Agrovoltaics and expansion of solar energy - Dr. Richard Lu

Paul Yeager   All right, I just pulled out the IFB just finished another interview. This time, we are going to talk a little bit about that field that's behind me. Many fields across the United States and Canada. What's on top of them? What's being produced, but not in the ground? above the ground, we're not going to talk about wind. We're going to talk about solar. And before you hit skip, give this a listen. Dr. Richard Lu is the CEO of Solarbank. It's based in Toronto, Canada, we had a conversation about solar in general, talked a lot about what's going on in Canada, what he sees as the United States, what's happening here, the goals of administration's and what they have been about renewable energy and also the inflation Reduction Act. Where are we on clean energy, we know that ethanol is one thing we know that wind has become a thing, hydrogen, but solar is the one that really seems to be pushing a lot of buttons in our audience here of Market to Market. By the way, I'm Paul Yeager, this is the MToM Show podcast, a production of Iowa PBS and the Market to Market TV show. Dr. Lu is asked several times and then He says it again. For those in the back about what type of land companies like his are looking for? Where is solar expanding to? Is it the prime ground of the Corn Belt and the Grain Belt? Is it land around? Is it the highway? Is it the brownfields or the town dump? Or the county dump? We're gonna get into all of those questions and more in this installment of the MtoM Show podcast. Dr. Lu, the Canadian people get this reputation of always being cold and snowy. But in the United States, we've done a much better job of keeping the snow longer than you have in Canada. Are you? Are you a Canadian native? And are you still trying to get used to those winters?

Richard Lu   Being in Canada for 32 years, and this is the most northern country I have ever been. But I tell you, you know, Toronto is better than Buffalo.

Paul Yeager   Oh, man, you're saying you can say that again. Holy cow. What, uh, that lake effect being who would have thought being on the wrong side or the the other side of the lake would make such a difference? 

Richard Lu   I think, you know, being in Toronto for so long. And I feel that is almost like you're living in Oceanside. And we have a lot of projects in upstate New York and I leave Toronto was four seasons higher, I will end up a snow tire driving interested in it.

Paul Yeager   I love it. So 32 years, what brought you to Toronto in the first place?

Richard Lu   So by training, Occupational Physician and I came to Toronto working for you, University of Toronto. But quickly that decided to go back industry. So start consulting, worked for Husky injection molding systems for Enbridge for Toronto, Hydro, all the way to 2007 that I started my own company, Abundant Solar and the 15 years later, now the company is a public listed, and it's called the Solarbank.

Paul Yeager   So why solar?

Richard Lu   You know, I think if you look at the world of energy that most of them are fossil fuel based over the last 100 years, right, you do have nuclear, which is now emitting and you have hydro, which you know, is clean, but nonetheless, you have a larger environmental footprint. I look at the wind, and we have moving parts as being a utility people would like to have passive generation and the solar panel is the only technology with passive converting light into electron. You know, without moving parts, you know, of course, if you do tracking those moving parts, but I think for me safe and reliable and low cost away producing energy is a solar panel sitting in the field, you know, converting light into power. So that's what we're doing.

Paul Yeager   All right, we're gonna get back to that word field, because I have a huge audience that always thinks that every solar panel is taking over every farm field in America or North America. We'll get to that in a minute. Okay, so is SolarBank publicly traded company in Canada or in the US as well?

Richard Lu   So we currently listed in the Canadian Security Exchange, we're in the process to move into the main board, and we are over the counter a NASDAQ. And in Frankfurt, I think, you know, we are now in the process of moving into the main board, but I think eventually will be listed is the New York Stock Exchange and to lose thing in Canada, Toronto Stock Exchange.

Paul Yeager   What does that mean? What does that infusion of cash mean for you and what you're able to do as a company?

Richard Lu   You know, we have been in business for 15 years and we're always making money by doing Good. And, you know, we always have been a very cash positive operation with limiting our growth is really working capital, as you know that, you know, interconnection cost a lot of money and cause a lot of time. You know, at this moment, you know, we have millions of dollars with utilities are waiting for interconnection studies, right. So this public listing give us access to the public market, which really improved our working capital, you know, let's say, our working capital, probably a few millions, now it's 10s of millions, you know, let's say we'll only be able to do 10-50 megawatts a year now, we can do more, you know, 20-30-40 megawatts, it really speed up the polling deployment of our pipelines. And of course, you know, by doing so we deliver more green energy to the world, and the slowdown, the climate change or global warming. So, you know, not to mention that green investment opportunities for the society,

Paul Yeager   the Canadian government, what is their interest in what you do?

Richard Lu   Yeah, you know, I've been in Canada for 32 years, most of my time in the states in Canada, I will say, we are actually, you know, from an energy perspective, you know, Canada already at 92%, the non-carbon emission power. In the States is 80%, you know, fossil-fuel based. So in Canada, they're more emphasizing on additional renewables, you know, but I think, you know, the market is relatively smaller than in the US, you know, us I will say, even though you have only 10 times more people there, but your renewal market is 100 times bigger than Canada, right. So, you know, you have inflation Reduction Act, which are putting hundreds of billions of dollars into it 50%, RTC and all of those in Canada, we only 30% ITC. Right, but, you know, we have something to be, I will say Be relaxed about, you know, we're already doing mostly

Paul Yeager   Well, in that 32 years that you've mentioned, in Canada, was the industry driven without the government or with the government's help?

Richard Lu   No, I think, you know, as you know, you know, climate change, global warming is truly, truly a policy driven, you know, I think, you know, it's an infrastructure issue, you know, it's not something average citizens, like myself can do individually, right, it takes a movement, I will say, you know, if started on recognizing the rising sea levels, you know, more tornadoes in your areas, and the wind could be picking up a farm or a cow, maybe sometimes, right?

Paul Yeager   That's just in the movies. That's just a twister. Come on.

Richard Lu   It does happen. Right. Right. So so that's why every country realizes, and you probably know, United Nations have this net zero goal. And many, many companies are signatory to that requirement. And now, you know, I think, you know, environment, you know, social and governance ESG components in every major corporations mind, right. So it's, I will say it is combination, but mostly, I will say this is a policy driven versus a societal driven.

Paul Yeager   So then in the United States, you mentioned the inflation Reduction Act, that was a policy attempt to try to help the green industry. Do you see the United States expanding green energy through policy?

Richard Lu   I think in the United States, I will say, you know, the next I will say before 2030, you know, certainly before 2050, you will see a huge shift of the energy landscape. You know, I think, a couple of ways, you know, currently, as I mentioned, 80% of the US power is fossil fuel based, was the Inflation Reduction Act or with investment in not only the utility in terms of large, renewable energy, such as wind and solar farms, but also you think about the community solar that each individual can participate, let alone of the commercial and institutional companies such as like Honeywell, or even houses in your neighborhood, right? So they are all equally have access. So that industrial funding, right, so that will give people not only a desire to be more green, and you know, more participation in fighting climate change, but financially make that more viable, and not to say that they create jobs, converting from traditional fossil fuel based jobs into more environmentally friendly jobs. So that's where I will say certainly happened. I think you have a slogan in the States called the 30 by 30, 30% of energy is renewable by 2030. I think with inflation reduction act now. You are actually 80% by 2030.

Paul Yeager   Yeah, that was that was part I think of the Biden administration's goal was to push that forward quicker. Yes, yeah. Do you see In the United States, the greatest resistance coming in oil producing regions, or outside of those two speficially?

Richard Lu   You know, lots of people trying to pick a fight, you know, let's say, you know, two parties play a game, right. But in my view, I will say, you know, it's a was a collaborative and the concert of the activities, you know, when we talk about netzero, doesn't mean there's no fossil fuels, in my view is that, you know, netzero means that whatever fossil fuel, I have the use in terms of co2 equivalent, and we have equivalent of power, that renewable power that we're not emitting that level of co2. So the co2 level that we as human civilization released to the natural environment will be zero, right, because of this, I will say, you know, our industry is failed over the last 200 years based on steam engines, which is, you know, fossil fuels and so on, so forth, that technology and equipment and assets will graduate. Right. And the meantime be replaced by renewables, you know, in the years to come. So 2030 is a very probable on the 50s where assert, right, so, all your companies, you know, most of them are investing heavily into renewables. You probably in Canada, you know, we have Alberta producing 10% of your energy to the States through Enbridge, which is my old employer. So the Enbridge pipelines, right? They buy solar farms, they invest in wind, they actually do carbon capture. Right. So I will say, I would rather see them as a enabling and collaborate the party than that, you know, we were getting the fight.

Paul Yeager   What do you see Enbridge doing, I guess maybe don't say, Enbridge specifically. But do you see those types of companies doing that as a hedge to just we're in oil? Yeah, we need to be in renewables. Is that more public relations for that hedge? Or do they truly see it as a business opportunity?

Richard Lu   I think it could be viewed as a public relation. tactic. You know, as you know, recently, the Royal Bank are taking first place to finance the fossil projects that were made the headline, I'm sure, you know, people thinking it's the US banks, but now it's a Canadian bank funding those, right? If you look at their investment in renewables, probably less than their traditional, you know, energy investment, right. So, you know, with with people looking at this one, they could say, well, is this just a greenwash? Right, but you know, it like cross section, it may be, but if you look at the long term, you know, it takes a process. Right. So So for Enbridge, for example, they already trying to inject hydrogen into their gas pipe. why did why do they do that? Because they are required to reduce the carbon content? Well, there's only a messing you really cannot change in the molecules, but you could put in more hydrogen, right? So they realize have a sustainable business over the long run, right, you have to gradually off ramp certain things and up brand versus plants. So so to me, you know, to be at the times we viewed as a green tactic. Well, I think, you know, it takes a different speed together, we want to be okay,

Paul Yeager   let's go back to the field situation here. Do you see in 20 years fields like this covered with more solar? Or do you see residential properties being where the biggest growth will happen? I guess I'll go United States specific, where do you see solar?

Richard Lu   I love those fields behind you. I tell you, and I don't think those things will be covered by solar panels. Right? You see, when we develop a solar projects, we go after the land that is not agricultural. Suitable, you know, the soil for example, in Canada, they divided into 12 levels. 123 are fertile, agricultural soil, we even don't touch it, people even pay us and we said no, no, no, no, no, we will not go in there. Right. So we go to those places. You know, people grow hay, and they sell, I don't know, $500 a bushel or something. Right. You know, the farmers rarely can make up, you know, a living on it. Right? And it is truly not, you know, impacting them the food source. So if you look at the overall Earth, if you think about Arizona, North Dakota, South Dakota, you know, those places right now are many, many non agricultural areas, right? So that's where I see a lot of utility solar will grow. Right. So that's one market that actually will give you you know, help you to achieve the goal of renewable procurement portfolio standard. That's a requirements for every utilities So over time has to achieve, right? So that's one section, the middle section about the community, solar and the CNI. Right. So that's to enable the community to participate, you know, to me, you know, if we're looking back there, you know, there may be some areas that you in your area really, you know, difficult to find, you know, a non productive land, but there might be some could be 10 acres could be 40 acres, just don't have the hundreds of acres. Right. And you might have some brownfield, you might have some close to land field, you know, those are what we focus on. Right. And we reasons to build a two solar system for Honeywell on over there a maintenance yard on the roof. Right, that is enough to power that building. Right. So So those are the ones in the middle. People already installing on their roofs at the residential level, you know, they, but not everyone has a roof. Right.

Paul Yeager   Right. But those that do could maybe put it on?

Richard Lu   Yes. And the payback, I tell you, is pretty reasonable. Now with your pace and with your ITC, you know, lots of people in the past, I think when I started the 15 years ago, people say, Oh, solar so expensive, you know, I do that, you know, but now people never ask you this question now is basically how fast can you install it? Right?

Paul Yeager   Okay, well, let's say my power company, has its own coal generated or wind generated or their own solar generated plant? Yes, they create their own power, why would they want me to put solar on my roof? Because then I'm not buying from them? Do you anticipate that there's going to have to be some, I guess, policy or government action that helps these two parties find common ground.

Richard Lu   As you know, back to 100, 150 years ago, the system was built a central system, that's where we have generation transmission and distribution all the way to our homes. Right. So that system has been operating, let's say 100 plus years. And that system, you know, is that end of life infrastructure, you you'll probably hear, you know, people complaining, they never put back enough money to keep the, the things up and running, right, reliability is, you know, power outages, and so on, so forth. So the company in this power company, they need investment, worthy invest money coming from from ratepayers from you and I will pay the electricity bill. Right. So that's one thing. So they say, Oh, our system is not good enough to meet the demand, you will have to build new ones, well, you don't have to be the only one meeting the demand right, you know, you can extend your your infrastructure life and of course, it was something needs to change right, such as replacing the PCB based or transformers, but you can also allocate some demand to meet the demand at the customer end, which is rooftop solar carports little community solar, and so on, so forth, right. So, so there will be a balance, you know, we talk about the micro grid, we talk about AI managed, you know, a, a virtual power appliance also force those new technologies, you know, coming from from Toronto I will say, we like it, because they also know that they need to be modernize their infrastructure. Right. So I will not say that, you know, an eventual will be a benefit between the central backbone, which is baseload and the, you know, customer and systems to meet the up and downs.

Paul Yeager   Well, I guess, I may have missed something in what you said, because if I'm not paying my energy company, yeah, for my electricity, they're not going to have that money to reinvest in that technology.

Richard Lu   Tuesdays, even though you are not paying for the electron, you are still paying, oh, you have paid for the wires to get your your house. Okay. Because of winding the night when there's no light, you see the power, that power is from the grid. Right? So that's why a lot of utilities have a net metering project, you know, when you're producing more power, the power goes this way, when you don't have the power power goes this way. So that at the end of the your meter, isn't that right? So that's where I will say, you know, you're you're actually not you know, reducing the revenue from the power company completely right. On the other hand, in the company now, we have to have more time to actually focus on the infrastructure, right, we're versus the, the commodity which is electronic itself.

Paul Yeager   Okay. Little bit of my a little bit about my area when we don't have farm fields here. Along our interstates in the central part of the United States. We are full of warehouses, large buildings, large parking lots for those warehouses for semis. Are those prime spots for solar panels?

Richard Lu   That should have already got a power January the area yesterday? You know, you Is incubated right. You know, we're currently building a four megawatts solar rooftop in a warehouse in Alberta, right? They produce fossil fuels. But the people that realize, you know, they have to also achieve net zero. So we are building those who are on the rooftops, right. And couple of things, now you're producing enough power to power the warehouse, you are sending the room power to the grid, you're also protecting the roof, because the roof is no longer be bombarded by UV lights, the live action get extended, right? And also, you're actually helping energy efficiency because you don't have the heat or cool the building much, because now you have a jacket above the roof. Right? So there are many, many, I will say benefits only if you willing to go ahead. And we have a lot a lot of converted real estate assets, companies that are approaching us.

Paul Yeager   So I had asked that question, I want to say back in January with an energy person in the south, Southern United States, and they said that a lot of the big box retailers specifically and some of those warehouse folks, they get a really, really, really good deal on their electricity, and they're not interested in the solar. How do you change the mentality for those two sides?

Richard Lu   Yeah, I think there's a couple reasons that why the I will say the implementation of this not fast enough. You know, electricity is commodity, they have long contracts, you're stuck with a contract. Let's say I sell you at, I don't know, six and a half cents, right. But you have to buy it from me for 10 years? Well, you're only in the 50. You know, there's like your mortgage if you terminate your survey of animals, right? Yes. So you let it run. Right. So that's one. Secondly, that, you know, if the building is fully leased out, depends on the lease agreement between the owner and the tenant, the owner may not have the right to do that, because the tenant has responsibility. But tenants are only going to be there for another three years with a solar installation. 35 years life, right. So it is only a, you know, a transition, let the old contract, finish lead, oh, the green finish, then you can start it was new and going forward. So we're gonna see a lot of transition. That's why the industry said this is energy transition in the next 10 years. Right. It will happen.

Paul Yeager   It will. So what has been the best, the greatest technology and solar itself, when he talked about how the panels were expensive? You'd had people tell you that? Where was this breakthrough that's happened that it appears to me in solar in the last five years,

Richard Lu   I will say that to when I started the solar 2003, you know, I pay the $4 a watt, you know, for for a panel. Now, you know, I will say 20 years later, that we only pay 30 cents a watt, you know, it, you can see the cost reduction, right. And the cost reduction is not only because of the volume, the scale of economy, but also because the technology advancement, you know, when I started attending the panel was 9%, efficient, 11% efficient. Today, it's 27%. Efficient, right? You know, so that's where I will say, the constant reduction in the renewable energy, including wind, you know, are very, very fast over the last a number of years. So we now we can actually produce renewable energy cheaper than traditional form of energy, you know, produce the from coal bike, burning coal or natural gas.

Paul Yeager   I've mentioned this land a little bit before and you mentioned marginal land, and in Canada, the grading of systems. So say this isn't prime for you. But there's two acres, 10 acres, is that efficient to find the dump in my home county, or along the interstate? Or the four lane road? How do you tie all that together to make it efficient to get to the grid or to somewhere that can use that power?

Richard Lu   Yeah, see, that's where the technology coming. You know, we're talking about smart grid, they talk about a local community solar, because you think about, you know, when the power produced from a central plan, if they have to travel hundreds of miles, right, they lose power, you know, it could be lose by 10, 15%, by the time you get to places where you have this one, you know, in the dump behind the county's office, and the people are in this village, right, those line loss and everything is much, much less. Right. So actually, we love those a smaller projects, you know, 10 acres, 40 acres, you know, even a big warehouse of a five acres, right. So those are the distributed the generation I would say, probably more easier to adopt and the more economical for people to to, to use renewable energies in most places.

Paul Yeager   But if I have 40, If I'm you I'm going like can I get at like can I get 140? Why can't I triple what it is there? Because more is better, right?

Richard Lu   Yes. What do you get? You got to think about, you know, the big utility solar farms, right? You know, this big, you know, 300 megawatts each. So they're talking about 1000s of acres, right. But they take a long time to build. Even after the build, we can only sell the electron at the wholesale price, like, I don't know, I think the Tennessee Valley or broke records some years ago, like two and a half cents a kilowatt hour, right? Most of the people sell four and five kilowatt hour, because the same has to be transmitted the far, far, far, right. But if I'm building right behind your meter, you know, you're taking a huge discount on your retail price. Right? So let's say you pay in 12 cents, I gave you a 10% discount, you still pay me 10. Because I'm small, nearby much losses, economic is better, right? But if I build one big one, yes, I make lots of money. But I'm only selling five cents. Okay. All right. So so from Wall Street perspective, we're looking at internal rate of return in terms of Project Return, you know, usually talking about the utility energy is also first, we're talking about, you know, 8% is on so forth. Right? So, size, actually, you know, has its pros and cons. We haven't believed distributed energy more than centralized energy.

Paul Yeager   Well, I have folks that come on our show, talk about, oh, this home farm here, they want to build, they want to carve it up into solar, and they don't think it's that marginal of land. It's a lot of anger. Anger is the word I'm using about solar panels, taking up valuable farmland at a time when they think we need to be producing more to be on a stronger global footing and feeding the world. At what point does the regionalization or that 10 to 40 acres? How long can it hold up? I mean, you're talking about efficiencies. But how long can it hold up before we need to see for powering the world? Bigger fields? More of them? Maybe not bigger, but more?

Richard Lu   Yeah. You know, Elon Musk mentioned that, you know, for solar to power the United States. They don't need to put solar panels all over the places, they just need to cover the desert, the derbies and the non productive areas. So solar actually, is not the major reason that you know, to reduce the farmland, right? What people need to really focus on is looking at those brownfield, those landfilled, those marginal land, and so on so forth, you know, don't have really to push him agricultural, you know, for example, for God's sake, you know, one day that we cover all the highways using solar panels, and the trucks stick and drive on it. We don't need any land,

Paul Yeager   you know, well, and I, I've said along the interstates, there's a whole lot of shoulder and a lot of places. And there's already infrastructure run with electric already along the interstate. So some of that's already there. Right. Yeah.

Richard Lu   You know, just you know, we are one of the six companies that qualified with Maryland Department transportation, right to work on to how to read their transportation system along the highways. So there are states, you know, the DoD is are doing that.

Paul Yeager   Okay. Yeah. Okay. You mentioned Elon Musk, and the various parts around the country, but ethanol. We, I've heard this debate, that maybe ethanol doesn't need to be a national mandate. But all this renewable energy needs to be whatever is best in your region. So if solar, if we put panels all through Utah, and and Nevada in into into eastern California, that will power the West, they don't need to have our wind, but if we're really windy in the United and central will have wind but we have solar, do you see renewable energy succeeding the most on a region by region? approach?

Richard Lu   I think renewable energy actually is the best to be consumed as the wind is produced, you know, I think, in the United States power is actually a state responsibility in Canada power is a provincial responsibility, the federal level is only overall principles foundings so on so forth, so I will say the local solution is the best for the local issues. Right? And, you know, your agricultural area, you mentioned the ethanol, right? You know, those are biofuels, right? The ethanol can be cracked into hydrogen, right? And how do you employ in fuel cells, the fuel cells are in your cars. And so nowadays, people are using evey charging for small cars is great, you know, people putting hydrogens on trucks. That's probably it's alright. But hey, you know, I once upon a time was in the biodiesel business, we put uh you know biodiesel which is from agricultural product into the truck, the ranchers that as well you know it's a carbon neutral it's not carbon zero, but it's right yeah. So our farming community you know actually do have ways to participate in the overall fight for this climate change.

Paul Yeager   Well how much have you noticed in Europe the stories about solar panels and agriculture living side by side even agriculture under or as the panel moves during the day that it becomes a crop that's maybe different than what they grew there? Is that a good suggestion a long term you know, just nice pie in the sky.

Richard Lu   You know, I tell you there's actually a specific term for it is called an Agrovoltaic.

Paul Yeager   You know, say that again, it's

Richard Lu   called what Agrovoltaic? Okay, agricultural photovoltaics. So it's an Agrovoltaic, right. And we practice that, for example, some of the solar farms, we do the ground cover with grass that is good for sheeps, right, we sometimes cover it with flowers, sometimes for beekeepers, right? And sometimes that because the clearance is about three foot up on the ground, that our plants can grow underneath it, you know, such as blackberries, right? Blueberries, right? I was in Greece, looking at a Agro voltaic greenhouse that they have the way they actually where it needs things, the study does the frequency of the light saying the plant like this frequency that goes through the panel, the panel like that work and see let the fruit can stop by the crystal to turn on electricity. So I will say agro tech is another good thing that can be, you know, I will say coexist with farming communities. Right. But I will say, you know, look at the beautiful land behind you. And rather than as a a huge columbines going there are resting, you know, I wouldn't touch that.

Paul Yeager   Well, and there's a lot of farmers in my home area, freak out. And I'll use I've used a couple of strong words when they hear about solar panels, because they think it's coming for their land.

Richard Lu   No, you know, we actually a cycling this thing. So very, very carefully, you know, we look at the land, if we find them our Agricultural Act, you know, productive, we just don't touch it. Even when the marginal ones we go through a process with the zoning board or with the town board or with the planning board. And you know, there's lots of public meetings as over people are not against the renewables, right? They just want making sure it's just a sustainable development, sustainable means that lead the line of good for agriculture to produce a food Leatherby and the worst, the not producing enough economics, for the livelihood of our farmers and so on. So first, we'll find alternatives, you know,

Paul Yeager   okay, let's close with this. In five to 10 years, solar power is what the largest renewable fuel source we have, or energy source, I'm sorry, that fuel energy,

Richard Lu   I would say intent invite LLC by 2030. Right. 80%, the power in the states will be from renewables. And those renewable we work from wind and solar, I will say a lot of offshore, a lot of in the mountainous hilly area. So we'll be a wind that to provide this backbone and so on, so forth. And the solar probably more in the areas that are close to populated areas on the roofs and the parking lots, the Brownfield and the zones over non marginal marginal land, right. Those two new technology and two technologies, you know, probably and hydro, of course, will make up you know, that 80% by 2030. In the United States,

Paul Yeager   we're gonna have a lot just maybe not a clear winner, but just everybody's percentage goes up as they take away from other sources. I hear I hear you. Absolutely. Absolutely. I appreciate your time. Thank you so much for for helping me understand, and I think some of our audience, have a little better understanding about solar.

Richard Lu   No, thank you so much for this opportunity. I look forward to your area to enjoy a ride among those beautiful greys. Thank you.

Paul Yeager   My thanks to Dr. Richard Liu, the CEO of Solarbank. If you have any ideas for me on this podcast or somebody you want to pitch that I should talk to send me an email MarkettoMarket@IowaPBS.ORG. New episodes of this podcast come out each and every Tuesday in audio form wherever you get your podcasts and also in video form on YouTube we appreciate all of you who watch and we'll see you next time.

Contact: Paul.Yeager@IowaPBS.org