Shownotes
Episode Summary
Tim Hade is Co-founder and COO of Scale Microgrids, an organization that builds and invests in the world’s most cutting-edge microgrid solutions. Today, Harry and Tim discuss the importance of making our energy infrastructure cleaner, more affordable, and more resilient. Tim speaks to the vulnerability of our power grids, the concept of decentralization, and the actions we must take to address the biggest problem facing humanity: climate change.
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Key Takeaways
07:13 – Tim Hade joins the show to recall his time serving in Air Force and his passion for solving the biggest problem humanity has ever faced: climate
15:09 – The vulnerability of our power grids
19:23 – Decentralization and Tim’s career in the energy industry
25:16 – Challenges to overcome as a first-time founder and the impact Elon Musk has had on climate
32:29 – Microgrids, explained and the work Tim and his team are doing at Scale Microgrids
35:35 – How Tim got involved in vertical farming and the story behind collaborating with Fifth Season
45:02 – What vertical farmers should consider when it comes to energy usage
49:24 – Lithium-ion batteries and other innovations that are exciting to Tim
52:58 – The tribal lands initiative and the genesis of the capital solutions business
1:00:50 – Future opportunities for Scale Microgrids
1:03:14 – A specific ask Tim has for his colleagues in the energy and vertical farming industries
1:04:12 – Harry thanks Tim for joining the show and lets listeners know where they can go to connect with him and learn more about Scale Microgrids
Tweetable Quotes
“Being in the military is what also got me very inspired to work on climate. It’s one of the things we don’t talk about a lot, but for the last twenty-five or thirty years, the Department of Defense has looked at climate change as the number one national security threat over time.” (10:40) (Tim)
“We want to be a little piece of this global effort to try to solve the biggest problem humanity has ever faced, which is climate.” (14:55) (Tim)
“If you’re going to build decentralized electric generation, solar and storage weren’t really at the maturity point from a technology standpoint that they needed to be at in order to do it in an economically viable way.” (22:50) (Tim)
“The reality is that Elon Musk is the most important climate-tech founder of all-time. Tesla is the most important clean-tech company that’s ever come.” (29:56) (Tim)
“You think about how people have always received electricity and it’s been from the grid. So, there’s a powerplant a few hundred miles away that generates electricity which comes through the wires and that’s what you use. And a microgrid is really taking that electricity generation and making it locally.” (32:52) (Tim)
“I think vertical farming represents at least a partial solution to that problem. If we can figure out how to sustainably grow crops in a controlled environment, we don’t have to have a population that starves.” (38:39) (Tim)
“If you’re gonna build a vertical farming system, energy needs to be a core competency of what you do.” (45:26) (Tim)
Resources Mentioned
Tim’s LinkedIn – https://www.linkedin.com/in/timothyhade/
Tim’s Twitter – https://twitter.com/timothyhade
Scale Microgrids – https://www.scalemicrogrids.com/
Scale Microgrids Twitter – https://twitter.com/ScaleMicrogrids
Books Mentioned:
Lights Out – https://www.amazon.com/Lights-Out-Cyberattack-Unprepared-Surviving/dp/0553419986
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Mentioned in this episode:
2025 Precision Ag Report by iGrowNews
2025 Precision Ag Report by iGrowNews
Transcripts
$680 million poured into precision ag last year.
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Speaker:help connect you to the right technology and ensure your project is successful.
Speaker:Best of all, their service is free because they work on behalf of their partners.
Speaker:Visit cultivated.com to learn more. And that's spelled
Speaker:C-U-L-T-I-V-A-T-D.com,
Speaker:or click the link in the show notes. So you think about how people have
Speaker:always received electricity, it's been from the grid, right? So there's a power
Speaker:plant a few hundred miles away, generates electricity, comes through the wires, that's what
Speaker:you use. I guess what I would start off with, right, is that if you're
Speaker:going to build a vertical farming facility, energy needs to be a core
Speaker:competency of what you do.
Speaker:Welcome to the Vertical Farming Podcast, weekly conversations
Speaker:with fascinating CEOs, founders, and agtech
Speaker:visionaries. Join us every week as we dive deep into the
Speaker:world of vertical farming with your host, Harry Duran.
Speaker:Vertical Farming Podcast Season 7. Regular listeners, welcome back.
Speaker:If you are a new listener, I'm so glad you've decided to take a chance
Speaker:on this show. And if you're looking for conversations where we interview
Speaker:fascinating CEOs and founders of the leading vertical farming companies from
Speaker:around the world, You're in the right place. I'm your host, Harry Duran.
Speaker:In case you missed last week's episode, it was our first foray out to Iceland
Speaker:of all places, which is somewhere magical that I want to visit at
Speaker:some point. I've always had a dream to get out to
Speaker:Reykjavik, and we had a great conversation with Dr. Isaac
Speaker:Berzin. He's the founder and CTO at VaxaLife, and
Speaker:it's a company that's developing sustainable algae-based feed and food ingredients.
Speaker:Dr. Isaac was named one of the 100 most influential people in politics,
Speaker:business, and science in 2008 by Time magazine for his work in sustainability and
Speaker:climate change. Great conversation about the biology of algae and
Speaker:its role in the food chain, his experience working with supplements at Qualitas Health,
Speaker:and the work they're doing at Vaxxet to create alternative foods rich in vitamins,
Speaker:minerals, and proteins. It was really an eye-opening
Speaker:education for me on all the benefits of algae and how it relates to what
Speaker:they're doing in a vertical farming environment. Really fascinating. This week,
Speaker:the fun continues with Tim Haigh. He's the co-founder and COO of
Speaker:Scale Microgrids, a company that builds and invests in the world's most
Speaker:cutting-edge microgrid solutions. In this episode, Tim and I talk
Speaker:about the importance of making our energy infrastructure cleaner, more
Speaker:affordable, and more resilient. He talks a little bit about the
Speaker:vulnerability of our power grids, the concept of decentralization, and some
Speaker:of the actions we have to take to address the biggest problem facing humanity,
Speaker:climate change, and also how this whole conversation
Speaker:relates to what's happening in the world of vertical farming. Again, I'm
Speaker:fascinated by these conversations because I'm learning more with each episode,
Speaker:and this topic of energy is front of mind for a lot of folks in
Speaker:this space recently. So I'm sure you'll definitely learn something as well.
Speaker:Okay, don't forget, if you're enjoying this episode or past episode, I'd love it if
Speaker:you leave a rating or review at ratethispodcast.com/vfb so I
Speaker:can read yours out next. So let's jump into this conversation with Tim,
Speaker:but before we do, a couple of words from the amazing folks that support
Speaker:this show. This episode is brought to you by Indoor AgCon
Speaker:2023. I'm so happy to have been working with the team
Speaker:last year. Indoor AgCon 2022 was my very
Speaker:first indoor farming conference, so it was really eye-opening for me. So I'll
Speaker:always be grateful to the team there for rolling out the carpet for me,
Speaker:and I really had a good time meeting a lot of past guests and excited
Speaker:to join them again this year. Entering its 10th year in a row, it's the
Speaker:largest trade show and conference for vertical farming and CEA, and it's returning to
Speaker:Caesars Forum Conference Center in Las Vegas on February
Speaker:27th and 28th of 2023. Once again, they'll be co-located with the
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Speaker:CEOs, growers, investors, and others in the field during this
Speaker:full-scale educational conference. As always, you'll be able to connect with
Speaker:peers, grocers, and other potential new business partners at their great networking
Speaker:events. I haven't even gotten to the best part. The team at Indoor
Speaker:AgCon has given listeners of this show 20%
Speaker:off their full access conference pass. All you have to do is use promo
Speaker:code VFP, as in Vertical Farming Podcast, and sign up at
Speaker:indoor.ag. See you there. If you're a regular listener to the show, you'll know
Speaker:that this is the space where I get to talk about some of the fantastic
Speaker:sponsors and supporters of this show. If you are interested in being one of those
Speaker:sponsors, by all means reach out to me directly,
Speaker:[email protected]. We've got inventory
Speaker:available for season 7, and the reach of the show just continues
Speaker:to increase year over year, and we'd love to partner with you and get the
Speaker:word out about your company or service. So Tim Haigh, co-founder and CEO
Speaker:of Scale Microgrids, thank you for joining me on the Vertical Farming Podcast.
Speaker:Thanks so much for having me, Harry. I appreciate you making the time. We are
Speaker:getting close to the end of the year. Does that mean usually for
Speaker:you that it's winding down time, or is it hibernation time, or personally
Speaker:what's like end of year usually mean for you? Yeah, no, the end of the
Speaker:year is chaos. So, you know, typically between now and, uh,
Speaker:I don't know, December 15th, something like that, is peak
Speaker:chaos. And then, you know, hoping, got our fingers crossed that the last
Speaker:2 weeks of December will be pretty chill, but it never seems to work out
Speaker:like that. So we'll figure it out. And where's home for you?
Speaker:So I am calling in from Santa Barbara, California. I'm actually a recent
Speaker:California transplant. We started our business in the Northeast
Speaker:and we're really concentrated on that for a few years. But last 2, 3
Speaker:years, we've been building our business in California and now it's about
Speaker:75% of the new projects we're building are in the state. I could talk more
Speaker:about why. But it's not a bad place to call home. So it's
Speaker:getting text messages from all my friends and family
Speaker:in the, you know, New England area right now who are freezing, and I am
Speaker:not. So I'm all right with it. Yeah, so I can
Speaker:definitely relate. I grew up in Yonkers, New York, just outside New York City, but
Speaker:I lived— New York City is really my home. That's where I've— I moved out
Speaker:of there in 2014. I was married at the time, and we actually moved
Speaker:to LA, but I was there for 4 years. And home
Speaker:now is Minneapolis, Minnesota. So definitely had a taste of both
Speaker:coasts. And I'm familiar with the, with the cold weather from my time in New
Speaker:York, and I'm getting reacquainted with it here in Minnesota.
Speaker:Yeah, no, for sure. I mean, there are pluses and minuses. I definitely miss the
Speaker:seasons. But when I have a friend in Buffalo, New York, who's getting ready for
Speaker:like 6 feet of snow or something like that, and I don't miss it on
Speaker:days like that. So you went to school in Stanford?
Speaker:I went to grad school. Yeah. So I actually did my undergrad at the Air
Speaker:Force Academy. And was in my first kind of career was a
Speaker:military officer, then went to grad school at Stanford and
Speaker:got into distributed energy, which kind of led me to the
Speaker:intersection of energy and farming, which is, I think, probably what we'll get
Speaker:into a lot today. Yeah. Well, thank you for your service. I appreciate that.
Speaker:And I'm always curious, like, where folks' mindset are, you know,
Speaker:when they make decisions like that. So where were you, if you can recall back
Speaker:to making that decision to join the Air Force? Yeah. So,
Speaker:you know, the decision for me to join the Air Force was pretty petty. I
Speaker:mean, I was, I didn't have any money to go to college and it was
Speaker:free. And that seemed like a good deal at the time. So I kind of,
Speaker:you know, got into it without putting a lot of thought about
Speaker:what being in the military would be like. I went to
Speaker:basic training in June of 2001. And so then like
Speaker:my 4th or 5th day of school is 9/11. And so what
Speaker:it meant to be in the military changed very, very quickly in a
Speaker:very brief period of time. And look, I think
Speaker:overall, like any experience, there was a lot of pluses, a lot of
Speaker:minuses, but I think one thing the military
Speaker:really helped me develop was my ability to think about
Speaker:systems. And that's essentially
Speaker:what doing the job I had in the military is about, is kind of like,
Speaker:A lot of if-then statements, right? And sort of thinking about
Speaker:things from a bigger picture standpoint. And
Speaker:subsequently, I guess the other part of it, which is relevant,
Speaker:is being in the military is also what got me very inspired to work on
Speaker:climate, right? So it's one of the things we don't talk about a lot, but
Speaker:for the last 25, 30 years, the Department of
Speaker:Defense has looked at climate change as the number one national security threat.
Speaker:Over, you know, sort of time. And so I actually did some work on
Speaker:that while I was in the Pentagon, and
Speaker:it kind of blew my mind, right? So as I transitioned out of the military,
Speaker:that was a thing that I was really, really interested in working on.
Speaker:I started to, you know, learn about the electric grid and sort of the energy
Speaker:systems that we have in place and found that, you know, the way I
Speaker:thought about things was pretty conducive to making change in this
Speaker:industry. And that's how we got started. And that was 11,
Speaker:12 years ago. So it's been a wild ride since then. That's crazy. Yeah.
Speaker:I was actually living in New York City during 9/11. So I, I
Speaker:witnessed that, like those, I had a front row seat for that. It was pretty
Speaker:wild and pretty, one of those moments in history where you're just like, when you're
Speaker:like 30, 40, 50 years out, you know, telling kids, grandkids about
Speaker:it, you're just like, it's a weird moment. And I think what recently happened with
Speaker:COVID is another moment where the whole sort of the whole world was feeling it
Speaker:at the same time. Yeah, absolutely. And, you know, I think
Speaker:9/11 definitely changed the world. It changed the way I look at the world. And
Speaker:COVID did the same thing, right? And I think at the end, you know, the
Speaker:commonality, right, is that it's in those moments that you kind
Speaker:of start to understand our shared humanity, right? And that we're
Speaker:all on this rock floating through outer space together. And we
Speaker:got to try to make it work for each other. And I think that's kind
Speaker:of been my takeaway. from both of those huge events and is
Speaker:really a driver of the work we try to do at Scale Microgrids.
Speaker:Just, you know, kind of do what we can to make our energy system
Speaker:more sustainable, more resilient, more just, and to sort of do our part.
Speaker:And yeah, you know, events like that kind of put that, push
Speaker:that to the front of your mind. One of the things that I've always found
Speaker:fascinating about younger kids, or kids, I guess, for the
Speaker:most part entering the military, is the amount of technology you get
Speaker:exposed to and then the systems and the machines machines and
Speaker:everything that normal folks probably wouldn't
Speaker:access until maybe they graduated with a master's in engineering. But I think
Speaker:very quickly, you're given a lot of responsibilities and I think it, I mean, I
Speaker:don't wanna speak for you, but I'm sure from a maturity perspective, it ramps
Speaker:up that curve pretty quickly. Yeah, definitely, right? I mean, I think,
Speaker:and look, I don't know if this is the best thing in the world or
Speaker:not, right? But when you think about the Department of
Speaker:Defense and what the capabilities our military has are,
Speaker:It kind of redefines the realm of the possible, right?
Speaker:And so, you think about vertical farming or clean tech, like
Speaker:what I focus on, and you go talk to investors and they tell you that
Speaker:technology ideas are crazy. And that might be true from
Speaker:a dollars and cents finance standpoint in certain situations.
Speaker:But when you've seen the things I've seen, you realize that
Speaker:things happen really fast. And if we have a
Speaker:properly motivated society, There's really no limit to what
Speaker:we can accomplish. And look, I think when it comes to climate, right,
Speaker:one of the things that's really shaped my view on it is part of
Speaker:being in the military and coming from a military academy is learning
Speaker:a lot about World War II, right? Which is kind of the
Speaker:culminating military experience for the United States still to this day.
Speaker:And what they were able to do in a 3, 4-year timeframe
Speaker:was unbelievable. It exceeded everyone's
Speaker:expectations by an exponential factor. And so you start
Speaker:thinking about it, and if you can figure out a way to generate that
Speaker:kind of momentum, that's the reason to have hope about
Speaker:the climate future we're heading towards. But it really is going to take
Speaker:that kind of effort, right? Everyone in these different industries coming together,
Speaker:focusing on the problem, setting their differences aside, and
Speaker:just making progress. Look, I mean, there are a lot of pessimists in our
Speaker:industry, right? And as to whether or not that can happen or
Speaker:not, I don't know. I think we're in better shape today than we were 10
Speaker:years ago, for sure. Are we moving fast enough? Definitely not.
Speaker:But that's ultimately what we aspire to be part of, right? Is we want to
Speaker:be a little piece of this global effort to try to solve the biggest
Speaker:problem humanity's ever faced, which is climate. And a lot of the folks we work
Speaker:in the agriculture community are trying to solve the same problem from a different angle.
Speaker:Which is why we like working with. And so one of the things you mentioned
Speaker:is because of that front row seat you had to
Speaker:the current condition of our energy grid, are there things
Speaker:that most folks would not or would be surprised about
Speaker:if you explained in terms of like the, the capacity of it or
Speaker:the ability for it to sustain like intense experiences?
Speaker:You know, we saw a little bit of taste of that in Texas. I think
Speaker:it was last year when it was a winter and the grid went down. And
Speaker:I think a lot of people just assume, you know, you, you plug your appliance
Speaker:into the outlet and then the power gets its way there somehow. But I
Speaker:think we don't really think about how stable it is. And I think you
Speaker:had a front row seat to seeing just how vulnerable we are when it comes
Speaker:to understanding the grid for this country. Yeah, absolutely. I mean, I
Speaker:think that's sort of the thing that was most surprising to me when I started
Speaker:to really understand about, you know, grid architecture and, you know, the
Speaker:macro grid, right? Really, in the United States, we have 3
Speaker:independent electric grids. There's what's called the Eastern Interconnect, which is
Speaker:kind of east of Colorado. There's the Western Interconnect, which is west of
Speaker:Colorado. And then Texas has its own grid called ERCOT.
Speaker:And, you know, it's extremely fragile,
Speaker:right? When you think about this from a threat assessment standpoint, whether it's, you
Speaker:know, physical impacts from things like climate change,
Speaker:extreme storms, extreme weather events, things like that, Whether it's in the
Speaker:cyber realm, and there's a lot of cyber concerns when it comes to
Speaker:grid and the grid architecture and cyber safety, or when you think
Speaker:about it in terms of, you know, physical attacks, right? There's
Speaker:a lot of equipment that makes our grid work that's
Speaker:very rare and very difficult to replace, right? And so
Speaker:there's a lot of literature that's been written about this. One of my favorite books
Speaker:is a book written by Ted Koppel. called Lights Out,
Speaker:which walks through all the different scenarios where large regional
Speaker:power outages could occur in the United States and explores
Speaker:what the impact on our society would be. And it's pretty
Speaker:terrifying. And I think one of the things people
Speaker:don't think about a lot is how resilient that
Speaker:infrastructure is. Our utilities and our public
Speaker:service commissions and all the folks that operate the grid, You know,
Speaker:really do a remarkable job of keeping the lights on for the most part.
Speaker:But essentially what they're doing, right, is they're duct taping
Speaker:together a system that's kind of been hodgepodged together over
Speaker:120 years. And a lot of the equipment that
Speaker:we use today to transmit and distribute electricity is
Speaker:100 years old, right? And so, you know, in
Speaker:addition to, you know, the big talking point, which is
Speaker:decarbonization, We also have to be doing a lot more thinking
Speaker:about the health and safety aspects of our electric grid.
Speaker:And that's one of the areas where, you know, my company, which is a distributed
Speaker:energy company, spends a lot of time trying to educate people,
Speaker:especially in the vertical farming community who are obviously, you know, their
Speaker:business is very susceptible to long-duration power outages and it's a
Speaker:material threat to, you know, the industry as a whole. You know, I think a
Speaker:lot of people take it for granted and You know, we're hoping that
Speaker:we can kind of be proactive in helping to shore some of this
Speaker:stuff up before something really bad happens. And it doesn't take a big
Speaker:event like, you know, the freeze in Texas, which killed over 60
Speaker:people. And, you know, it cost, I think, like
Speaker:dozens of billions of dollars in economic damage. But, you know, what
Speaker:people don't realize about that event is they were literally 30 seconds away
Speaker:from blowing the grid up and potentially not having power for months.
Speaker:And those are the types of situations as we move into a climate
Speaker:future with increasingly unstable weather, as we move
Speaker:into a cyber realm where it doesn't necessarily
Speaker:take state actors to access the power grid and shut things off or
Speaker:mess around, but can kind of be like a kid in his basement, right?
Speaker:Those threats are very, very real. We don't think about them a lot. We don't
Speaker:think about them enough, but they should be driving our decision-making, and too
Speaker:often they're not. Yeah, a lot of those will give listeners room
Speaker:to pause and be a little bit worried. But I think what we want to
Speaker:get out of this conversation is hopefully some hope for what some
Speaker:opportunities are. And so I think, you know, obviously having had that experience in the
Speaker:Air Force prior to Scale Microgrids, you spent some time with
Speaker:Energy Rudux, which is now Centrica. Can you talk a little bit about your experience
Speaker:there and how, you know, that eventually led to what would be present day with
Speaker:Scale? Yeah. So kind of the theme of my career in the energy
Speaker:industry has been decentralization, right? So if you think
Speaker:broadly from like an energy transition standpoint, there's
Speaker:kind of, you know, 2 facets to how we're going to solve climate
Speaker:change, right? The first is generally referred to as electrify
Speaker:everything, right? So if you think about global carbon emissions
Speaker:today, roughly a third come from transportation, roughly a third
Speaker:come from electric power production, and then roughly a
Speaker:third come from heavy industry and agriculture, right? That's kind of the
Speaker:allotment. And in order for us to get to where
Speaker:we need to be in order to mitigate climate change, We essentially have to
Speaker:convert all those fossil-driven processes to
Speaker:renewable electricity. So that's kind of the first step in solving
Speaker:climate change from an energy transition standpoint. Then the second
Speaker:stage is how do you electrify everything, right?
Speaker:And I think there's really 3 principles that we have to
Speaker:sort of abide by in order to do that. The first is obviously
Speaker:decarbonization, right? So we have to use a lot of a lot of renewable
Speaker:or low-carbon energy in order to generate the electricity on our grid.
Speaker:The second, and this is the thing we don't talk about a lot, is
Speaker:decentralization, right? So if you think about the electric power industry,
Speaker:which has been a commercial product for roughly 120 years,
Speaker:it's always been a top-down model, right? And so you've always
Speaker:built really, really big power plants and then connected that to load
Speaker:via this series of transmission and distribution lines. And the reason that
Speaker:that was done originally was because of the way we generated power and economies of
Speaker:scale. As the way we've generated power has changed and we're moving
Speaker:more towards solar and storage being the backbone of the grid, that's
Speaker:opened up the opportunity to build a distributed bottom-up network. And
Speaker:that's really where the resiliency piece comes into play, right? Is that if you just
Speaker:think about this at the highest level, you don't want single points of
Speaker:failure, right? So if you have one power plant, that's responsible
Speaker:for lighting a million homes and something happens to
Speaker:that one power plant, you're in trouble. If you have a million power plants that
Speaker:are energizing a million homes, that
Speaker:threat profile is much more secure. And so
Speaker:decarbonization, decentralization, and then the third thing is digitization,
Speaker:right? And so essentially our entire electric grid was built and
Speaker:a lot of it still runs on an analog system. What we can do
Speaker:from a digitization standpoint is pretty remarkable, and we're just kind of scratching
Speaker:the surface of that. And so that's basically the recipe for, you know,
Speaker:solving climate change, right? Is electrify everything. And then within
Speaker:electrify everything, decarbonization, digitization, and
Speaker:decentralization. And that's kind of what we work on at Scale Microgrids,
Speaker:specifically that decentralization piece. And so this
Speaker:is— talk a little bit about this, the idea, because you, at the time, you
Speaker:were still Energy Products when you came up with the idea for Scale.
Speaker:Yeah, that's right. So, you know, Energy Rudox, what's called a cogeneration
Speaker:company, right? So it's cogeneration or combined heat and
Speaker:power. It's a good technology, primarily runs on fossil gas,
Speaker:right? And so when I started this, you know, 11, 12
Speaker:years ago, working at a company called Rudox Engine and Equipment Company, we went through
Speaker:a few mergers. If you were going to build decentralized electric
Speaker:generation, solar and storage weren't really at the
Speaker:maturity point from a technology standpoint that they needed to be at in order
Speaker:to do it in an economically So what a cogeneration system is,
Speaker:is a very, very efficient way of using natural gas to
Speaker:provide both electricity and heat to a commercial and
Speaker:industrial facility. Typically, there's also some residential, but that's,
Speaker:you know, it's mostly a C&I product. And that's what I started working on in
Speaker:the space that sort of led me into solar and
Speaker:storage, right? And I started to learn a lot more about solar and storage because
Speaker:I was hearing from my customers, but I was also just personally interested in
Speaker:You know, it's great that we're reducing greenhouse gases by 20, 30,
Speaker:35%, which is typically the environmental impact of a CHP
Speaker:system. But like, how do we get to 90% or 100%?
Speaker:Right. And, you know, it just so happened that around
Speaker:the time that I was starting to ask these questions, a lot of technology providers
Speaker:were starting to make big breakthroughs specifically in lithium-ion batteries
Speaker:that kind of changed the landscape for how you think about designing these systems.
Speaker:So, you know, the first part of my work at Energy Rudox was
Speaker:kind of trying to figure out how to integrate CHP systems with
Speaker:solar and storage. And I did a few of those projects. And then I
Speaker:think me and my co-founders kind of lost interest in
Speaker:CHP, right, is maybe a good way to put it. We still do
Speaker:some CHP systems, but like we wanted the backbone to really be solar and
Speaker:storage. And that was really the precipice for starting Scale Microgrid
Speaker:Solutions, sort of going out on our own. To try to build these systems in
Speaker:a more renewable way. And, you know, it's been a crazy
Speaker:journey because, you know, the technology curve with all this type of stuff
Speaker:is super duper, duper steep. So how we build projects today and how we built
Speaker:projects 5 years ago are entirely different. But it's cool, right? And I
Speaker:think ultimately that's what we're doing for our, you know, C&I customers is we're
Speaker:essentially turning buildings into power plants, right? Lots of solar on the
Speaker:roof, solar in the parking lot, right? Solar wherever you can put it. a good
Speaker:energy storage system that allows you to manage and time shift that load.
Speaker:And then a dispatchable generation asset to make sure that if the grid goes down,
Speaker:the facility can continue to meet its operational requirements.
Speaker:And yeah, you know, how we deliver that value proposition changes as
Speaker:technology matures, but that's kind of the common thread
Speaker:of what I've been doing for the last dozen years. Yeah, I imagine it's been
Speaker:a wild ride starting in 2016. So what were some of those challenges
Speaker:early on? Because obviously when you're first getting started, it was your first time as
Speaker:a CEO. CEO, so you had to build a team as well and then figure
Speaker:out who— what your product offering was going to be and who your initial clients
Speaker:were going to be as well. Yeah, for sure. I mean, so I guess to
Speaker:begin with, right, like I got really, really lucky in that I
Speaker:started this company with really 4 people, all of whom are close
Speaker:friends of mine who are amazing, right? And so Ryan
Speaker:Goodman, who's our CEO, is like an amazing
Speaker:business mind, right? His dad Howard is our
Speaker:CTO. And is one of the best power engineers of
Speaker:the last like half century, right? Is a legend in our industry
Speaker:and is brilliant engineer. Guy named Duncan
Speaker:Campbell, who is like sort of like Howard, but in the digital world,
Speaker:right? And does sort of all our modeling and optimization. And then a guy
Speaker:named Pete Crasco, who's a military buddy of mine, who oversees all
Speaker:our construction, project management, stuff like that. And I
Speaker:don't think any of us could have done it without the other 4, right? So
Speaker:it really kind of took a village. But, you know, we started with a really
Speaker:strong team, and then we were able to add on to that with a bunch
Speaker:of remarkable people. Currently, we have about 75 people at the company,
Speaker:and they're all amazing, right? Like, we've gotten lucky on a number of fronts. But
Speaker:look, I think, you know, the biggest challenge that we had when we first started
Speaker:the company, and this is probably not surprising, was raising money.
Speaker:Yeah. We're a hardware business, right, at the end of the day. And
Speaker:the average project that we build is like $5 to $6 million,
Speaker:right? There are smaller projects in our portfolio, there are much bigger projects, but on
Speaker:average, it's about $5 to $6 million to build one of these things.
Speaker:And that means you need a good capital stack behind you in order to do
Speaker:that. So when we started the company in 2015,
Speaker:it was not a good time to start a climate tech company.
Speaker:Sort of the history of this, right, is that a lot of investors got
Speaker:really excited about climate tech during kind of Obama's
Speaker:first term, right? Yeah. And put a lot of money into it. That's when
Speaker:Tesla was founded, but that's also when Solyndra was founded, right?
Speaker:And even though today, right, like the return on those
Speaker:climate tech 1.0 companies from a venture standpoint is
Speaker:really, really good, that wasn't the case in 2015, right?
Speaker:There were a lot of bad stories about climate tech. So early-stage investors in
Speaker:general were staying away from it. Subsequently, we've seen that
Speaker:market kind of change and unchange like three or four
Speaker:times, right? But it was really, really difficult to convince people to sort of
Speaker:get behind us and write checks that were big enough in order to let us
Speaker:do what we needed to do, right? And I think that's you know when I
Speaker:talk to a lot of founders in the vertical farming space, right? It's kind of
Speaker:the same story, right? Which is like you could find people to write you a
Speaker:million dollar check, but you might as well set it on fire, right? Like, you
Speaker:really need to be able to raise at, you know, probably $100 million
Speaker:scale in order to pull some of these businesses off.
Speaker:And that's really, really tricky to do. And so ultimately for
Speaker:us, you know, it was kind of, I don't know, there was a phase where
Speaker:it was kind of like beg and borrow from friends and family in order to
Speaker:like make payroll and keep the company afloat. And then
Speaker:ultimately we were able to build some of these projects and really
Speaker:show people what we were able to do. That opened up a whole new
Speaker:world of financial opportunities for us. And in
Speaker:2019, we were able to close a $500 million
Speaker:round with Warburg Pincus, which is a private equity company, one of the
Speaker:sort of most illustrious private equity companies in existence today.
Speaker:I think it's the oldest private equity firm in the world. And they've been remarkably
Speaker:helpful in sort of helping us think about how to grow and scale the business.
Speaker:But again, right, like that was definitely the biggest challenge is trying to figure out
Speaker:how to get the amount of capital we needed to really, you know, not
Speaker:just execute a few projects, projects, but lay the foundation for a really good business.
Speaker:It definitely was not easy. I think at one point we counted and we had
Speaker:like over 100 investor meetings where the outcome was very bad.
Speaker:And so it was just kind of like stick-to-itiveness. And then we kept going
Speaker:back and we kept kind of figuring out a way to survive until we got
Speaker:an opportunity. And then I think we've made the most of that opportunity. Yeah, it
Speaker:sounds like it mirrors a lot of what we see here in terms of timing
Speaker:and raising capital with vertical farming. And so for folks that are
Speaker:new to this, I'm also curious, I'm wondering, If the visibility
Speaker:of someone like Elon with Tesla and sort of education, educating
Speaker:people, good or bad, depending on what people's opinion of him is, I'm
Speaker:wondering how that affects what you're able to do in terms of getting the word
Speaker:out about what's possible. Yeah, you know, it's interesting, right? I mean,
Speaker:I think, look, the reality is, is that Elon Musk is the
Speaker:most important climate tech founder of all time, right? I mean,
Speaker:Tesla is the most important clean tech company that's ever come.
Speaker:You think back like 10 years ago, right? The idea of an electric car was
Speaker:preposterous. And when you talk to a lot of climate experts, that's what
Speaker:they would tell you is that the sector we're really worried about is the
Speaker:33% of greenhouse gas emissions that come from transportation,
Speaker:because we have no idea how to fix that, right? And Tesla fixed that,
Speaker:right? I mean, the impact that they had can't be overstated,
Speaker:both on the transportation side, but also their stationary battery
Speaker:project or products. have been instrumental in helping
Speaker:decarbonize the electricity grid and deal with intermittency
Speaker:problems that are associated with renewable energy, predominantly wind and
Speaker:solar. And so you can't really overstate the impact that Tesla's
Speaker:had on our industry or climate in general. I'll
Speaker:separate that a little bit from Elon Musk, right? Because I think that, you know,
Speaker:sometimes he's super helpful and sometimes he's not. And I think
Speaker:lately it's been more not helpful than helpful. Look, I
Speaker:think, you know, that's one of the things that really worries investors about,
Speaker:you know, our space is that when, in my experience, the best
Speaker:entrepreneurs go and, you know, talk to investors, they seem a little
Speaker:crazy, right? And I've had this conversation with a lot of vertical farming folks
Speaker:and indoor agriculture folks as well. I think it's kind of the same reception,
Speaker:right? Which is, this sounds like so ambitious, you must be insane
Speaker:to try to pull this off. And look, I think like in
Speaker:recent months or years, the guy who's kind of the
Speaker:figurehead of our industry has given people a lot of pause in
Speaker:terms of his mental stability. And so that's not super helpful.
Speaker:But, you know, again, right, like, you still can't understate like the
Speaker:importance he had and the Tesla team had in sort of moving this
Speaker:industry forward. And then look, there are a lot of other great founders
Speaker:that have come up and are a lot more stable than Elon.
Speaker:But, you know, I think he, for better or worse, is kind of the figurehead
Speaker:of our industry. And I hope he thinks about that, right? Like, you know,
Speaker:I don't know him. Like, we do a lot of work with Tesla. They've always
Speaker:been great for us. They build amazing product at a really good price point. They
Speaker:stand behind what they do. Been a great partner for our business. But,
Speaker:you know, I don't know, when he's making decisions, I hope he realizes that like
Speaker:a lot is riding on, you know, the world's perception of him and
Speaker:he doesn't scare too many people away. Yeah. And now that he's got a new
Speaker:platform to do it with, it's a little weird
Speaker:and scary to see what's going to happen. So shifting gears.
Speaker:So talk a little bit about the work that you do, you know, take us
Speaker:to present day, what your current offerings are. I know you do work in microgrids,
Speaker:maybe even defining that term for the listener, you know, for people understand the
Speaker:entire grid, what defines a microgrid, and then some of the work
Speaker:you're doing there as well would be interesting to hear about. Yeah, so the highest
Speaker:level way to think about it is a microgrid is a personal power plant, right?
Speaker:And so you think about how people have always received electricity, it's been from the
Speaker:grid, right? So there's a power plant a few hundred miles away, generates electricity,
Speaker:Comes through the wires. That's what you use, and a microgrid is really
Speaker:taking that electricity generation and making it locally.
Speaker:Right? So you know again, right? The core of any
Speaker:microgrid built today, for the most part, is solar and storage. So
Speaker:you're going to put a lot of solar panels on your property, whether that's in
Speaker:the roof, in the parking lot, in a field behind your facility, and then
Speaker:you're going to complement that with battery storage. Right? And that's kind of the
Speaker:hub of what we build is solar storage systems. Now that in and
Speaker:of itself is usually not sufficient for a lot of
Speaker:C&I customers, especially customers who value
Speaker:resilience like our friends in the vertical farming community. And so then
Speaker:typically you need a third component, which is a dispatchable
Speaker:generator, right? And that can run on a number of different source fuels.
Speaker:Traditionally, these things have been built with natural gas generators, but, you know,
Speaker:cleaner fuels are coming in the mix, whether that's renewable natural gas or green
Speaker:hydrogen, things like that. All of which we're experiencing, you know, we're
Speaker:experimenting with. And ultimately, right, the goal is how do you take
Speaker:this mix of technologies and figure out how to use them
Speaker:together to create a value proposition that's
Speaker:economically, environmentally, and operationally optimized?
Speaker:And, you know, the fourth piece of that system is a switchgear and control
Speaker:system that does that, right? So generally speaking, when we
Speaker:build a system, you'll have solar panels kind of all over the place and then
Speaker:3 boxes in the parking lot. One will be the dispatchable
Speaker:generator, one will be the battery, and one will be the brain. And when you
Speaker:do that, right, I think in general, especially in like high
Speaker:energy density use cases like vertical farming, you can
Speaker:significantly reduce your electricity bills. You can have resilience.
Speaker:So during a power outage, you know, plants don't die or servers don't crash,
Speaker:whatever the use case is. And then you can typically reduce your greenhouse
Speaker:gas emissions, at least your Scope 1 and Scope 2 greenhouse gas
Speaker:emissions. by 30 to 50%, which whether you're thinking
Speaker:about this through an ESG framework or just like being a good human framework
Speaker:is pretty important. And so that's like the basics of what we build.
Speaker:And, you know, hopefully we'll get into this, but I think, you know, one of
Speaker:the use cases that we really love and one of the industries that we're
Speaker:really excited about is vertical farming. And so we've built a few projects in
Speaker:that space. Some have worked out better than others, but, you know, I
Speaker:think it's a really, really cool application of the technology.
Speaker:And it's an industry whose mission is very consistent with ours, right,
Speaker:which is something that's really important to me and our employees, is making sure we're
Speaker:working with companies who are trying, you know, work towards the same end goals
Speaker:as we are. When did vertical farming get on your radar? So I think
Speaker:like maybe 2017, I had a buddy from
Speaker:grad school who went and worked at Bowery Farming. He was kind of one of
Speaker:the first 10 or 12 employees at Bowery Farming.
Speaker:And initially it was just like, hey, I'm working on an indoor farm.
Speaker:And I was like, what's that? I want to come see it. And
Speaker:originally it just like piqued my curiosity, right? Then I started
Speaker:to meet the team and sort of understand the narrative and see what they were
Speaker:trying to do. And that's a ridiculously talented team of people at
Speaker:Bowery. And I got pretty hooked on it pretty
Speaker:quickly. But I also saw like the application of what we were building,
Speaker:right? And I think, you know, for Bowery, the conversation started
Speaker:with a, you know, a conversation about resilience, which is, you know, what are you
Speaker:guys going to do if there's a major power outage that lasts, you know,
Speaker:a week, a month, whatever the case might be? And, you know, they
Speaker:obviously, you know, are very, very focused on sustainability, which is,
Speaker:I think, a key issue in the vertical farming community right now.
Speaker:And then the economics matter a lot, right? Because ultimately you're trying to, you know,
Speaker:produce a pound of lettuce that's, you know, economically comparable
Speaker:to, you know, traditionally grown crops. And so you kind of put those
Speaker:2 things together and it was a good, you know, we thought it was a
Speaker:good project to do. They agreed. We built it. I think that system was
Speaker:commissioned in 2018. It's been a pretty good relationship for us
Speaker:ever since, but that was kind of our first step into vertical farming and indoor
Speaker:agriculture. And yeah, we've done a bunch in the space since then. And I
Speaker:don't know, in general, are like very supportive of the industry, think
Speaker:it's a good thing. You know, our role in it is trying to make sure
Speaker:that, you know, we help solve some of the energy challenges that, you know,
Speaker:are becoming increasingly apparent when it comes to indoor ag.
Speaker:Yeah, I think it's one of the topics that comes up a lot when people
Speaker:talk about vertical farming. You know, you can't get too far down that road in
Speaker:terms of that conversation without people bringing up the impact
Speaker:of the power needed, the electricity needed. And so I'm wondering,
Speaker:having worked in different industries, was there anything that you saw different about the
Speaker:challenges or the needs specifically about folks in the vertical farming space?
Speaker:And I know you've worked with a couple of other folks after Bowery as well.
Speaker:Yeah, I think the first thing about the vertical farming space
Speaker:that was really clear to us, and I continue to be
Speaker:convinced of is we need it, right?
Speaker:I mean, if you just look at the facts, right, 85% of the arable land
Speaker:on Earth is already used, the population's growing, climate
Speaker:change is happening, weather's becoming increasingly more predictable.
Speaker:You know, we're not so far away from not being able to feed humanity, right?
Speaker:Yeah. And, you know, I don't know, right, like, back to my experience in the
Speaker:military, I went to a lot of places in the world where I saw what,
Speaker:you know, malnutrition and starvation looks like. And
Speaker:it's fucked up, right? It's not fair.
Speaker:And I wish more people had that experience of at least, you know,
Speaker:being in those communities and seeing the folks that this impacts. But this is
Speaker:like a very, very, very real challenge. And, you
Speaker:know, I think vertical farming represents at least a
Speaker:partial solution to that problem, right? If we could figure
Speaker:out how to sustainably grow crops in controlled environments,
Speaker:we don't have to, you know, have a population that starves. And so
Speaker:I think that was the number one thing for us is like, regardless of how
Speaker:like hairy or complex this is, we're using what we're good
Speaker:at to enable an industry that really matters to sort of
Speaker:take the next step, right? But then look, you know, from an electrical
Speaker:engineering standpoint, a vertical farm is basically a data center
Speaker:for plants, right? And so if you look at the load profile
Speaker:of most indoor agriculture facilities, And you look at the load
Speaker:profile of a data center, they're basically exactly the same. And so that's one
Speaker:of the, you know, starting points for us is we had a lot of experience
Speaker:building these systems for data centers. And we were able to take a lot of
Speaker:that knowledge and bring it into the indoor agriculture community.
Speaker:And then, you know, obviously there are tweaks and there are things that you change
Speaker:depending on the use case and the application. And, you know,
Speaker:every vertical farm that we've worked on or looked at is a little bit different
Speaker:in terms of the type of technology they're using. You know, the growth
Speaker:mechanism, whether it's, you know, hydroponics or aero, you know, and all that
Speaker:sort of stuff. You know, the basic premise is you have, you know, a
Speaker:flat, predictable load. And so from an
Speaker:electrical standpoint, that gives you— that's like perfect, right? That's where you
Speaker:can go in and start manipulating like time-of-use pricing with
Speaker:batteries and making sure you're buying renewable electrons
Speaker:from the grid and then dispatching them at night when most of the electrons are
Speaker:fossil heavy. and things like that. And so ultimately, I think that's
Speaker:the thing that got us hooked on it was not only is this like a
Speaker:really good thing to do for humanity, but also the technology we
Speaker:build delivers a really compelling value proposition in terms of, you know,
Speaker:the economic impact we have, resilience, sustainability,
Speaker:as compared to some of the industries, the other industries we work, we just think
Speaker:it's really, really compelling. And so that's what's kept us around, so to speak.
Speaker:You've also did some work with Fifth Season, which has made news recently for
Speaker:shutting down, which is, you know, some of what's happening and what we're Consolidation,
Speaker:and this is normal for any industry. I mean, I think any industry that is
Speaker:around long enough, you're going to see companies come and go. And so, can you
Speaker:talk a little bit about the work you did with them as well? Yeah. So,
Speaker:I guess first off, right, and this is one of the things I think a
Speaker:lot about in clean tech, right, is I have a lot. I
Speaker:have a ton of respect for everyone who puts themselves out there and tries,
Speaker:right? And you know, the fifth season team, right? It was originally
Speaker:called Robotany when we first got involved in it. Those guys gave it everything they
Speaker:had, right? They really did. And they built a really, really cool facility.
Speaker:And sometimes this stuff doesn't work out, right? That's just kind of the game
Speaker:that we play. We knew that when we invested in them.
Speaker:And, you know, not everything works out, right? So
Speaker:I think in turn, you know, the first thing, and I think this is good
Speaker:for everyone who's thinking about a career in vertical farming or indoor
Speaker:agriculture or clean tech to know, is that the
Speaker:probability of failure is high, but like, it's still
Speaker:worth it, right? It really is. Because I think, you know, all those folks, and
Speaker:I've talked to a bunch of them, you know, since they announced they were shutting
Speaker:down shop, I think they can all sleep easy at night knowing that, you know,
Speaker:they tried to tackle a Herculean problem, gave it everything they
Speaker:had. And, you know, look, sometimes things don't work out. You know, with
Speaker:that said, you know, that's one of the things that we really like
Speaker:about the way we build microgrids is we build them very modularly,
Speaker:right? And so, you know, when we make an investment in a company— and when
Speaker:I say an investment, maybe I should take a step back, right? How we do
Speaker:most of our projects is through a financial arrangement called an
Speaker:energy-as-a-service agreement. And so essentially, we build
Speaker:the entire system for zero money down, right? We
Speaker:invest all the CapEx to build the system, and then we sell the
Speaker:electricity back to the consumer Just like a utility does,
Speaker:right? And so you get a per kilowatt hour bill
Speaker:for the electricity you use. And, you know, as
Speaker:such, every system we build, or at least most systems we build, represent a
Speaker:capital investment for scale microgrid. And so, you know, I think at
Speaker:the end of the day, right, when we think about the bankability of these investments,
Speaker:we don't want to be able to just build these projects for Fortune 500 companies
Speaker:and rich people, right? We want to be able to You know, build these
Speaker:projects for cool startups that we believe in, or, you know,
Speaker:disadvantaged communities, low-income communities, tribal lands, things like
Speaker:that. In order to do that, you have to design the system in a way
Speaker:in which the equipment has really high residual value in the event of a failure.
Speaker:So what's going to happen with Fifth Season is that we built them a system,
Speaker:they shut down operations. We're working through some of the details,
Speaker:you know, right now in terms of exactly what this is going to look like.
Speaker:But it's what's probably going to happen is we're going to pick the equipment up
Speaker:and we're going to bring it to another customer and we're going to use it
Speaker:there. And so, you know, I think, you know, that's kind of how we
Speaker:think about these systems and designing and financing these systems
Speaker:is really based on modularity, you know, transferability,
Speaker:things like that. And our engineering team does an amazing job of like putting
Speaker:packages together that make that feasible. And so, you know, when
Speaker:things like this happen, it's obviously like super unfortunate and
Speaker:it's emotional. And, you know, everyone in our company was a huge fan of Fifth
Speaker:Season and What they were doing was amazing and the produce they were
Speaker:producing was amazing. One of the best salads I've ever had. But
Speaker:again, right, like this is a very, very tough business and, you know,
Speaker:not every time is it going to work out. And so, you know, you
Speaker:kind of lick your wounds, you pick up your equipment, you go to the next
Speaker:one and you do it again. And that's kind of our plan in this situation.
Speaker:Yeah, I think anyone who's started a business, been in a business, been an entrepreneur
Speaker:knows that failure is sort of like par for the course, and it's just a
Speaker:function of how quickly you can recover from it because it's inevitable it's going to
Speaker:happen in some form or another. And I think your ability to sort of
Speaker:dust yourself off and, you know, learn your lessons from what happened
Speaker:and then how you can do something better going forward. Yeah, for sure. And if
Speaker:you're going to fail, right, doing it in the context of trying to save
Speaker:humanity is not a bad use of time, right? And I think, you know, that's
Speaker:definitely how I feel about all the Fifth Season team, right? I have a lot
Speaker:of respect for, you know, what they tried to do and what they put on
Speaker:the line in order to get there and wish them nothing but the best moving
Speaker:forward. I'm curious, when folks are considering a
Speaker:vertical farming project, and I know obviously because of the nature of this
Speaker:show, this is specifically who we're speaking to, what should farms
Speaker:be considering when it comes to their energy usage, their planning,
Speaker:you know, building a new facility? You know, what are some of the things typically
Speaker:they may not be thinking about that they should be? Yeah. So, I mean, I
Speaker:guess what I would start off with, right, is that if you're going to build
Speaker:a vertical farming facility, energy needs to be a core competency of
Speaker:what you do, right? And if people aren't aware of this, right,
Speaker:whether the, you know, this is the number one argument against vertical
Speaker:farming, right? And whether that's made by folks in traditional agriculture,
Speaker:or whether that's made by investors, or whatever the case might be, right? It's
Speaker:that the, you know, reason that we are trying to build
Speaker:a bunch of vertical farms is to solve help solve some of the
Speaker:impacts of climate change, right? And if vertical
Speaker:farming is contributing to climate change, then it's
Speaker:kind of counterproductive, right? And so,
Speaker:energy is a core competency of vertical farming. You have to figure out not only
Speaker:how to grow delicious, economically viable crops in
Speaker:a warehouse, but also how to do that while
Speaker:minimizing your carbon footprint. And also how to do that while making
Speaker:sure that a power outage doesn't cost you your business. And so, and
Speaker:by the way, from an economic standpoint, typically for vertical farming customers,
Speaker:utility bills are the number one operational cost, right? Especially
Speaker:as we move more towards robotics and AI and all that jazz and are
Speaker:replacing people with process in the farm. And
Speaker:so, you know, that's what I would tell everyone who's thinking about getting into
Speaker:this industry is you better have someone who really understands energy. On
Speaker:your team, right? And then, right, there's a lot of
Speaker:different considerations. The first one is where you locate the farm
Speaker:itself, right? And there's obviously a ton of factors that go into this. You want
Speaker:to be close to population centers, etc., etc. But you also want to
Speaker:locate your farm in an area where the grid mix is
Speaker:more sustainable than other places, right? So if you're building
Speaker:one of these things in Mississippi or Georgia, right, where this is
Speaker:predominantly coal power, The environmental footprint of your
Speaker:lettuce or kale or whatever you're making is not going to be good,
Speaker:right? If you're doing this in California, Oregon, or Washington
Speaker:State, right, upstate New York, it's going to be a lot better.
Speaker:So location to begin with matters a lot. That's
Speaker:true in terms of sustainability. It's also true in terms of economics, right?
Speaker:Because power costs in Mississippi are a lot cheaper than they are in California.
Speaker:So you have to sort of think about that in the context of where you're
Speaker:locating your facility to begin with. And then, look, I think
Speaker:that personally, every single vertical farm should have, at a bare minimum,
Speaker:solar panels on the roof and a battery in the park, right? And, I think
Speaker:generally speaking, right, and every facility is a little bit
Speaker:different, just putting solar panels on your roof can produce
Speaker:anywhere from 20% to 30% of the power you consume in a year,
Speaker:which is a big step in the right direction, right? Yeah, that's good. Then, if
Speaker:you pair that with a battery, you can typically in most areas of the
Speaker:country make your facility at least sort of 50%
Speaker:run on renewables, which is like sort of the next step, right?
Speaker:And then if you want to get to, you know, 80, 90, 100%, that's when
Speaker:you got to call me, right? Or someone like me, because doing that
Speaker:really has to be customized at this point in time in history
Speaker:and requires a lot of like fancy technology that's not super commonplace.
Speaker:And so, you know, I think that's, you know, what the message I would send
Speaker:to people is there's a lot of different ways to
Speaker:make progress on this issue, right? There's a lot of different technologies to
Speaker:consider. There's a lot of different ways to do it, but you got
Speaker:to be thinking about it, right? That's the most important thing. And you got to
Speaker:sort of identify that as a core competency of the business. And I think, you
Speaker:know, the folks that we work with that do that, I think have come
Speaker:together with really good plans and are able to sort of answer some of the
Speaker:critics. When it comes to, you know, the economic and
Speaker:environmental viability of vertical farming. But if you're not
Speaker:prepared for those questions, you don't have a good plan, I think you're probably going
Speaker:to run into some trouble, if not now, sometime in the near future.
Speaker:Yeah, it's really important. And it's such a good reminder to have that
Speaker:consideration as early as possible in your planning process.
Speaker:What are you seeing in terms of innovations or improvements? You know, when
Speaker:we talk about solar, we talk about, you know, their capacity to how they're changing,
Speaker:like the way they're designed, the cells, the batteries can hold longer storage
Speaker:time. So what has you most excited in terms of like where the industry
Speaker:is going and, you know, improvements or
Speaker:developments or stuff that's in the works, you know, that you're seeing the most? Yeah,
Speaker:batteries, right? I mean, like, look, I
Speaker:mean, climate tech and clean tech and renewable energy, whatever you want to call the
Speaker:industry, I mean, the The pace of
Speaker:innovation is incredible. And so we're seeing like so
Speaker:much improvement across the value stack that it's crazy. You know,
Speaker:this has obviously become a real thing. It's become, you know, a government focus,
Speaker:both, you know, domestically and internationally. Tons of money's pouring into
Speaker:the space. Tons of smart people are coming in. And so the pace
Speaker:of innovation is really staggering. And that's true on solar and it's true on dispatchable
Speaker:generation. It's true on the digital side of things with controls and switchgear and things
Speaker:like that. But where it's most apparent is in batteries, right? And I think,
Speaker:you know, generally speaking, the way to think about this is
Speaker:6 or 7 years ago, lithium-ion batteries
Speaker:weren't a thing outside of like consumer appliances, right?
Speaker:No one thought that you could drive a car with lithium-ion batteries, at
Speaker:least not an affordable car, right? No one thought you could power
Speaker:a building with lithium-ion cells. I was in a lot of meetings where
Speaker:engineers who had 30 years of electrical engineering experience told me I was
Speaker:crazy because I wanted to use batteries on projects, right? And now we're in a
Speaker:place where lithium-ion batteries are commonplace. Like the
Speaker:deployment curve is insane. I think more
Speaker:batteries were deployed in 2021 than in the rest of history
Speaker:combined, right? Like that type of exponential growth curve. But
Speaker:lithium-ion is just one chemistry, right? And we're really just
Speaker:scratching the surface of what's possible. And so there are some
Speaker:things about lithium-ion batteries that are inherently really good. But they
Speaker:tend to be good for sort of short duration, right? Like 2 to 4
Speaker:hours of storage. That's really where like they're economically viable
Speaker:and they make sense. And so the challenge we need to solve, right, is both
Speaker:daily and seasonal over time. And there are going to be different battery
Speaker:chemistries that help us solve those challenges. And so ultimately,
Speaker:right, there are some specific technologies that we're super excited
Speaker:about, iron-air and nickel-hydrogen being 2 chemistries
Speaker:that We're spending a lot of time on right now, trying to sort of figure
Speaker:out how they work and you know what their degradation curves are going
Speaker:to be and things like that. These new chemistries are coming online, and so
Speaker:ultimately what that's going to mean is that you know today we
Speaker:might need to use fossil gas or you know some
Speaker:form of dispatchable generation to solve you know twenty to
Speaker:thirty percent of the power needs for a facility. I think five years from now
Speaker:that won't be the case, right? You'll just have like a lithium-ion battery and then
Speaker:another kind of battery. and then maybe a third kind of battery. And the combination
Speaker:of those 3 technologies will be able to give you both 24/7 and
Speaker:365 reliability. And so that's where the most
Speaker:innovation's happening. That's where it's most exciting. I think, you know,
Speaker:policies like the Inflation Reduction Act are gonna sort of supercharge
Speaker:manufacturing in the sector. And so we're seeing sort of in
Speaker:the short term, there's a lot of like inflation, supply
Speaker:chain instability with respect to pricing. But you're definitely
Speaker:seeing like that curve come down pretty steeply. So
Speaker:really, really excited about the future. And I think that's going to be a game
Speaker:changer for distributed energy in general. That's helpful. Thanks for sharing
Speaker:that. I saw that some of the work that you do is focused on what's
Speaker:happening on tribal lands. Can you speak a little bit about that as well? Yeah.
Speaker:So, you know, I guess this kind of, you know, our tribal
Speaker:lands initiative kind of stemmed from A
Speaker:homework assignment that I gave a bunch of people on our BD team
Speaker:about 2 years ago, right? And when you think about
Speaker:distributed energy and kind of what I've been talking about in general,
Speaker:there's so many good things that can come from it. But if not
Speaker:properly managed and not properly thought about it, it also can lead to a
Speaker:lot of environmental justice issues, right? So if you just think about, right,
Speaker:a microgrid is a personal power plant, right? Well,
Speaker:if rich people and Fortune 500 companies all get personal power
Speaker:plants and the rest of us have to use the grid, what kind
Speaker:of society does that create? Because the costs of managing the grid are basically
Speaker:fixed costs. So the more the people that leave the grid, the higher the
Speaker:percentage of fixed costs those of us that remain have to pay.
Speaker:And so it's something that we try to think about
Speaker:constantly and we try to think about within the context of every project that we're
Speaker:building. And out of that exercise, a statistic
Speaker:emerged, right, which is that less than 1% of the
Speaker:United States population lives on tribal lands, and
Speaker:75% of unelectrified homes are on tribal
Speaker:land in the United States. And so, as you
Speaker:learn more and more about it, you realize, in addition to,
Speaker:you know, centuries of injustice that have been faced by tribal communities,
Speaker:Energy equity has not been available to most
Speaker:tribal lands forever, right? And it's a real
Speaker:problem. And so that was kind of the precipice for us wanting to
Speaker:get involved in tribal lands. Subsequently, the
Speaker:Department of Energy has started to come out with a lot of big grants and
Speaker:incentives to help sort of bridge the gap of
Speaker:bankability with tribal lands. So that's helped us deploy
Speaker:capital and sort of make progress on a lot of these projects. But look, I
Speaker:think like the number one thing for us is it's just good work to do,
Speaker:right? When you meet with these tribes and you hear stories about,
Speaker:you know, what they and generations of folks behind them have had to deal with
Speaker:and put up with, you can't help— you just want to help, right?
Speaker:And so I think that's what we're trying to do with a portion of our
Speaker:business and our tribal lands initiative right now, which is really build renewable
Speaker:microgrids to help support tribal communities, provide them with
Speaker:access to cheaper, more reliable, more sustainable electricity.
Speaker:And we're working on it, right? It's a tough nut to crack in a lot
Speaker:of cases. There's a lot of sort of cultural stuff that we've had to
Speaker:learn along the way in terms of, you know, how to interact with tribes
Speaker:and sort of some of their sensitivities and things like that.
Speaker:But we're making progress and it's something we're really passionate about and we
Speaker:love working on those projects. Yeah, I definitely applaud the work you guys are doing
Speaker:there and I definitely encourage listeners to spend more time on your website, you know,
Speaker:seeing some of the projects you're involved in there. So I appreciate you being generous
Speaker:with your time. I know we're getting close to the top of the hour. You
Speaker:also have a capital solutions arm. Is that tied directly to the projects you're working
Speaker:on, or is that another thing you can talk a little bit about? Yeah, no,
Speaker:so it's a good thing. And we have a chief investment officer, his name's Julian
Speaker:Torres. If I didn't talk about this, he would be all sorts of happy. So
Speaker:this is good. No, so basically the genesis of our capital
Speaker:solutions business, which is essentially a private equity
Speaker:firm that sits inside our company that's focused on distributed
Speaker:energy capital deployment, was we
Speaker:got a shot, right? So, as I talked about in the beginning, the hardest thing
Speaker:for us was raising money. And I think one of the reasons it was really
Speaker:hard for us to raise money is because the investment community didn't understand what we
Speaker:were trying to do, right? And so, after we
Speaker:hit that milestone and we had money, we started thinking about all
Speaker:the developers and entrepreneurs who were behind us who didn't
Speaker:have access to that capital. Because there weren't investors who understood what they were
Speaker:trying to do. And so, you know, sort of the thought process was like,
Speaker:okay, why don't we take a piece of this fund we just raised that we're
Speaker:investing in our own projects and go out and try to work with
Speaker:other third-party developers and entrepreneurs to help them achieve
Speaker:their goals as well? And we brought in Julian, who
Speaker:came from RBC, to run that business, and he's done a
Speaker:fantastic job with it. And we're doing a lot of cool stuff
Speaker:that we have our hands in, like pretty much anything you can call a distributed
Speaker:energy project we're looking at and investing in right now.
Speaker:And it's awesome, right? I mean, I think it's, you know, especially when we're funding
Speaker:entrepreneurs who have been traditionally underserved, right, and don't have access to
Speaker:capital, you know, watching those folks, you know, see their
Speaker:dreams realized in terms of the projects they're building, right, and being
Speaker:able to actually see their vision through. Is I don't know. It's
Speaker:like it's a really, really good feeling. So it's you know that's a big part
Speaker:of our business today. About half of the capital that we deploy is on
Speaker:projects that we develop internally, and half is on third-party
Speaker:development now. And you know I could see a world in which like
Speaker:that's like 75% of the money we're spending, right? And so it's really
Speaker:exciting. I think we've learned a lot, right? And having sort of Warburg
Speaker:Pincus, which is like a real private equity firm behind us, to teach us how
Speaker:to think about and do some of these things has been. unbelievably valuable.
Speaker:We definitely couldn't do it without them. But that was kind of the genesis of
Speaker:that was just like, hey, this was really hard for us. How do we make
Speaker:it easier for the next generation? And, you know, I think slowly but
Speaker:surely we're making progress on that front, but it's a really cool aspect of what
Speaker:we do and something I'm really proud of. Yeah, I imagine it gives you a
Speaker:front row seat to see some pretty interesting projects, technologies,
Speaker:you know, forward-thinking entrepreneurs. Yes. I mean,
Speaker:it's honestly like really inspiring, right? And I think one of the reasons I
Speaker:like it, right? Like when I sit in those meetings, I'm like generally useless because
Speaker:like I don't really understand how finance works. So I'm not the decision
Speaker:maker, right? But you know, I like going, right? Because I think that's one of
Speaker:the cool things. And this is maybe a positive note to end on, right? Is
Speaker:I think this is true in both indoor agriculture, vertical farming, and clean
Speaker:tech, right? Is like the quality of
Speaker:people that are coming into these industries is
Speaker:insane. And anytime I like get like
Speaker:too much hubris, right? Or I want to like rest on my laurels or
Speaker:anything like that. I go meet some of these folks who are the
Speaker:next generation of entrepreneurs coming up. And like, I very
Speaker:quickly go back to work, right? Because it's like super inspiring in
Speaker:terms of how creative and innovative and committed
Speaker:these folks are to maximizing utilization of these
Speaker:technologies, inventing new technologies, inventing new ways to use
Speaker:technologies, all these types of things. And they're starting to succeed, right? I
Speaker:mean, that's the coolest thing about this is you're starting to see more and more
Speaker:companies, you know, come up and really get to maturity and really
Speaker:having a positive impact on the world. And so, you know, ultimately, as much as
Speaker:you, you know, hear all this doom and gloom in like the mainstream media,
Speaker:right? Just, I guess, the media in general about climate and
Speaker:the situation we're in, which, by the way, like a lot of it's warranted. It's
Speaker:not a situation on paper. The reason for hope is the
Speaker:people that are working on this problem, right? And I think, you know, across
Speaker:our industry, and I'll just lump vertical farming into climate tech, right?
Speaker:It's just an amazing, amazing family of people
Speaker:who are coming together and just breaking down doors left and right.
Speaker:And if that like sort of exponential growth curve continues to
Speaker:happen, I think we're gonna make the best out of a really
Speaker:bad situation. We're gonna be all right. So there's a lot of work to do,
Speaker:but a lot of really smart, talented people who are working on it, and cool
Speaker:to be part of that community and cool to work with those folks on a
Speaker:day-to-day basis for sure. Yeah, it must give you a great front row seat to
Speaker:what's possible and give you hope for the future as well. So maybe just kind
Speaker:of like ending on that note, you know, it's hard to predict what's going to
Speaker:happen. You know, a lot of people in end of 2019 had some plans about
Speaker:what they were going to do in 2020, and you know, you saw what happened
Speaker:there. So just if you can look a little bit forward, forward, you know, when
Speaker:you think about roadmap, when you think about upcoming projects, when you think about
Speaker:things that have you excited over the next 12 months for scale
Speaker:microgrids, what comes to mind? Yeah, you know, one of my
Speaker:mentors in this industry is a guy named Jigar Shah, who now runs the
Speaker:Loan Programs Office at the Department of Energy. So I'm not allowed to talk to
Speaker:him as much as I used to. But he's like super important now. But
Speaker:he spoke at a conference I was at last week.
Speaker:And kind of the message he sent to people was, you got
Speaker:to stop thinking in Ms and start thinking in Bs.
Speaker:And generally speaking, what he was talking about was, a lot
Speaker:of us have gotten into this industry and we've built viable
Speaker:businesses and we can write paychecks to our employees and there's
Speaker:some stability. But if you think, the scale
Speaker:of the opportunity is such that we really should be thinking bigger.
Speaker:Right? Both from an impact standpoint and financial standpoint,
Speaker:and I think that's really like the big next step for us. Right? Is
Speaker:you know we have built our business. I'm really really proud
Speaker:of, but we're still kind of like this niche business. Right? We
Speaker:you know work in hundreds of millions of dollars, definitely not billions of dollars yet.
Speaker:And I think you know that next step is really challenging.
Speaker:Right? It's just as hard as the first step to get to kind of where
Speaker:we are today. That next step is really challenging. And I
Speaker:think it takes a lot of discipline and a lot of commitment, a lot of
Speaker:camaraderie to be able to say like, yeah, what we're doing isn't good enough,
Speaker:right? Like we need to go bigger. We need to keep taking risks. We need
Speaker:to keep, you know, making progress and doing crazy shit.
Speaker:And that's, I think, what I'm excited about, right? I think I work with a
Speaker:group of people who are up for it, right? Who are willing to say
Speaker:like, yeah, like we've built something cool, but it's not good enough. Let's
Speaker:keep going. Let's keep doubling down. And I'm excited to be a part
Speaker:of that. So I think that'll be 2023 for us, right? Is
Speaker:like, we're going to take a shot at B's and it might work out and
Speaker:it might not, but we're going to go out swinging. And so
Speaker:yeah, that's going to be next year for us. Hopefully I'll get to sleep for
Speaker:like 2 weeks at the end of December before that happens. Then we'll get going
Speaker:in January. Given the audience for this podcast, is there any
Speaker:parting notes or parting thoughts that you have specifically for the folks?
Speaker:You know, there's a lot of the, you know, your fellow leaders in this industry,
Speaker:CEOs and founders of this growing
Speaker:industry. Any thoughts for them? Yeah, I mean, I guess 2
Speaker:things. I mean, one, keep going, right?
Speaker:I think as somewhat sort of independent, objective third
Speaker:party watching the growth of this industry, I think the progress that's been
Speaker:made is remarkable. But like, The potential that's in front of y'all
Speaker:is unbelievable. And I do think it's going to be a major
Speaker:industry and a major source of food production for humanity moving forward,
Speaker:and we need it. So keep going. And then I guess the second thing is,
Speaker:if you have energy questions, my door is always open. Let me know. I love
Speaker:working with the community and, you know, would be happy to, you know, chat with
Speaker:you if you got any questions, concerns, thoughts on
Speaker:whether it's distributed energy or just electricity in general. Let me know.
Speaker:Sounds good. Well, Tim, I really appreciate your time and sharing your
Speaker:inspiring story. It's so interesting to see, you know, how the arc of your
Speaker:career started and what was important for you and what
Speaker:influenced you and what motivated you. And you can see that as a
Speaker:common thread for everything you've been doing up until the present day. And I can
Speaker:still sense the excitement that you have for what's possible, and it
Speaker:really like gets people motivated, gets listeners motivated. And I think it keeps—
Speaker:I'm sure your partner's motivated because it feels like we're all marching towards the
Speaker:same initiative to make the world a better place and doing your part. And, you
Speaker:know, folks in vertical farming are doing their part as well. So I really thank
Speaker:you. Amen, brother. Well, thank you so much for having me. I'm a big fan
Speaker:and I appreciate you having me on. So, uh,
Speaker:scalemicrogridsolutions.com for folks to learn more. Anywhere else you want to send folks to get
Speaker:connected with you? No, that's about it. I'm on Twitter
Speaker:@TimothyHayde if you want to see some of my rants, at least as long as
Speaker:Twitter exists. Thanks so much for
Speaker:having me, Harry. I'll talk to you later, brother. Thanks again to Tim for coming
Speaker:on the show and sharing his story. As always, full show notes are available at
Speaker:verticalfarmingpodcast.com. Full show notes, summaries, timestamps,
Speaker:key takeaways, any resources mentioned during the conversation. We go out of our way to
Speaker:do that so you don't have to sit here taking notes. You can listen to
Speaker:the conversation, sit back with your cocktail of choice,
Speaker:and enjoy all the information that's being shared here. And then just go look
Speaker:at anything that we talked about that was relevant for you. Thanks to our season
Speaker:7 title sponsor, Cultivated. If you are looking into a vertical farm and don't know
Speaker:where to start or which technology would suit your needs, reach out to them today.
Speaker:Best of all, their service is free because they work on behalf of their partners.
Speaker:Learn more at cultivated.com, and that's spelled C-U-L-T-I-V-A-T-E-D.com.
Speaker:Leave out that last E. If you're a regular listener to the show, you'll know
Speaker:that this is the space where I get to talk about some of the fantastic
Speaker:sponsors and supporters of this show. If you are interested in being one of those
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Speaker:[email protected]. We've got inventory
Speaker:available for season 7, and the reach of the show just continues to
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Speaker:as a reminder, if you're enjoying this show, or any of the past episodes, please
Speaker:leave us a rating and review at
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Speaker:out on a future episode. Tune in next week for my conversation with Henry
Speaker:Erst of Control Union. Until we meet again, here's to your
Speaker:health. Thanks for listening. To read the full show notes for this
Speaker:episode, which includes any links mentioned in the episode, as well as
Speaker:a full show transcription, visit
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