Interview: Mark Goodwin, CEO, Apex Clean Energy

‍Mark Goodwin is the CEO of Apex Clean Energy, a turn-key renewable energy company founded in 2009. To date, Apex has financed more than 3.5GW of clean energy projects and completed 12 facilities across the United States. Before he speaks at Financing Wind North America next week,
we sat down with Mark to find out more about his thoughts on innovations in project finance, transmission, and his career in renewable energy.

Could you tell us a little bit about your background, how you became involved in renewable energy?

I am a former naval officer and deployed in the fleet in the early 1990’s. Coming back from my third cruise in the Persian Gulf, I realised that much of my training was about protecting energy and making sure there was energy stability in the Middle East.

I was on vacation from my station in Southern California when I saw my first commercial wind farm. This was a lightbulb moment for me – why wouldn’t you want to take energy out of thin air? I wanted to get involved, and so I eventually got a job working for a turbine manufacturer and it went from there. I’ve been at Apex since the early days as one of the first employees and have seen Apex evolve from a development shop growing out of the acquisition opportunities following the financial crisis, to working across every phase of project realization - from origination and financing to construction and asset management.

With the Production Tax Credit cliff drawing nearer, how have commercial priorities evolved at Apex?

In this business we are pretty used to PTC cycles, and we are in a long-term PTC cycle now so have been executing our business with that in mind.

One of the challenges is that for certain projects their economics are built on an expectation for a value of the PTC, and so we’re working to line up developers and suppliers and power purchasers in the context of a cliff year. Our priority right now is getting all of our 2020 projects off and running.

We are actually already working on projects, so if at a certain point it becomes clear that a project is not capable of being delivered in 2020 from a finance liability standpoint, we will then pull the trigger and say okay, we’re now pricing this one for an 80% PTC.

Where do you see the greatest opportunity in the post-PTC environment?

Things are very exciting right now as at a federal level climate legislation is at the forefront. Even more importantly, a number of states are talking about 100% renewable and clean energy standards.

If you add it up, around half of the population of the US live in a state where 100% renewables have passed or are being seriously discussed. This will drive demand and partnership between states, and hopefully it will drive more transmission.

This will be a good opportunity if you have a diversified portfolio, which we do, and to be active in states where policy favours renewables.

What are the key trends that will drive innovation in project financing?

As the PTC phases out, wind and solar will transition to more traditional energy finance. Today, we have projects financed by a combination of sponsor equity and tax with some back leverage, but the amount of term debt you can put on a project is very much limited by tax equity and the availability of cash flow to be levered.

Traditional energy finance is set to come into play and it will hopefully bring cheaper and cheaper debt into projects. Prices for projects may go up a little bit, but we’re already bringing such a great product with such low prices that I think the market will be sustained and we will have healthier traditional project finance. I’m looking forward to that as we phase out the PTC.

On the offtake side, we have already seen a number of innovative structures. Wind has for a long time been financed with commodity hedges – whether from companies like Morgan Stanley, BP, or Goldman Sachs, there’s a long history of that product being used in wind. Now the price of solar is low enough to finance it on commodity hedges too.

One of the innovative structures we’ve used at Apex on a couple of hedges is a Proxy Revenue Swap, an insurance product that provides diversity within the suite of offtake solutions you might have. We’ve done projects with commodity hedges, with corporate offtake supported by Proxy Revenue Swaps, and with traditional PPAs. I think there will continue to be innovation along those lines.

You can hear Mark Goodwin present on innovations in project finance at Financing Wind North America in Denver, Colorado, next week. Book you place.