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Q&A

The Renewable Energy Investor Optimistic About the Future

A conversation with Mary King, a vice president handling venture strategy at Aligned Capital

The Q&A subject.
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Today’s conversation is with Mary King, a vice president handling venture strategy at Aligned Capital, which has invested in developers like Summit Ridge and Brightnight. I reached out to Mary as a part of the broader range of conversations I’ve had with industry professionals since it has become clear Republicans in Congress will be taking a chainsaw to the Inflation Reduction Act. I wanted to ask her about investment philosophies in this trying time and how the landscape for putting capital into renewable energy has shifted. But Mary’s quite open with her view: these technologies aren’t going anywhere.

The following conversation has been lightly edited and abridged for clarity.

How do you approach working in this field given all the macro uncertainties?

It’s a really fair question. One, macro uncertainties aside, when you look at the levelized cost of energy report Lazard releases it is clear that there are forms of clean energy that are by far the cheapest to deploy. There are all kinds of reasons to do decarbonizing projects that aren’t clean energy generation: storage, resiliency, energy efficiency – this is massively cost saving. Like, a lot of the methane industry [exists] because there’s value in not leaking methane. There’s all sorts of stuff you can do that you don’t need policy incentives for.

That said, the policy questions are unavoidable. You can’t really ignore them and I don’t want to say they don’t matter to the industry – they do. It’s just, my belief in this being an investable asset class and incredibly important from a humanity perspective is unwavering. That’s the perspective I’ve been taking. This maybe isn’t going to be the most fun market, investing in decarbonizing things, but the sense of purpose and the belief in the underlying drivers of the industry outweigh that.

With respect to clean energy development, and the investment class working in development, how have things changed since January and the introduction of these bills that would pare back the IRA?

Both investors and companies are worried. There’s a lot more political and policy engagement. We’re seeing a lot of firms and organizations getting involved. I think companies are really trying to find ways to structure around the incentives. Companies and developers, I think everybody is trying to – for lack of a better term – future-proof themselves against the worst eventuality.

One of the things I’ve been personally thinking about is that the way developers generally make money is, you have a financier that’s going to buy a project from them, and the financier is going to have a certain investment rate of return, or IRR. So ITC [investment tax credit] or no ITC, that IRR is going to be the same. And the developer captures the difference.

My guess – and I’m not incredibly confident yet – but I think the industry just focuses on being less ITC dependent. Finding the projects that are juicier regardless of the ITC.

The other thing is that as drafts come out for what we’re expecting to see, it’s gone from bad to terrible to a little bit better. We’ll see what else happens as we see other iterations.

How are you evaluating companies and projects differently today, compared to how you were maybe before it was clear the IRA would be targeted?

Let’s say that we’re looking at a project developer and they have a series of projects. Right now we’re thinking about a few things. First, what assets are these? It’s not all ITC and PTC. A lot of it is other credits. Going through and asking, how at risk are these credits? And then, once we know how at risk those credits are we apply it at a project level.

This also raises a question of whether you’re going to be able to find as many projects. Is there going to be as much demand if you’re not able to get to an IRR? Is the industry going to pay that?

What gives you optimism in this moment?

I’ll just look at the levelized cost of energy and looking at the unsubsidized tables say these are the projects that make sense and will still get built. Utility-scale solar? Really attractive. Some of these next-gen geothermal projects, I think those are going to be cost effective.

The other thing is that the cost of battery storage is just declining so rapidly and it’s continuing to decline. We are as a country expected to compare the current price of these technologies in perpetuity to the current price of oil and gas, which is challenging and where the technologies have not changed materially. So we’re not going to see the cost decline we’re going to see in renewables.

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Spotlight

Meta’s Bacterial Mystery Could Poison the Data Center Well

Water pollution in Wyoming has big implications for the future of data center development.

A data center and water pollution.
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Did a Meta data center introduce a rare, dangerous bacteria into the sewers system of Wyoming’s capitol city? It’s an environmental pollution mystery with an answer that could decide the future of American AI infrastructure development.

Our drama begins in Cheyenne, Wyoming, where the city’s board of public utilities just wrapped up a lengthy investigation into the presence of Cupriavidus gilardii, a potentially lethal bacteria resistant to heavy metals, in the city’s wastewater treatment systems. Apparently, in February, board staff detected the contamination and shut off public access to the city’s water reuse system, a supply of treated non-potable water fed with treated wastewater and used for lawns, athletic fields, and other green spaces. Officials were worried that spraying this water could release into the environment a bacteria found to cause fatal health outcomes in immunocompromised or elderly people who are infected by it.

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How Big of a Problem Is Data Center Noise?

A conversation with Ross Marchard of the Taxpayers Protection Alliance

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This week’s conversation is with Ross Marchard, executive director for the Taxpayers Protection Alliance, a center-right advocacy group that focuses on what it sees are onerous policies potentially hindering responsible collection and use of tax dollars. TPA’s position on AI clearly skews pro-free market, as they’ve recently defended Anthropic from Trump administration attacks. TPA also recently took on the mantle of defending data centers from noise complaints, publishing a paper on Tuesday “debunking myths about data centers being excessively noisy.” The paper references various analyses of data centers by state legislators and local regulators to argue that claims the sector is generally noisy are false.

I asked TPA’s executive director to chat with me about why and how the organization will try to quell these fears. The conversation was really interesting so I decided to share it with you in full, sans light editing for clarity and consistency.

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Hotspots

The Electro-Magnetic Freakout on the Cape

And more of the week’s news around project development.

The United States.
Heatmap Illustration/Getty Images

1. Barnstable County, Massachusetts – I have a whopper of an update on the Vineyard Wind project, which might be in operation but risks becoming fodder in the fight against offshore wind.

  • Like all offshore wind projects, Vineyard Wind has to send power to the coastline via cable. One of the three sites where these giant power lines land is Barnstable, a small shore community, where longtime residents for years have voiced concerns about electromagnetic fields or EMF.
  • Concerns about EMF are comparable to those about infrasound from data centers. We do not know whether these concerns are really rooted in legitimate health impacts, as I have written, but regardless this remains a common concern raised around large high-voltage power lines, including those for offshore wind projects.
  • On June 30, the town’s board of health heard from a group of Barnstable residents who claim to have measured EMF from the town’s wind cable. The same group, Save Greater Downes Beach, had unsuccessfully sought to stop the cables through litigation and public pressure.
  • This board of health meeting was controversial: Ahead of the meeting, the director of Sierra Club’s Massachusetts chapter wrote the board of health requesting their testimony be limited and no action be taken on the findings. “Concerns being raised about electromagnetic field exposure associated with Vineyard Wind 1’s underground export cables are not only invalid but outside of the Board of Health’s jurisdiction,” wrote chapter director Vick Mohanka, according to a copy of the letter posted to Facebook by anti-wind activist Susanne Conley.
  • This Sierra Club chapter was right to be concerned about how this meeting would affect Vineyard Wind. I watched the lengthy testimony before the board of health. Activists presented a case that the town should implore regulators with authority to deeply study the wind farm cables. They asked the board of health to back a state study on EMF and put the question before the Massachusetts permitting regulator, the Energy Facility Siting Board.
  • “We’re not asking the board to place any restrictions or limitations on the project at this time,” Gary Peters, a local medical professional and member of Save Greater Dowses Beach, told the board. “We’re asking you to put that ball in the court of EFSB.”
  • The board was receptive to this request. Board chair F.P. Lee told the group he would “take this under advisement” and said he’d talk to their legal department about it. Daniel Luczkow, the board’s vice chair, said he agreed with activists’ feelings that Barnstable residents were “guinea pigs.”
  • “It sounds like the contention is that these levels we’re measuring are much, much higher than the information given when the project was started,” Luczkow said. “We’re the only place on the planet, maybe, that actually runs these [cables] through a populated area and we have no idea what type of damage they’re causing?”
  • Should Barnstable strenuously take this issue up, I would predict it only be a matter of time before it’s also raised by organs of the federal government. Health and Human Services Secretary Robert F. Kennedy Jr. last year asked the Centers for Disease Control to study negative health impacts from precisely this infrastructure. This kind of hyperlocal squabble is often what manifests as conversation in anti-wind opposition circles, and Vineyard Wind was already causing PR headaches for the energy transition.

2. Prince William County, Virginia – Northern Virginia is officially hostile territory for data center developers, and I learned about it through a call from my mom.

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