Renewable Energy SmartPod
Renewable Energy SmartPod
Navigating the New Energy Landscape with Michael Chanin from Cherry Street Energy
Sponsored by: KPMG
While recent months have been full of turmoil for renewables companies amid market uncertainty and dramatic policy shifts, there are still energy companies that are closing new deals and driving innovation in the renewables market. Michael Chanin, founder and CEO of Cherry Street Energy, stops by the show to discuss the changing energy landscape and how businesses can adapt. Michael highlights the impacts of recent policy changes, supply chain challenges and solutions, and shares his predictions on what the future holds for renewables.
Recorded on the date of Cherry Street Energy's 10th anniversary, Michael and his team aren't planning on slowing down any time soon.
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(Note: This transcript was created using AI. It has not been edited verbatim)
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Sean McMahon 0:50
What's up everyone and welcome to the Renewable Energy SmartPod. I'm your host, Sean McMahon, and we all know that these recent months have been full of turmoil for renewables companies. Dramatic policy shifts and changing market dynamics have led to big picture uncertainty about the status of the clean energy transition. But amid all that uncertainty, it's easy to forget about the companies that are still out there, doing deals, breaking ground on new projects or cutting ribbons on projects that are ready for operation. Cherry Street Energy is one such company, and in a few minutes, I'll be joined by its founder and CEO, Michael Chanin. Of course, Michael and the team at Cherry Street have felt some of the ripples from all the headlines surrounding renewables, but they're still out there working hard on projects, large and small projects for customers like Delta Air Lines, the city of Atlanta, the always busy Hartsfield-Jackson airport, and even Porsche's North American headquarters, which I learned from Michael, was used as the Avengers headquarters in the movies, providing power to the Avengers headquarters? I gotta say, that's pretty cool. So get ready to hear more about that and more from Michael.
But before we begin that discussion, just a quick reminder to check out the most recent episodes of this podcast. Last week, I chatted with Nexus Labs founder and CEO James Dice to get smarter about smart buildings. Before that, I talked to another Sean, Sean Kelly from Amperon, who stopped by the show to talk about what's next for energy prices, which, if you haven't noticed, seem to be grabbing more and more headlines as of late.
We also discussed trade policy with Jessica Libby from KPMG and did a deep dive on geothermal with Mike Richter from Brightcore Energy. So be sure to check out all those episodes. And as always, if you want a daily dose of renewable energy news delivered directly to your inbox, head on over to SmartBrief.com and sign up for the Renewable Energy SmartBrief or just click on the link in today's show notes.
Sean McMahon 3:05
And joining me right now is Michael Chanin, the founder and CEO of Cherry Street Energy. Michael, how are you doing today?
Michael Chanin 3:13
Wonderful. Thanks so much for having me today, Sean.
Sean McMahon 3:15
Yeah, it's great to bring you on. I thought we'd kick things off by giving you a chance to kind of just walk our listeners through what you and the team at Cherry Street Energy, do you know, what are your What are your typical projects? You know, things you're involved in these days?
Michael Chanin 3:28
Of course, in a timely time for me to join you. 10 years ago today, I founded Cherry Street Energy, which is a power company for commercial and industrial customers. Our team of now 64 people sell competitively priced electricity to customers, municipalities, universities, schools, hospitals and we're vertically integrated, from our sales development team to the designers who design and stamp our electrical drawings to our construction crews and our operations and maintenance team that incorporate predominantly solar power on rooftops, parking canopies or ground mounts, most often for the jargon behind the meter. As a independent power producer through long term power purchase agreements, selling the electricity from solar panels, increasingly incorporating battery storage and for customers who'd like it, for fleet vehicles or their customers or tenants, we have some electric vehicle charging infrastructure as well.
Sean McMahon 4:25
Alrighty, that's That's great to hear. And one of the reasons I want to bring you on is, as you probably know, the renewables industry, you know, so far this year has been heavily focused on a lot of policy changes that are coming out and, you know, and the impact that's having on, quite frankly, how power is going to be generated absolutely and so I kind of realized I hadn't brought on someone like you, a leader of a power company or developer side, just to kind of get your perspective. You know, we're about eight or nine months in, and what have you noticed in terms of changes in the marketplace in light of all these recent policy shifts?
Michael Chanin 4:59
Certainly accurate that the headlines have been harsh. From an industry perspective, related to clean energy, what had happened in the inflation Reduction Act, the tax credit and just, I think the focus on sustainability and the shift in that from from federal policy in that perspective, for us, the momentum has been unbounded. We continue to find ourselves providing competitively priced electricity in the communities that we serve in ways from a technology that enhance not only our customers operations, but the system. We work very closely with utility partners to incorporate this distributed generation, because we do not have enough electricity in the markets that we serve, and there is an incredible push. Is the jargon again, perhaps in the industry would say it's an all of the above approach. We need more electricity in the system to help us meet the growing demand and load growth in the markets we serve, the southeast, nine states that we operate, the load growth in the last year has been more than in the last 15 years, and so the headlines around the tax credit, mostly foreign entities of concern, and some supply chain where that equipment comes from, has created a lot of disruption. However, in our 10th year now, these are not new challenges that we face, and our business model, frankly, has been unchanged, and we would be advocates for a lot of others to pursue this type of structure, because we think that our incentives become fully aligned with not only our customers, but the system, and it's probably the reason that we see the momentum that we do in the markets that we serve.
Sean McMahon 6:41
And now you mentioned supply chain. Are you experiencing any particular challenges right now?
Michael Chanin 6:49
There's definitely still some unknown as it relates to the ownership of some of the original equipment manufacturers that we use to incorporate best in class technology on our platform. We haven't faced material supply chain challenges, mostly because seven years ago, at least, we tried to onshore, purchase domestically, all that we could whether it was our solar panel manufacturers. We buy predominantly from Hanwha Q cells factories, which is in Georgia, where we sit. The largest solar panel manufacturer in the Western Hemisphere is Hanwha Q Cell plant up in Dalton and Carrollton, Georgia. We also buy from other manufacturers who are producing domestically. You know, I mentioned to someone recently, Sean, that the other piece of our supply chain in this commercial and industrial segment, one large utility scale project falling out, provides us equipment for a year. We're building this year, probably about 50 megawatts of capacity. Organically, we'll acquire some others and have some other opportunity. But generally, we install about two projects a week, our average installation is about 200 kilowatts, and that throughput will allow us to build that capacity from our signed customers, because our customers generally have a lot of building stock, and we work on a framework agreement to incorporate renewable power at all of them, and it's just the cadence of that delivery that gives us a pretty material amount of backlog to work through. So our our supply chain has been, has been okay, but we see some pricing fluctuation. But again, we sell electricity at the retail, not wholesale rate, and it gives us a little bit more cushion, as it were, to absorb some of those. And again, it's against a backdrop of electricity prices. So the macro we need more electricity in our market, and the rate for electricity is escalated, materially higher rates percentage than what our pass through from the OEMs would have been for tariffs or some other supply constraint.
Sean McMahon 8:59
And so now let's talk about specific projects. I know you're headquartered in Georgia, and you mentioned you kind of operate in the southeast. So what are some recent projects that you've brought to the market, or anything that might be on the horizon that you think our listeners might be interested in?
Michael Chanin 9:12
We have a number of exciting projects that are ongoing. One for a customer Fulton County is a solar plus storage attached to live load. This is a behind the meter solar plus storage program that will roll into a broader pilot with Georgia Power that has just come out from the Integrated Resource Plan, the rolling planning process from the utility that solar plus storage attached to live load is the first example in our market of that technology being brought this is not something that's backup generation, but that would be bi directional, and ultimately for our customers like Fulton County, where we have now over 40 projects with them installed and operating, we'll be able to attach batteries at those locations and not only serve the customer, but be able to serve the system that's that's an exciting opportunity that we have another that's going to start construction in the coming month, will be for Mitsubishi power outside of Savannah Georgia in pooler Georgia. Mitsubishi power makes gas turbines. This will be a multi megawatt ground mounted solar array powering a plant that makes gas turbines where they've got three years it would take them to deliver it. If you buy the next their backlog is so robust they're looking to double that facility, because we need materially more capacity in the markets we serve, and a lot of it's going to be from those gas turbines, which, interestingly, can be fabricated then to also be hydro or other types of gasses to turn it and so it's a it's an interesting opportunity and an interesting way of demonstrating what all of the above looks like. And a lot of people, when they come into Atlanta, Hartfield Jackson, the business airport in the world, is incorporating renewable power on rooftops at the fire stations and adjacent to it. Delta Airlines has their headquarters. We've been working across their campus. All ground operations will be powered. And actually, next door to that is Porsche cars North America, which is an exciting one to see. It's a micro grid because they can charge and have some pretty interesting vehicle to x capabilities on the micro grid that we built there. And an amazing business model. For your listeners who like cool business models, people pay them to go drive one of their cars in a circle. And so many people pay them to go drive those cars in a circle, they built a second circle. And I've been fortunate enough to get on the track. It's pretty neat. But when you park the cars, they're solar canopies. We've got solar walkways. There's a parking deck that has solar panels on top of it, as well as the main headquarters for Porsche cars North America, which for the movie buffs out there, if you watched the adventures, that building was also Iron Man's headquarters. Is the same building. Pretty neat.
Sean McMahon 11:56
I didn't know it's the Porsche HQ?
Michael Chanin 11:57
Yeah,
Sean McMahon 11:58
Nice. And then, hey, when you got on that track? Did you set any track records or what? So safety is first in our business, you know, we own and operate. And so there's this somewhat challenging part where the because you ride and you're driving, and I'm not sure if you've done it, but you got someone riding with you, and comes across, he's like, sir, you're going to need to go ahead and put your flashers on. There's someone that's going to come around to your left. And so I, I would say I didn't set any courser records, but it's it was neat to see and try to spin out and control that type of stuff. I gotcha, sounds like a good time. We'll be right back.
Sean McMahon 12:31
Just a quick reminder that this episode of the Renewable Energy SmartPod is brought to you by KPMG. Amid booming demand for energy, KPMG is at the forefront of helping organizations navigate new energy development and energy efficiency. With an industry based structure, KPMG brings together versatile multidisciplinary teams comprised of individuals who have the precise skill sets needed to serve this sector as it grows.
To learn more, visit kpmg.com/us. That website, again, is kpmg.com/us or just click on the link in today's show notes.
And now back to my conversation with Michael Chanin from Cherry Street Energy.
Sean McMahon 13:22
You mentioned the project with Mitsubishi power, and how that's for a gas turbine plant. And anyone who's covered energy markets knows that gas turbines and the backlog I'm hearing it's like far as seven years. That's a huge issue. I think that's a fascinating example of renewables and companies like yours being part of that, you know, more of everything, all of everything, solutions. So, you know, you're helping build a plant that's going to power gas generation. So what are your thoughts on that? Have you got any feedback from, you know, colleagues?
Michael Chanin 13:53
Yeah, our sense is that the technology that we utilize, you know, the first solar panel ever put into service was in America's Georgia in 1955 Bell Labs. It was exciting history for me, because it's here we are in a place that this technology has served us for so long, and we're looking at it in different ways now, because we know that we need to find cost efficient ways of incorporating more electricity into the system to support the growth that we're going to have. Mitsubishi power, the man that runs that plant that I've become friendly with over the years, it tells me that they're taking orders now for hyperscalers to co locate six gas turbines, which would be like 250 megawatts at the location where they're building the data center. And it's just a market opportunity they've not had before in a way of building the system that hasn't existed concurrent because of the RE industrialization, the onshoring of so much of the manufacturing that had moved off because of the electrification of the auto fleet, certainly because of AI data centers, we need more electricity and when I meet with regulators and utility leaders, I continue to think that we need to push for we just built the third and fourth Vogel units plant. Vogel is in outside of Augusta, Georgia. Vogel units, three and four are Westinghouse, a 1000 nuclear plants. It's the first nuclear that's been built in the country since the 1970s a combination of having more nuclear, which we believe in Georgia would require a federal backstop, more gas, which is going to require more pipelines because of the capacity, and then ultimately, as we add more generation, the bias I would say that I have in the industry is that we need a lot more distributed generation. Our Chief Technology Officer, Ben Damiani, is publishing a paper in the fall that will show that there's about 10,000 megawatts, 10 gigawatts of available roof capacity in metro Atlanta, and it's less than 1% penetrated today, if we're going to meet these targets today, Georgia has 20,000 megawatts of capacity. Estimates from the utility and the Public Service Commissioner that 20 needs to get to 35 over the next decade, even if we build all of the capacity to your point of three to seven years, perhaps to get the turbine, it's six to get the permit years, and so to build that over this period of time, to have pipeline to get to those plants and into me, most critically is transmission, to get it out and then in the places that it needs to be served. Georgia, again, the market that I know the best, has 18,000 miles of transmission. The last major addition of transmission in the state was in the 80s, and it's overwhelmingly cumbersome and costly to add it for all of the reasons that your listeners are going to know well, and that's you know, even with reconductoring and all sorts of system upgrades, it's still going to have to lay new lines, and the cost and time to do that is why we continue to believe that we not only serve our customers because of the cost competitiveness of our solution, we serve the system because the ability to serve the load where it is at the Mitsubishi power plant shows it's the best way for the Customer, for affordability, it's wonderful for the system, for reliability, and then that collaboration should hopefully enable meaningful growth in the communities where we live and work.
Sean McMahon 17:31
So, yeah, there's a lot of complexity to what the future of energy looks like. And one of the pieces, you know, hearing more about is virtual power plants. You know, I think there's, you know, a lot of activity in California, and I was doing a little research. It sounds like you're working with some customers on that front as well. So tell me a little bit more about that.
Michael Chanin 17:47
You're absolutely correct. And whether the market calls it a virtual power plant or some other oftentimes, people now reflect back to us that our business model is energy as a service, which it could be. And if we get the valuation multiples like the software as a service businesses do, then I would would welcome the the name reference and just go ahead and change the branding right, like, just raise this up otherwise. And yeah, take independent power producer has less cachet than like SAS. And perhaps, if we have energy as a service, people will recognize the value of the platform, not just the value of the generating assets, and that's what a virtual power plant is today. Cherry Street has the city of Atlanta as a customer. In the city of Atlanta, we have 60 of their facilities, the Hartsfield Jackson airport, some water treatment facilities, recreation centers, fire stations. The city operates 600 facilities. We're on 10% and they've made a commitment that they'd like 100% of their facilities to have them. We're working on that with them. As interesting is being the power provider across 600 city of Atlanta facilities. That also means that we've got an opportunity to add storage, and storage really becomes a place at which we can not only serve the customer at that location, but Cherry Street will own, most likely the largest peaker plant in the metro area, because we will have across the city and all of these different nodes, an ability for our utility partners to say we need reliable power tomorrow at three o'clock. Cherry Street has 1000 megawatts of capacity that it can reserve to dispatch dispatchable power tomorrow, and most often, as it relates to solar, if there's shade that's thrown at the technology's way it is that it is an intermittent resource. It is also not dispatchable. That is to say, a utility planner or a central planner can't press a button and send solar out. Solar is binary. It works when the sun's shining on it with the incorporation and attachment of storage. It fundamentally changes that capability. It is dispatchable. It is something one can plan for, and that will unlock a meaningful amount of value for the platform and for the system. And it seems that those changes are imminent. And so I think that virtual power plants are however we call that distributed capacity that is controllable from a central location and a central planner is going to enable us to do a lot more.
Sean McMahon 20:26
Okay, well, you know, before I get to my next question here, I'm not going to let the opportunity pass me by to tip my hat to the pun you just laid there with if there's any shade thrown the solar way, because it's intermittent - shade. Okay.
Sean McMahon 20:41
So, you know, we've talked about your projects, and you know you've listed, you know, a handful of household names. You know, Porsche, Delta, Atlanta, Hartsfield, Jackson airport, but I'm sure you got some smaller ones, and that's where I find some of the most interesting stories can be told. So are there any smaller customers, you know, smaller you know, campuses, things like that, where, where cherry Street's doing something pretty cool that you want to talk about?
Michael Chanin 21:04
Yeah, for sure, we're focused on Power for All, and to do so, we need both. Adair court is the first low income housing on Atlanta's beltline. The Beltline is this amazing adaptive reuse that came out of an urban planner, out of Georgia Tech's thesis became this opportunity for the city to focus again, on being walkable and connected. It's a 22 mile loop now inside the center corridors of Atlanta and housing and accessibility and affordability was something that we cared a lot about. Similarly, in the Pittsburgh neighborhood, which is a underserved and under resourced community in the south side of Atlanta, the Annie E Casey Foundation, she was the UPS founder's mother, that's the UPS Foundation, said we need to support tradesmen in this community, a blacksmith or a welder that might not have a stall. And they built Pittsburgh yards, which is this workhorse of opportunity for creatives and entrepreneurs to have space, and we power it with reliable and affordable electricity. And I would also say, with a number of our municipal customers, whether it's Chatham County, the city of Savannah, Athens Clarke County, energy burden increasingly becomes something that I think it important for audiences to recognize. I mean, the the impact of the cost of electricity is the rates continue to go up are really pricing people out of being able to use electricity, and it has some meaningful and unfortunate impact. And so we're focused on doing a lot of what we will call resiliency hubs. Practically, though, it is just a place for someone in the heat of summer to go and cool off, or in the cold of winter, go and warm up when they're making the decision not to turn on their heat or air because of the cost in the zip code that I sit in, more than half of low income households pay more than 20% of gross income on their electricity bill. And so when you hear someone saying, I'm just working to keep the lights on, it's a literal statement, and it's a tough choice that people are making that can have some dire outcomes. And so consequently, it's important and incumbent for us to make sure that people are aware and know that there are some alternatives for how that we can respond to that need. And so we have whether at eight air court, because we can lock in low cost for them at Pittsburgh yards, they can work without worrying about, you know, welding at unknown rates for that electricity and those types of partnerships have been exciting ones for us to serve the community.
Sean McMahon 23:42
Well I appreciate you kind of painting that picture for me. You know, the urgency of some of these projects that you've got out there that aren't just the big, you know, headline grabbers out at the airport or at the racetrack
Michael Chanin 23:53
So much, and if I can mention on it to other places that we do it in the impact that it makes one is through our solar school, or both have really come from our solar school, but there are two shelters in Atlanta that help house and retrain women going through trafficking, people that are reentering from incarceration or just homeless. The other is with the insurer Foundation, which supports young adults aging out of the state's foster program. We built a solar school eight years ago to start training people that were going to come on the jobs. We own the asset and care deeply about the rigor with which it's installed. Some of your audience might be aware that 90% of electrical loss from a solar panel actually happens from poor crimping wire management and how MC for connections, a multi contact point where the electrical wires connect. It's done poorly, and so there's a lot of loss that happens there. We train in our solar school. It's a 10 week program. Everyone leaves with a certification from the North American Board of certified energy practitioners, the NABCEP certification that they get. And then at these facilities, where these nonprofits are, we also provide installations. And so we have competitively priced renewable power at the facilities. We then have solar school, which we have, not only at our headquarters, just here, but at each of these other locations where we can train. And then on a quarterly basis, we have hiring. We have six affiliated, although not owned, business. We call them our shine on partners through our shine on program. And those in the communities that we serve, Savannah, Athens, Macon, Atlanta, those businesses get the backlog, and then they can also do residential solar. They can do any number of other things in the industry, but they have placed skilled labor. They have steady income from the opportunities that we build with our customers who have large portfolios, and we call it a reimagined renewable energy economy, we think again, coming with you upon this reimagine renewable energy economy can shine on everyone, and to do so, we go from blue collar to new collar, and this workforce that we're creating enables us to make sure that we're creating careers, 250 of them we've created so far in the communities that we serve to know that this infrastructure that we're building is going to have someone to take care of it for decades to come.
Sean McMahon 26:28
Well, I appreciate the scope of what we've been able to talk about here today. You know, we started with, you know, top line policy, you know, stuff coming out of Washington and, you know, just there you're talking about workforce development, stuff you're doing in your own backyard. You know, one of the things I like to do on the show is I ask guests for their bold predictions about what we're going to be talking about in, say, two or three years. And we've covered a lot of ground, but I'm going to leave it up to you. You know, if we get back together in that amount of time, what are the hottest topics going to be for this industry?
Michael Chanin 26:59
The hot topics for the industry. In a couple of years, some we've hit already, battery attachment rates are going to continue to go up because of the technology and need for some of these virtual power plants for dispatchable power, and how to manage those cherry streets aspirations. And I've appreciated the opportunity to be with you today, and I look forward to those follow up touch points. Is we think through since 10 years ago to the day when we started. The vision was not just to go from Atlanta to Augusta, but an aspiration of going from Savannah to Seattle, the plane that we might fly on to meet one of two manufacturers of it. And you know exactly who's going to make, make that plane the airline. I could guess three airlines, and you'd know. And if you used your phone to call me to tell you, tell me when you got there, I could guess one of two carriers, and you'd know exactly who it was going to be today. If you said, Hey, I know someone that's IPP or a developer, or whatever you want to call what Cherry Street Energy does today. I imagine a lot in your audience thinks there's a couple 100 of us out there. In my mind, it's really a smaller universe, probably of 10 to 12. I think you're going to continue to see pretty material consolidation in the marketplace to have consistency in different regions, so that you can have consumers of electricity, especially in this commercial and industrial space, have a lot more control, a lot more consistency and a lot more unified delivery in their operations across the country and and I think over the next couple of years, we'll see that momentum pick up.
Sean McMahon 28:36
Well, listen, I think that'd be fascinating to be able to predict who provided the power to someone I'm talking to, say, 3000 miles away, and guess that with a certain degree of confidence. Listen, Michael, I know you're busy. You and the team at Cherry shooter have a lot of things going on, but I appreciate you taking the time to talk to me today.
Michael Chanin 28:53
Totally really enjoyed the conversation, and thank you so much for the time.
Sean McMahon 28:58
Okay, well, that's our show for today. But before we get out of here, I want to say one final thank you to the exclusive sponsor of today's episode, KPMG. If you like this podcast, please share it with your friends and colleagues, and be sure to follow us on Apple, Spotify, YouTube or wherever you get your podcasts, the Renewable Energy SmartPod is a production of SmartBrief, a Future company.