbonisation. So, within the Energy and Sustainability Services group focused on all things energy, I help lead the group that really focuses on renewable energy, decarbonization, sustainability solutions for customers. We act as an independent third party advisor to many of the biggest companies in the world on how do I hit my renewable energy target? How do I set a renewable energy target? How do I figure out how to set and hit a science-based target, right? I want to get to net-zero carbon. I want to get to 100% renewable. How am I going to get there? And then we actually help them execute and get there and manage that position over time.

Adam Zuckerman
And you guys have been tremendously successful with this. There are more than 140 PPAs. And I read a stat that might be even higher than this now that you've helped with over 10,000 megawatts of new wind and solar, is that correct?

John Powers
That's right. Yeah. In the off-site power purchase agreement space, we've advised - and give credit to our customers, they're the ones who signed the deals, but we've acted as a third party advisor - on behalf of our corporate clients on over 10 gigawatts, over 10,000 megawatts of off-site corporate PPAs. Add to that, millions of megawatt-hours of renewable energy credits, carbon offsets, and on-site solutions as well.

Adam Zuckerman
Alright, let's talk about that. We've got listeners at all different levels across the world. What is an off-site PPA, and how does it play into credits? Most people when they're just getting started, they imagine, okay, it's just the source of the energy. It's where I'm buying some, but it's a lot more complicated than that. And I imagine that's what your energy buyers and advisors help with. If I'm a new customer coming to you and say, Hey, you know what, I only have dirty energy. I'm sourcing, I don't know, say 1,000 megawatt-hours a year. Not massive, but fairly sizable. Walk me through the process. What are you trying to help them understand?

John Powers
First, we'll take a look at what are their goals? Okay, you're trying to get to 100%, renewable. What markets are you in around the world? We've got, in the Energy and Sustainability Services team, we have people in over 40 different countries around the world, so understanding where is your load, what are the options there. And if you're looking to get into renewables, there are three typical ways you can engage in renewables. One is on-site. If you've got good resources, if it makes sense financially, if you've got roof space or land near your facility, maybe you can do on-site solar panels or an on-site micro grid, some kind of on-site solution. The next step up, or if you want to get a little bit bigger, is procuring energy just off the normal power grid, like from a utility. You get it into your buildings like you normally do, your factories. But can you control where that energy is generated from at the at the outset? And so that's what we call an off-site power purchase agreement. It's where you're actually buying the electricity, as well as the renewable energy credits from a large scale wind or solar facility. Often, for our clients, they want to look at new build facilities where they say, I'm willing to sign a 10 year agreement, or a 12 year, 15 year agreement from a large scale off-site wind farm that's just set to be built, so that I can say, My contracts, my impact allowed that project to get financed and built. That's the off-site power purchase agreement. And then the third way is you can purchase renewable energy credits, energy attribute certificates is the more generic term where there are guarantees of origin in Europe. LGCs in Australia, I-RECs, renewable energy credits in the US.

Adam Zuckerman
Let's talk about the third option that you just mentioned. If a company in Europe, let's say, is looking to go clean, but they can't source, for whatever reason, as much energy or the mechanisms in their location. Are they able to buy clean certificates from Chile, for example, even though it's across an ocean and offset that way? Or are the markets that they're operating in actually truly local, which is where you all come in to help them understand that that dynamic?

John Powers
We definitely want to help them understand what they're driving towards and what their goals are. We have customers that say, this is a global, global warming is a global thing. Global climate change, right? And so I just want to target, we have customers that say, I just want to target the dirtiest power grid where they have the most coal and build a wind farm there, build a solar farm there, because that's gonna displace the highest emission source, even if I don't have any load there at all. Right? I want to sign a contract like that. That's probably not the most common. Most commonly, folks want to follow third party guidance, whether that's the Carbon Disclosure Project, CDP. WRI has a Greenhouse Gas Protocol. There's a science-based target initiative. A lot of our clients, including Schneider ourselves, we have a 100% renewable energy target, a science-based target and we report to the CDP. If you want to report, people have set up frameworks around what counts and what doesn't. And so typically, for many of these, it's a connected power grid. If you're buying renewable electricity, if it's feeding the same electricity grid where you're using that electricity, you're able to claim that you use zero carbon electricity in that location. For instance, North America is a very interconnected power grid where you can trade from one region to another. If you were to buy renewable energy in Texas, or in North Dakota, you could claim that against your load you're using in New Jersey or North Carolina or anywhere else within the country, but not Chile, because that's not really interconnected in any kind of meaningful way.

Adam Zuckerman
Okay, so it's almost like you have to have an interconnected link to be able to offset for a specific location. If that's the case, then the planning process, it means that you need to match, not only what your current needs are, but what your expected needs are versus the opportunity on the grid. How far out do you see that process actually looking our customers typically coming to you to offset their existing operations? Or are they coming to you and saying, Hey, we actually need help, because we're planning a new facility and we want to make sure that when it opens, it's all sourced with clean energy.

John Powers
All of the above is the real answer to that. People need to, you typically want to start with operations they already have. They're buying brown power, they want to be a certain percentage green. Often, they'll come in with a target or a goal or we'll help them set that target or goal. And then they'll say, I want to be 50% by 2025. And so you've got a target and then we help them map that out globally and say- There are a few customers, and including customers of ours, big tech companies, that have a real nice balance sheet, plenty of money to spend, that say, I want to be on the forefront, I want to be a leader here. And I want to source locally to all of my facilities, and I want to get to 100% right away, even if it's at a premium. But the vast majority of the companies in the world, and the vast majority of our customers, the economics really matter here. The good news is renewables are cheaper in many markets around the world. We kind of sit down with them with that map of where do they have load? What are they looking to achieve? What are their areas where you can source renewable energy in a way that's at least breakeven, with what you'd be paying for power normally? Often, you can negotiate and lock in a contract that's nominally below what you're paying today. Now, whether or not that's gonna work out for you, if it's a long-term contract, right? Power markets can go up and down, so no guarantee there. A lot of the work that we do with clients is sitting with their CFOs and their treasurers to understand what are the range of outcomes? What are the probabilities and ranges of outcomes of power in various markets around the world and what are those going to look like? But yeah, we'll help them map that out and say, Okay, you've got these targets, these interim targets, let's start here, let's move to here. What is your roadmap look like? And then, critically, we help them go execute that roadmap as well.

Adam Zuckerman
Now, how do you actually do that? There are many different ways that you can purchase electricity. It's open market, it's a direct PPA. There are even exchanges that are popping up. Does Schneider maintain relationships with GENCOS, generation companies? Or are you trying to help them say, here are all of your options, we're going to help you advise and evaluate everything that's out there?

John Powers
We act as a buyer advisor. We sit on the side of the corporate and industrial as an independent buyer advisor. So we're not trying to steer them to this particular energy service company, or that this particular project developer or that. We really sit down and help them understand what their needs are. And then, depending on what they're looking to do, there are different ways to go about that, right? Commonly, the off-site, power purchase agreement - which is a great method for a lot of our clients that have big ambitious goals that need to go big scale, but also want that additionality component, want to be able to say my purchase is getting this new project built - when we're looking at those, there are platforms. We have a platform that we've developed with over 400 corporate industrial buyers called the NEO Network, but what we found over time, that's more of a pre-transactional platform. We have service providers, developers, any number of different participants in this community, we host events. And it's great for education and for getting people up to speed for understanding what are typical price ranges to expect in the market, what are new deal structures, etc. But when it comes to actually securing a transaction, if you're going to be buying a 12-year, 15-year power purchase agreement from a 100-megawatt wind farm, you might be committing 50, 100, $150 million over the course of that 12 or 15 years. What we found is, while the platform is great to support and to educate and to get people together, that's really a custom thing. You're not going to point and click for a $150 million decision. It's much more like an investment banking type relationship, where you want a trusted advisor to walk you through the process to customize it to your needs, and to be there every step of the way.

Adam Zuckerman
Alright. So with that, help our listeners understand what type of facility, size-wise? Maybe use an example or an analogy if you can. What would need a PPA with a 100-megawatt wind farm? What would need a PPA with a 50-megawatt wind farm? What would need a PPA with a 25? So, as you scale up, it starts at what and it ends at X.

John Powers
We tried to approach it that these large scale wind farms and solar farms need a certain amount of guaranteed revenue and investment over a period of time in order to obtain financing from third parties make it bankable. Exactly. So there's a certain threshold that they need to get that project built. In the US, the projects are pretty big, especially in a lot of the big deregulated markets in the middle of the country. You get these giant wind farms that are 100-megawatt, 200-megawatt wind farm that might produce 400,000 megawatt-hours a year, at the 100-megawatt level up to a gigawatt-hour of - I'm sorry, a terawatt-hour of electricity per year for some 200, 220-megawatt project. They need some pretty big energy users, and some pretty big energy buyers, big industrial users, or large retail companies with lots of locations, etc. Something that we've worked a lot more on is how do we aggregate customer demand? How do we go out and approach these developers that we've done many, many PPAs with and say, Hey, maybe this isn't just one big customer, but we have a basket of smaller customers, right, that we can bring to this together to really enable more and more participants in these markets. With a lot of our customers, they might have dispersed load around the world where they've got a bunch of load in Europe, a bunch of load in Australia and the US, and then they've got little bits of load in other countries and markets. In those cases, just purchasing the certificates in those markets is probably your best bet. Trying to negotiate and sign a 60-page, 70-page power purchase agreement for a very small portion of energy, it's just not worth your time or the developer's time to do that. Just buying green power year over year, either from your utility, or as an unbundled certificate is a totally reasonable way to fill in those gaps.

Adam Zuckerman
That makes sense. And it is a very different experience than doing with a steel production location where they've got a furnace that's running 24/7, 365 a year, or McDonald's that has franchises across the country that have an aggregate high amount, but it's a very small draw per. Interesting.

John Powers
Yeah, exactly. It's going to depend on the customer. We try to design solutions that meet the customer's needs, wherever they are. We certainly specialize in large, global, multinational companies, commercial and industrial companies. But we also have a lot of companies that are much more mid-size and medium scale or big companies that have just a smaller amount of load in this market or that market. It's critical that we help create solutions that work for everyone across the board.

Adam Zuckerman
You're obviously successful in that. You've had a few really big announcements that are quite impressive recently. Let's talk about Walmart. What happened there?

John Powers
Walmart is a great story. I mean, they've been a leader in sustainability and in renewable energy for many, many years. I think Walmart announced one of the first corporate PPAs, I want to say back in 2001, 2002, so many, many years ago. They've always been a leader in the space. They engaged us to help them source a few PPAs for their own usage, but then the conversation just kept going from there. They've got Project Gigaton, which is a program that they've developed that has been running for five, six plus years where they're trying to engage their suppliers. You can imagine the supply chain of Walmart, it's hundreds of thousands of companies that are suppliers into Walmart. And so they've looked at their carbon footprint and they've said, Wow, actually by far, sure we use power in our stores and our trucks to transport, and so we've got emissions there, and they're not insignificant, and we want to address those. But really, the bulk of our footprint comes from our supply chain, and the products in our stores, how they're created, etc. And so they've been looking to engage their supply chain for many years to reduce a gigaton of emissions out of their supply chain. It's a voluntary program that Walmart runs. They engaged us and said, Well, one of the ways that we can help our suppliers to reduce carbon emissions is renewable energy, and is aggregating some of that supplier demand. Some of our suppliers are big enough, and they're just off and running, doing their own deals. There are many public companies that have announced deals, Procter and Gamble, or Johnson and Johnson, or Clorox, who were already doing their own power purchase agreements, their own renewables that have their own targets, but Walmart said, How can we expand the pool? How can we encourage some folks that maybe weren't already jumping in to be a part of this and aggregate and we give it something of a little bit of boost or encouragement for them to voluntarily participate? They have engaged us at Schneider to reach out, educate all of those suppliers. We have a portal on our NEO Network where suppliers come in, sign up, get educated and registered, and then we aggregate those into cohorts and go out to market to secure power purchase agreements. What it's enabling us to do is, over time, open up that market to a lot of companies that never would have thought about, never would have gone for it, or were too small, or had credit rating issues, or whatever the case may be. When you can put a bunch of them together, you can enable a lot more impact. That was really Walmart's goal and then Schneider was the right partner to help them out.

Adam Zuckerman
It sounds like that definitely can de-risk that opportunity for them, which is fantastic. Hey, are you designing cohorts based on location then? I imagine, because the supply chain for a company like Walmart, it's global.

John Powers
Yeah, definitely based on location and on criteria for what that company wants or needs, right? Luckily, they have enough suppliers that you can design a bunch of different cohorts. We wanted to start the program in the US where Walmart is headquartered. They said, let's start it here, let's pilot it here and then we can expand beyond that. Right now the program is just open to companies with load in the US and that's where we're focused now. in future years and iterations, we hope to expand that to market around the world. And then companies have different buying cycles, they have different drivers or requirements, different accounting frameworks. If you're a US-based company under US GAAP, or you're an international based company under IFRS accounting, which can drive really different preferences and different outcomes and what you're looking for, we're really trying to form and aggregate those cohorts so that there are like-minded, like-goaled companies to maximize the chance of a successful outcome.

Adam Zuckerman
Can you explain some of those differences in characteristics? Not on the GAAP side, the accounting principles, but rather on how companies may evaluate whether or not renewables make sense for them and why they may move toward that side of the equation.

John Powers
It's going to depend on a number of factors. The main drivers or reasons that our companies typically cite for, Why are you looking into renewables, why are you doing something, is just an overall sustainability angle, often from the top down. Companies truly care about the planet. They want to be a business that's around for the next 500 years, not just the next 50. And so there's that DNA. And a lot of our customers, sometimes that's push coming from employees, coming from shareholders. We've seen, we've all seen Larry Fink's letter at BlackRock, right? So that can be a big driver, or customers. A lot of our clients, their customers are really clamoring for renewables, or their employees. Stakeholder pressure on renewables, potential concern with future regulation, or government pressure. That's always a big part of it. The other big factor is economics. As I mentioned before, they really want to be able to sign a deal that they have a glide path to not losing money or not spending a ton of money on. The perfect storm is if you can get to 100% renewable and actually save money at it. We're always looking for those solutions. And then for some of the bigger load customers with a bunch of load in a certain market or region, there can be a really nice hedge benefit for power prices. Typically, you can only buy power in liquid markets - one, two, three years at a time, sometimes up to five or six - but if you plan to run that factory for 30, you're exposed to rising power prices, everything beyond year four. A lot of our customers will look at it as a hedge against future rising power prices, then, depending on what those drivers are, is going to drive what solution is right for them. Or maybe there's no solution right for them, or maybe not right now, maybe they should come back later. But typically, we're focusing on companies that do have a desire at some level, for some reason, to work with renewables and to become more sustainable and then we're just helping them achieve that ambition.

Adam Zuckerman
How granular does it get? Can companies say, I only want to source my electricity from wind? Or I only want to source my electricity from solar? Is it that, or is solar and wind and hydro all just grouped in as renewable, and it really doesn't matter where you're getting, it's all in the price?

John Powers
It's going to kind of depend on the company, but I'd say the most common refrain we would hear is any new build renewable, that is going on to the grid works for me, right. There are also third parties that will classify what counts as a renewable resource and what doesn't, so sometimes people want to follow the Center for Resource Solutions in the US, which kind of categorizes these are things that count as renewables, and these are ones that don't. We don't have a lot of customers clamoring for hydro certificates from the Hoover Dam that was built decades ago, where they're really trying to support some of the newer and ongoing growth resources. But typically, once you hit those criteria, people say, Okay, well then within that, let's find the best economic solution, the best solution that fits where my locations are. Obviously, renewables is a very location specific thing. Is it sunny there, is it windy there? What's going to be appropriate? And then there's also a time of use, if you're looking to hedge your power. We've got customers that are looking to get, that have more of a flat load profile, maybe they're a data center type company, or they just run three shifts in their factory. In that case, we'll combine a portfolio of projects where maybe you'll have some solar that's obviously producing in daylight hours, some wind that might be producing more at night, and a little lower during the middle of the day, and you kind of flatten out that load curve to better match around the clock load.

Adam Zuckerman
What about clean baseload that's there all the time? Is that only available through a combination of battery storage, wind, solar, whatnot? Or is nuclear in the mix, some people consider that clean? How do you approach that, because a data center, it's 24/7 doesn't turn off.

John Powers
Again, it goes back to what that company's views are on what counts and what doesn't. Some companies might have just carbon free as their standard, in which case, they'll use nuclear and they'll use the Hoover Dam hydro and they'll put everything together. Other companies say, Well, we want to follow what a third party will recognize, whether that's WRI Greenhouse Gas Protocol, whether that's CDP, whether that's Center for Resource Solutions, Green-e. We just sort of talk to the customer, understand, lay out all of the different, here's all the different third parties and certifications and what you qualify for with this or that. Here are the trade-offs in terms of cost and availability and time of use, etc. But to get that true baseload power, it's going to take a big variety, probably take battery storage, or hydrogen type of solution on a grand global scale for us to really get to 100% renewable. We've got a long way to go before we're there. While we do have some clients that are really pushing for that 24/7, around the clock solution right now and pushing the envelope a lot of the tech companies, data center companies, and we're working with them on those solutions, there's often a cost trade off to that. The more common solution or the more common outcome would be for a company to say, Okay, well, if I've got this many dollars to spend, I want to make a bigger percentage of my portfolio green, versus making sure that a smaller percentage is exactly 24/7.

Adam Zuckerman
Alright. Now, which countries in which companies are doing it right? And then which countries and jurisdictions could catch up just a little bit?

John Powers
The one of the biggest things about the location is if you actually have retail choice. So can you, as an energy user, as a buyer, can you choose where your power comes from? Is it deregulated? Or is it a fully regulated monopoly? It can be a lot harder in the regulated monopolies to actually do anything at all, so that's kind of the starting point. I mean, even within the US, we've got plenty of deregulated markets, but we've got plenty of regulated markets as well. It's a lot more challenging for clients, in most cases, to choose and guarantee 100% renewable within that regulated monopoly. Some of the utilities are doing a good job and offering a really impactful renewable product and renewable offering, but it's pretty hit or miss. Then you get into the economics. Where we really focus is, where are there good deals, and where is it possible to do? The US has been a leader, particularly speaking to off-site renewables, because on-site is very localized, based on local incentives, etc. For off-site PPAs, the US has been a leader for a long time. Europe is the next biggest market and the biggest growth market by far. We've seen absolute tremendous growth in Europe where we're proud to have market for 50 plus different off-site PPAs in Europe. Currently, there is a whole bunch of demand from companies based in Europe for decarbonization and sustainability. And within Europe, there are certain countries that are stronger than others from an economic standpoint, so we kind of target those. The Nordics, Spain, Italy, to a lesser extent Poland, done some deals in the UK, etc. Then Australia, we've done a good bit. There were government incentives in India and Mexico back in 2017 timeframe that made those really attractive, those have gone away, so that's cooled off a little bit. Right now, Brazil is a big growth market, where there's really strong opportunities for clients in Brazil, as well, and we've got some clients doing pilot projects in Vietnam. You kind of pivot around, where does the government incentive, where does the economic opportunity lie, and you pivot into there. And then there are some other countries that are still, it's really challenging to get a deal done. China is one we get asked about all the time. From an off-site PPA standpoint, it's just not there yet. The mechanisms aren't there. They've just created a tracking system for certificates, which is a great first step, similar to South Korea, but it's really not there where you've got a lot of retail choice at this point.

Adam Zuckerman
Have you seen a bell curve of PPA sizes establish itself, so you can say, yeah, 5% are going to be 20 megawatts and above, 10% are going to fall in this trench? Where does it actually lay?

John Powers
If you're in the US, that bell curve is probably, one standard deviation on each side or one and a half or something, is probably in that 20 megawatt, 15 to 20-megawatt up to, 150, 200-megawatt range. Once you get that 150, 200-megawatt, there are not that many buyers. You have to be a behemoth energy user to go that big. And then once you get below that 20 threshold, we're probably looking at an aggregation solution for you, whether it's because we've got a client already buying 150 of those 200 and then there are some slices you can take off what's left, or whether we're going out together in a cohort, like the Walmart Gigaton PPA program. That's pretty typical. In Europe, the whole thing would shift down a little bit, because there are just not as big of projects. Other than some Nordic wind projects, you just can't build, the land is much more of a premium, you can't get as big there. And so for Europe, you could be a smaller buyer, and then you're not gonna find anything much above 100, 150 megawatts.

Adam Zuckerman
Alright. Last question I have for you. You are clearly well-informed. I imagine you get a great deal of information from the NEO Network itself, which is nice to have access to, but where do you get your news? You wake up every single morning, and you've got Google Alert set and you go to a few specific sites? Or what's your process?

John Powers
Yeah, we I mean, we definitely rely on our global network of experts, right, that are in these energy markets. There are special market updates that come to the inbox all the time to understand what's going on in this market or the other market. Again, the NEO Network, as you mentioned, tons of great information on there. And then we're members of a number of third parties, … are a couple of US-based groups. The Resource Group in Europe, the REBA group, Renewable Energy Buyers Association group in the US. We participate in a lot of these industry groups that are trying to get the word out, aggregate information, share it broadly. This is something that's going to take all of us. Schneider is obviously a big participant here, but we're not the only one and we can't be the only one. This is a huge, huge issue and huge undertaking. It's going to take all of us, it's going to take us, competitors, developers, buyers, all working together, to try to pull the order in the same direction and move the industry forward.

Adam Zuckerman
And I think that's what we're seeing internationally. A few of the other guests that we've had on the podcast as far. John, this has been absolutely fantastic. Appreciate your time. John Powers, Vice President, Global Clean Tech and Renewables at Schneider Electric. It's been a pleasure.

John Powers
Thanks a lot, Adam. Appreciate the time.