Opinion: Struggling To Get Your PV Project To Pencil? Put An Electrolyzer On It!
By: Oliver Mortensen, Guest Contributor
NEW YORK, NY - Hey gang, it’s your old friend Ollie back with another mind-blowing revelation. This one is so good I hesitate to even share it with you nitwits, but fuck it - I can’t see how this strategy could possibly backfire so lets get down to brass tacks.
Last month one of my people came to me like a total soy-boy beta cuck and says “Excuse me Mr. Oliver sir? You know that really big development stage project in Georgia that we acquired for a rather substantial sum? I can’t seem to see how it will pencil. Here, let me show you the model….” at which point this insufferable little shit actually started to turn his laptop toward me to show me a model on his screen. Like I was going to roll up my sleeves and dive in with him, or something. Can you believe that? Gross. I slapped the computer off the table, sending it careening across the room and stared at this young man with fury in my eyes and explained to him that if he ever tried to pull some shit like that again the thunder of my vengeance would echo through these corridors like the gusts of a thousand winds. What do I look like…some validation-seeking “Vice President” who still gets his hands dirty? I mean…have you ever heard of anything more Piper Jaffray-ish?
Anyway, I calmed down a little, and started dropping life lessons on the level of the Dalai God-damned Lama: “Look. Kid -what’s your name again? - actually, shut-up, I don’t care. If I’ve learned anything in my career it’s that if an investment you’re looking at doesn’t model out promisingly, you have two choices: 1) change the assumptions until it looks good, or 2) change what “it” is so that no one has any idea if the expectations you’re setting are reasonable.”
Now, most of the time I just go with the first option. Want me to explain what that looks like? Shut up, I’m going to do it anyway. It’s really easy. Some peon comes to me all nervous-like and tells me my investment idea looks shitty, or that one of my existing investments is in the red….usually he (yes it’s always a ‘he’, do you know nothing about me?) thinks he’s breaking really bad news and I’m going to be all flustered. It’s adorable. Anyway, usually I mock the poor little fucker for a little while and pretend I’m deeply concerned about the investment fundamentals - as though that matters in the slightest. But after I’ve had my fun, I tell the kid to just calm down and fuck around with the assumptions until everything looks fine. That’s always followed by a long string of “But Ollie’s” (as I call them) usually directed my way as I casually offer a middle finger over my shoulder as I saunter off muttering “shut up and just do it, snowflake,” or something to that effect.
But there is a second option: you just tweak the project and make it into something else.
Ok, so lets say you have a solar project under development which looks like a dog for whatever reason. This happens to me a lot because I’m completely undeterred by concepts like “valuation” or “fundamental value” when acquiring an asset. Maybe the electricity market in the area got really soft…maybe when you were acquiring the project you applied perfect-flat-rectanglular-site-with-no-constraints-and-clean-geotech EPC cost assumptions to your hilly-Rorschach-test-shaped-site-crisscrossed-with-ACOE-jurisdiction-streams situation. Hey, we all do it. Gotta keep that money moving, know what I mean? So do you pull the plug? Cut your losses? Put your tail between your legs and write one off? MY WHITE ASS! Some people say “but Ollie - don’t throw good money after bad, both the EPC and PF teams are saying there’s no angle here. mew mew mew.” Oh yeah? Someone bring me that EPC estimate….I want to wipe my ass with it. They don’t tell me what pencils…I tell them.
So what do I do? These days I just slap an electrolyzer on it and call it a “Green Hydrogen” project. Bada. Fucking. Bing.
Is there any proven market for hydrogen? How reliable are electrolyzers? How are we going to deliver the hydrogen to the end user? Do we really know how much it will cost? These are all great questions for you to ask your grandma, but please don’t bring that soft shit my way. It’s all irrelevant. If we say it’s a profitable hydrogen project, it is. Just whip up a few slides about how hydrogen is the next Facebook or whatever, throw some market size bullshit on there with some quotes from some asshole at Chevron, maybe drop in some pictures of electrolyzers that look shiny, and you’re golden.
Some people might say “…but Ollie, surely this is just putting lipstick on a pig….covering up a bad asset with a red herring of sorts.” That’s when you bust out a story about Netflix pivoting to streaming, or Twitter pivoting from podcasting, or Starbucks pivoting to storefronts. None of those examples are even vaguely relevant, but the important thing is you’re making your audience feel like cowards incapable of having the vision needed to make the big bucks like you do. Or like I do, at least. Tell them they have no vision and that’s why they can’t get to the top. That’ll shut em’ up right quick.
What do you do from there? I don’t know - prematurely overpay for a bunch of drawings…frame super high level conversations with potential Hydrogen buyers as sure things…lots of meet/greets with potential EPC firms before you have a single discretionary permit. Et Cetera. But, above all else, make a massive PR push involving quotes from the local stakeholders - especially those whose current fossil-based jobs might be saved by your ingenuity. Then you wave all this stuff in front of your investors until they are so proud of themselves for saving the world that they wouldn’t dare ask another question.
Oh fuck. I just had another genius idea. You ready for Uncle Ollie to drop you little sparrows another big fat juicy nightcrawler? Oxygen. We sell the fucking oxygen too. Surely people want that, right? Shut up…it doesn’t matter. We’ll say we have “proprietary relationships” with “key industrial conglomerates” who are short on oxygen for some complicated chemo-industrial process that no one dares try to wrap their head around. How will we deliver it there? Fuck you. Doesn’t matter. Are there safety issues?….what is this, Sweden? Just blabber on about repurposing existing pipelines, handwave about some interim step that involves ammonia or something, get a guy in a white lab coat to pose for a picture with a beaker in his hand, show some clips from that Keanu movie “Chain Reaction” (not the parts where the plant explodes), and pass along those wire instructions, baby. Cause we’re doing this Hydrogen thing full-tilt whether it makes sense or not, kids. Lets split some atoms. Molecules? Whatever.
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