Nextpower Inc. (NXT) Earnings Call Transcript

My name is Mike Rietbrock. I'm the Director of Research at BNP Paribas. It's my pleasure to welcome you all to our second annual Power Up Conference. Hopefully, you guys are having a good day. Thank you for making the time. I know that everybody is busy. I know that it's probably the worst week of the year to try to get around New York City. So we're very appreciative that you're here and let any of us know if we can do anything to make your time more efficient. I would also just like to quickly thank Moses and his team as well as our corporate access team who do a great job of putting this together. It's a lot of work, and it always goes off [indiscernible]. And then with that, I'll introduce the panelists for our solar CEO panel. First, our MVP down -- well, sort of in the middle is Dan Shugar, who's here for the second year in a row and played an important role in putting this panel together. We're also joined by David Zwillinger from DESRI [indiscernible] Yuri and then finally, George Hershman from SOLV Energy. So with that, I'll turn it over to Moses. I think Moses will sort of lead a discussion for 40 or 45 minutes, and then we'll turn it over to questions from the group. So thank you. Thank you again.

Perfect. Thank you, Mike, and the powerhouse of a panel. Very excited to have you all here. I think one thing I want to almost -- excuse me here. To get started, if I summed up the solar space right now, at least from the perspective of some of the investors, and I've had some of them even approach me about this today, this morning, the first thing they want to know, is this a net tailwind time, net headwind time? Are we in a good solar market or bad solar market? If you follow all the data out there, if you pull up all the projects, what was safe harbor, what's projected out a few years, usually, you could just take Wood Mackenzie and add 10, 15 gigawatts into the out years. That's my -- that's our secret sauce actually. But then if you look at other things, we had the Section 232 come out a little over a month ago. It's created a lot of confusion, what will this mean for inflation on solar, what will it mean for access to solar panels, followed suit by the Trump executive order, which is accelerating the time frame of pushing out some of the Chinese product. So I don't want to monologue on that. But if I set the backdrop of AI power load growth, solar is the cheapest, the pipeline looks like it's great against a bunch of these headwinds in the way. How do you put this all together? And would you send as a sort of clarifying message to everyone here to start, projects are still continuing along, and we're making it through these sort of stumbling blocks and maybe solar comes out stronger? Or do we have to rethink our numbers in our models?

So maybe if we could start, let's just go through sequentially here. Look, what are your thoughts -- and sorry, please provide a little bit of background of your [indiscernible].

Sure. And I think you're going to hear different perspectives because you have different groups in the supply chain of delivering power here, right? So I think it will be a good perspective of kind of where we sit and maybe the fact that there is -- there's what you hear and what you actually see. And so SOLV Energy is EPC and O&M. So we provide the construction services and the operations and maintenance for solar and storage plants. So from our perspective, we're really -- we take it from the development assets that David and Yuri work through in their teams to develop projects to -- they come to us then to build and operate them and maintain them through their life. What we're seeing is that our projects in our backlog, which is -- we've reported our backlog is $8.5 billion. We're seeing that, that backlog that is really a 24- to 30-month slice in time for building and deploying projects is strong. We're seeing those projects are continuing to move forward. Product is secured for them. We've had long conversations with all of our customers. The demand is still there. Those projects are moving forward. So from an execution standpoint, while there are clearly challenges around the executive orders and how do we have to pivot maybe an inverter manufacturer on a project that's in design, those kind of things are happening. So I'm not going to say it's all rosy. But we have procurement teams that are working through it. Dan will talk about his supply of inverters into the market and things that are coming to help address some of these challenges. But in the near term, we're seeing that execution certainty is a requirement. Our business is continuing to grow. We're seeing continuous incoming on a daily basis of more demand that is continuing to kind of fill the backlog that we're putting in place every day. So I think from where we sit today, the near-term 24, 30-month outlook is really strong.

Yes. I've been doing this for 18 years and on stages like this where we sort of self-flagellated about whether the industry is succeeding or not. And every year, we succeed. So I have a basic belief in the capability and the ability of the leaders in this industry to succeed. We've done it through a lot, and it's not always easy. I think the biggest changes that I see -- and by the way, my name is Yuri Horwitz. I run a company called Sol Systems. We're in clean energy IPP based out of Washington, D.C. Most of our projects are in the Midwest. We've got some exposure to Texas and SPP as well. We're in the middle of constructing about 800 megawatts of projects right now. We've got about 3 gigawatts in our pipeline, and we operate over 1 gigawatt of projects. We started doing some very different things and have migrated into the IPP space and have positioned the company to do clean energy infrastructure as well as sustainable infrastructure writ large. So a few things. Number one is we are at a political moment where there is significant opposition within this administration to what we do and concern. And I think we have to acknowledge that. And that is a time in the moment. We are also at a point where data centers and manufacturing in the United States will drive an increase in demand, overall electricity demand from anywhere from 12% to 19%, depending on which report you read and who you believe. And I would pause it that the first one is a time and a point in time. And the second is a fundamental alteration of our economy. And I would bet on the second. Long term, not the first. And so the question is who's going to meet that. And I'm not going to advocate or argue that it's going to be 100% solar, but I think it's pretty hard to avoid the fact that solar is going to be a huge part of that demand or -- sorry, meeting that demand, that generation. It has been, it will be. And so I bet the long game as I have been building this company for 18 years. And I see that on the ground in our projects. Yes, 232 tariffs aren't fun to navigate for our company or for really any other company in this industry. But we have and we will, and I think others will as well. It's about innovation. And fundamentally, solar and storage in the clean energy industry is about innovation. It's what we've done over and over and over again. And we're in the middle of building up a supply chain to meet the overwhelming needs of the United States. We don't do that. Increasingly, Dan does that and others do it really well, and we rely on our partners to do that. And I think that's a metamorphosis we're all going through. And if I were going to bet on what would be the long-term driver for solar and clean energy in general BESS, I'd rather have a based in demand, raw demand from data centers and industrial needs than on companies making clean energy commitments, even if I agree with the commitments and I'm aligned with them. And I think that's where we're at. We're increasingly driven by the requirements in the United States for massive energy build to drive reshoring of manufacturing, data center expansion and industrialization. So I'm actually pretty -- I'm not suggesting for a moment, we don't feel the pain when a tariff arrives, we feel the pain, everyone feels the pain. But I'm pretty confident we'll overcome it, and I'm betting on others doing the same.

Great. Well, Moses, thanks for the invitation to come back. And I really want to thank George, Yuri and David for being here. They're all my customers. And this is really a who's who of top leaders in the industry. And so we're going to have Q&A later, so feel free to ask away. Okay. So first up, where do we stand? I'll just speak to Nextpower. I founded Nextpower 14 years ago. So we have last quarter reported record backlog. We also had record revenue. Our backlog, we reported at $5.5 billion. Additionally -- for our legacy businesses, additionally, we did some acquisitions. So since we were here last year, we acquired an inverter company, and we're scaling that in the U.S. We can speak about that later. And we acquired a battery company. And so if we add our battery backlog, that's another over $300 million of backlog as we look forward. So the fundamentals are we need energy, we need power. Solar provides energies, battery provides power and firm power. No one would have imagined, at least I didn't, 3 years ago, that a battery can do something a rotating machine can't and can really help a grid or a weak grid support a very highly intermittent load like a data center with a learning model application. So we're seeing really exciting things happening. We're in the middle of fulfilling right now with our battery business, a 1.3 gigawatt application for a learning center. And that's awesome. And that the more storage that's added, the better the environment for solar, because we had a lot of solar starting to -- we were starting to see saturation in the largest markets in Texas and California, some negative pricing. But those markets have 15 gigawatts of operating battery systems. Now that's a lot. So you've seen excess solar being stored. But then those batteries can do other things, provide tremendous value to help those systems come online. We're seeing also the -- a significant build-out in the domestic manufacturing chain. We at Nextpower stood up 35 factories in the U.S. with our partners. We don't own factories generally, but we -- most of those are bespoke to us, and we were the first to achieve 100% domestic content to U.S. Treasury standards in the U.S. And that engendered -- and we're shipping every week 1,000 trucks, plus or minus of finished goods. That's a tremendous amount of material. And seen tremendous support for this manufacturing in the U.S. Well, we've seen that not only in trackers, we're doing it in some of the other businesses. We've acquired an electrical balance system. Inverters, we are -- we've announced a double-digit gigawatt inverter manufacturing facility that we're standing up that will be operational next summer. And we've seen it beyond our scope also in the solar panel area with a number of factories that were originally -- many of them actually built by Chinese companies, but then they had to de-FEOC, Foreign Entity of Concern, and they sold. For example, T1 Energy, another public company, bought a beautiful factory from Trina Solar. I was physically there, best factory I've ever seen. It's cranking out solar panels. They're sold out right now and expanding and they're going upstream. And we're seeing Tesla announced a major crystalline manufacturing investment to make ingots and wafers and cells in the U.S. Our company has many supply chain people in Asia, we've seen them order equipment. So the pricing environment now supports continued expansion. So for the intermediate term, as George mentioned, his backlog is secure. We've announced our backlog. The current demand environment is strong, remains strong for the need for power. And longer term, we see a build-out of additional supply chain. And we think that supply chain in the U.S. really engenders policy support and not only for solar, but also power electronics, batteries, transformers and things like that. So there's headwinds for sure, but our backlog since we went public a little under 4 years ago, our backlog at that moment was $2.1 billion. Today, it's over $5.5 billion plus $300 million for batteries. So that's kind of a way to bookmark it, and we just announced record backlog last quarter.

Moses, thanks for having me. My name is David Zwillinger. I've been doing renewables for 20 years. We worked at D.E. Shaw. That's why I cofounded this business, and we spun out of D.E. Shaw early 2025. We've got about 10 gigawatts operating or in construction. George is a huge partner of ours, as is Dan, and we've been doing business with them for a very long time. Moses, I'm going to try to be a little different than the rest of them just to keep people engaged here and not to fall asleep. So the market is good, just to give some data points. Before 2024, we had built one project north of 300 megawatts. This year, we expect to do 4, okay? Last year, the same, and the size and scale are increasing. So I would say in our business, obviously, you see the other companies that are public, their business. Actually, business is pretty good. And so when I walked in today, Moses said, the average person in this room thinks the renewable industry is going away. And I sort of laughed. Like why is there such a negative sentiment over there and a positive sentiment over here? And so I'll say a couple of things. One, you way overweight the federal government, okay? You way overweight them positively or negatively. In 20 years, I put 0 correlation with who's in the office. DEMS in the office, I've had terrible years. Democrats in the office have had amazing years and vice versa. I think people way overstate the importance of the federal government. This federal government is trying to make itself more important. I don't want to minimize. I see the same thing you guys do. But I think it's -- UFLPA WRO can't get modules from China was somewhere between 5 and 100x worse than what we're going through today in terms of the 232. So that's number one. Number two, the industry certainly is benefiting the people of scale, okay? There were years we could sign a power purchase agreement and post $1 million. And then we've called George up and have to give them $1 million. Today, when we sign a contract, often we're posting $50 million. We've already put $25 million into our interconnect. Dan wants $10 million, then George wants $25 million. And that's one. By the way, the business has required more scale. So we hear a lot of voices of some of the smaller names who are struggling. Companies have gone bankrupt. There's been consolidation, but those parties have not been able to scale up in an industry that requires more scale to be successful. But the bigger players that you see in the space, I think they're generally saying things are going better often because the same point of interconnect, we're now selling solar and storage. We're selling 2 for the price of 1. We're doing all the development work for 1 asset. We're getting 2. Last, everyone talks about this. It's all about how much demand there is. If we're in a market and there's a lot of demand and not a lot of supply, you get more price. You get more price, you protect against interest rates, you protect against supply chain. It's true the cost of the customer has gone up, way cheaper than your alternatives, right? But the reason you're hearing this is you're hearing about affordability. You're hearing the federal side. You're hearing every data center hyperscaler talk about behind the meter. Guys, 12 months ago, no one ever said the word behind the meter, never was said. Don't look at the 2022 queue in MISO. Look at the 2023 queue in MISO. Look at the 2025 queue in MISO, okay? It's all renewables, all renewables. And so when you think about wait a minute, what is -- where is the market going? If you need power, the answer is renewables. Now gas will be part of the solution for sure, and it is needed. But I think what everyone is hearing is sort of like spot today, everyone is talking about those things, and that's true. And that will be super important in 2030 and '31 and it's areas we're focused on. But as you talk about building today, it's solar, it's storage, it's a little bit of wind and it's a little bit of gas.

That was great way to transition to this next. It's sort of a follow-up question to this. Not specific to 232, but just the arc of where we've been, which is a lot of the things that David, you just touched on at the end, $20 a megawatt hour was a PPA price when it was seemingly even more commoditized, but still a smaller industry in 2020, becomes a developer's market with premium suppliers and EPC companies able to sort of make a good game there as we get to $30, $40, $50 a megawatt hour, now you hear $60 a megawatt hour is almost a way to quantify this discussion at it's just going to come at a price. If it means it's a $70 market, it's a $70 market, whether that's a post-ITC discussion, whichever regions that, that fits, whether that's because of the trade effects, et cetera, is it just going to be a matter of price? Or is this future conversation? Imagine we're sitting here and I'm first putting this in front of the developers, we're going to sit here in '29, 2030 and you're going to say, well, we had a bunch of projects we were able to do, but we ran out of access to inverters. We bought up Dan's factory, and we couldn't get more from SMA and the Chinese were out of the market. So would you say that it's all just going to come down to price? It will price in and it will still be cheaper than alternatives. There's still tons of it in the queue, and that's the way to frame it? And that's what we'll look at when we turn around in a few years from now and see solar is continuing to be on the rise? Or is it that solar is still going to be the best, so to speak, solar plus battery, et cetera, but we might be constrained as an industry physically in a sense?

Okay. Two things. Once the product is -- the solar farm is built, the biggest cost of goods sold is our cost of financing. So the 10-year is 5%, the 10-year is 60 basis points. That in and of itself is $10 a megawatt hour, maybe even more. Commodity costs have come up and labor costs have come up. And so when we're pricing our power purchase agreement, we're taking all the latest costs, what's Dan selling us a tracker for? What's George giving us a BOS for? What's the module cost? What's interest rates? And then what are we targeted rate of return and how much risk is in there. And so all of that factors in. And unfortunately, it's been inflationary. And at the long term, that's bad because the best thing you do is sell -- you're selling a commodity good. You sell a commodity, the cheaper you sell it, the more you're going to sell of it and the less competition. Now the good news is everyone's price has gone up. I mean, I see some announcements on SMRs, and I just laugh at the price that they're charging, okay? Renewables are massively cheaper. Look at where gas prices have gone. So I think you got to think what is the competitive product? People need power. They're going to need more capacity, and so you're pricing that in. Now as I see no worry about the ability to get product. We've got a lot of smart people. There's a lot of capital in the space. So if we go and say, Dan, we want to buy a lot more inverters, he's going to build a lot more manufacturing. Same thing. So I see no shortage of the ability to get the equipment. Maybe in any 6-month window, transformers have probably been the most challenging thing we've had. I mean, to give you a sense, we own 60 transformers for projects that we haven't built because we saw the supply chain. And so I don't put any worry of that in any type of medium-term concern. Over time, as the price goes up, you start to introduce other options. Would you do more run time? Can you do an upgrade of facility? Do you do more energy efficiency? So I don't want to suggest you can continue to raise prices $10, $20, $30, $40. But where we stand today, we are super competitive with all the alternatives.

There's a lot of room there. Yuri, would you agree with that?

Yes, supply of equipment at all. We have a grid that's 20, 30, 40 years old. And that grid sustained in the United States for decades with minimal demand growth. But it's decades old. The average coal plant, I think, is 40 years. Many of the gas plants are decades old. No one even knows how to build gas in the United States anymore. They literally have to go find people to build the gas because everyone is too old to build gas. So we have a system that's decades old, and we have a massive increase in demand. As I said, 12% to 19% increase in demand over the next 5 years. So prices are going to go up. It's not politically palatable to tell consumers that because we're in a moment in time or a period of time where there's significant inequality in wages and wealth. But yes, prices are going to go up, and they're going to go up when you introduce SMRs that cost $250 a megawatt hour or new nuclear that costs $200 to $300 per megawatt hour or new gas that costs $100 plus, $100, $150 per megawatt hour. Those are the numbers that no one is talking about, geothermal, which is -- I'm a huge fan of geothermal, but it's expensive. Taking old nuclear and putting it on the grid, that's expensive. It's $100 to $120 per megawatt hour. You can go and find that out if you look at the Meta PPAs or the Microsoft PPAs. So electricity is getting more expensive, whether solar is contributing to that or not, and it's because we have an outdated grid that needs to be upgraded. The first thing that we should be doing is making the grid more efficient. That's the very first thing we should be doing. So rather than spending huge amounts of money, Duke spending huge amounts of money on new gas, they should be investing in [ TD&I ] to make the grid more efficient. They should be investing in storage to make the grid more efficient. That's not what they're investing in because they can make a lot of money investing in gas and so can all the other utilities. And so there is a decoupling there of the consumer interest versus a regulated utility, and that needs to be addressed. That's not my job, but someone should address that. Solar is going to be more expensive in the future. And when the ITC rolls down, it will get more expensive, but it's going to compete head-to-head with gas. And we can do 12-hour storage for less than most gas is built at right now. So it's going to compete. It's not going to be a shortage of supply on equipment. It's going to be coupled with gas, and it's going to be coupled with storage, but solar is going to compete.

Moses, can I build on Yuri's comment? So I started my career. I'm an electrical engineer. I was working for Pacific Gas and Electric, doing electric transmission planning and operations, okay? And what Yuri said about the grid is true. It's really hard to build transmission, new transmission. It's how many lawyers per mile. It's just hard. And if you look at the circuit miles that have been built in the U.S., they're really low. Now there are these advanced grid technologies. You have these conductors that use carbon fiber core that can carry in the same physical size of wire, 50% to 100% more current. You can use the same corridor, usually the same towers and get a lot more current. Even there, utilities are really slow in the U.S. to take this on. They're just not building that much. The tech is there, but they're not. That's where batteries come in. And this is a new -- this was like an epiphany to me when I started getting my head into the whole storage thing. So we had seen -- we delivered at Nextpower 30% CAGR for 5 years in a row in solar. We're still delivering a strong growth in solar, but that growth has slowed. And we looked at batteries because my major customers are doing storage on most, if not all, of their projects, but we also saw it as a way to help solar and a way to contribute shareholder value. What I didn't appreciate when we started first looking at this is how much flexibility the storage and modern power electronics add. All these data centers, everyone wants the grid, okay? You want the grid. You don't want to build as a stand-alone. You see some news articles about this, and there's a few -- a handful of projects. They all want the grid for reliability. And so -- but what these batteries and power electronics allow you to do is use a grid that may not have sufficient capacity to serve you even with normal loads, let alone these learning model data centers. Now we acquired a company, Prevalon Energy, which had the origin was out of Mitsubishi Heavy, so they knew how to interact these battery systems also to support rotating machines. If you have a grid, I want to put a rotating machine on the customer side of the transformer. Okay, that's good, but the rotating machine is not -- cannot move fast enough to address these intermittent loads. You can literally snap the shaft of a million pound rotating machine by having these data centers start consuming and power and then going off, but the battery can solve that issue. But there's also more routine loads. So putting the learning model data center on the side, utilities have grids that they may not be able to serve their existing loads. So the day we closed the Prevalon acquisition, which is now Nextpower Energy Storage, that was this quarter. We flew up to Idaho and visited Idaho Power. They have 9 battery systems operating in their grid. The company we just acquired had just delivered a 200-megawatt, 800-megawatt hour system up in Boise. I was there. I heard the customer, Idaho Power, speaking. A large chip manufacturer had -- through the CHIPS Act, built this huge factory out on the line. But for the battery, they couldn't -- they just didn't have enough peak power during critical hours to supply the chip factory and their other customers on the line. So the battery was existential to them using the existing grid. So you can -- the existing grid that's there is the grid we're going to have. There should be more investment. I'm not seeing a lot of utilities leaning in. But with this tech that we now -- is now commercially available, affordable and we're scaling it provides solutions to allow customers to come online in the near term. But you're not going to see very many of these islanded applications where, oh, we're doing a big solar wind, gas thing, it's totally off grid. I mean, I think there'll be a few, but that's a side show of what's happening in the real market. But this new tech is a very exciting way to serve the very strong growing load with the grid that we have.

Brilliant. And I think we're going to return more to battery a little further in the discussion. I want to also move to George on the EPC side. One of the perceived, I don't know, constraints, if that's the right word, is we can't get enough labor. We're competing with other forms of generation. We're competing with transmission build, the data center build itself. There's a deficit of electricians in the country. How do you slot it in? Think about that now by region. Solar and battery are now shifting in terms of the regions that are more popular than ever. Texas is still big, but other regions are coming up. So how do you sort of pull that all together as one of the top EPC players? Talk about execution, talk about what those bottlenecks are or are not? And what do you do from an innovation standpoint to break them?

Yes. I think we've talked a lot about how scale matters in this industry from pricing and deployment. It absolutely matters in execution. And what we're seeing now is that the top-tier EPCs are not only growing in scale because of project sizes are just getting so large that they're starting to size out a whole middle market of EPCs that just can't compete in this market because of project size and demands. And what that's doing is, one, it's driving market share of projects, but it's also importantly, driving market share of talent. So we're seeing a movement in talent to organizations like ours that have a large visibility in pipeline because of our backlog. If you're a skilled electrician and you want to come to companies that have a long runway of work and opportunity, right? Workforce wants to work. And so what we're seeing is that more and more of those -- that trained workforce is moving and coming from other smaller maybe Tier 2 players that just can't size into this market. And so we're seeing that talent shift we're investing a lot of money in our own development of talent. I've been doing this for 20 years now. And I'm proud to say that guys that came in as interns for us are now running the largest projects in the world. And so they've worked through that entire progression. People that are a general superintendent that is running a complex of 4 gigawatts of work for us started as a pile driver for us a decade ago. And so we have a huge commitment in our organization to really train and develop leadership within our organization. And so we bring in, we attract talent, but we train talent. And that is what really delivers an organization that we trade on operational excellence and certainty, right? At the end of the day, what David and Yuri need is they need a competitive price, but what they really need is certainty on execution. And because that's what their customer demands. And so that's really what we continue to strive for. And we are looking at ways because we understand we've been in this business, and we want to continue to deliver at the best and lowest cost to serve. And so we're looking at ways to optimize through automation, robotics, our business looks a lot more like a manufacturing business than it looks like a construction business. I spent 20 years in commercial construction before I started this group in 2008. And we've modeled it more like manufacturing than we ever modeled it like construction because we do the same thing over and over again, just happens to be out over 20 square miles, but we're doing millions of modules. And so we think about automation, where automation works, and we're doing autonomous pile driving on projects alongside of manual pile driving. Because we can optimize the crews that we have. We're still hiring 650 people for a job, but we can get more production out of 650 people because we're using autonomous module installation and autonomous pile driving. And those crews, autonomous crews might work 3 shifts a day and our manual crews and manned crews work 1 shift a day. But we can get more production and complete projects faster, which ultimately drives down the costs. David talked about cost to carry, but that's real. And so if we can finish early, they can deliver energy to their customer early that drives down costs. So while costs are being pressured in every way, I think I know from the execution side, we're looking at ways to help mitigate these cost increases. I'm not saying they're going down by any means. I'm saying we're trying to mitigate.

Bigger project that can even be done in a shorter time line and more automated and so on and so forth. And if you took a trailing market that was 35 to 40 gigawatts, you really see the EPC side better than anyone. What would you say that upper limit might be if we're looking a few years out? Is it the market can't handle 50 to 60, assuming the demand is there, which it seems like it is and that we can get all the product necessary, limit to that market?

No, I think we saw 50 to 60 coming. And I think we saw projections if we looked at way back into IRA projections and other things that we were sitting in that 60 gigawatt scale. I think demand is there. I think that the supply chain is in better position than it's ever been. I think if we sat back 5 years ago, we had supply chain challenges. I think Dan has done a great job of scaling his business. I think that we're positioned to deliver. There's a operational efficiency that's happening as well as projects are getting larger, we can get -- you think about what I need is I need skilled management, superintendents, foreman level to manage a project. If that project is 200 megawatts, I need that group of people. That group of people can now manage a gigawatt project. I don't need 5x more of those people. I need a percentage of more tradespeople. I need maybe a percentage of more junior people doing tasks because of the scale of the project. But that's where a lot of the efficiency is growing in this market is just that we could not grow at the scale of gigawatts annually if I was doing in at a 200-megawatt chunk. But I can grow my revenue significantly because for every 200-megawatt project, I'm now putting in a 400-megawatt project or a 500 megawatt or -- and with a couple of gigawatt projects that drop in there, too. So that's where a lot of the scale efficiency is coming without just sheer manpower, I would have to.

Larger for same.

Yes, larger for same, which is, I think, in everybody's business model, much more efficient.

David, what's your limiting factor in your business? Is it financing, safe harbor? We discussed a lot on the product side in general. You've increased the scale of DESRI. We could see it through the numbers that we can find from public data sets.

There's -- the capital markets are strong. So we go to the project finance market. This year, we'll raise about $10 billion, pretty -- I mean, it's maybe not the best market of my career, but one of the better markets. There's some pretty good depth in that market. So I'm not worried about the capital side. A little harder on the tax credit side, but I don't think that's a binding constraint. I think we can buy as much trackers as we need to fulfill. I think we can get as much EPC as we need. So I don't think it's those constraints. We probably run into 2 challenges, Moses, just human capital. Every one of these projects, you got to underwrite correctly. Every single one of them, we have a 15 to 18 FTEs spending 30% of their time for 6 months, getting design right, getting financing, getting an independent engineer, getting legal. It's a little bit of human capital. That's probably one. And then two, you -- there is a growing market, but I don't want everyone to think that everyone -- any price, any time, go ahead, that's overstating the demand. Demand is there, but demand is there in sort of 2 buckets. One, the hyperscaler will pay the price they want if you get them a data center. If it's just to buy renewable power, that's their price plus $1, okay? I tell the team, ESG is dead, like nobody cares. Nobody cares about anything except for that I get my data center built. And then there's the usual utilities I've got to buy, but they've got to be cost conscious. And so I think there is demand. We're in a lot of discussions. So I'm positive on demand. But I don't want people to think you walk out $70, no, $80, no, $90. I wish it was that good. It's not. And so I think it's a little bit of good underwriting. It's a little bit of human resources and a little bit of do you have the projects that are ready for development. I'll just hit one point. The 90-plus percent of the projects that are built go through the interconnect process, okay? PJM, we have a project in PJM that George built for us in Ohio. We have an expansion to that project. In PJM, that meant you go through a fast-track process because our interconnect costs are less than $5 million. So expansion in a place we have a site that we have less than $5 million of upgrade costs. We started in 2019, we'll be online in 2029, okay? By the way, that's not that uncommon. I mean, that's long, but like -- so there is a real process. Interconnect takes time, permitting takes time, development takes time, s*** goes wrong. And so all of those things just constrain how fast you can go. That's why when I hear data centers, we're putting it up in 12 months, other than maybe Texas, that's just not practical. These just take time. It is often a 2- to 4-year permitting process. The interconnect process is usually 3 to 6 years. And so some of it is just constrained by the natural course of time. MISO 2022, we're a big player in the middle of the United States. MISO 22 has not given you your full interconnect. We expect to get our full interconnect in 2027. They often have to build upgrades. So that's a 7- or 8-year process from the time you started just to get your project online. So those are all constraints.

No, that's fascinating. And Yuri, if you take that commentary on customers, especially you built the business originally from the SREC side, I'm sure you have some insight into how contracts are designed in that sense, the value from the energy, from the credits, et cetera. Speak to us about the VPPA market -- and David, you could have as well. But like what do you see in the VPPA market? How is that changing? What does that mix look like over time? Is the corporate going to continue buying in Texas, if the value of the solar without the battery, pre-battery could drop to 35, but they'll still sign a contract at 60. These are some of the things that confuse us when we look at the market. How do you see the value of solar and the value of solar with battery and the type of customer evolving?

Yes. So I agree with David that ESG is dead, but I think that's because ESG was a terrible terminology for what most of the corporate America is doing.

It's not the tagline of the BNP.

ESG was a screening tool [indiscernible]. It's a completely -- like it's a misnomer just to tick it out. It's sustainability goals. And those aren't dead. And David, I might respectfully disagree with you. They are just in the background of a hyperinflationary decision-making process, which is data centers, data centers, data centers because that's what they're being told to do. But when you actually talk to people at Microsoft or Meta or Amazon, really any of the hyperscalers, Anthropic, OpenAI, they're not talking about sustainability if it's dead. They are talking about focusing on data centers at scale. And so I do agree with David that you have to prove that your project was going to enable data centers. And generally, that's done with combining solar plus BESS because in markets that are traded in nonregulated markets, you need capacity to set your data center. So that's a big reason why Dan has gotten into batteries because they enable what is a huge economic. I think it was like 48% of all economic growth in the United States last year was AI related or something like that. You guys know that stuff better than I do. So I don't believe that their goals are dead. I do believe that they are looking at the Venn diagram of where can we meet these goals and where can we enable data center growth. And they're doing data centers all over the country. And so we're in the process of signing a PPA in Texas. And I don't think that energy prices are going to go back down to $35. Just to be absolutely clear, I don't know that anyone in our space believes that. That's just not what's happening. You can't build new energy on top of old transmission distribution infrastructure and expect it to be $35. It was never going back. So I think we will be competitive. I do want to say one constraint for our industry and for any industry doing infrastructure right now is community opposition. And someone asked me, I was talking to someone from OpenAI the other day. They said, is that good for you guys or bad for you? And I said, oh, it's terrible for us. We're going through the same thing you're going through. You're doing data centers. We're doing solar. It's really, really hard. It's also really important that we change the way we do what we do. Actually, I think the answer might be a little more complex than that. I think as you saw with OpenAI in New Mexico, they were going to power Stargate with natural gas. And then they were going to power Stargate with Bloom Energy and natural gas, I think, that's how Bloom works. And now they're going to power Stargate with solar. And OpenAI was not a leader in sustainability. Anthropic was ahead of them and Meta and Microsoft and Amazon and Google were all far ahead of those 2. It is part of what their messaging needs to change through, which is a respect for communities. And so what our company does is we do far fewer projects than David. David is a monster. He's awesome. We probably do about half of what you do, David, maybe. But we do smaller pipelines, but we try to do fewer projects and do them really, really well with the community. And I think there's a lesson in that for data center developers as well, which is you have to shift your whole focus to we're building infrastructure in partnership with the communities we're in. So when you ask what the constraint is, that is one of the biggest constraints for our industry is we have to start building smarter and more thoughtfully on the ground because we're building massive infrastructure as this industry scales, as data center industry scales. And those pieces of infrastructure, those projects influence they change communities. So you either have to like embrace that and say, we're changing the community, how are we going to do that well? Or you can ignore it at your own peril. And so I do believe that's one of the biggest challenges we have as an industry is adjusting to that new norm because that's not going back any time. Actually, that's never going back. So we're all adjusting.