Transcript
Recorded at the UNC Clean Tech Summit
Nico Johnson: I'm Nico Johnson, your host at SunCast, but today we're doing a special collaboration episode for Energy Empire — Jigar's new podcast with our friend Jamie Nolan.
Dan is the protagonist of the conversation today. Dan, I wanted to start by welcoming you back to North Carolina. Thank you for the many ways you've contributed to the growth of clean energy in my home state, and in our industry. From the place where you sit — as one of the most well-known and important infrastructure companies building the current energy sector — what's holding us back right now?
Dan Shugar: Thanks, Nico, and I really appreciate what you've done with SunCast. Congratulations, Jigar, on your new podcast, Energy Empire. Really looking forward to this conversation. It's great to be here in North Carolina at the UNC Clean Tech event.
What's holding us back? I would argue we're up and to the right as an industry. We're going very, very strong despite a lot of noise to the contrary. Last year in the United States, 83% of the new power generation capacity was solar and storage. It is working.
As a yardstick, three years and one month ago we went public. At that moment, our backlog at Nextpower was $2.1 billion. Today it's well over $5 billion. So we're not being held back. We've won on economics — solar is the lowest-cost way to generate power pretty much everywhere on earth. And now that we have storage that's affordable at four to six hours, it can work pretty much everywhere as firm power.
In terms of getting to the next level, we're really limited mostly by our imagination and our talent. We're trying to bring the best and the brightest into our industries and really evangelize our message. We need to transition our thinking from being alternative energy to we are the mainstream energy. We need to start acting that way — investing more in public education, public policy, evangelizing our message, not only at home but abroad. We're in 45 countries around the world. So we're doing great. We can do better. We are part of the solution for affordable, reliable energy and play nicely with other power generation technologies.
Attracting the Best and Brightest
Jigar Shah: On getting the best and the brightest to join our industry — you and I were the best and the brightest at some point in our careers. I started AstroPower in 1995. You started at PG&E and have been working on solar since the 1980s. How do you get the best and the brightest to choose our sector? What was your journey? How did you decide this was going to be your path?
Dan Shugar: I'll answer that, but a quick tangent first. There was a golden moment, Jigar — you founded SunEdison and we were at PowerLight at that point. What we were both focused on was the right thing: drive down the levelized cost of energy, which then allows project owners to have the highest unlevered project rate of return. Staying true to that — you carried that thought all the way through the awesome investments you were making during your tenure at the Department of Energy. Thanks again for your incredible service there.
For me, staying true to a vision — solar renewables works for all, and we're going to deliver no-compromise, high-reliability energy that wins on all merits — those are the things that attract the best and the brightest. We've been able to deliver on that. Last year Nextpower was the top-performing renewable stock, and beyond renewables, in all mid-market-cap companies we were in the top 10. So folks are like, wow, this is not just good for the planet, this is a really smart business.
That's driven by satisfying customer needs — people need power that's reliable and available. To deliver a fulsome solution, we've brought in robotics, inspection robotics doing vision, predictive analytics, digital O&M. To support that business, we brought in fantastic machine-learning teams. The scope to take our products and services to the next level requires the best and the brightest. Our team is the most important thing in order to innovate, execute, and deliver those kinds of products and services for our customers. We need to stay true to our vision and our mission, articulate that, and deliver exemplary operational performance so folks see this as a real industry. Does that make sense?
Jigar Shah: It does, but I think you dodged. I want to know about all the uncles who told you that you were wasting your life by going into solar power or working for the electric utility.
Dan Shugar: There have been a lot of naysayers along the way.
Jigar Shah: Right, but those naysayers are also telling the best and brightest not to join your firm. The real question is — what did you say to convince them you were still invited to Thanksgiving dinner?
Dan Shugar: That's funny. I did this whole video series called Dinner with Dan because I was at a wedding and some guy was going on about renewable power — well, that's not reliable, the panels are all made in China, why don't we do nuclear, those types of objections.
What we need to do is really get communications right. That's the number one place we as an industry have underperformed very consistently. We've leaned in — not just at Nextpower, but in our industry associations. I serve on the American Clean Power board. We've taken the comms budget up from a few hundred thousand to north of $10 million a year to really evangelize those messages.
One of the things we did was a clean energy manufacturing jobs tour. We've done nine public factory openings, and it's very popular. It really helps transcend the unfortunate politicization that's happened with some of these energy techs. Everyone loves the fact that we took a former Bethlehem Steel facility in Pittsburgh and converted it into a modern manufacturing facility shipping hundreds of trucks a week of finished goods. Rinse, repeat. We're doing that with electronics in California, where we're making advanced frames for solar panels using US steel.
The manufacturing story has been really important to cut through, evangelize the message, and make it a message everyone signs up for. And then really hitting now the affordability — we're delivering the lowest-cost power. It's a ground game. We need to grow up as an industry. We're not an alternative — we're mainstream. Let's start investing.
Jigar Shah: 83% feels like a dominant position last year.
Dan Shugar: That's a great word. We've earned what we've created through a lot of hard work. This tech works. The project returns are happening. We're supporting hundreds of projects across the United States and the world. By being very factual and concrete about that, we attract talent and support our industry.
Culture and Continuity at Nextpower
Nico Johnson: One of the things I've been most impressed by, watching the last 20 years of your growth from PowerLight through to Nextpower, is the continuity of the team. In an industry that's growing as fast as ours, it's not so common to see that level of fidelity to a core team. There are eight, maybe nine co-founders of Nextpower. How does that unified experience accelerate growth and value for shareholders, and serve as a beacon for folks looking at the industry? How do you think about that internally as a management team?
Dan Shugar: Thanks for saying it. It sounds like apple pie, but the culture really is the most important thing. Drucker said culture eats strategy for breakfast every day, and people can read through — they can see that.
What do I mean? At almost every all-hands meeting, we encourage people to do the right thing for the customer, do the right thing for your business, take risk. If you make a mistake, that's okay. The company has your back. We can make a mid-course correction. What's unacceptable is analysis paralysis — being afraid to make decisions.
When we bring people into the company, we don't give them a rule book as thick as an encyclopedia. We've brought it down to one thing: please make every decision at the company like it's your own money, your own company. Ninety-nine percent of the time, that'll be the right thing to do.
We also have a strategy people can articulate. If you walk into 80, 90% of companies around the world and ask someone in the hall what the company strategy is, most of the time they'll say, "I don't know, I'll tell you what mine is." If you walk into Nextpower and ask, they'll say it's ICT. What does ICT stand for? Innovation, Customers, Execution, and Team. Innovation that delivers value customers understand. Incredible customer focus. Relentless focus on execution with everyone we touch. And building the best team.
A clear strategy that's transparently articulated, and a culture that allows people room to grow in their career. For example, our chief operating officer at Nextpower started three companies ago as a clerk in the project construction department. A few years later, when it became time in 2004 to build the world's first 10-megawatt system — which was in Germany — we looked around and said, who's the most qualified person? It was Marco Miller. He did that. He's elevated through senior project manager and beyond. If people work hard, they're diligent, and they deliver, you need to provide upward mobility within the company.
Capital, Cycles, and the Narrative Challenge
Nico Johnson: In an industry that's had so many up-and-down cycles, it's often difficult to provide that kind of upward mobility, and talent ends up moving away. We've struggled to gather enough capital around the idea, and enough commercial success — which you're fantastic at — to create something that feels like a balloon lifting everyone off the ground. How do we address that? Right now there are some headwinds, but we have a lot of tailwinds. How do we address the capital requirements to make sure folks have a job in two, three years?
Jigar Shah: This goes back to what Dan was saying. Part of this is a narrative challenge. Look at employment in the solar industry since the tariffs put on by President Obama in 2012, then in 2015, and all the other things — it's been up and to the right. We've consistently hired more people every single year to meet the needs of millions of homes that decide to go solar, hundreds of thousands of commercial and industrial facilities, utility-scale solar. Now we're adding batteries to all of those projects. People are busy. People are really, really busy.
There are going to be companies that fail to execute and go out of business, and those folks unfortunately lose their jobs. But they get absorbed by the rest of the companies who make good decisions and still need the talent to go to the next level. Our biggest challenge right now is a narrative challenge.
We are in the middle of one of the largest energy crises we've had since the 1973 oil embargo. In 1973, we didn't have the solutions we have today. Today, we not only have the solution, we have billion-dollar companies providing those solutions at scale, and we can meet this moment. So the narrative has to change. People have to understand that putting in a backup diesel generator is a cost center; putting in a backup battery can become a profit center for you and your family while protecting your family. These are narrative challenges, and they keep us from growing as fast as we could — even though, as Dan suggests, we are still going up and to the right.
Reshoring Solar Manufacturing
Jigar Shah: Dan, let's go back to COVID. There was a presidential election. The president that came in at the time was all about onshoring and reshoring, which President Trump had been pushing since 2016. The solar industry was slow, frankly, to get that message. They sort of took it until 2024, 2025, when they were like, oh, I guess people are serious — we're going to have to onshore and reshore. You were never slow. You went at this head-on, right in the middle of COVID, figuring out exactly how you were going to onshore and reshore this capacity. What triggered in your mind early to understand this was a lasting trend, one you had to take seriously, one you had to attack?
Dan Shugar: I appreciate that. Sometimes there are moments you don't have perfect information, but you need to do pattern recognition and make a decision and go forward.
In the very early part of COVID, there was a global meltdown in the logistics industry. Prior to that, you could move a container from point A to point B, anywhere in the world, from any port for about $2,500 to $3,000. We saw logistics triple in a quarter and a half. Warren Buffett came out and said all his portfolio companies were caught completely off guard. We also saw steel double in that period. At the time, we were largely protected on the steel side through our business practices, but logistics was a huge hit. We absorbed over $100 million of costs honoring every single contract we had with customers. We absorbed those costs over two years.
But I took a step back and said, "Time out. At this phase of my career, there's no way going forward we're going to be subjected to those kinds of uncertainties for delivering material reliably to a schedule, to a customer site — based on a COVID-mandated shutdown in a faraway port, or congestion at the Port of Long Beach, or strikes, or all the other things happening." We made a decision based on fundamentals: deliver material reliably to customers, onshore. Create a narrative around the concrete facts on the ground. We stood up over 35 factories across the United States.
Jigar Shah: And it matters. People notice you've done that. It's actually led you to get more market share and more enthusiasm from your customers.
Dan Shugar: I will, but let me finish. I'm a student of — I don't want to agonize about the past, but I try to learn from it. What was our decision process at the time? It was driven by satisfying customer need. What everybody else was looking at: "Wait until we get through Chinese New Year, things will decongest." Or "wait until this happens, or that happens." I said, no, we're moving forward on a massive build-out.
I thought at the moment we were going to build 10 gigs of capacity. I thought that was a lot. It frankly was harder to do in the US than we thought. So we said, okay, we're going to 25. Then we said we're going bigger than that. We pulled that trigger. That ended up being a defining moment in the history of the company. It was the right thing to do.
It engendered — we were able to radically simplify the whole logistics part of our business. We give customers buildable megawatts by block in a predetermined sequence, with visibility on all materials, and hit unbelievably high on-time delivery. When we do QBRs with EPCs, we ask: "Have we slowed you down on any project over the last few years? Have you been waiting in the field for any material?" They look around and the answer is no. We've been delivering. We were able to reduce lead times.
A side benefit we hadn't even thought of: how much cleaner US steel is. Electric arc furnace steel uses a fraction of the energy that a blast furnace does, and a fraction of the carbon content. We've been able to build incredible relationships with three of the top mills in the country — Nucor, Steel Dynamics, and US Steel. We did the right thing. It was predicated on satisfying customer demand and customer satisfaction. It then engendered a lot of confidence and respect, and we were able to completely re-engineer our supply chain operation, save a lot of costs, deliver on time, and bring a whole range of new benefits to the table.
Industry Leadership and Telling the Story
Nico Johnson: Dan, it's been amazing to see how, as Nextpower executes and gets bigger, it brings more focus to the industry. A lot of folks like to joke that you're the industry rock star. You actually are a literal rock star — with groupies and everything.
Jigar Shah: We're standing around in the hallway and people are walking up going, "you're the guitar guy." He's known as the guitar guy as much as the CEO of Nextpower.
Nico Johnson: You mentioned what ACP is doing. Jigar mentioned that the narrative is the most important thing. My question was going to be: what's the most important thing to get right over the next five years? I think it is the narrative. But why don't we see more CEOs like you on CNN, and how do we get them there? And why don't we see more companies and CEOs leading with their checkbook to create the kind of political power we need? What's that going to look like over the next five years?
Dan Shugar: Shout-out to some of our brethren and sister companies in the space. Amazing leadership from David Carroll at Engie, from Sandhya at EDP Renewables. NextEra has really stood up and done great work with John Ketchum. Silicon Ranch regionally in the Tennessee Valley area. Leeward — Desiree and her team in their realm. We've seen really great leadership stepping up to tell our story about delivering reliable power that can happen quickly, affordably, and create a lot of employment.
We are seeing increased engagement and leadership. But I want to encourage anyone who's a participant in this industry to lean in on this and be confident about telling the story of what you're doing with your products and services. We want everyone to be successful. The enemy is not the renewable energy company down the street that might be a competitor. The enemy is old ways of thinking, and us not really — because we're not alternative energy, we're mainstream energy, and we need to start acting like that.
North Carolina, Utilities, and the Path Forward
Jigar Shah: What does that look like, Dan? In North Carolina, we have over 7,000 megawatts of operating solar farms in the state, most of which have a power purchase agreement with Progress, which is now part of Duke. They've just issued a 15% rate increase to do things the old way. The new way would be to take Amazon up on their offer to build batteries at all of these sites and build capacity that way.
There's narrative, and then there's the fight. This is a public service commission, an actual docket. The vertically integrated utility says, "I want to do it the old way." You're saying we're 90% cheaper if you do it the new way. The data center companies are saying, "We'd rather do it the new way because we don't want to get blamed for a 15% rate increase." But you've got a governor who may not be a PhD in electricity regulation. How do we as an industry help get those better outcomes?
Dan Shugar: A number of the folks you mentioned are trying to lean in. Governor Josh Stein will be here today — I have the pleasure of introducing him. He's been a champion for clean power for a decade, going back to his work as attorney general. He's participating in this conference with an address.
These investor-owned utilities — we're trying to lean in to make it a win-win for all participants. Serving the data centers with corporate offtakes is not a new thing. It's probably one of the dominant drivers of demand. Let's make it a win for these utilities too.
What we're really focused on is the engineering around interconnection — making sure the inverters stay with the grid and keep supporting it. There's so much opportunity. Our technology is a much better way to generate power and control the grid than a rotating machine. At Nextpower, we've engaged with NERC at an engineering level to show the flexibility of these inverters for ancillary services — voltage support, ride-through, frequency regulation. To do those things and pair with batteries — there's tremendous opportunity.
We're mainstream energy now with solar and storage. Let's start doubling down our investments with all the stakeholders you mentioned, and really be a solution they can win with under their current business models. They want to keep the lights on, and I don't blame them. I used to work at a utility. I really think we're part of the solution.
We're going to do our best at Nextpower. We're building additional labs. We're working collaboratively with stakeholders to continue to innovate, to find solutions that are lower cost, higher reliability, faster to market, create more economy, and yes, better for the environment than legacy ways of generating power.
Jigar, thanks for all your amazing work and congrats on Energy Empire. Nico, always a pleasure to work with you.
Nico Johnson: Thanks, Dan. Thanks, Jigar.