Sweat the Details with Mark Goodwin: Wind Energy, Timber, and Real Estate

Sweat the Details Podcast by Nest Realty cooperation

This week, we were joined by Mark Goodwin, CEO of Charlottesville-based Apex Clean Energy, a nationwide leader in wind, solar…you know, clean energy. We talked about clean energy’s growth, sustainability, the power grid, the impact of wind on residential housing development, their coming timber frame building in Charlottesville, and how the shift from steel to timber is a much more environmentally friendly option.

Mark Goodwin - Caricature

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Highlights of the Conversation

    • What is a utility-scale energy company?
    • What inspired a Navy helicopter pilot to want to work in the clean energy field?
    • Transition from Apex Wind to Apex Clean Energy
    • Grid logistics, selling to Facebook
    • Wind and solar projects are often built on agricultural land; these projects are an additional “crop”
    • Impact on nearby communities
    • A big company in a small town
    • Building with timber instead of steel could help pull millions of tons of carbon from the atmosphere; Apex’s new building
    • Apex employees to have more sustainable practices
      • Grants for employees to put solar on their homes, for electric cars, charging stations at the new building
    • Wind predictability and the grid
    • Battery storage
    • How wind and solar compliment each other
    • The future of renewable energy in the US
    • The future of Apex

We hope you’ll join us for the next episode of Sweat the Details. View the full transcript below.

 

TRANSCRIPT

Jim:
This is Jim Duncan with Nest Realty and Sweat the Details. This week we were joined by Mark Goodwin, the CEO of Charlottesville based Apex Clean Energy, a nationwide leader in wind, solar, clean energy. We talked about clean energy’s growth, sustainability, the power grid, impact of wind on residential housing development, and their coming timber frame building in Charlottesville, and how the shift from steel to timber is a much more environmentally friendly option. We hope you enjoy the discussion. We did.

Jim:
This is Jim Duncan with Nest Realty and Sweat the Details, sitting here with Jonathan and Keith and Mark Goodwin with Apex based here in Charlottesville, Virginia. Mark, if you don’t mind, tell us a little bit about who you are, and what your company does, and how long you’ve been here, and just a quick little summary of what you’re doing.

Mark:
Sure. Yeah. I’m Mark Goodwin. I am president and CEO of Apex Clean Energy. And we are a utility scale energy company that’s based here in Charlottesville. We started the company in 2009. And what we do is we develop, we design, permit, finance, we sell the power, and then eventually build utility scale renewable projects, wind and solar. And then also, sometimes we operate them on behalf of the owner. So it’s a turnkey scope that we do, the project, the scale of the projects. And we’re national company, so we’re building projects from Texas to Illinois, Michigan, Iowa. We’re developing here in Virginia. The size of the project is as small as solar project that may be 50 megawatts to wind projects that are as big as 500 megawatts. And then, the scale or the investment size is as big as $600 million per project.

Jim:
Wow.

Jonathan:
And tell us about your passion behind this. Clearly you’re passionate about this. Tell us kind of what the drive was for your passion behind this, and why this is so important to you and to Apex.

Mark:
Yeah. So there’s a lot of folks at Apex that really believe in our mission. Our mission is to accelerate the shift to clean energy. And so it’s a real luxury to have a mission driven company like that. And we attract people that really support it.

Mark:
My personal story is that I was a military officer, a helicopter pilot, and went to the Naval Academy. And ended up doing very typical tours in the Navy where we would go out with a battle group, and went to the Persian Gulf three times. And around the third time, I started to understand that a big part of our national interest is in energy, is protecting energy, is in making sure that we have access to the petroleum resources in the Middle East. And it, to me it was a moment where it just like, wow, we really spend a lot of resources on this.

Mark:
And I came home, about the time I was ready to get out of the military in 1998, and I actually was getting engaged in Palm Springs, California. And I saw my first utility scale wind turbine there. And it was an absolute epiphany moment for me that that’s what I want to do. Actually, we stopped the car, we got out, and I still have the pictures, the grainy pictures, today of standing in front of a wind turbine understanding what I wanted to do.

Mark:
So I did get out of the Navy, and I couldn’t find a job right away in it. But I eventually got enough experience to where I interviewed to work for a wind turbine manufacturer, a Danish wind turbine manufacturer called MEG Micon. And we were selling wind projects across the country. And that’s how I got into and learned the business.

Jim:
So how big is Apex now?

Mark:
So Apex is, we’re about 214 people last I counted. And 80% of those are here in Charlottesville. Our second largest office is in Minneapolis. So we have a little center of gravity there. A lot of projects that we’re working on are in the Upper Midwest. So it’s good to have a base there. And we’ve been profitable since 2012. So we started the company in 2009, and that was time that we spent doing M&A, acquiring development stage projects, building our capability. We’ve added scope as we’ve grown.

Mark:
So we went from really being an M&A and a development shop to a company that can build and operate. So those were just adding people along the way. And yeah, we built our first project in 2012. It was, at the time, the largest single phase project in the state of Oklahoma. And that’s been a good state for us. But ever since then we’ve been just adding more projects, adding more people, more capability.

Keith:
Of the projects you do now, what percentage is solar side, what percentage is wind, and how do you guys break that out?

Mark:
So when we started the company, we called ourself Apex Wind Energy. And probably, I want to say maybe four years into it or five years into it, we added the clean because we knew we wanted to break into solar. And we did that in full force here probably two and a half, three years ago. So of all of the projects that we’ve built, they have almost all been wind projects. But we just closed financing on our first utility scale solar as an 80 megawatt project here in Virginia called Altavista where the power purchaser is Facebook. And of our development portfolio projects that we are working on, on a development stage, I would say about 70% of those are wind and the other is solar.

Keith:
So, let me ask on this project with Facebook, so Altavista, just South of Lynchburg, is that where the actual facility is? So for selling to Facebook, what is the transmission? I mean there’s no Facebook office near Altavista that I’m aware of. Maybe there is.

Jim:
There is now.

Keith:
How do you guys sell to a national group? How does that work?

Mark:
So here in Virginia, we’re in the PJM Interconnect, and so many corporate power purchasers, Facebook included, are interested in procuring renewable energy in regions close to where they have a power load. So there are a lot of of tech companies that have data centers in Virginia.

Mark:
So Virginia, there’s huge communication hubs that go through Virginia. So all the name brand tech companies have significant operations in Virginia including Facebook. So it is possible in liquid market, which PJM is, for a power purchaser to do a either a physical or a virtual power purchase agreement from a renewable energy project.

Mark:
So we’ve done that in a number of cases, including Altavista, where they create the opportunity for additionality, meaning new renewable projects get built because they are financing off take. And that serves to for them to demonstrate that the new projects that are being built based on their power purchase agreement is adding a renewable resources to the grid, which is offsetting coal and gas which otherwise would have been used to serve the [crosstalk 00:00:09:07].

Keith:
So it may not be that they are buying the power you are creating or you’re capturing, but more that they’re buying power, and you are offsetting the grid with your piece that it balances.

Mark:
That’s a good way to think about it.

Keith:
Okay.

Jim:
So you’ll see where I’m going with this one. But when you drop in this new power facility, if you will, does that provide new jobs to that environment? And the real question is what impact does wind have on residential real estate?

Mark:
So most of the wind projects, and I’d have to say probably all of the wind projects that we have built, have been on agricultural land. So the farmers or the ranchers, our counterparts, are the land owners. We generally sign a lease with them. And the way they think about it is, it is an additional crop for them.

Mark:
So you can think about what has been going on here with tariffs. A lot of farmers in multiple regions of the country have been struggling with tariffs, and a good a way for them to offset some of the losses that they have because of the tariffs is for them to have their additional revenues that come in from wind. So in most cases, we’re adding revenue streams to the land that we’re leasing. And it generally increases the value of that property because not only can they continue to farm, but they bring in those revenues from the wind leases.

Jim:
One of my questions also is, with wind farms, and again, I haven’t seen one in awhile, but for the nearby houses and neighborhoods and communities, what impact does it have on those?

Mark:
So there’s been multiple studies that show in a community where a wind farm is brought in that it generally doesn’t have an impact to houses that are there. What we do is we not only bring in revenue for the farmers who are hosting the wind farm, but there are also new jobs that come. So the O&M facility is part of the wind farm.

Mark:
So there’s economic development. We improve the roads, the tax base in a local community. So lots of rural communities are struggling these days to generate tax revenue for their schools. At the same time, they’re losing young people, they’re moving to to cities. And these communities are fighting to keep their young people there. And one of the benefits of the wind farm is that we are helping them to fund their schools. We’re helping them to improve their roads. So it is universally a positive that the wind farms bring to local communities.

Keith:
Very cool.

Jonathan:
That’s great. So I mean talk about community here. I mean, it sounds like community is a big aspect of your company, and being part of the Charlottesville community is a big part of it. Well, make one other comment along those lines. You’ve got a big company for a relatively small town. What challenges have you had growing a 200 plus person company over the past 10 years in a small to midsize market in the middle of Virginia, in Charlottesville?

Mark:
Yeah. Good question. I mean I think you would probably agree that Charlottesville has changed in the last 10 years, in my view, for the better. I mean there’s more diversity in the economy and the type of business that are here. There’s all kinds of specialty breweries, and financial organizations, and entrepreneurship has really blossomed in this town.

Mark:
But when we started the company, I think how I viewed it has evolved as well. When we were bringing in our first leaders, we were pre-revenue and not that many people in the company. And they really, really had to believe that they could be part of building the company into something. And in those cases it seemed, that was kind of the version of Charlottesville, didn’t have as many opportunities as there are today. It was still, I think, viewed as a great quality of life.

Mark:
But a lot of those earlier hires were thinking of it from the context as what’s my spouse going to do when they come here. And we had to deal with that, and we did. But frankly, in the past six, seven years it hasn’t occurred, and it is a overwhelming positive in recruiting for people to come to Charlottesville because it blends a quality of life in having the cultural aspects associated with being near a university as well as kind of the charm of an old Virginia town and the rural and outdoor things to do here. So I don’t get that question anymore.

Mark:
And it is a positive also from the standpoint of we have a lot of UVA grads that work at Apex, and it is draw for them to be a successful graduate of UVA, they go out into the world and work across the country, around the world. And having an opportunity in the various aspects of what Apex does, which there’s a lot of different types of roles at Apex. We have engineers, we have lawyers, we have business people, we have developers, we have operators.

Mark:
So those former UVA people are like, wow, I can come back to Charlottesville and enjoy the town that I love so much when I was a student, and have a tier one company like Apex to work for. So it’s really transitioned from that kind of early is there a problem here to being an overwhelming positive.

Keith:
It is interesting. What brought me to Charlottesville back in the mid 90s was that my wife was a UVA grad, and she was happy to come back to Charlottesville. But I had an opportunity at S&L Securities, which was a tiny, tiny company of less than 100 people at the time. And one of the things in the recruiting for S&L that they looked for was the automatic already existent ties to the community. Right? They wanted people who had either been UVA grads or had some other longterm connection because it makes the recruiting to Charlottesville whole lot easier when somebody already has that kind of built in love.

Keith:
I want to I want to shift if I can, I think this will tie to the recruiting questions for you all as well, but wanting to ask you a little bit about the new building, and kind of what that means for you guys for growth. And if you can just kind of speak to the design process and what’s gone into into that piece. Because that’s a huge milestone for you guys and a big step.

Mark:
Yeah, it is. Yeah. So the background is we started over in the Queen Charlotte building on High Street and we kind of grew like an amoeba in that building. And then, we took over the first floor and went up to the third floor, and then we’re at the garden level, and then we expanded into the court square building. McGuireWoods was also a tenant over there. And we’re filling out that building.

Mark:
And we started our operations center, our remote operation control center. And that is in the former Martha Jefferson Hospital. So that was a built for purpose-

Keith:
Which is a couple of blocks from where you’re talking about your main headquarters.

Mark:
A couple blocks. So yeah. So we’re now-

Keith:
A pretty broken up-

Mark:
That’s right.

Keith:
… community.

Mark:
So we’re in three different buildings, and we were continuing to grow. And Apex has always been a company that thrives on very fast communication. And just like if there’s a water cooler company we’re it. It’s like we really need to be in fast communication, and being separated in the building makes that harder. And we’ve wanted to put everyone under one roof for a long time. And so we’ve been working on it forever. And that’s a little challenging in Charlottesville with downtown office space is not the easiest to manage.

Mark:
And so, we finally got to a place where we said, look, we have the stability as a company in line of sight to we’re the size that we want to be as far as a building that we would… And we started just working on a building. And one of the things that we’ve come around to at Apex is, when you’re at a renewable energy company, there’s some level of complacency. Well, I really don’t need to think about sustainability because we’re leaders in it. We’re already doing it. This is what the company’s about.

Mark:
But as we thought about the building we wanted to also be a leader in how we made selections there. So we were fortunate enough to hook up with McDonough who is a world renowned architect, and he got onboard to the project. And he saw that we wanted to be at a leading edge for sustainable materials and building practices. And it’s been a match made in heaven for us to partner with him.

Keith:
It’s really funny. I mean, Bill McDonough, I don’t know if he began in Charlottesville, but he certainly was affiliated with the UVA school, was Dean for a period. But his practice, as you said, is a worldwide practice. The fact that it’s one of our backyard neighbors is a pretty outstanding kind of asset for you guys to have right here. And is this the biggest project he’s done locally?

Mark:
To my knowledge, it is. Yeah. I’m not sure that he’s done a big project in Charlottesville at all. I think this is it. It’ll be the first big one that he does. And the building itself is going to be very exciting. So the kind of sustainable building trend today, or craze is probably the wrong word, but a lot of people are excited about mass timber. And as a building material it is very exciting because it has a much lower carbon footprint than the traditional office building made of concrete.

Jim:
Just a dumb question, what is mass timber?

Mark:
So it’s actually a building that’s structurally made of wood. And so it’s an engineered product where they use layers of wood that are treated with resin, and then they make it into large beam structure. And you can do-

Keith:
The same things you do with steel.

Mark:
You can do the same things you would do with steel. It has the strength of steel. It has actually better fire performance than a steel building does. I mean steel, when it gets to a certain temperature, it melts, it loses its structural capability. The mass timber chars on the outside. So it can be repaired after fire damage. And from the standpoint, as there’s more and more of these, there’s definitely more of these now in the West Coast and Canada, but the East Coast is coming up now. So this would be one of the largest on the East Coast. It will be eight stories tall. And it is a much better kind of working experience to be working inside a timber building. It is beautiful. It’s easy to manage from a heating perspective. And it’s, I think, going to be the state of the art for the near future.

Keith:
And what type of array are you guys going to put on the roof, or how are you all going to power?

Mark:
Yeah, we’ll have two separate solar arrays. One that’ll be on the roof, which it’ll be on top of a pavilion. So that’ll be a resource that Apex will have. And I think it will also be, perhaps, something that’ll be open to Charlottesville as well. It’ll have like views of the mountains, and I think we’ll have one more solar array. So the spaces that Apex will use, so we’re renting part of it out to other companies, but we’ll be net zero for the offices that we’re taking up inside the building, meaning we’ll generate as much power as we use.

Keith:
So I mean I will say, Bill McDonough, amazing. He’s done work with McDonough-Braungart Design Chemistry, which is also based here in Charlottesville, which really is consumer product [inaudible 00:23:00] but his architecture side, that’s worked with Ford and other people. I mean, one of his big pieces is bringing light into the workplace, bringing a better health to the environment of the actual office environment. I would assume that all of those are principles that you guys are trying to bring in, and make a part of kind of the corporate culture as well. I mean is that a fair statement?

Mark:
Yeah, absolutely. It’s going to be high ceilings, open air type of feel to it. And additionally we have a mentality at Apex where we are encouraging our employees to have more sustainable practices themselves. So Apex already provides a grant to our employees to put solar on their homes. We have a grant for electric cars. So if you buy an electric car, we give $4,000 a year. So it’s a little bit of a retention thing to just encourage the adoption of these technologies-

Keith:
Clean energy products.

Mark:
… that are going to move. At the new building, the plan is to have numerous charging stations there. And where municipalities are going is that those cars charging during the course of the day are our demand response resource. So that’s where cities are going as far as their ability to help the load following entity to balance load in a way that enables them to use more of the intermittent resources. So hopefully this building, that’s on the cutting edge as well of office spaces to have that capability. But it’s one we’re going to be tracking.

Keith:
So just wondering, of your employees in Charlottesville, what percentage do drive electric vehicles.

Mark:
I don’t have a number off the top of my head.

Keith:
It’s just a great, I mean, I’ve not heard of that as an employee benefit, but that’s amazing.

Mark:
Yeah, well, we want to be leaders. And a lot of people, they are pragmatic about how they make a decision to buy a new car, and hopefully this puts them over the top. So people are not buying new cars just for the grant. But when they do, we’re encouraging them to do. So I’d say, probably, maybe a quarter of our team are in electric cars at this point.

Keith:
That’s amazing.

Mark:
I have one myself. I’m not sure if Steve is there yet.

Keith:
But certainly putting charging stations in the workplace will make that more attractive.

Jim:
I want to take on the load balancing thing you mentioned. Some when we were doing prep for this, one of the threads was balancing the grid and how predictable wind is there. Because if the wind doesn’t blow, how do you provide power?

Mark:
So, one of the things that it’s helpful for the public to understand is that a wind farm is part of an energy system. And regardless of whether you’re a wind farm, a solar array, a coal plant, a nuclear plant, those are contributing to the power that is brought into the grid. At the same time, that has to be balanced against what is demand, and demand goes up and down, up and down. And the grid operator balances what’s being generated to match what the demand is.

Mark:
And the fact that a wind farm goes up and down, given the gigawatts, the numerous plants that are contributing to the grid does not make a a real difference in the minute to minute how the grid is balance. All those plants go into a large grid. They can see the trend as it’s happening. And what happens is they’re balancing with the dispatchable resources at the time when demand is going up or down. And that’s done broadly, and one wind farm is not going to change a decision that a large grid operator makes. I hope that that helps explain it.

Jim:
The dispatchable resource, what is that?

Mark:
Something that can be ramped up and down on command. Now solar and wind have certain amount of dispatchability with them. They can be ramped down. And sometimes if they’re being curtailed, they can be ramped up. But the new trend in power is that solar and wind will be paired more frequently with battery storage. So battery storage is becoming cheaper and cheaper. And to the extent that certain parts of the grid have a lot of wind or solar in them, it does get challenging to balance the supply and demand of power in those regions. And what will happen as battery storage becomes cheaper is it will enable greater penetration of wind and solar in those regions, especially those regions where it’s already the cheapest.

Jim:
One of the prep notes I had was talking about there’s a Chicago freeze story. And Steve is stepping up to provide a prompt.

Mark:
Right. Yeah, yeah. People talk about wind and solar because it’s not working when conditions are what you want. One of the attributes of wind is that it blows more in the US at night, and it blows more in the winter in most regions than it does in the summer. Solar is a nice compliment to that.

Keith:
[crosstalk 00:29:18].

Mark:
You get more generation in obviously it’s happening during the day time, and you get more generation in the summer. So in general they compliment each other. One of the busts that people have thought there was related to wind is in ultra cold, some people have the idea that the wind is not blowing, or that the wind turbines can’t handle that.

Mark:
That the truth is, is that during cold events, when it is windy, that’s what wind turbines love. So they love the cold because the density of the air is better for them. And during recent polar vortex, the ones that didn’t get too extreme, the wind assets were blowing at the time when the power was needed the most. So it was a beneficial asset to the system during those events.

Mark:
Rocky Forge is a project that we are developing. We have a power contract with the the Commonwealth of Virginia. We announced that recently. If you looked at what the wind was doing when the polar vortex hit Virginia, it was generating very well. It would have been generating.

Jim:
So as we look at solar and wind and all of these things, where do you see renewable going in the next two to five years?

Mark:
So if you look at a state by state trend right now, many states are passing so-called renewable energy standards, or they’re making commitments where they’re transitioning from, where many of them are in 10 to 20 percent renewables to 100 percent clean energy. And the target dates for those is anywhere from 2045, Rhode Island just passed a renewable standard recently by 2030 I think they want to be 100 percent renewable.

Jim:
Wow. Is that achievable?

Mark:
It’s very achievable. I mean for Rhode Island, they have the benefit of being near offshore resources. So they can build large offshore wind farms to meet their requirements. But the trend is, we’re figuring out how to deliver the projects in those states that are requiring that they make the shift off of fossil fuels. So that’ll be a lot of collaboration between states. A state like Illinois for instance, it’s neighbors with Iowa. Iowa doesn’t have quite the load that Illinois does. So it’ll be a benefit to both Iowa and Illinois that they cooperate with one helping the other to achieve their renewable goals.

Mark:
So we see a lot of states and utilities and corporations that are making those types of goals. And so for us, we are long carbon solutions in a market that’s really growing. So I see obviously a bright future. What keeps me up is, how are we going to do that? We know the demand is going to be there. With the state RPSs with these incorporations and municipalities wanting to go all clean energy.

Mark:
But we need more transmission lines. Those are very hard to site. Takes federal action, sometimes regional action for those to get built. We also have problems with false narratives going out and being spread in communities and making it harder for us to site projects. So siting and permitting at a state and local level has gotten harder I think in recent times.

Mark:
And I think that policy, at a federal level, still is uncertain. So there’s a lot of ideas in the Congress about how to take some of these state initiatives and make them federal initiatives. So I’m looking forward to that, but we need leadership at a federal level to achieve what we’re capable of.

Jonathan:
So as we wrap this conversation up, tell me what the future holds for Apex.

Mark:
So in the near term, I think the thing that’ll be different is we’ll be doing a lot more solar. So we’ve been working at a development stage on our solar projects now for two and three years. And those projects are getting ready. And so we’re building our capability there, and the projects are becoming more advanced. So we’re excited about adding solar projects. And then we’re also working hard on storage.

Mark:
So those are two kind of differences in kind of the products that we’ll be bringing. We are looking at different ways to engage at an power purchaser level, at a finance level that I think will enable us to deliver projects in a different way, in more innovative way. And we’re going into some new states, which is always exciting to build a project in a new region and develop that capability.

Jonathan:
That’s great. Thanks so much for taking the time.

Mark:
All right.

Jonathan:
Very informative.

Jim:
Mark, thank you. That was great.

Keith:
Mark, it’s been a great day. Thank you so much for the time.

Mark:
Thanks for having me.

 

 

 

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