Energy Affordability and Fit-for-Purpose Capital with Jigar Shah

In this episode of the S2G Podcast, Sanjeev Krishnan, Managing Partner of S2G Investments, and Jigar Shah, Co-Managing Partner of Multipler, focus on the through-line of affordability, execution, and fit-for-purpose finance in the energy transition. Shah argues that a 20 percent reduction in electricity rates by 2030 is achievable if states and utilities squeeze more value from existing assets and pair sensible load growth with proven tools: grid-enhancing technologies and advanced conductors, pragmatic connect-and-manage practices, and widespread demand flexibility supported by batteries. He contends that the bottleneck is not invention but deployment, and urges governors to press utilities to adopt what already works. The conversation also explores capital discipline, realistic exits, and ways to escape an endless cycle of pilots, with examples ranging from renewable natural gas and HVAC efficiency to rooftop solar on warehouse districts that can directly serve growing data center loads.

Shah’s perspective draws on a career that spans entrepreneurship, finance, and public service: founder of SunEdison, a pioneer of the power-purchase-agreement model for ​“no money down” solar; co-founder and president of Generate Capital; and director of the U.S. Department of Energy’s Loan Programs Office from March 2021 to January 2025, where he oversaw a major expansion of federal clean-energy lending. He is now co-managing partner of Multiplier, an advisory firm specializing in helping climate companies scale and achieve better exits. 

Jigar, welcome to the podcast. Thanks for doing this.

Wow. Thanks for having me. This is great.

You are no stranger to podcasts, I know, but I usually start with bio and then go into a few topics and maybe get a little spicy. You and I met in Washington a long time ago. I think it was like maybe  ​‘05, ​‘06 when you were doing the Carbon War Room. You were just leaving Sun Edison at the time.. What a career. But before getting your career, you grew up in Chicago.

Yeah, I was born in India, came over to Chicago Ridge.

How old were you?

I was one. And then when I was like eight, I moved over to Sterling, Illinois, which is 120 miles west of here. 

What was growing up like?

It was fantastic. I didn’t know any different.

Did you know you wanted to be in energy?

I did. So when I was a kid, there was a company called The Southwestern Company, which basically trained all those college students to sell books. And my dad was just a sucker. Like he would just buy the books every time they’d knock and knock on the door. And so I’d read the books and one of the books was on energy — and it was amazing.

And then you went to university?

University of Illinois Urbana-Champaign got my mechanical engineering degree, and I worked for a company called Atlantic Orient Corporation, which basically designed small wind turbines like 60 kilowatts. And then I worked for a beltway bandit called Energetics. We did government consulting to DOE and that kind of stuff. And then I got a job at BP Solar in 1999. And then I started SunEdison after that.

What was the origin story of Sun Edison?

So I interned while I was in college for a company called AstroPower. And I was on the engineering side, but you meet people in the cafeteria and it was pretty obvious that people really wanted solar. AstroPower, I think they were selling a lot of five-watt systems for ranchers who wanted to electrify their fence, and it was too expensive to bring power out there.

Something would always happen — their tractor would break or something — and they’d say, ​“Oh, sorry, we went over budget this year. We’ll buy it next year.” So solar was never a first priority. It was always, ​“If we have extra money, we’ll buy it.” That’s when I realized it needed to become less of a CapEx sale and more of a service sale.

And then when I worked at BP Solar, that kept happening there too. And so then at some point, like even somebody as dumb as me is like, oh wait, this keeps happening. I think God’s telling you something, like you should actually follow this pattern and write a business plan.

And then I was in my MBA program at Maryland, and I wrote it.

Every time I’ve heard you speak — and we’ve interacted a lot over the years — you bring this systems lens: engineering first principles, economics first principles, policy first principles, and then, what I think is super unique and I love, fit-for-purpose capital principles. Maybe not first principles, but close. Is that an accurate interpretation of how you think about problems across these disciplines? And how do you systematically approach them from a financing perspective? Or is that not the right way you think about it?

Yeah, it’s a funny thing because, like, what I’m truly gifted at is business development, trust building, sales, actually getting people to do things they don’t want to do.

Everything else is first principles, just because it’s not my area of expertise. I don’t skip over any steps. Like engineering, I love engineering, but I was not a straight‑A student.

My MBA program was actually second nature, so that part was actually pretty easy. But then, Wall Street, I’ve never worked on Wall Street. So, I ask a lot of dumb questions, like people will say things and just assume I know everything because I worked at Goldman or whatever, which I didn’t.

But then I would ask them, ​”What is the LP like trying to solve for? What are you trying to solve for? How does this thing work?” And I think people first think that I’m doing a bit because they’re like,”Is he that dumb?” But then I think they realize they don’t actually know the answers to half the questions that I’m asking. They sort of just assumed it at some point. 

In the concept of leadership training, it’s called the ladder of inference. Like when you’re arguing with people at this ladder, you’re like, instead of arguing here, why don’t we go down the ladder of influence and retrace our steps and then figure out like where we still agree.

Basic facts, and then move back up. I’m naturally attuned to doing this ladder of inference thing because it’s not my area or specialty. So in some ways I’m asking them questions because I actually want to know the answers, and in other cases it is a bit, because I’m just doing the ladder of influence.

You went on to start Generate, then you went to the Biden administration and the LPO. You’ve had this experience of needing to understand engineering and thermodynamics, the economics of these value propositions, the policy side, and the capital market side. Is it almost helpful that you have this ladder approach because very few people can play in all those zip codes, I would imagine.

Oh yeah. No, it’s huge. It’s hugely helpful. But the thing I find, and I think you know this better than anybody, is that for as much as everybody claims to be the most rigorous due diligence person on the planet, the vast majority of venture capital deals are done because they’re like, ​“I like the cut of your jib.”

And they’re like, ​“Here’s $2 million”. I’m like, ​“Really? Is that all it took?” They’re like, ​“We were looking at the sector, we wanted to do something in the sector anyway. I feel like when I go to the dinner party, I can brag about it and they’re gonna think it’s cool.”

And you’re like, ​“What? I did all this prep, I did this whole data room, I did all this stuff, and you’re not even gonna read it. You’re just like, gonna give me money?” And then you find that happens over and over again. Like, part of the reason why I do all this media and communication stuff, because people are like, Jigar, ​“Why do you do the podcast? Why do you do this stuff?” Because I find that almost the entire field that I work in works in a jealousy loop. People are just like, ​“Jigar, You want money from me for what I want to do, renewable natural gas, right?” They’re like, ​“Oh, renewable natural gas.I just talked to the guys at Earth Justice, and like, those people abuse those cows. Like we would never get involved in something that abuses cows. And I was like, ​“They have open manure ponds, like they literally just waft methane into the air. We’re gonna capture it, we’re gonna turn into renewable electric gas, we’re gonna sell it into the low carbon fuel standard credit market, all this other stuff. But then they’re like, ​“Maybe I don’t want to be first. I want to be like fourth.”

 And then you find out that when I talk on stage at Trellis or Green Biz, I do this thing, and then I go to a guy and I’m like, ​“Hey, you know where you’re really screwed, your scope one emissions, you use a lot of natural gas. If you use renewable natural gas, you can actually reduce your scope one emissions.” And that guy gets super fired up, and then this guy gets super fired up, and then suddenly a podcast comes out about it, and they’re like, ​“Hey Jiger, you know that renewable natural gas thing you’re talking about? I’m hearing a lot of chatter about that renewable natural gas thing. Maybe I do wanna put a hundred million dollars into your thing.”

And I was like, ​“That’s how the world works?” Like I talked to four of your LinkedIn friends, and then they got back to you, and suddenly you want to fund it? And I don’t mean this in any disrespectful way, because I’m not saying people are like dopes or anything, but I do think that people, they just create this backstory to how they got to a decision that’s like overly analytical when you and I both know that’s not how it worked. They went to a Bears game, and the guy that they were friends with was talking about it.

One of my professors in college was like, the most natural human instinct is to buy high, sell higher. Because buying low and selling high is just contrarian.

No, totally.

And it requires a level of independent thinking and non-signaling. Because signaling is the most lazy form of thinking, was what my professor taught me. 

That is exactly right. 

But the world works on signaling, I think, generally for bad. But I think you are one of these people, I think that you’re not relying on signaling.

My big thing is that I look at pattern recognition, right? So obviously I did Sun Edison, so that’s one pattern, and it happens to be there’s a lot of patterns that sort of look like that. I was talking to this guy the other day, which was just fascinating, like he was explaining to me how boilers in general have too much pressure in them, and that he could bleed the pressure off the boilers and create 175 kilowatts for the power. And he’s delivered like a hundred of these units, and now there’s 25,000 more to do, and we have a power crisis. I was like, this is amazing. Do I understand how he bleeds stuff off, and like why it works and who the boiler maker is, and all this other stuff?

No, but that’s a pattern I recognize. I know exactly how to sell that, and so there’s a pattern recognition piece. And then, once you find the pattern, then you’re like, all right, let’s go through the cycle. How are the engineers gonna view this? How is Wall Street gonna view this? How does this view this? How does that view it? 

Because ultimately it’s not just about getting the first check-in, which yes, you need to do, but then eventually you got to exit it. Like you’ve gotta actually sell it off to somebody. And then what’s the story?

When I was helping Plug Power create their story, it was pretty awesome. I was like, ​“How does this even work?” And they’re like, ​“What do you mean?” I’m like, ​“Basically, you’ve convinced Walmart and Amazon to not use lithium-ion batteries for your forklifts, right?” Because you can’t use fossil fuels inside a building, you’re using this thing. We use like 3% of all of our square footage for refueling. For plugging them in. And we make so much money on these racks. Yeah. That by putting the hydrogen outside and putting a fuel pump through the wall, we get a 30 day payback on reclaiming that space. That’s why we do fuel cells. And I was like, ​“I can get that.”

 And then it was like but we can’t get any of the solar and wind investors to invest in hydrogen. So then we concocted this whole story about how you had all this curtailed solar and wind and it was true, like it wasn’t concocted.

At the time, everybody was like the way we’re gonna decarbonize the grid is we’re gonna overproduce solar and wind, and we’re just gonna spill some of it, because sometimes you don’t need it. And I was like instead of spilling it, why don’t you turn it into hydrogen? And so then that became a whole meme, and suddenly their stock price went up like 10x.

Yeah, because all the investors were like, ​“Oh, you are like related to solar and wind? I want in on that.” And I was like, ​“How the hell did that happen? That’s not a fundamentals analysis. You didn’t do a like cash flows analysis and discount it back.” You were just like, ​“Oh, you’re now part of the solar and wind supply chain. I could overpay for you.”

Yeah. So it’s accidental sometimes. So you’ve had a career in entrepreneurship, a career in even the NGO space with Richard Branson. You’ve done finance with Generate, you’ve done obviously a very high profile role in government and policy. What are you doing now? What’s your portfolio of activities?

So when I left office, I’ve had a couple of these career transitions, and so I realized early on that you don’t jump into a full-time job. And my brand from an ex-Biden official with Trump coming in was probably like, I was probably gonna be more of a liability to the person that hired me. So I was like, I should probably lay low for a little while, right? And so the first thing I did was call a hundred CEOs and just say, ​“What’s going on? Like, how are things going?” And the thing I learned right away was basically that they all said, ​“I’m upside down with my partners. My venture fund basically paid too much and they don’t want to write down the investment, or reprice, and they’re having a hard time raising their second fund, so they don’t want to share that that’s going to come.”

And so it was very obvious that they had all these issues. Like it was a CFO problem. They had people who were piloting them to death. And my thing is look, I love the doing well by doing good thing. I love it. But all of my friends that I’ve met get the doing good part, and they never do well. They like end up selling their company and they made like $842,000. And I was like, that’s not nothing, but that’s not what you signed up for. Like when you were telling me you were worth $80 million in paper. So I started asking them, ​“What’s your exit strategy?”

It was very obviously that they were stumbling. They had no strategy, right? I was like, ​“I don’t know. Who are the top three companies you think might buy you?” It didn’t roll off the tongue, so I was like, ​“You haven’t thought about this enough, so then what milestones are you doing?”

So then Jonathan Silver came up to me and said, Hey, I’ve been thinking about this same thing, et cetera. So we got together, we created Multiplier. We were mostly just screwing around this year — mostly like just talking to people. We brought in a couple clients, like we’ve been working with them really earnestly. And it’s taken off, so I think we signed eight more clients.

What is Multiplier meant to do?

So it’s basically meant to get people better exits, like bottom line. Along the way, I might have to help them with replacing their CFO or dealing with a board member who is, no way in hell I’m letting you sell this company. And so you got to figure out like what they need and how to do it. They’ve got companies that are piloting them to death. You’re like, ​“Hey, how do I get them to like actually do a full rollout contract?”

And so far it’s been fun because it is like not the same cookie-cutter conversation with each company. Each company is in a different sector with a different set of things, and so it’s been really rewarding.

You have this amazing view at the emerging company space, the large corporate space, obviously, where it’s going on our politics. In the markets you care about, what are the questions that are not being asked on these podcasts that you wish you were asked about, like just where we are?

What I find is that the vast majority of these podcasts and or conversations are really tied to what’s not working? Not what’s working. Because they’re just like can’t be bothered to celebrate what’s working. But as somebody who is part of the Carbon War Room, like we talked about, right? I was there when they were creating the sustainable development goals. And I just think people they’re so obsessed with making sure that Saudi Arabia is like building 130 gigawatts of solar. That they don’t take the win around the fact that like we have 700 million people in electricity poverty in the world today, most of whom have cell phones, have no place to charge them. They have to go to some bodega with a diesel generator and pay $15 a kilowatt hour basically to charge their cell phone. We’re going to solve that problem by 2035.

Yeah. Like solar panels are 7 cents a watt. 

What’s happening in Pakistan could happen everywhere.

But like how extraordinary is that? For somebody who’s my age, who lived through Michael Jackson and Live Aid, and like all these things and people were going hungry. And I’m not giving them charity. They’re already paying for charcoal or wood or kerosene, or diesel. They pay like the equivalent of $2 a kilowatt hour for whatever productive energy they need.

We’re going to give it to them for 8 cents a kilowatt hour through a solar lantern or whatever it is. And just like, that’s fricking amazing.

What else is working?

When the Ukraine conflict occurred, I remember everybody in the Biden administration was like — LNG. And I was like, ​“Wait, what about heat pumps? What about all the energy efficiency we’re doing?” And then I called up Bill McKibben and I was like, ​“Hey Bill, can you write this article and publish it?” Because everybody in the White House like reads that and he did.

We suddenly shifted and we were like, ​“Okay, it’s LNG and heat pumps.” Energy efficiency saved 60% of the entire volume of Russian gas. LNG only made up 40% of the volume of Russian gas. That’s a huge win, right? But the only thing you hear about is LNG exports. 

You don’t hear about the fact that we went from like a paltry penetration of advanced heat pumps and energy efficiency and all that stuff to a massive penetration to the point where like I think I remember Michael Leibreich, who’s like a very good friend of mine and I love him to pieces like wrote a scathing thing on like social media about how stupid, I was basically about pushing heat pumps. And then later he was like, yeah, we actually needed your stupid heat pumps.

I mean there are like Mittlestand companies in Germany that just did phenomenal. Viessmann sold to Carrier for $10 billion and I think they went from majority fossil heat pumps to majority renewable driven heat pumps and grew from 800 million to 4 billion. It’s remarkable. Like companies that you would not think were quote unquote climate tech did phenomenally well and clearly saved a country.

Like a continent for sure. And the thing that bothers me the most is look, we’re recording right after, the blue wave, blue tsunami election, occurred. And when you think about all of the things that roll off your tongue, right? If I said to you, ​“What are the top three policies that you would do to build a new nuclear plant in New Jersey or Virginia?”

You’re like, ​“Here they are.” Because we have those off the top of the tongue. But if I say to you, ​“What are the top three technologies that you would deploy to reduce everyone’s electricity bill 20% by 2030” Because that’s in front of the governor elect of New Jersey or Virginia. It doesn’t roll off of anybody’s tongue. Because I tested it. I called everybody today and I was like, ​“Hey, NRDC, what’s your top three things? Hey, Sierra Club, what’s your top three things? LCV, what are your top three things? Like EDF, what are your top three things?” They’re like ​“Uh?”

What are the top three things?

It’s just one thing. You have to make more out of what we’ve already paid for, right? We need to move to connect and manage. So you got to overload the transmission circuits and curtail. That’s what they do in Texas. 

Two, you have to fully deploy grid enhancing technologies, advanced conductors, all that stuff to use the right of ways more cost-effectively.

And three, we got to go all in on demand flexibility and batteries. Because if you have load growth, and most of the load growth, remember, is not AI data centers. Most of it’s like air conditioning, heat pumps, electric vehicles, new manufacturing facilities, all this other stuff, right? Like building new generation in the middle of a farm in a rural area doesn’t solve the problem.

Because you have a wires problem. You can’t get those kilowatt hours to that load.

One thing that I saw last night in each of the victory speeches, or the word I should say. I know you are passionate about this. I heard almost every speech talk about affordability. You’ve been on affordability. Why didn’t that message come through more when we have these dialogues?

Look, I mean my whole career has been getting solar panels to actually be cost-effective. Tom Hoff at Clean Power Research and I used to like plot in like 1999, 2000 when I worked at BP Solar. And he would run an economic analysis for every single nine-digit zip code in the entire country. We have these colorful maps and figure out where stuff is or whatever else. So I’ve been obsessed with affordability my whole life. I’m like, ​“Can we combine with energy efficiency? Can we do this? Can we do that?” 

And then what happened was in 2009, during the Copenhagen negotiations at COP Hillary Clinton was like, we’re gonna give you a hundred billion dollars fund to do this transition ​’cause we know it’s more expensive. And then in 2015 we made this huge breakthrough. Which was like China, India, Brazil, and South Africa, we convinced all four of those countries that this was actually the largest wealth creation opportunity of our time. And then Bill Gates stepped in and was like, mission innovation, with Obama. And then we got derailed. We were gonna talk about affordability and the largest wealth creation opportunity of our time.

But instead, we were like, let’s focus on hard-to-decarbonize sectors. Let’s figure out how to commercialize nuclear or commercialize geothermal. And I was like, yes, but let’s just focus on the stuff that’s already like 2% of people are using these technologies. How do we get ​‘em to 20%?

Affordability has to be the most bipartisan place to live.

We stopped. We stopped. People are living in places that during the polar vortex, in the Midwest or winter storm Uri in Texas, couldn’t hold their temperature, right? No matter what you did it wasn’t insulated. We have hundreds of thousands of people, if not like several million households who are not yet weatherized.

They’re on a waiting list for weatherization. But it’s magically cost-effective to build a $20 billion nuclear reactor. But it is not cost-effective to actually weatherize their home right in this moment. And you know why? Because ICF has created some weird cost-benefit ratio that says you can’t do energy efficiency unless it’s like negative two cents a kilowatt hour.

But you can definitely afford 17 cents a kilowatt hour for a new nuclear plant. And I’m just like, ​“What world do we live in where these technologies are crazy affordable, but there’s some weird cost-benefit analysis that like says you can’t do it?”

I’ve yet to bring up AI in this podcast, but I’ve been in DC a bunch and our team has been in DC a bunch, and they’re hearing a lot, both sides of the aisle around power load growth and affordability. And I think there’s a notion that I think is a safe space around wires and grid. And I listened to your podcast years ago where you were saying the incentive model right now is not around affordability.

It’s not.

And so how would you reshape if you were to be able to give an executive order on the grid and sort of the incentive structure that you know intimately well, better than anyone else probably, all these different nuances. How do we build load, but also not have it be on the back of rate payers.

It’s not complicated. It’s just hard. Yeah, like my tagline is it’s simple, not easy. If you remember, during the first Trump administration, oil prices started to go up and Trump just dragged everybody in and said, ​“You guys are gonna get the cost of oil down, right?”

And it magically did go down. That’s it. That’s the answer. Because all of these utility companies, you’re like, we invented these dynamic line ratings. Oh yeah we’ve used it in four different lines, but it doesn’t work universally and it doesn’t really work in every single line. Advanced conductors. I don’t know. Like I talked to my union and they don’t really love installing it and dah da, whatever. And then you’re like what about smart meters? Oh we didn’t really wanna unlock the data, and it’s just too much work. And then we got too much customer service challenges.

They’ve got an answer for every reason why the most affordable, cost-effective thing they could possibly do is not gonna work. For the first time in my lifetime, you have two governors-elect who basically are like, I heard more about electricity affordability than any other issue on the campaign trail.

So they need to go to these utilities and say, ​“Stop making all those goddamn excuses. Done. I don’t care. Just get the goddamn problem solved.”

Deploy it already.

I think the other thing, and it’s an adjacent topic, but I also think that big tech and these hyperscalers, everyone’s talking about AI and tokenization and the revenue model. I don’t think people are fully appreciating the gross margin issues. This is not public cloud SaaS gross margins.

Oh no, it’s not like, my phone storage for my pictures of my son that I refuse to delete where I’m like $2.99 a month.

It’s finally levered to the thermodynamics of power generation. And I think they’re starting to realize that. These companies have to figure out the power story. Are you hearing them understand that a level of nuance, that it’s gonna impact product pricing, gross margin? We had this big short seller come out, I think a couple days ago, and as I dug in, it’s like there’s really not a lot of people talking about the gross margin of AI productization. Because it’s so levered to something that they don’t understand typically. Is that a fair statement or?

It is, but look, when you’re a Microsoft or a Google or Meta or Amazon or whatever you don’t get into these weeds. Like you’re just like, yeah, here’s a goddamn contract. Just freaking build it. And I’m gonna pad it. I’m gonna give you 20% more than you asked for.

Just build it on time and on spec. They don’t build their own data centers. Google actually has done stuff in-house, but the vast majority of the rest of them are just like, we’re outsourcing this right? Now they’ve got people like Brian Janice was at Microsoft, or Caroline Golan was at Google, or like these other people, they’re amazing, super smart people.

They never met the CEO of the company. They’re not like, they’re not like direct beeline to the CEO. So like in general, the thing that Microsoft wants to know is they’re like, all right, We want this much power and we want it now. It’s like a chant. What do you want? Power. When do you want it? Now! 

So someone just needs to say to them, do you want to get connected next week? Yes, I do. Great. This is what I need you to do. I need you to basically weatherize these like homes and then that’s gonna free up enough capacity to power your data center. Or let’s replace these things. Or just put $400 million worth of batteries at your $22 billion data center. 

Yeah. Don’t this make this a generation problem only. Do the efficiency stuff. Do the dynamic.

And then they would just be like, whatever. I don’t give a crap. Like just connect to me. I’ll just do it. But like the utility is like, well, I don’t wanna ask them for that because I make more money by overspending by a billion dollars in this other thing. And like the governor’s like, ​“Wait, what? I’m supposed to understand electricity. Wait.” Advisor, A, B, C. ​“Why don’t you tell me what’s going on?” Yeah. I don’t know anything about electricity. I got hired because, like I have good relationships in this particular affinity community and so then they’re like who’s our expert on utilities?

Oh, the utility, CEO. He’s like your biggest donor. Oh, utility CEO, what should I do? Let me spend a billion dollars on this thing ​’cause that’s the only way to solve this problem. That stuff that Jigar’s saying doesn’t make any sense at all. And you’re like, wait, what? Like how is this happening?

I think there’s common cause, though, around affordability and some of the grid.

Oh my God. I got so many text messages from all of my friends who are former regulators who just retired or whatever, like, ​“Jigar, did I just hear what she said in her acceptance speech? We have a historic opportunity to go in and advise her and tell her that here are the things that the utilities have been doing to screw us over for the last 10 years that you could just ask ​‘em to do and it’ll reduce rates by 20% by 2030.”

That’s the thing, it’s like even when I talk to my friends, like in the environmental movement, they’re like, Jigar, ​“That’s not possible. You can’t reduce rates by 20% by 2030.” I was like, ​“This is not that hard.”

Numerator, smaller number. Denominator, much bigger number. Like we need as much load growth as we possibly can in the denominator, and we need to use the cheapest possible solutions to get more outta the stuff we already paid for in the numerator, that’s 20% discount by 2030.

On the load growth side, where do you see natural gas playing a role? I’ve heard it increasingly as the easy button for a lot of these hyperscalers to source from sort of combine cycle. Is that something you’re seeing more and more?

No, no. The whole thing is made up. That’s what’s so crazy. They’re taking modified jet engines. Turning it into a power plant. Just to be clear, right. If you have A‑C-C-G‑T, right, a combined cycle of natural gas turbine, like you’re at like, fifties efficiency, maybe even higher, right?

Then you take a modified jet engine or these simple cycle gas flights or something. You’re in the thirties. It’s horrible. And so the whole thing makes no sense at all. And remember the reason why we don’t have combined cycle gas turbines. It’s amazing to me how many people come to me going, ​“Jigar, it’s your fault that we don’t have combined cycle natural gas turbines. Because you hate natural gas.” I was like, ​“I don’t hate natural gas.” Natural gas was fully unprofitable from 2016 to 2020. Who was president then? Oh yeah. Trump one.

Siemens and GE and everyone just announced that they’re shutting down their plants because they weren’t selling. And so now you’re like, ​“Oh, Jigar, it’s your fault that they don’t have a supply chain.” My fault about economics, what am I talking about? And so, like now it’s like a five-year waiting list to get those things, what’s not a five-year waiting list? Batteries.

I can deploy that stuff next week and solve the problem for 2% of the hours. Which basically unlocks a hundred gigawatts of new capacity in our grid. Oh, problem solved? Yes. Problem solved.

The other thing that I know you and I share a very common fondness for is fit-for-purpose capital markets. One of the things I remember the yield code phase of solar. That did help, I think. I believe that we do not have fit for purpose capital markets, and it’s to the detriment of these economics and deployment. Do you agreed?

Totally agree. Like we’re in this weird spot where…I was talking to a financial advisor the other day, and he told me something that was quite shocking to me. He said to me, every time we have a market correction, we lose 25% of a certain type of investor base, like new investors who’ve never gone through a market correction before for the rest of their lives.

I did not realize this. Basically, if you’re like a Gen X and then millennial and then Gen Z, Gen Alpha, like when a financial crisis occurs, they’re like, Ugh, like my $20,000 went down by 20%, or whatever it is. They never invest in the stock market again. And they only invest in like bond funds or whatever it is for the rest of their life. And like we have yet even today, to ever make a fit-for-purpose retail product for our space.

Isn’t that crazy?

Never done it right? And my mother is one of these people. I had to force her to put money back in the stock market. She like had some bad experience in the 1970s, and she’s like, I’m never investing in the stock market.

I remember she like took all of her banks for a ride in the late nineties ​’cause she like had laddered CDs and they were like at 7% interest or whatever. But that’s all she wants.

I could give her a laddered CD all day on clean energy. Are you kidding me? 

What’s preventing more fit-for-purpose coming out, or do you think that’s our future? The people that develop those fit-for-purpose products for the right risk return? Is that sort of where we’re going?

I think so. Look, I think that there is a level of discipline required, which you and I both know seems to be lacking. Like when I create that product for my mother, right? If there is a moment in time in the stock market where I could say, ​“You know what? Those people are dumb.” If I actually take this whole vehicle public, I think this thing would trade at a 3% dividend yield, which means the stock price has gone up by double. That’s not a good thing. That’s what happened to the yield codes. Remember? The price went up, and then the dividend yield went to 3% and they lost their head. They were like, I think the cost of capital now is 3%. No, it’s not. They just overbought the stock. 

And so, at some point, you have to say how do I dial down the temperature? And just do the most boring thing possible, and just pay that person out 6%. I’m not gonna take it public. I’m not gonna try to enrich myself in a temporary fashion and then screw over the retail investors, which happened with all the SPACs in 2021.

But instead, like you’re like, how do I show discipline myself. I’m gonna make a lot of money if there’s a lot of assets under management, I make fees, whatever. But at the end of the day, I’m not gonna go for broke just to screw these people over. But I think weirdly, we are in this place right now where I think we just need a correction of morals. People have to be like, we’re gonna create a fit for purpose solution. We’re gonna solve this problem, and we’re gonna not get greedy.

I think there’s a lot of also collective magical thinking as opposed to soberness. And some of that is there’s incentive structures for collective magical thinking. One of the best things about America is that we do collective magical thinking and dream of the future.

Oh yeah. Look at AI. Look, Tyler Cowen wrote that big piece recently which talks about, it’s like in what other magical time in history would you have such a realignment of capital structure? Think about how much of the US economy is now moving into AI investment. That’s amazing.

We’re so nimble. That part’s great.

And by the way, it’s build it and they will come is the hope. America does that uniquely. Shale was another thing financed… Now some of that leads to capital destruction, to your point. But the soberness piece I want to get to because I think you are very passionate about hey, different sectors have done this before, like the real estate example. Where there’s a way for everyone to win here, but it’s gonna require some soberness on capital structure. And you had this concept when we talked in DC a little while ago on hard money needs. Yeah. Maybe just talk about some of the things that you think our space needs to flush out this stuff.

So like, I think that when you think about where we’re headed, I think that there’s two or three different things going on. One is that the people who want to buy your company, generally speaking, only want to pay a hundred million dollars. They never want to pay a billion dollars,

Yeah. There’s no terminal value exit..

So then, why are you raising a B round and a C round and a D round? Just hit product market fit, get two customers to be super happy, call up Siemens or Schneider Electric and sell for a hundred million dollars. You’ve only raised $12 million to get it here, and you’ve pocketed $25 million.

That’s great, right? But you’re never gonna be worth a billion dollars. So stop trying. Like it’s not gonna happen, right? So that’s one, two, like some of these companies, like for instance, in the clean cement space, right? Or the concrete space, right? Like they are amazing companies, right?

But they’re trying to license their technology to existing concrete companies and saying, ​“Why don’t you upgrade your local stuff? And we’re gonna decarbonize it for you.” They don’t wanna do that. 

But you know what they want to do is there’s a 70-year-old who wants to retire and his kids don’t want to work there.He’s happy to sell you his whole company for two times earnings. So just buy his company for two times earnings, merge it with your company. He’s never gonna get somebody with your talent to run his company. Now he’s got some SBA bro that’s trying to borrow money from the SBA to buy your company for two times earnings, right? And then make his company hugely more successful, decarbonize his thing, and then sell all that cement to Microsoft for a premium, and then maybe other people will license your technology, or they won’t, you’ll just buy the next 70-year-old company.

So those are like business models you can do. Other business models though, are also like, at some point you need people who actually want to not only give you capital, but also give you expertise. That’s the other thing that I find is that there’s a lot of people who take money from venture capitalists and venture capitalists are like some of my closest friends.

I love those guys. I’m not like badmouthing them. But when you ask them like, are you an operating partner for TPG or Apollo? No, you’re not. They’re not like coming into your business and helping you with all this execution risk. 

So go to somebody that has more patient capital or family office or whatever else, or a high net worth individual and get that person to give you money and do these things that like then leverages their expertise and they help you with sales and they help you with execution and they help you with this and that, whatever. Did they give you the highest pre-money valuation? No. But are they gonna help you with the rest of it? Yes. And so like I find that we are in this weird spot, where there are a lot of people who really believe that their net worth on paper is real.

In closing, so we talked about energy poverty reduction. That’s gonna happen in the next five to 10 years. All these gains in energy efficiency, all this low hanging fruit in wires, for lack of a better word. And I think that’s pretty bipartisan.

I think it is too. What’s not bipartisan is forcing the electric utility companies to do it. 

That could become bipartisan.

Oh, I would not be surprising to me if the Democrats went after their utilities hard, that Donald Trump doesn’t pile on. Like he might actually do it.

Because they don’t want these to be the equivalent of egg prices.

But we are. Electricity is definitely the new egg prices. That’s what we learned in the election.

Ending on the positive, what’s on the frontier for you of the next thing that we should watch for, where it’s working or it’s going to work?

It’s all of the most boring stuff. Think about how many renewable natural gas platforms that we built. Like we built one at Generate Capital, Generate Upcycle, you’ve got NextEra. But if you talk to industrial food companies and say, ​“How much waste do you have?”

Industrial waste, right? So big quantities that you send to landfills every year. Generate processes more industrial food waste than anybody else in North America. I think they process 4% of industrial food waste in this country. We need 57 more digesters to get to like just meeting the industrial food waste amount. That’s not cafeterias, other like concentrated food waste like McDonald’s, whatever.

And so like, why did we stop? We did a bunch, and now we like paused. This pressure bleeding company, they’re amazing, right? But like we could do 25,000 boilers.

The riches are in the niches.

The riches are in the niches. HVAC. There’s this great company called Blue Box Air. They do deep cleans of coils. Immediate 40% reduction in airflow movement costs. And so now you’re at a place where like HVAC is the largest user of electricity in all buildings, and they can cut that cost by 40% for like just the airflow part.

So when you think about LED lights. LED lights were roughly like an 85% reduction in electricity consumption from incandescent light bulbs to LEDs. We probably could save the same amount of absolute kilowatt hours that we did from the LED revolution, just through this HVAC revolution, like fully rolled out.

But also look at electric vehicles. Yeah. We are now at a point in electric vehicle development where you can find sub-$35,000 vehicles without the tax credit. And so you have 20% of all users in the country that drive more than 20,000 miles a year. And it is so much cheaper for them.

This is before Waymo.

I am so impressed by the Waymo stuff. You could easily ride 100,000 miles a year or 200,000 miles a year with Waymo. It’s so amazing. I just think if we took the stuff that we already have, rooftop solar, we have 400,000 warehouse rooftops where it’s only a 20% premium to install solar on that warehouse versus like on the ground somewhere but it’s actually on the distribution circuit.

You could generate a hundred and I think 80 terawatt hours worth of electricity, which is exactly how much data center load growth we expect to have between now and 2030. You can meet it all just. And then you add some batteries there. 

The solutions are there, we just gotta get going.

Yeah. We just gotta go from a 5% penetration to a 50% penetration on all these niches.

Jigar you’ve been an inspiration to me, and many of us. It’s a real treat to interview you on the podcast. Thank you for doing this. Thank you for your leadership, your service, and for what all you’re doing.

The feelings mutual. I just am so proud to be a part of such a dynamic industry and such an extraordinary group of people, which you are at the top of that list.

Thank you, Jigar.