The Exchanges

Q We need to get the broad sustainable infrastructure market to the multi-trillion dollar scale. Um, when you think about that level of scale, what does success look like to, you know, unlock the value of the incentives that will ultimately drive that investment?

A Yeah, I think at the end of the day, to unlock value in this industry, both for the incentive, but broader, it is really making proper connected capital markets, right? Where we see the most money is at the top of this funnel, and then it starts to bottleneck as it starts to get more and more towards the front lines, right? And what you see in more efficient capital markets and other industries, when you want to bundle and trade, when you want to refinance, Right? You know, in certain industries, you could log into a Bloomberg terminal and make a same-day trade, right? And yet, private market infrastructure is a black box. Instead, it's like, here's my data room with 10,000 documents. Let's engage in a multi-month process to understand whether I want to make an investment or not. And then ongoing, I don't have, like, you know, easy monitoring of risk and easy, a single number that says, here is whether it's, you know, good or bad. Instead, I'm also doing Continue to do this process, and so it looks very different from efficient markets. In order for us to meet this multi-trillion dollar goal, we need to move to that efficient marketplace system. Now, not to say that we'll ever get to the point of like, you know, the Bloomberg terminal, right, or a FICO score for solar, but we could definitely, uh, take baby steps towards that, right, where we need to be able to make it so as yo…

AI assessment note: “to unlock value in this industry... it is really making proper connected capital markets”

Q So let's dig a little bit more into the new players that are entering the market. The Greenhouse Gas Reduction Fund is encouraging a lot of new financial players to come in and finance some of these smaller deals like community development financial institutions. How are they starting to evaluate this market and what do they need to know about, uh, getting some of these deals done?

A Yeah, that is one of the most incredible parts of, um, that, that twenty-seven billion dollars, is it's earmarked not only for helping scale existing green banks and institutes, but really encourage that the local CDFIs, the local lenders that have the relationships with the communities, um, should be also developing solar programs, EV charger programs, energy efficiency programs for their communities. I think what's really exciting here about the greenhouse gas Reduction fund is not that, not only are funds flowing to existing green banks and community lenders who do solar energy efficiency, it's encouraging and even earmarking dollars for the local community lenders that already have community relationships, right? It's going to be easier to deploy that capital if you already know that local, uh, farmer or local small business Uh, cause you had that relationship, but you might be a CDFI that's never done solar before, and those are some of the entrants that are coming into this space, right? Hundreds of local financing institutes that for the first time have earmarked funding to say, build a solar program, build an energy efficiency program, and that is incredibly exciting because they bring a wealth of knowledge around how to invest in their communities, but it's also a challenge because they've never done this before, uh, and we need to figure out very quickly How to create…

AI assessment note: “we need to figure out very quickly How to create standards, processes, systems”

Q And then there's this question of how different institutions assess risk. So how do you create, you know, consistent methods to evaluate project risk and, and create identical risk frameworks for a wide variety of institutions?

A Yeah, I feel like it's, it's twofold, right? Uh, one, it's collaboration. That's why we're both here, right? Which is, we need to make sure that the people who are, uh, like Rachel, guiding developers and on the ground and, and helping, uh, communicate, uh, are in the same rooms as myself, large-scale bankers, et cetera, that we're sharing, um, so that we at least are able to try to inch towards the same, uh, area. But the second becomes really important, which is technology, right? Technology in itself, right? Like software, right? Data platforms are very binary in nature, right? You can't code a subjective thing particularly well. It has to be like, well, I got put this in this box, right? Your screen is going to show you a check mark where it's going to be green versus yellow, and there needs to be rules on whether it's green versus yellow, right? It's going to say something in a field. And so it enforces sort of guidelines and guidance around it. And where we feel really excited about is for a lot of both what Rachel and I are doing, our technologies first go, go to market is, is not to do with brokering that deal, right? Building double-sided marketplaces very hard, right? It'll lend the brokers. On our end, it's a data platform to help an owner operator or a bank or financier manage their own data, right? Uh, we have people paying us to manage their pipeline. Manage their…

AI assessment note: “it's twofold, right? Uh, one, it's collaboration... But the second... is technology”

Q dollars per year for the energy transition. So let's talk a little bit about the Inflation Reduction Act, and there are certain incentives in the IRA that are helping push many of these smaller deals, so creating higher volumes of these smaller deals, and accelerating funding in local communities as well. So why, what are some of the areas of interest within the IRA that you are specifically focused on?

A Yeah, when it came out, we were so excited that a lot of these smaller communities, disadvantaged communities, were getting a big boost, right? There was the low-income tax adders, of course, and also the twenty-seven billion dollar greenhouse gas reduction fund, all focused at really deploying capital towards disadvantaged communities, as well as deploying capital towards local lenders. Super exciting, but where we were focused on that was like, wow, these are This is capital allocated towards the smallest of deals, often to counterparties and projects that prior financiers found unbankable or developers thought were not worth the time because it's a complicated deal and very tiny. And now there are all these incentives and discrete funds that are saying deploy towards that direction, right? Fantastic for those communities, but all of a sudden the discrete problem that, uh, Lyle was very interested in solving because we I saw, um, that the problem was going to be incredibly acute.

AI assessment note: “There was the low-income tax adders, of course, and also the twenty-seven billion dollar”

Q There's another really interesting element to this, which is just the actual language barrier, the shared vocabulary, and, um, there are a lot of terms that are used differently across institutions and deals. Amanda, how much of standardization is actually just like creating that shared vocabulary?

A So much of that, right? It's just like forcing people to be specific enough, right? And so, you know, a lot of times when people say standard, it's very scary, because it's like, you all got the same interest rate, and the exact same loan document, and you're like, no, that's okay, right? Like, we're all a different company. We don't need the exact same profiles, but we need to understand how to speak in a standardized manner, and understand that, like, certain products will, will meet a certain credit box, right? And so the ones that always drive me the most crazy are when people are saying things that are Very, you know, qualitative, right? Like, I need a bankable, you know, off-taker, and I need an experienced EPC, right? Like, those are meaningless words in many ways, right? And so what does that mean, right, if you need an experienced EPC? Is it one year? Is it five years? Is it what the exact technology? Um, how can you be specific enough so that you have got, give guidance as a lender when you give out your program so the developers can understand whether they're wasting your time or not, right? And we start to understand what it is we need to be clear about, right? Standardizing what needs to be said, right? Not standardizing saying it all the same way, right? What do we need to be clear about? What are the exact same ways we talk about good versus bad, so we're not usi…

AI assessment note: “So much of that, right? It's just like forcing people to be specific enough”

Q I think this brings us to a place where we can talk about some specific examples. Amanda, do you have any stories of smaller deals that have been derailed or slowed because of these financing difficulties?

A Yeah, I think we've seen, um, and this speaks a little bit to the work that we're now doing with, with coordination and, and being more than just a data platform, um, but we've, we've had, uh, customers have come to us and have said, hey, right, we know you, you have a lot of banks too on that platform, right? Uh, we currently have a facility that can seek funding, right, for it. It was going to go through this program. This program is, um, of, at risk, right? And so now we, we lack financing. Can we go and get, uh, is there anyone else who might be interested, right? Uh, and that was an interesting way of starting to approach that, hey, we actually have a lot of insights on what that could be, right? Uh, I'm now having a conversation, not just similar to the conversations I had back when I was at Generate, which is, okay, tell me about your deal, but in the back of my mind, I have all the insights for the lenders we work with, and what their criteria are, and what they're looking for, and so now, right, you know, it's this off-tech platform, right? You turn into this human version of what we can automate, which is, hey, we can play a little bit of the matchmaker, right? And so we started brokering a little bit of that, and then you immediately start running into the blended capital solution, which is, okay, I found one capital provider who could do like this section. Now there…

AI assessment note: “This program is, um, of, at risk, right? And so now we, we lack financing.”

Q Can you give me some examples of projects that have used the platform that have been easier to finance and execute?

A Yeah, I think there's at the higher level, right, the larger banks that are coming in, um, we've worked with SMBC, for example, and they were like, you know, and from their perspective, look, anything under a hundred million dollars would be really difficult to invest in because of such a taxing process they have up front and ongoing. Um, when we sort of did the end-to-end analysis for where we could save time, we were showing anywhere from 15 to 16, 60, six-zero percent savings, uh, on their processes, uh, Um, that, uh, go through the origination and underwriting flow, right? That means that, you know, over two X in some places of like being able to increase velocity of deals, which means that they could not only save, you know, time, money, resources, all of that, but be able to come into smaller markets. Um, that's sort of like how we think about large, larger banks and funds coming into smaller places, smaller banks and funds, uh, projects. But as we think about, uh, green banks in particular, we've also worked with green banks. I saw that one was spending over 1400 hours just on compliance, right? Like, not on portfolio management, not on originating and underwriting, just on keeping compliance of key obligations. Almost an entire person doing that. And as we think about the types of local banks and CDFIs that could be employing money to local communities, they don't have …

AI assessment note: “we've worked with SMBC, for example, and they were like”