Brentan Alexander with New Energy Risk
On this week's Industrial Talk we're talking to Brentan Alexander, President of New Energy Risk about “Project Finance as a deployment tool for companies in the new energy space”. Get the answers to your “Project Finance” questions along with Brentan's unique insight on the “How” on this Industrial Talk interview!
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Company Website: https://newenergyrisk.com/
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Welcome to the industrial talk podcast with Scott Mackenzie. Scott is a passionate industry professional dedicated to transferring cutting edge industry focused innovations and trends while highlighting the men and women who keep the world moving. So put on your hard hat, grab your work boots, and let's go.
Hello, and welcome to industrial talk. The number one industrial real related podcast in the universe said features industry heroes all around the world because you are bold, you're brave, you dare greatly you innovate. You're solving problems. You're making my life better. Yeah, you are. You're making communities better. Yes. And you're changing the world each and every day. Thank you very much for what you do. All right. We're going to be talking about on this podcast, project finance, you need money, you know the fulfill that dreams however, you're going to finance it you need. You need individuals like Brenton Alexander, new energy risk is the president of that organization. And we're going to be talking about project financing, but not the way you might think. So let's get cracking. All right. We're also brought to you by AI dash, AI dash. What's great about AI dash O, let me tell you what's great about AI dash. I'm a utility guy, former utility guy transmission lineman, right. And one of the biggest challenges we always had each day, and I'm not getting each day is vegetation management. Here's a solution. And then combined satellites with AI technology to be able to manage that vegetation from a utility perspective, looking from above, looking down, and then deploying that capital in a way that is meaningful to your service territory, and the quality of power that we just take for granted. That's AI dash go out to Ai dash.com Find out more great company, great people, the other sponsor is Armis. Now, that for me, we talk a lot about digital transformation, that whole connecting of your assets. And every time you connect, you know, that's great, we're pulling data, we're trying to make tactical decisions from those devices, you need to know that they exist out there and that they are secure. Armus has the platform to do that. And quite honestly makes it pretty painless. So go out to armas.com Find out more. All right, a couple of things. Again, if you know me, I'm pretty impatient. I want information fast, I want to see it in in bullets, I don't want to read about it, which is sort of bad about it about me. But however i i want to see it in bullets I want I want solutions delivered in little chunks, right. And there's a lot going on in industry, a lot happening, a lot of innovation, a lot of leadership stuff going on a lot of events, talking about new new things. And there's a there's a velocity that exists out there that you need to keep, you know, keep track of you need to be a part of it. And so in an industrial talk, we have that platform, we are dedicated to education, industrial education, featuring companies featuring leaders that are truly pushing the envelope with innovative thinking, that's one educate, you got to educate, you got to collaborate, because I know for me, I don't have all the answers. You don't have all the answers, but you need to collaborate with trusted people. So industrial talk once again, as a platform that says hey, these guys, or this person, this company knows what they're doing. It's sort of a vetting process, for lack of a better term, but you need trusted collaborators in your journey going forward to create that business of true resilience and success. And then finally, you need to innovate. And that's the world we live in. Everybody's talking about it everybody is trying to deploy some sort of level of innovation to deal with, let's say workforce management, whatever, whatever it might be. You name it, the you know, they're looking for solutions to be able to stay in business and survive and definitely prosper in the future. So there's an innovation component. So with that said,
podcasts are great. Podcasts are great, because we can sit there and banter back and forth. It's a it's sort of a no frills, you know, no, no formal, but we can't do certain things in podcasts. I can't just sort of share, share a presentation and say, What do you mean by that? What is that? So that just begs the question for, I hate to say it, but webinars and there's a value with webinars, but I'm going to sort of take it a little step differently here on industrial talk, micro webinars, small because I am impatient, my attention spans not the best and I just want the unfiltered truth to solving problems, right? And, and so we're going down the road of creating these on demand micro webinars. They're small hour, maybe a little more than an hour. But what we can do is we can definitely provide whatever the paper, whatever that document whatever the presentation and be able to do it a little bit more in depth, it gets a little bit more deeper than what we can do on the podcast, what we do on the podcast, is we elevate the attention, then we bring it down into a little bit more nuts and bolts with these micro webinars, we're going to be starting one with utility maintenance, that's something I'm very passionate about, I see the need for utilities, because again, just think about it, we take it for granted that the power is going to be there, we just do. And until the power is not there, then we realize how important the power is. So utilities are constantly looking at ways of being able to manage their asset base in a way that delivers the solutions and services to the end user. And that's us. So that's an interesting, and they're going through a lot of changes to the other one is of course, manufacturing and that, that that's a big broad category, but we're, we're venturing into that. And again, it's that connected, you're looking at RMS, you're connecting your assets, you're looking at it, you're seeing what's going on, how do you make that, that manufacturer more efficient, we're doing oil and gas, we're gonna be doing logistics supply chain, because that's the topic that is on everybody's mind. So there's a lot of things that are coming out. But the thing for me, for me is that it's there going to be created for on demand, you go out to industrial talk, find the find the webinar, micro webinar, and then be able to download the documents to help you be better, right. But it's on demand, if you're, it's eight o'clock at night, and you feel like you need to learn a little bit more about utility maintenance, ready to go. So that's, it's, it's the Netflix approach to industrial education, right? Just go there, download, do what you need to do watch it. And fast forward if you want to. But the reality is, is that we want to put more information in your hands so that you can succeed because the reality is, again, you need to succeed, you need to prosper, we need to specially now more than ever need to be in that whole education, you know, collaboration, and definitely innovation mindset. You can join, join industrial talk, that's a great ecosystem for people who truly want to make that happen. Now about education. So I'm looking at this and this is an interesting, you know, we talk about connected assets and being able to pull I got an article out there by Trend Micro in depth look at I CS vulnerabilities, this is part one of three, and ICS, if you don't know is industrial control systems, and, and whether whether we like it or not, we have to have that conversation wrapped around cybersecurity, how do we protect, right? How do we prevent, you know, attacks, because once again, you need to be successful, we need to make sure that you're you're not vulnerable. So there's an article out there go out to industrial talk, it's going to be a featured article out there. And I think that it's got a grass, get good pictures. They do a good job. And they know what exactly what they're talking about. All right on to the interview.
Here is something his name is Brenton Alexander, right. And if anybody's ever been through project financing, the traditional project financing, there's a lot of justification to stacks and stacks and stacks of paper. But that's the way we normally have to finance we don't have the balance sheet to be able to say on out EMI, let's go down here. So many fall into that category that they've got. Definitely a project finance where they're going. This is an important conversation. That if you are looking for capital, I just he's, you know, new energy risk is is they're just an open book. And they've got some real creative ways of being able to help you succeed at what you're trying to do have that conversation all the contact information will be out there. And it was a great conversation, so enjoy it. Brenton Welcome to industrial talk. Thank you very much for finding time in your busy schedule to talk to the best listeners in the universe. How are you doing?
I'm doing well. Oh gee, Scott.
Well, I can't complain because you're talking about a topic listeners that you might think is not sexy, but boy do I think it's sexy. And it's it's funny. How do we take this incredible innovation, the energy out there in this energy transition, right energy transition space, and be able to mitigate, manage, and financially bring a lot of this innovation to the mark Get. And that's what Brenton with new energy risk brings to the table. All right. Let's get a crack. And for the listeners, let's, let's sort of lay the foundation on who Brenton is, give us a little 411. on who you are.
Yeah, sure. So Brian Alexander president, your energy risk, technical background. So mechanical engineer by training went through, you know, multiple degrees can decide what to do with my life. So stayed and did a PhD. In electrochemistry, thermo chemistry and got really into the energy transition space, went out into the world, tried a number of startups and quickly realized, you know, good tech is necessary, but insufficient piece to actually get infrastructure built in this world stealing to the ground. So, you know, you mentioned not very sexy topics, I ended up ending up in insurance, which is a good topic to kill a conversation at a dinner party. So you
don't say insurance. Right.
But, you know, our goal here is to utilize insurance Capital to help solve all these risks that exists in new energy projects and enable them to get to market faster by accessing low cost of capital financing that they otherwise we'd be unable to access due to, you know, tech risk on the project or contractual risks from some of the counterparties that lending institutions are just unable to take. So we're really trying to use a capital efficient insurance capital to enable these projects to move forward in a way they'd be unable to do otherwise.
Because yeah, you're absolutely right. I mean, a part of my history has been to try to finance projects, and it is it's, it all gets down to the capital that you can deploy to be able to bring that that solution that innovation to the market. And then that requires a team that requires a team of financial people who are in your corner to be able to do what is necessary to make that happen. So it's interesting, given your background, and how you sort of ventured into Hi, I want to do that you just sort of saw the need out there and say, I got this innovation, we got to wrap it some way, shape or form.
Yeah, that's right. So that, you know, the company was founded by a combination of insurance folks and tech folks. And the idea was, you know, these projects are being held up at the finish line, because, you know, new tech developers in the energy space feel like you wrap your project in green credentials, you know, it's energy transition, it's ESG. It's good for the environment. You go to the lender, the lender has an ESG mandate, they want to do these projects. And then you run into the credit committee, and they say, Well, so what you don't have a bankable technology, you know, bankable offtake, you don't have a bankable feedstock agreement. We can't put money behind that. And then you stop. So our view was, Well, is there a way we can use insurance capital here to actually solve this problem, take these risks off the table and let the lender move in and make the project go. And that was the genesis for the company, the genesis for our founding. And that's what we've been doing for about 10 years now.
So take us through an example. Let's say, I know you rattled off feedstock offtake, you've there might be technology risks that is unique. How do you take that risk? off the table? Wrap it, and everybody makes money, right? I'm a bank, or I'm a bank, and I say, oh, all the risk is over here in that area. How do you how do you sort of approach it that way? I don't see how you make money. Because that's, you're, you're accepting the biggest risk of everything. I mean, that's what it is.
Yeah, I suppose. But I mean, it's, it's, it's, you know, it's like any other insurance you buy, you're gonna have a few failures, but you've you've spread that risk across everybody paying premium, and then you socialize the risk. And so instead of nobody getting done, you get everybody done, and how, you know, some people are going to fail. But you're all socializing the cost of those failures across all those projects, and everything moves forward.
See, and I do like that. And so if I'm a new tech, so what would be the first step if I came to you knocked on your door? And I said, Yep, I've got this green transition manager gamma, and I want to I want to get financing, find out, how do we go? Will you take us through that scenario,
or so so we want to talk to everybody in anybody at every stage of development. And so people come in our door, some people, it's, you know, they have an idea and it's, it's, it's one person in a garage, and other folks are, you know, established companies with 100 employees, and they're what they think is weeks away from a financial close, we get everybody in between. And you know, we will come in, we'll take a look at at your proposed structure or your proposed economics, the technology, and, you know, we'll give feedback on areas we think we can support and help and areas we obviously can't, and we'll give guidance on what you think what we think you need to do to kind of get to the finish line. So, you know, for our projects, it's not uncommon for us to have from first contact financial close to three, four years. Because these, these projects are long to just stay, there's a lot of pieces that have to come together. And as you're putting the pieces together the facts on the ground change, so you got to get them back together. And, you know, the shape of the world is moving as you're trying to get it all back work and, and, you know, if the stars of Saturn and everything else align, and, you know, it's the third, third Thursday, or whatever special month, it all comes together and you reach financial close. And
and it's so funny, because you bring up a good point, and we were having this conversation offline. And that is, it's like a house of cards, and you just had to keep nurturing it, you gotta keep sort of making sure that, you know, this side is a little weak, I know, you nurture. And you're just your, your journey is all about that project. Do you find that your Do you provide some like consulting, relationship type stuff and saying, hey, you need to do sort of think this way, let's, let's help NERT. Let's, let's frame it this way, whatever, to help with the banking component to it.
Yeah, so I mean, we're not a consulting shop, where we're paid at the end of the day when deals closed. So we're motivated to get deals closed, because that's how we how we pay the bills. And so as much as we can help clients, we work with advance, give them feedback on what we've seen from others in the marketplace that, you know, they may or may not be doing well, to give them sort of a sense of where they need to head, you know, introductions we may be able to make with capital providers, or EPCs, or others we've worked with in the past to sort of help them move down the chain, we'll do that because it's valuable to us, both from a, you know, ESG standpoint, we're all here because we want to drive the energy transition. So we want to see the projects get built just to impact the world. And we all want to, you know, get our bills paid to. So we want to see the projects close. So we get we get the cash in the door to keep the lights on. So, you know, we don't consult directly as a consulting agency. Instead, we provide feedback and help for projects and promise to help them move to the finish line.
But again, if no projects too big or small for you guys to actually have a conversation.
That's right. Sorry to hear it's a small projects, generally, it's small, you know, the first small project leads to 10 small projects, these don't 100 small projects, like they everything grows and scales together. And we want to help folks down that scaling journey.
I'm having a hard time finding a real issue with any of this because I living through that hole, how do I capitalize a project and then having the conversations with the bank and then addressing their concerns? And then it would seem to me like this would be a good relationship to have. And and the reality is, these projects don't come, you know, without risk. They don't come with massive balance sheets, they don't come with the traditional stuff that banks like to lend against.
Yeah, that's right. And I mean, I don't want to make ourselves out to be a magic bullet that solves all the problems. You know, at the end of the day, we'll protect a debt lender coming into projects, we generally won't protect a layer of the equity, because we want to make sure there's alignment that someone has skin in the game. So it's not a heads, they win tails, we lose type scenarios. So it's still hard even with insurance, you got to find, you got to find equity dollars that are willing to take the risks, you got to find all the various contractual parties who will put the structures in place that need to be put in place, it's still hard. But you know, our goal is to make it a little bit easier to help, you know, a couple more projects get over that finish line more than
the what what goes into my mind start ticking tick, tick, tick, tick, is like you have to create these models. These are new things, right? You've got the traditional lending institutions over here, they look at this and everything sort of procedure alized, right, then you start talking about very unique vision and view of whatever that risk might be project by project by, you might be able to say, Oh, I've used that over here. Let's just pray. You might be able to but these are. I can only imagine the modeling.
Yeah, well, you know, that's that's part of the magic here is we have scientists, engineers on staff to do a lot of that technical underwriting. We have former investment bankers who are on our bizdev staff so they can understand the way these projects come together. We have actuaries on staff who take all that knowledge and put it through their magic machine and it gives out an answer that looks like something the insurance industry is used to seeing. And that enables the insurance capital to stand behind these things. So it's really taking all that all those pieces and putting them together in a way that insurance capital understands. And then structuring that into a definitive insurance document that the lending finance community can understand and feel like their risk is mitigated. Yeah,
and then it has to happen, I can appreciate it. Because many of these projects that you address you talk about, they need that service, they need that solution to be able to come to market. And and if we're really interested in the this transition to other forms of energy, it has to be that collaborative approach that financial approach, because it's it's just heavy lifting. It is just without a doubt, it's heavy lifting. Yeah,
I mean, if you're going to succeed in this space, you need to find capital that's going to come in at single digit cost to capital infrastructure funds, traditional capital sources, and they're used to doing, you know, gas peaker plants, or bridges, or roads, or airports, and you give them anything that stuff that that looks weird, they're going to ask for the three reference facilities that have at least three years of operation under them. So you have a total chicken and egg problem. How do you how do you get that done? Yeah, yeah, you're gonna, you're gonna avoid those guys, and just do all equity. You could be paying 15 20% cost of capital, it's super expensive. So how do you? How do you bridge the middle there? That's really the goal.
Well said well said. Okay, so that's all good. You've sold me on the solution here. What are the roadblocks? What do you have? What problems exist out there? Outside of the obvious what? Me as a small business owner, what, what what risks? I mean, I don't want to do it, you know, go to market, whatever. What is that? Yeah, I
mean, honestly, there's a few areas that that that, that our clients run into problems. And the first is I don't want to blame our clients, because you have to be of a certain mindset to do project development, you have to be an optimist, you have to see the glass half full all the time. And that's just not the way the lending community looks at the world, right, they're looking at the risks and what their downside is, and they will look for the weakest link in the project,
quite frankly, I don't like going to have a beer with them, because they are a downer.
That's right. And so you know, you have eight, eight amazing attributes of your project. And the ninth is kind of weak, and that's the one they're going to focus on and base. And, you know, that kills our developers, but a lot of folks coming through, they really, you know, I don't want to say believe their own hype too much. But you have to be able to think like a banker and pick your own project apart. And if you're unable to do that, you're gonna, you're gonna come to market with something that's not ready for primetime. So we see a lot of folks who don't want to say cut corners, but they have pieces of their projects that look really great, you know, they have a product that's highly valuable in a specialty market. And they're looking at that and say, Wow, that gives me a competitive edge. And then they feel like other parts of the project, they can probably let be a little bit worse, because they have this one piece. That's so great. And the truth of the situation is, it doesn't work that way. Every single attribute has to be bankable, you can't have one great attribute offset another, they all have to be good. So that's a key piece as we see people just miss that, that that area of of but
that, but you brought up the sort of the personal characteristics of a project developers, I'm optimistic, I don't want to go to that bad negative stuff that that room makes me feel uncomfortable. I walked over here, this is cool stuff.
Right? Totally. Yeah, you got to tell the story. Absolutely. But you got to you got to know what your own dirt is, too. And then, you know, another key area we see problems is and this was, this was me coming out of grad school is a belief that the good tech, the good, innovative, new, you know widget that's going to change the world is enough to get it done. If you build it they will come and the answer. The answer is no. You know, good technology, new technology, novel technology, even while proven is it's necessary, but insufficient to get your project done. There's a lot of other pieces that have to come in place, getting those pieces in place takes time. And that takes money. You know, project development can be if you're lucky, two years, could be three years could be four years, could be millions of dollars spent in terms of consultants, and permit applications and engineering work. And that's all to get to a point where you can then get a project funded with equity and debt. And we see a lot of people, insufficiently capitalized their startup or their project development shop. And they don't have the funds necessary to do everything they need to do to get the project project ready for an fit for a final investment decision. So we see a lot of people come to us because they see insurance as sort of a magic bullet to skip the step of project development, and try to do all that stuff later. And it just doesn't work. You got to do your basic engineering, you got to do you know, site control, you got to get your permitting done. You gotta negotiate the contracts, all that stuff costs money, it takes time. And if you don't do it, you're not gonna have a project that's gonna be investment, investment,
right? And if that doesn't, if that's not salt on the wound, when you invested all this time, energy, effort, passion, money, whatever it is, and you get it to that point, and it's not bankable. That's a real buttkicker. Big time. To say the least. Yeah, well put it I gotta tell you, kudos to the people who want to live in that world. And I mean, that's, that's a heck, that's a heck of a calling.
It's a tough world. I mean, it's a binary risk world, it's high risk, high reward. And, you know, there's no, there's no half built project, you're either get it you don't.
So what I get out of all this is that you need to find a team of trusted individuals to help you in this journey, whether you like it or not. And that includes companies like New Energy risk, and others to be able to have that conversation sooner than later. But again, you have no issues with approaching companies wherever they are in that whole process. But I just see the necessity to be able to bring on people that you trust to help you in this journey. And if the journey is not going to happen, know that sooner than later, right. You know, okay, I'm only out a million dollars as opposed to oh, my gosh, it's far greater than that. So
short of loading correctly and in abandon the abandon the ways that aren't going to work before you put too much money. Yeah,
yeah. And have people that are not afraid of, you know, giving you or telling you the real story. All right. So listeners out there saying, Oh, my gosh, I want to know more. How do I get a hold of you?
Yeah, well, the easiest way is to you know, you can find us on our website, your energy risk.com our email addresses contact at New Energy risk.com That sounds like it's one of those black hole email addresses. But
in fact, I was getting ready to say, Oh, come on. Yeah.
Go straight to our had a biz demonstrate to me as well. And we follow up on those within a couple of days. You know, it's it's reach out, we we get multiple, multiple inbounds a day, we work with a number of folks, and we're happy to pick up the phone or answer the email and get moving.
One last question. How do you really want if somebody uses that contact email? And you do the follow up and say, yes, no, maybe let's have a conversation, that type of thing on all of those
will always have a conversation. Absolutely good. Always have a conversation. If there's a there there, we'll get an NDA in place. And then we'll, we'll go from there.
Yeah, like that. Seems painless. Well, relative pain is relative. Let's just sort of make sure that everybody understands that. Well, I enjoyed this conversation, we could go on forever. But I think that listeners you need to reach out to Team New Energy risk. I think if you're in the world, this has always been I've lived through project financing. And and at a at a minimum, it took up a room of paperwork. That stick and project financing.
Yeah, it's it's that is a gauntlet gauntlet, maybe we'll do live to see the you know, the light at the end of that tunnel. So so
if you do come across those people tag them, because they're rare. They are very rare. All right. Brenton. Thank you very much. All right, listeners. We're going to wrap it up on the other side. If you're not we're going to have all that contact information that Brenton provided, everything that you need to reach out to this. This incredible company I really enjoy. Thank you, Brian, for being on the podcast.
Scott. Appreciate the time. Appreciate the opportunity.
All right, listeners. Stay tuned, we will be right back.
You're listening to the industrial talk Podcast Network.
All right, a hearty thank you to Brenton Alexander sharing his insights into project financing. You need money. You need money, you need to reach out to Brent and all the contact information for Brenton will be at industrial talk, find his interview, find his conversation, boom. There's his contact information. All right, we're creating an ecosystem here at industrial talk. It is featuring companies and individuals that are trusted in their specific profession. You need that innovation, right? So we need to educate, we need to collaborate, we need to innovate and you need to do that with trusted individuals. If you want to contribute. Go to industrial talk, send me a quick little buzz saying hey, we want to contribute we've already got people that are committed to leadership committed to manufacturing committed to the IoT committed to asset reliability, everything in between. And we're just expanding because we need to solve problems that we need to do it with trusted individuals. All right. People will be brave dare greatly hanging out with Brenton you're gonna change the world. That's for doggone Sure. All right, we're gonna have another great conversation shortly. So do not go away. We'll be right back.
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