CIBC hosts, James Wright and Ines Serrao, are joined by Ken Young, CEO of Apex Clean Energy, and Todd Alexander, Partner at Norton Rose Fulbright, to discuss the Big Beautiful Bill and initial views on its impact to the Renewable Energy Industry.
Intro: Welcome to The Energy Shift, a podcast series focusing on the rapidly evolving energy landscape with host James Wright.
James Wright: Hello everyone. On today's episode, we'll be discussing the thing everyone's been talking about, the Big Beautiful Bill. The BBB as it's known was signed into law last month and has maturely changed many of the energy transition provisions within the Biden administration's Inflation Reduction Act. What changes will this new legislation bring to the renewable energy industry and how are developers looking at the future? We're thrilled to be joined today by two really great guests. We've got Ken Young, who is the CEO of Apex Clean Energy, one of the country's largest renewable energy developers, and Todd Alexander, who is a partner with Norton Rose Fulbright and also the host of the Project Finance podcast Currents.
Ines Serrao: Thank you both for joining, Ken and Todd. I'm looking forward to diving into this topic today. It has been a whirlwind of a summer as we've all been closely tracking the various iterations of the bill as it passed through the House and through the Senate. And of course, the icing on the cake was the executive order from President Trump a couple of days after the BBB was signed into law. But before we get into the details, I want to start out by getting to know both of you. I'll start with you, Ken. How did you find your way into the renewable energy sector? And what led you into your current role as CEO of one of the country's largest developers?
Ken Young: Well great to be with you. Thank you so much for having me. My formative years were spent in the army as an infantry officer. And a few years after I transitioned out, a startup wind IPP led by a former Navy officer reached out, was interested in hiring people with my background. I jumped into it really not knowing what to expect. The wind was kind of nascent at that time and quickly found out that I love the work.Really what I loved about it was bringing disparate scopes of work and different people together for a common purpose. That's something I had missed since I transitioned out of the military and something I was looking for. Also getting into the wind business, I was at the interchange of purpose and business, which was an incredible interchange. The ability to do so much good with the work that we have and serving that larger purpose might sound a little trite orinteresting, but it really was something that motivated me. So I spent the first half of my career moving all over the place into maybe less than optimal ventures, worked for three different renewable companies in about 10 years, three different moves. And then about 10 years ago, I found Apex. And what I found was a growing, resilient, young development company. I had the opportunity to serve here as the COO for several years, transitioned into this role about two years ago as the CEO of the Apex team. We transitioned from a development cell model about three and a half years ago with the majority investment into Apex from Aries. They've been a wonderful investor and it's been able to fuel our growth into this owner model. Now we're delivering at scale and we're accelerating the shift to clean energy, which is our mission and something we're very serious about. It's been an awesome experience here. We have a wonderful expert team built on a solid culture that I'm happy to participate in. And while I'm biased, I think it makes it a great place to work. I think our team members stay here though, mostly because they like the people they're working with. And I'm proud to be part of that team. It's a wonderful privilege, a great honor and responsibility to lead this team. So happy to represent them here today.
James Wright: That's inspiring stuff Ken, and be honest, that military background must be handy for managing project finance bankers.
Ken Young: Lots of yelling. Just kidding.
James Wright: Yeah, exactly. Todd, over to you, how about yourself? How did you find your way into the legal side of this business? I guess on a side note, did you always dream of becoming a podcaster in your spare time?
Todd Alexander: So first, also thanks to CIBC for hosting this and putting me on the spot, being on the other side of the questions this time. Unlike Ken, I can't say I had as much forethought in getting into this business or much altruism in it. I kind of became a project finance lawyer largely by chance. I was traveling after the bar exam in Asia and one of the places I stopped in was Vietnam and got in a motorbike accident and it delayed my start date at my law firm and there was a partner who was doing international project finance and he heard about my accident and my first day of work he just came in and said, you're my guy. He said, if you're the type of guy who was willing to go to Vietnam for vacation, you're the kind of guy that I need to go help me do project finance deals and he was a great mentor. His name was Peter Fitzgerald. He's retired now and he was fantastic to learn from. And from that became the International Project Finance and then Domestic Project Finance and then largely Domestic Renewable Project Finance. And I've had the chance to work with a lot of great clients, including doing deals with Apex and CIBC. In terms of podcasting, that's very different. That was very intentional. When I was a kid, growing up, I used to at night when I was going to bed, listen to a lot of talk radio. And there was one guy who was a university professor at the University of Chicago who had a talk show and he would have these phenomenal guests like Margaret Thatcher or somebody like these incredible like Milton Friedman. He'd have like these incredible guests come through and I just thought what an incredible job that is to be able to just ask any question you want of these brilliant people, or even if they're not brilliant, these people have had such incredible life experiences. And if I would have thought there was more of a career in it for me, I probably would have gone in to be a talk show host instead. And so when the opportunity came up here at the firm to do a podcast, I said let me give it a shot. And we're about 300 and I don’t know, 30 episodes in and we're still giving it a shot. So that's how I got into podcasting.
James Wright: Well, that's a great backstory. I didn't know that about you. And we'll try to beat Margaret Thatcher on today's chat. We'll see if we can beat Margaret, but-
Todd Alexander: I already got Ken.
Ines Serrao: Thank you both for that. I'll shift to the actual meat of this podcast episode. As we said at the top, the Big Beautiful Bill has created a new landscape for US Renewable Energy. Todd, could you give us a quick summary of the main changes that impact the energy sector and what your clients have been mostly focused on regarding the bill?
Todd Alexander: Sure, I mean, there are a lot of changes in there, but I think probably not just the big, beautiful Bill, but what's come since the big, beautiful Bill. I think there's the accelerated phase out for the clean energy tax credits for wind and solar, which shorten the time to get projects into service. There's the FIAC rules and their implications. There's the increased tariffs. And now, know, case on even going back retroactively and trying to get the tariffs, the things that were imported during the moratorium, get those tariffs collected. There's the executive orders that in general make it more difficult to develop wind and solar. And then very recently, now there's the change in the start of construction rules as well to eliminate the 5 % safe harbour for projects that don't qualify starting September 2nd and on. And so I guess Ken, I'm sure, is going to be in much better position to say how that impacts businesses in planning and going forward, but certainly there's been a lot of shifting sands under the industry since Trump's inauguration.
James Wright: So Ken, all that that Todd just highlighted, this wall of new legislation, how does a company like Apex react to that? How do you think about planning for the future? And I guess on a personal note, as the leader of the company, how do you kind of keep the troops motivated and focused on the mission in this environment?
Ken Young: Thankfully we're in a period of incredible demand for our product. And that hasn't relented through all the inflationary pressures we've had in the post pandemic era and even now in this period of uncertainty. So it's really on us to deliver certain products. And that's what we have slightly pivoted to, which is removing distractions and focusing our efforts on delivering solely wind and solar at scale. And so what I mean? distract, removing distractions. We're in the storage business and we'll continue that. A couple projects operating, one under construction, but we're kind of removing that for the time being. Putting that to the side. We have more time under the tax incentive program as Todd outlined, under storage. And we'll come back to that. Now, longer term, we'd like to diversify our business, but right now what's at hand is what we're really good at, which is delivering large wind and solar projects at scale. So we're pressing into that. Simply, why let a good crisis go to waste or a deadline. It's kind of like my academic career. You if you wait till the last minute, it only takes a minute. So we're trying to stretch that last minute out and get as many projects on as we possibly can to meet this unprecedented demand. And how do we think about motivating the troops? Despite all the headlines and distractions, it's about providing enough context that we're still in the fight and that we're a resilient bunch and we can wrestle our projects down to a point of certainty and evidence that to banks and other stakeholders as we move forward. our team has responded as you'd expect they will. They've dug in and we've never seen the kind of response that they've offered. So uncertainty, yes, but moving everything to a point of certainty that's within our control.
James Wright: Good to hear. Thanks Ken.
Ines Serrao: Thanks, Ken. And I would just add we're witnessing that firsthand from the lender side. And it's great to see the motivation and digging into the details and showing how this development is being made. And it's great to see from the other side. I'm going to move back to Todd. One of the points you raised were the FIOC regulations for foreign entity of concern in the legislation. How impactful do you think these new rules will be in the industry and in the supply chains? And how do you see this interplaying with our large tariffs changes that we've seen recently?
Todd Alexander: So I guess first in terms of what the Big Beautiful Bill did there it's denying the technology neutral tax credits to projects that use too much Chinese equipment to taxpayers that benefit from Chinese equity debt management or that make payments under contracts for Chinese technology licenses that give the effective control of the project or the company over to the counterpart to the contract. So, and these ownership requirements have different start dates. The contractual obligations started immediately or actually retroactive and the ownership requirements apply for projects that start construction after July 4, 2025 and the material assistance rules. Those don't apply till projects that start after December 31, 2025. So I can understand what Ken's trying to do at Apex makes a lot of sense, both for getting the projects that they already have that they can start construction on to get them to get safe harboured so that they have a large pipeline and a long runway ahead of them. Because as we've seen in this industry, the landscape definitely changes depending on policy, both from Washington and from states. And I think there is a lot of opportunity for companies that are well capitalized or have access to capital from debt providers or vendors to start construction this year and safe harbour a bunch of projects so that they have a healthy pipeline that will allow them to kind of wait to see how the dust settles. And I think some of the stronger sponsors, maybe we can touch on that later, probably actually could benefit greatly from what's going on. So it could actually be pretty beneficial to a company like Apex in the long run. How impactful some of the tariffs are going to be and the rules are going to be on supply chains, think Ken, I'm sure, is more at the vanguard of that than I am. But I definitely think that the purpose of the rules is certainly to alter the supply chains that have supplied the U.S. We already saw a lot of that already starting for solar over the last, I don't know, six years or something like that. But now I think we're going to see an acceleration of that in the energy storage business as well.
James Wright: So with that Ken, back to you, I'm thinking about given the sort of prevalence of Chinese and Southeast Asian manufactured equipment in this industry, have those new restrictions that Tom was referring to, have they required you to materially change your project development pipeline and how you approach the business? And at least in the short term, are you sort of able to mitigate some of those effects on the company?
Ken Young: Not necessarily changing anything. I mentioned a short-term pause on storage, which is helpful under the circumstance. But I would say that the wind supply chain has largely moved to domestic. In fact, all of our projects qualify for domestic content under the rules as already outlined. And then we've seen the solar supply chain be quite adaptive around various obstacles, whether those be trade cases or tariffs as those have emerged. So we're mindful of all the requirements. I think we'll be able to evidence compliance at every turn. Todd brought up a really good point is that we started construction on a large number of our projects prior to 2025 and these requirements coming into play. And also just the slowdown of the supply chain in general, we are earlier and earlier on our procurement efforts and kind of way ahead of where we used to be. So working with vendors and partners to make sure we're compliant, and be able to evidence that to key partners and as we go. So I think we're largely in good shape. Of course, we'll see how the guidance finally plays out around FIAC, but it's not a major concern for us right now.
Ines Serrao: Moving on to a slightly different topic, notably right after the BBB was passed, President Trump signed an executive order that's titled, Ending market distorting subsidies for unreliable foreign controlled energy sources order, which directed the treasury to revise safe harbour guidance on the investment in production tax credits. The new guidance on this order was published two weeks ago and Todd, could you give us a brief summary of what that guidance said?
Todd Alexander: Sure, I mean, the basics, I mentioned it in my intro, but in effect, I don't think that that is going to have such a large impact on the industry. Certainly, it removed the Brightline 5% test, the Safe Harbour. But it left in place the physical work, Safe Harbour, for onsite and offsite work. And I think, in my practice at least, the vast majority of sponsors were using those to qualify anyway. So now it'll just force people to that and there's less of a bright line there. And so it's going to really come down to what will be acceptable to tax equity in terms of what they want to see for work performed to qualify for that safe harbour. So certainly it puts up another impediment to starting of construction, but I don't think it's going to be anything insurmountable or even too much of a speed bump.
James Wright: And Ken, from your chair, would you agree with that? mean, is there a sort of a moderate sense of relief that the safe harbour has largely been preserved, albeit with some of those modifications Todd highlighted?
Ken Young: Yes, short answer. But the one Big Beautiful Bill created a glide path away from tax incentives. And then of course, we get hit with the guidance and another period of 45 days of uncertainty. Just as with reconciliation, we worked really hard with our industry peers and with the American Clean Power Association to outline the cost and unprecedented nature of retroactivity. And we are really appreciative that the administration considered how best to move forward, and allowing the work that we've already started to be finished. That's what Congress voted for. That's what was signed into law. And I think for the most part, from where we sit, the guidance reflects that. And we're able to move forward, at least under this piece, of the tax interpretation.
Ines Serrao: I'll move to wind specifically. The Big Beautiful Bill followed other executive orders from the administration specifically aimed at the wind energy sector. Todd, I'll start with you. Does the cumulative impact of these adders plus the Big Beautiful Bill make it materially harder for new wind projects to get approved and permitted from your perspective?
Todd Alexander: I certainly would defer to Ken on this, but it would seem to me that it depends on the project. So now, like for the executive order, one of them, the way it's being implemented is they announced they're going to have increased enforcement against wind projects that haven't complied with their Eagle Take permits. And it seems like there's either a moratorium or much more difficult to get the issuance of Eagle Take permits, for example. So depending where you're situated. That could be an impediment. We've seen what's happened on offshore wind. Certainly that's going to be more difficult to do. I had heard from one of my partners, I don't know how accurate this statistic is, so I don't want it to become kind of gospel. At least internally at Norton Rose where we think something like 5 % of projects, renewable projects need some type of federal authorization. So for those projects, certainly it's gotten more difficult, but that still leaves a large universe of projects that are already being done. And then just like we had with supply chains, the market will adapt to the new rules. And instead of it being 5 % that need federal authorizations, it'll be probably close to zero. And we'll have a slightly different set of projects that get developed. it does seem to me like some of the projects that could have otherwise been done before now are either much more difficult or not feasible. But it's not the case that you can't do projects. It's just you need to be careful in selecting the projects you're doing.
James Wright: And Ken, you said at the top that obviously the DNA of Apex is as a wind developer, that's the bread and butter of the company. Do some of those particular challenges give you pause to kind of rebalance the pipeline at all? you sort of pivoting slightly towards solar and storage or is that happening anyway before this just due to the kind of, the cost implications and LCOEs, cetera, of those technologies? Was that kind of happening already?
Ken Young: Yeah, the day after inauguration day, my joke internally, for those that don't remember the wind executive order was issued the same day. And I went to about four meetings in a row and said, who said we were a wind first company? I want names. And it turns out we've been able to manage over last several months. We haven't had any projects that have been stymied by lack of ability to get permits. And largely that's because we select areas where we don't really require a whole lot from the federal government. We're on private lands. we design our projects, responsibly compliant with all the laws and we intend to operate our projects that way. So there has been a continued assault on wind, a little bit more than solar, but I think wind and solar have both been, under this tremendous assault, which is hard for me to reconcile given how much good we bring with our business. And during this period of really unprecedented demand. But anyway, here we are. And we're, as I mentioned at the top, we're a resilient bunch. And we figured out how to cite our projects and bring the right projects to market that evidence compliance with all the requirements as they are. So look, the adverse action or the innuendos are certainly not helpful to our business. There's a toll of the cumulative nature of those. from a practical standpoint, kind of between the lines working on the business, we haven't had anything that's derailed us so far. And so we continue to march forward on our business. And again, having wind and solar gives us a little ability to bounce back and forth. Having a broad regional and national program allows us diversity to pull which projects we want forward. And we're doing that and we're ready to deliver under this current tax regime that we've talked about earlier.
James Wright: So the general sentiment can I think and from both of you really is this industry as we all know has been through quite a few ups and downs over the last couple of decades and this is just another bump in the road on the long journey right.
Ken Young: That's a good one. We had a colleague give some substantive remarks at a recent conference and he used the, know, we didn't start the fire. It was all earning since the world's been turning. I've picked up on that and I loved it because we've seen a lot and we've seen far worse than this. I like to remind our team that outside of the Inflation Reduction Act, which was short lived, this is the longest period of tax certainty we've had in the 20 years I've been in the business. While the headlines may be showing something else, we're actually in a period of somewhat certainty if you look at it the other way. And that's what we kind of do as developers. We look at the glass half full and figure out how we can fill the other half. So think that's a good way to sum it up, James.
James Wright: Hey, that's the first time we've had a Billy Joel reference on this podcast. That's a check in the box, That's a good point to wrap this. So Ken, Todd, thank you both very much. What we like to do at the end of each episode is just have a quick go around the table. Each of us just give one or two things that have shifted our week. Ines, do want to kick us off?
Ines Serrao: Absolutely. I was thinking about it before we started the recording. What shifted my week was a great week vacation in Portugal, where I'm from originally. And so I was debating. I think the shift is the marvelous vacation. But if we're being very strict about the last week, it's the return. But I don't want to focus on the return to work. I want to focus on the vacation. And it was just wonderful beach time, family time, good foods and I'm very happy to be back doing deals again.
James Wright: That sounds delightful. Todd?
Todd Alexander: What I really wanted to end on is a thought that I've been having over the last, I don't know, maybe month or two after the big, beautiful Bill. And just for everybody who's interested in this industry generally, as I mentioned before, I used to listen to a bunch of the talk shows. I'm interested in politics. And to me, what's interesting is it seems like what the administration is trying to do is foster the development or greater development of both natural gas generation and nuclear generation, which seems fine, but the lead times associated with them are very long and they're much longer than what renewables can bring and at the same time, there's all this focus on AI and even though there's not a huge focus anymore on EVs, the EV market is still growing. And it seems to me that, at some point, the rubber is going to meet the road somewhere and there's going to be some kind of problem where we're not going to have enough power generation to meet the demand of what people expect. And then we're going to have increasing power prices if people like Apex get stymied too much. And so I think at the end of the day, policymakers, I think will be pragmatic. And it'll be interesting to me to see how the whole thing gets worked out because I just can't believe that in the medium term, policymakers are going to slow down the introduction of renewables. Even if it causes increased inflation and even as far as things like power rationing and things on very hot days. And so that to me is, I guess, what's interesting to me this week.
James Wright: Yeah, well said and I've had a bunch of power outages this summer myself. I'm now in the market for a backup generator, so I hear you. It's getting worse out there. Ken, what about you?
Ken Young: Yeah. I appreciate those summary comments from Todd. Yeah, we're ready to deliver. And this is something we've been investing into for quite a while, but I'm going to take it down a notch, make it a little more personal. Ines talked about coming off of vacation. Well, school started this week. My oldest two started college, senior and junior. And so I received some pictures yesterday, the first day of class. And our youngest started as junior in high school and started driving. So if you're in the greater Charlottesville area, please keep your kids close by. But with the fall comes routine, I love that. We are moving past reconciliation and guidance to some college football Saturdays, which I love. So go Irish.
James Wright: That's a great shout out. All right, well, I'll draw us to a close. I guess a bit of a personal one for me as well. I'll try and use a shifting pun. I was kind of shifted into gear this last weekend on a bike event, which actually was down in beautiful, hot Texas. And part of the route went through farmland with kind of oil derricks, those almost iconic nodding donkey pump jacks and wind turbines operating side by side. Which was kind of poignant, a little bit of reminder kind of to what Todd was saying actually that we can have and probably do need a all of the above energy strategy and it doesn't have to be this kind of either or polarized debate. So that kind of stuck with me as I was riding my bike this weekend and that was my shift. And I survived the Texas heat which as an Englishman was no mean feat. So with that, we'll draw it to a close. Big thank you again to Ken and Todd for joining us today. Thank you guys. That was great. A lot to unpack and no doubt a lot of topics we're going to need to return to, Ines. Have a great day everyone.
Ken Young: Thank you very much. Appreciate it.
Todd Alexander: Thanks for having us.
Ines Serrao: Thank you.
Outro: Please join us next time on The Energy Shift as we continue to tackle some of the hottest topics in the US energy transition landscape, providing fresh insights and viewpoints to help you shift your perspective.
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