Emerging Technologies Panel at Novogradac Conference Captures Enthusiasm, Excitement of Renewable Energy Market

The Novogradac 2022 Fall Renewable Energy and Environmental Tax Credits Conference in Washington, D.C., on Nov. 3-4 was Novogradac’s most-attended green energy conference to date, propelled in large part by the passage of the Inflation Reduction Act (IRA) in August, which provides $369 billion in clean and renewable energy provisions, causing a wave of enthusiasm to splash over the industry. This is an alchemic moment for the renewable energy sector as it coalesces around the financial, practical and technical realities going forward, including use of the production tax credit (PTC) and the investment tax credit (ITC).

It’s appropriate that the Emerging Technologies: Best Practices panel brought together some of the same industry pioneers who worked in solar energy and renewable energy as the market began to emerge 15 years ago. All four of the panelists are now looking to expand into new frontiers and new opportunities.

Pushing Boundaries

Izzet Bensusan is the managing partner and founder of Captona, an energy transition investment company focused on solar, biomass, wind, fuel cells, storage and, in our discussion, hydrogen. His primary focus is investing in proven infrastructure assets with long term contracted cash flows and mature technologies. Currently, Captona is expanding into green hydrogen, which is made by splitting many organic materials as well as water into its elemental components. Captona also looks at blue hydrogen, which is derived from carbon capture storage from natural gas. Although there are other hydrogen colors, the former are the current economic ones. Bensusan anticipates incredible growth in renewable energy in the next decade thanks to the IRA, especially in technologies beyond wind and solar.

“A lot of people think hydrogen is a tomorrow thing rather than already in place,” Bensusan said. “In fact, hydrogen has been around and it’s all around you–42% of everything in this room is hydrogen. It’s a matter of converting and using. … I think every individual in this room, if you spend one week understanding these other technologies, the amount of availabilities are endless in North America right now.”

Another emerging technology are microgrids, which blend multiple energy sources such as solar, battery energy storage, fuel cells and more to provide reliability, resilience and even energy independence. Julian Torres, the chief investment officer for Scale Microgrids, talked about the practical realities of bringing their products to consumers, which range from standardized modular microgrids to complex bespoke power systems while balancing the scale for each individual component and locale. He said understanding what a customer wants out of their microgrid informs how engineers working with Scale attune them.

“We could build a mini-utility on site for you,” Torres said. “It is suitable for many different segments and it can be scaled up or down depending on the load needs of the customer.”

Market Challenges

Interconnection agreements, which govern the relationship between a power generator and the power provider’s ability to accept and distribute that power, are one aspect the IRA aims to soothe through its allowance for projects under 5 megawatts to take a credit on an upgrade. Torres said Scale has some off-grid projects, but that interconnection challenges can bring a potential endeavor to a halt.

“The interconnection ITC component of the IRA certainly addresses the cost issue,” Torres said. “We’re seeing in markets where our product is in high demand are also markets where the grid is most strained.”

The IRA also presents the greatest potential to date for energy storage, which was Chris Wright with E3 Consulting’s focus, particularly the potential to use the ITC for standalone batteries. Wright said that even some in-progress projects are revisiting their capacity to add lithium-ion battery storage or bifurcate their financing to claim tax credits on battery storage by itself.

“We’re seeing a few clients come to us that have combined solar-storage projects in development thinking about [if] there’s a way to decouple those now,” Wright said.

Wright said the greatest challenge at present in the battery sector is securing and pricing raw materials such as raw lithium indexes for carbonate and hydroxide. Because top-tier suppliers are in high demand, Wright said second-tier battery suppliers are popping up to meet demands.

An Echo in Time

That all adds up to Nick Addivinola, executive director of mergers and acquisitions for Nautilus Solar. Addivinola works almost exclusively in acquisitions today, but, like Bensusan, Torres and Wright, has been involved in renewable energy since the solar boom of the late 2000s.

Addivinola said evolution of education and awareness about solar, wind and other types of renewable energies has brought a measure of stability to the market. Financing newer, developing technologies is reminiscent of the late 2000s.

“We are, in many ways, like it was 15 years ago,” Addivinola said.

Addivinola suggested that a path to securing financing for emerging technologies might be to work with boutique banks and other creative lenders focused on relationships who are willing to listen and take risks.

“Know that if you were in solar before, my guess is it’s not going to be as easy,” Addivinola said. “Get ready to hustle.”

Conclusion

If you are an investor, developer, syndicator or other clean and renewable energy professional working in emerging technologies or other forms of green power, consider joining the Renewable Energy Working Group to get the inside track on issues affecting the PTC, ITC and more.