by Stephen Lacey
February 15, 2017

Stephen Lacey: From Greentech Media, this is The Energy Gang, a weekly digest on energy, cleantech and the environment. I'm Stephen Lacey. I'm willing to bet a lot of you are listening to us on a bus right now. I know many of you listen while you commute. And, after all, there are more than 70,000 transit buses in the U.S. alone. But I'm willing to bet your bus, if you're on one, is not electric. Only 1 percent of the transit fleet runs on electricity. Our guest is out to change that. We're talking to Ryan Popple, the CEO of electric-bus maker Proterra, about his plan to kick diesel out of the transit bus fleet. He's also got a very compelling career path that brought him from the Army, to Tesla, to venture capital, and eventually to Proterra, and we'll talk a bit about that as well.

Then, in the second half, renewables are becoming the "new normal" in the U.S. We will take a glimpse at two important reports that put the current clean energy boom into perspective. Katherine Hamilton, with 38 North Solutions, is in San Francisco this week, coincidentally, at the headquarters of Proterra. So Katherine, you're fully immersing yourself for this show, huh?

Katherine Hamilton: Absolutely, and Ryan gave me a magnificent tour of the plant here, so I'm all in now.

Stephen Lacey: Jigar Shah is in New York City, where he's probably looking out the window at the same winter storm that I'm looking at, yeah?

Jigar Shah: Oh, it's awesome. I've got photos of my little guy rolling around in the snow in his snow pants.

Stephen Lacey: OK, let's say hello to Ryan Popple now. Ryan is the CEO of Proterra, an EV bus manufacturer based in the Bay Area. And the company produces those buses in South Carolina. But Ryan joins us from the West Coast, where he's plotting dominance of the transit world. Welcome to the show.

Ryan Popple: Good morning. Thanks for having me.

Stephen Lacey: You've got some interesting roots that are worth uncovering here. So if I have this correct, you were active for years in the U.S. Army. You were deployed in the 2003 Iraq invasion as a platoon leader. And later, you actually lead fueling convoys. I've talked to a ton of people in the military who eventually get into this field, and many of them have said it was seeing firsthand the complicated logistics of transporting fuel on the battlefield, or for forward operating bases, that woke them up to the need for alternatives. Was that the case for you?

Ryan Popple: Yeah. I wouldn't necessarily say that I had an 'aha' moment doing convoy security. More broadly, spending some time in the Middle East, especially in the military, just gives you a sense of how complex the region is, how volatile the region is. So our division deployed into Kuwait, and then crossed into Iraq in early 2003. And just seeing what Kuwait is like, in its proximity to some pretty unstable parts of the world, and also seeing what that energy infrastructure looks like in person, when you can literally see the oil tankers heading out of Kuwait and then down into the Persian Gulf. And also seeing U.S. troop ships, and heavy equipment ships, moving in the opposite direction. It's a pretty...stark visual as to how complicated energy can be when you need to move it all around the world.

I never planned to do convoy security. It wasn't the career path I chose to go into. I was an armor officer, so you tend to command vehicle units. And my first job was as a tank platoon leader. That's one of the coolest jobs you can have in the whole world. I had four Abrams tanks that were in my platoon. Unfortunately, I got promoted right before the war in Iraq started, and that's when I got moved into the support platoon leader role. So instead of having four 60-ton killing machines that were almost invulnerable, I had trucks. And we used those trucks to escort vehicles, to move fuel, to move prisoners. And we were on the road all the time. And so it was an interesting journey to start in tanks, which tend to be the front edge of the battlefield, and then have to figure out how to keep them rolling.

It's dangerous work. I was fortunate, you know? Nothing happened to me over there. But if you look at the casualty rates, running convoys is an extremely risky job. The insurgents tend to understand that that is where they should focus their efforts, because a smart insurgent does not want to take on a tank or an infantry platoon. They want to take on the bullets and the fuel, enable that platoon to fight. So, when I came back from the Middle East, I spent a long time thinking about what I wanted to do after my military career. And I just couldn't shake the thought that energy was something that would be worth spending my career on.

Stephen Lacey: So then you went to business school, and after that you ended up at Tesla as a very early employee. What impact did that have on your view of the transportation world?

Ryan Popple: So, when I was looking at Tesla, I was also looking at opportunities in alternative energy transportation, like biofuels and hydrogen. And I still remember, I was on the phone with Tim Wenzel, who, at the time, was the head of HR at Tesla, and he was trying to explain to me why what they were doing with electric vehicles made a lot of sense. And we were talking on the phone while I was driving my car, and he mentioned that the infrastructure for electric vehicles is much simpler, strategically, than these other approaches to try to develop alternative fuel for transportation.

I looked out my window, and I could see the transmission lines around me from the energy sector. And that was, kind of, the light bulb moment for me. Even in 2007, electric vehicles could make a lot of sense, because fundamentally, the energy infrastructure already existed. And what you needed to do is build a great product, and then solve, what I would call 'the last meter' infrastructure problem, which is basically connecting the grid to the vehicle. But that's a much easier problem than creating a national pipeline network for biofuel or hydrogen, and then figuring out how to distribute it.

Stephen Lacey: That brings us to Proterra. After Tesla, you went to the well-known VC firm Kleiner Perkins, where you were a board observer for this young, start-up electric bus maker. And you eventually became the CEO, because the company needed a turnaround after having trouble selling its buses to municipalities. You said in one interview that it was the company you most fell in love with. Why did you love it so much even though it had fallen on such hard times?

Ryan Popple: Yeah, so, my fascination with Proterra really started even before Kleiner was invested in the company. We were doing some research on other sectors, within industry, that were going to be disrupted by the emergence of low-cost electric vehicle drivetrains. And we, kind of, defined that technology as everything from the battery pack to the electric motor. So, basically, the thesis was, cheap batters are probably going to change a lot of other industries as well. And what early venture investments can we make to get behind companies that represent where this market is going versus where it is today?

So, as part of our research, we visited a bunch of different companies in a lot of industrial applications. I mean, almost anything that runs on diesel, or gasoline, you could start asking, "Why shouldn't it be electric?" We found a number of companies that were starting to move into transit, school bus, city bus, and we were really fascinated with Proterra. For me, what really, sort of, set the hook, is I went to their very first commercial deployment when they shipped three vehicles to Foothill Transit in southern California.

Foothill Transit operates a fleet of around 350 buses, and it covers parts of L.A. County, Orange County, and San Bernardino County. The thing that was so remarkable to me about it, especially having come out of Tesla, where we were selling cars for $100,000, was that the people who showed up to learn about this electric bus, from my perspective, there was not an electric car that they were going to be able to afford in the next 10, or even 20 years. A lot of the people who showed up wanting to learn about these new electric buses that Foothill had deployed, they couldn't afford a used car, let alone a new car. So this was a non-driving market. You saw students, you saw senior citizens, you also saw people from the disabled community that need alternative forms of transportation.

And what I loved about it, is that electric vehicle technology is the coolest way to get from point A to point B. Anyone who's ridden in a well-engineered, well-manufactured electric vehicle- You fall in love with it. It's smooth, it's quiet, it's powerful, it's high-tech. And what Proterra was doing was saying, "Let's take the most advanced vehicle technology, and let's put it into the base of the pyramid, into our transportation infrastructure that everyone has access to." I always thought that Proterra had the right idea, and I thought the same thing about Tesla when I joined in 2007. That, the right idea and being able to grow a business are two very different things, and sometimes the entrepreneur, or the founder, that has a great idea doesn't necessarily have the skillset to grow a business from $1 million to $100 million in revenue, or to a billion in revenue.

So, when the board decided to make some changes in the management team, and really focus on a team that could grow the company, I thought it was a really good fit for what I had experienced at Tesla from 2007 to 2010. Those were probably some of the toughest early years at Tesla. The honeymoon was over with the investors. The company was really struggling to get the roads during the production and make money on it. And it was the blocking and tackling of building a technology business. So, when the board asked me to step into the role, I really didn't have to think too much about whether or not I thought Proterra could be a success. It really was a question of, "Do I want to do another five years of venture capital, or do I want to go back into an operating environment like I experienced at Tesla?"

Jigar Shah: So Ryan, I worked at the Clean Cities program for DOE in 1998, and we were talking about electric buses back then. We were talking about how they'd be cost effective once gasoline and diesel crossed $2 a gallon, because back then it was like 97 cents. And we were talking about all the health impacts, et cetera. I mean, fast forward 20 years later almost, and we're, sort of, hearing the same pitch. Right? I mean, what's different now than was the case back in 1998?

Ryan Popple: Yeah. I'd say that the primary difference is, in 1998 there was no electric vehicle industry, other than, maybe, golf carts. Whereas today, you're seeing thousands of advanced electric vehicles ship every month in the United States, Europe, China as well. So what that has created, is a supply chain. When you introduce a new product, you can't reinvent every single thing about the product. You have to stand on the shoulders of previous innovation. Otherwise, it's just too capital-intensive and too daunting. So, objectively speaking, I'd say the biggest difference, between 20 years ago and today, is 20 years ago you could not economically or technically store energy on a vehicle.

You probably had a number of other issues as well. Lightweight materials weren't as readily available, and electric motors weren't as high-performance. There are a lot of things today that indicate that the time has come, and that the market is really moving forward with this. Part of it is, just the volume and the interest we're seeing from cities. I think other than, maybe, overhead trolley buses, you probably had no interest from cities in the late 90's to go towards electric vehicle technology. Today, we are talking to virtually every major city.

Jigar Shah: Yeah, and I'm not disagreeing with that. But back then, I mean, we did have big roll-outs of fleets in Louisville, Kentucky, and some other places back in the 90's. But I think that what we found was that- Now I'm hearing a lot of complaints from people saying, "Well, now that diesel has gone down from $4 a gallon, back down, electric vehicles are harder to pencil again." I'm just trying to figure out, exactly how does one justify being excited about rolling this out at the fleet level? What is the argument that people use to say, "Now we feel like, instead of going CNG, which is what we were going to do just three years ago, we're now going to go electric."?

Ryan Popple: Well, I mean, I can give you my opinion on it. I think it's also worth asking the fleets that are procuring electric vehicles, or have stated that they're going 100 percent electric. So there are multiple fleets now, in the United States, that have said they're going to transform their entire fleet to EV by 2030. You also have China that is going to transform its entire transit industry to electric. So you have a lot of smart customers that agree that this is a good idea. And I guess the question is, "Why?"

The economics are very, very powerful. And as a business- I've been CEO of Proterra since 2014, and we watched the oil markets unravel, and the price of oil drop dramatically. What's interesting though, is demand for Proterra's product has skyrocketed as oil prices have come down. So we are not going to market in the summer of 2008 when oil is $140 a barrel. We've been successfully growing with oil between $20 and $50 a barrel.

The problem that oil has is, while it has gotten a little bit cheaper, it's still volatile, so you can't bet on it being at this price forever. And the second problem is, it can't beat semiconductor technology. And by semiconductor technology, I mean scaled, lights-out, automated manufacturing of batteries. So yes, oil has dropped about 50 percent, but since 2010, batteries have dropped 70 percent. We're below the threshold where the Department of Energy thought this made sense in, like, duty vehicles. And in a heavy-duty application, the advantage of electric is even better.

So if you get down to really simple numbers, or if you were asking me whether or not you should buy an electric bus and you need me to prove it from a finance perspective, I wouldn't need a spreadsheet. We'd probably just use a whiteboard. And I'd say, "How many miles do you drive your bus a year?" You probably drive it between 30 and 40,000 miles. That's clue one. Buses are four times the utilization of cars, so you are four times more leveraged, or short-fueled, than a car. Then I'd ask you, "Well, how efficient is your bus?" Probably gets four miles to the gallon, so that's clue number two. Buses are the least efficient vehicle on the road.

So the simple math there, 40,000 miles a year, four miles per gallon, you've got to buy 10,000 gallons of diesel fuel every year for every bus. Now, if you're New York City, you have 4,000 buses. So just the logistics, and the expense, and the risk of procuring 10,000 times 4,000 gallons of fuel per year- It's just a massive financial risk and headache. But then, when you get into the economics, if you only get four miles a gallon, if diesel is two bucks a gallon, you need 50 cents of diesel for every mile that you drive.

An electric bus, which uses 80 percent less energy per mile than a diesel bus, it only needs about two kilowatt-hours per mile. And that number is falling. We've been steadily squeezing more miles out of the same energy for this type of product. So two kilowatt-hours, average industrial rate of 11 cents. Some of our customers procure energy for four or five cents, because they're tied into a municipal utility. So now, you're looking at 10 to 20 cents a mile versus 50 to 70 cents a mile in fuel. So, for most of our customers, for every mile that they drive the electric, the make about 50 cents. And if you're driving 40,000 miles a year, it's $20,000 a year.

The maintenance savings are also really significant. Making a truck engine do stop-start driving in the urban environment, whether that truck engine is running on diesel or natural gas, it breaks down a lot. So NREL did a study of our vehicles at Foothill Transit, and they found that even with our first generation of technology, our drivetrain system was three times more reliable than a brand new natural gas engine.

Katherine Hamilton: So, what impressed me when Ryan took me on the bus that they have here- I'm a big bus rider. I don't live near the metro, so I take the bus every single day. And I got on his bus, and it was just like the bus I take, except that I could find a seat. And what struck me was, while the inside is going to look the same, it's going to look like a typical bus that a lot of people ride on everyday in cities, the material that it's made of was so different. The fact that there wasn't going to be an odor when you're riding the bus, that the air quality was going to be greatly improved, and that there just would not be noise from it, these are all really compelling. And I think, for city planners especially, beyond just the economics, there are so many other planning decisions that can revolve around having these electric buses.

Ryan Popple: Anyone who has flown into a city, arrived at an airport, and then walked out of that airport and gotten on the typical rental car bus, can appreciate how bad of an experience most diesel buses are. In fact, there are airports where you fly in and the arrival level is the lower level. So these buses are pulling in and the diesel, or the natural gas, emissions are just hanging in that space. And that's your first impression when you fly to a city. You walk out of that airport and you're confronted by the noise and the emissions of heavy-duty vehicles.

Cars aren't that bad. They're not very loud. We have focused on tailpipe emissions in the U.S., so cars, typically, are not that dirty. It's the buses and trucks that are really nasty. But then, when you get on that vehicle, if you're unfortunate enough to sit at the way back of the rental car bus, or a city bus, you're sitting next to, what's effectively, a genset. It's like having a Caterpillar diesel generator running, because they're about the same displacement. Anyone who had to sit next to a diesel genset and do their job or try to talk on the phone- You know, it's impossible. So you're hit with noise, vibration harshness. There are fugitive emissions that you can smell in the vehicle. It's a 125 year old approach to moving people.

An electric bus is an incredibly different user experience. And, in a lot of ways, it's what the future of transit should be if we were capable of delivering it. We sometimes ask ourselves, "Well, if we could wave a magic wand, what would surface transport be like? Or what would a city be like in 20 years?" I would hope that we are talented enough to have a model where the prime mover of people in a city is not loud, and polluting, and difficult to even have a conversation inside of that vehicle.

Stephen Lacey: So you pretty much design everything in-house, from the battery packs to the power train. What did you learn from your time at Tesla that feeds into your in-house design and your broad design philosophy? Are you applying anything from your days at Tesla to what you're doing at Proterra?

Ryan Popple: Yeah, that's a great question. And, in fact, when I looked at taking on the CEO role at Proterra, I asked the board a number of questions about what their philosophy was going to be for this company. Proterra had done a lot of things really well, really smart. So I felt like the starting point for this company, from a product architecture perspective, was very good, and this wasn't a case where we needed to pivot or go in a different direction. About the only major strategic change I made to the company is, we stopped doing a fuel cell version of our vehicles.

We had taken orders for a small number of fuel cell vehicles. We built a handful of them. And when I looked at the numbers, it really didn't make a lot of sense compared to where EV was going. So, about the only thing that I disagreed with strategically and changed, was I said, "We're going to put all of our focus on building the best battery electric transit bus in the world. And we're going to stop doing anything else, including fuel cell vehicles."

In terms of what I learned previously, working the EV industry, some of the things that Proterra got right- Number one, don't do a converted electric vehicle. So, if you are an OEM and you're trying to take an existing internal combustion engine vehicle and you're trying to turn it into an electric vehicle, that's the wrong answer. That's like trying to convert a dinosaur into a mammal. Way too many of the subsystems are different. The product is not going to survive that surgery, so don't Frankenstein an existing product and expect that it's going to be a good EV. You're going to end up with a product that's too heavy, that doesn't have good driving performance, and is too expensive. So you won't be able to offer a compelling price to the market.

So, I love the fact that Proterra's approach was a purpose-built vehicle. I love their focus on lightweight materials. As our CTO Gary Horvat often says, or reminds me of, force equals mass times acceleration. So if you're trying to reduce energy consumption per mile, light-weight the vehicle. And our biggest component of the vehicle, the body, is carbon fiber and composite, so we have thousands of pounds of advantage when we go up against steel, or even aluminum, buses.

When you're designing a great EV product, some of the fundamentals are, start from scratch. You don't have to reinvent tires and axles, per se. But you cannot delete the combustion parts of the vehicle, drag and drop the electric parts, and think that's going to go well. That's like converting a Prius into an EV in your garage. It works, but it's not a product. The second thing is that 'light-weighting' is the core of great EV engineering.

And then, some other lessons we- You have to be careful about assuming what the supply chain can provide, especially in an early market. So I asked the board if they would be comfortable increasing the investment in R&D and technology development, because I didn't want to be constrained by what the supply chain could provide us. And one area, in particular, that I thought was not ready to provide an excellent product at a great price, was battery pack systems, or energy storage systems. You can buy battery packs. You can buy modules. But you tend to buy something that's not really a good fit for exactly what you're doing. So if you can get the right talent together, if you can afford to do it, you should vertically integrate around the key subsystems of your vehicle. Especially if the industry's not ready to give you what you need.

And so, I would say that the accomplishment that I'm most proud of is the development of our long-range vehicle. When I started at Proterra, I think our maximum range was 50 miles. Last summer, we drove a vehicle 603 miles in a single charge. And I didn't design that energy storage system; the only thing I did was helped hire and fund a phenomenal team of engineers, including folks in Greenville, South Carolina and in the Bay Area in California, where we've combined Bay Area high-tech development with automotive expertise. So I'd say, having the courage to build versus buy, on some of these systems, a lot of that came out of what I saw at Tesla.

Jigar Shah: So, let's shift the conversation a little bit toward sales. I mean, I know that you've got a backlog of 300, or so, buses, and that's extraordinary. It's about a half a percent of all the buses operating in the country today. But it does seem like your sales process is long. You're, sort of, waiting for municipalities to get free funding from the Transportation Bill, which is sort of delayed. And then they use that money to apply as grant funding towards your buses. I mean, explain how all of that works, and maybe how you think you can improve that.

Ryan Popple: Well, we certainly wouldn't want to accelerate the sales cycle at this point, because we are racing to keep up with the demand for the product. This market is a CapEx market, so we're selling things that are expensive. If you're selling airplanes, if you're selling trains, if you're selling roads, if you're selling buses, you're basically in the infrastructure market. So, our sales cycle is not that different from a Boeing, Airbus, Bombardier. And I tend to not try to think about- Or, I tend to not try to spend too much time changing the way a market works. A market tends to work a certain way for a number of good reasons.

So we have a long sales cycle in our market. But the reason for that is it requires thoughtful planning to deploy transit assets. We could go in to a transit agency and we could give them a great sales pitch, but no one says, "Great. I'll take five. Drop them off tomorrow." There's a lot of planning and logistics that go into buying even a diesel bus, or a natural gas bus. So the nature of the industry is a thoughtful, planned out, sales process, probably not that different from utility-scale solar.

That's the downside. It's not as fast as downloading mobile apps. But nothing is. The upside is, it's predictable and it's big. So we can put a sales leader on a project, and they can bring in two or three deals a year. And you could say, "Well, that's terrible. How are you possibly going to build a business if your sales force- if someone sells only three customers a year?" Well, when a customer buys 25 electric buses for $750,000 a piece, the sales force leverage is phenomenal. And we don't have to- Our customers are sophisticated. We don't have to teach them how to use buses. They know how to run a transit system. They typically know how many units they need. And they typically buy one to two years ahead of when they need them. So, really for us, it's an organizational problem.

I want to push back a little bit on the idea that our customers apply for federal money, and then they wait, and then they get free buses. This is an infrastructure market. When you think about rail, or bus, or roads, there is not- We, as a country, have decided to publicly fund infrastructure, because there really isn't a good private sector model to transport the elderly, disabled veterans, community college students. So we subsidize things like bridges, roads, airports, ports, trains, buses. So what our customers do, is they apply for what's called 'formula funding'. They can use that funding for all sorts of different infrastructure. They can use the same money they spend on our product for diesel buses. So there's about, I'd say, roughly $2 to $3 billion dollars of formula funding per year that helps to support the rollout of about 5,000 buses a year.

What has happened in our market, is we're priced, basically, at parity to diesel hybrid right now, without a subsidy. Diesel hybrid is about 24 percent of new purchases in our market. CNG is another 24 percent. When you add in CNG's infrastructure cost, electric is as affordable, or cheaper, on an upfront investment basis, than a fleet of CNG vehicles. I'd say roughly 40 percent of this market right now, today, can buy our product without a subsidy. And that's the result of us reducing the price of the product and the cost structure of the product.

A couple years ago, our product was a million dollars a bus. It was a little bit less expensive than a fuel cell bus. Today, a fuel cell bus is $1.3 million, and an EV transit bus is $750,000. One of the reasons I'm so confident about where this is going is- I just got back from visiting battery suppliers in a lot of different countries and reviewing their product road maps, and looking at their competitive quotes. We're already beating CNG and hybrid today on the economics. And that's 2017 battery pricing. You start rolling in 2018, 2019, 2020, this is only going to get worse. We are focused on growing as fast as we responsibly can. Our goal is to make sure that no one has to buy a diesel bus 10 years from now.

Jigar Shah: Well, but then, make a prediction for me, right? Let's say there's, what, over 3,000 new buses shipped out every year? 4,000 or so? When does a material, a number of those turn electric? Let's call it a quarter of those, every year, turn electric?

Stephen Lacey: I'm going to pile in here. I've read that you think diesel, diesel-hybrid, and compressed natural gas buses will basically be phased out of new sales in transit by 2020, and that diesel bus manufacturers are likely to go extinct sometime in the next decade. What leads you to believe that the transit sector is facing stranded assets, as you call them?

Ryan Popple: Well, there will be stranded assets if companies aren't agile. When I listen to the earnings calls for heavy-duty vehicle manufacturers, the public markets are already starting to ask them, "What's your plan for electric? And what's your plan for autonomous?" It really is a question for the incumbent manufacturers. Are they going to evolve or are they going to make carriages until they turn the lights out?

We could look at China as an example. China is not a good market for building diesel buses anymore. It took about 10 years from the beginning of building some rudimentary electric vehicles to today, but electric buses are quite prevalent in China. And that's the largest bus market in the world. The second largest is the United States. I don't think it's crazy to say that the U.S. may follow a similar path that China has, especially given that the U.S. has better electric vehicle technology. We're actually better at this than any other country in the world.

The other thing I'd look at, and I think is quite encouraging, is the heavy-duty vehicle sector, and transit in particular, has been quite successful at implementing more efficient technology. When you have to buy 10,000 gallons of fuel per year, you think about managing fuel costs every single year. It's your number one, or number two, driver or your cost structure. It's the main thing. That's why, in the transit sector, traditional diesel only has 50 percent market share. Hybrid and CNG have already taken away almost half of its market. And electric is driving another wedge into it.

Now think about that for a second. If the light-duty vehicle market was already 25 percent hybrid, 25 percent CNG, and 5 percent EV, oil would be $8 a barrel. We have made very little progress in the light-duty vehicle market at getting categories like hybrid, CNG, or EV to really dominate. And one of the reasons is, the economic value proposition in many markets isn't sufficiently compelling.

In this one though, I think the question- I would almost turn it around to you, and ask, "What do you think would cause cities to want to continue to buy diesel buses in a world where electric buses may be at cost parity or cheaper?"

Jigar Shah: Unions. I think there's a lot of people who like the status quo. Right? They've got jobs, they know what they're doing. You're basically saying, "Well, the maintenance on our bus is only, now, tires and breaks, that you're really familiar with. And everything else is new technology that you have to be retrained into."

Ryan Popple: So, what's interesting is, one of the larger unions, the IBEW, was recently at a major transit agency in southern California, and they were advocating for the cancellation of a 1,000 unit CNG order, in favor of saving that capital to buy electric. I wouldn't describe labor as a monolithic group. You've got a lot of different types of skilled labor. And electric vehicles require a lot of expertise that could provide a lot of jobs for certain labor unions, or certain segments of skilled labor.

If you look at the infrastructure opportunity, electricians, utility companies, utility supply, there are as many winners are there are losers. And there's money to be made. One of the things that we've seen is that we can get banks to finance these vehicles. So we sell the bus for the same price as a diesel bus, and then we offer a battery lease. A third-party bank will underwrite that deal, because the economics are strong enough that they can make an adequate return on their money.

I tend to believe in economic gravity. I think if unions were as anti-efficiency, or green, as you imply, I think diesel buses would have 100 percent market share. But in fact, a lot of the skilled labor in the U.S. has actually welcomed advanced technology, like hybrid, because it's a great training opportunity.

Stephen Lacey: I co-opted Jigar's question there, so would you care to add a number to your prognostication?

Ryan Popple: Let's see, by 2020- I can give you a number of transit agencies have already explicitly said they're not buying anything other than electric. I can bottoms up, and get to a pretty high number. Let's say 2020, I'm going to say a third of new vehicle purchases in the United States, for the transit agencies, are going to be EV. By 2025, I'll go 50 percent. By 2030, I'll say 100 percent.

Katherine Hamilton: I have a question, Ryan, about policy and whether or not this will impact that prognostication at all. The heavy-duty truck CAFE, or fuel economy standards, were released in August of 2016 by EPA and NHTSA, The National Highway Transportation Safety Administration. And those are setting the standards for fleets from 2021 to 2027. There's a very high chance that there will be a Congressional Review Act on those standards, because they fall within the timeline for that to be nixed by Congress. And I'm just wondering if that's going to affect the market at all. I mean, I know that the heavy-duty truck sector is already at risk of non-compliance. But I just wonder if that plays at all into the thinking of whether or not we can move forward, in a real way, with this market.

Ryan Popple: Well, I think it's important to think about this in a global context. The U.S. is a big, important market, but these technology drivers are global. And the U.S. influences global trends, but it doesn't control them, or drive them unilaterally. What I'm seeing around the world, is that cities are struggling with pollution, with air quality issues, human health issues, and urbanization is accelerating. We talk a lot about population growth from an energy and sustainability perspective, but the subset within population growth, of urbanization, is a more important trend in what's going on in energy and the environment.

In other words, the population is growing, and it's urbanizing very quickly. So we're going to double the number of human beings that live in cities in the next 20 years. Our cities are going to double in size. Every city around the world, and every city in the United States, wants to be less polluted. And the worst, and most controllable, source of pollution is mobile source emissions from heavy-duty vehicles.

Now, we're focused on the transit industry. And one of the reason's we're focused there is, cities tend to control their transit fleets, so you don't have that principal-agent problem. Maybe the federal government tells our trucking industry that they don't need to care about pollution. I think what you'll see at that point is, probably, more regional enforcement, because, at the end of the day, it's a local community, it's a mayor, who cares about toxic air quality. But, in a world where, maybe, truck fleets are not forced to clean up, the city fleets can probably accomplish the same objective by controlling what they actually have ownership of, which is their municipal transit fleets, and cleaning those up.

It'll be interesting to see how it plays out. But, when I look at the investments that are going into energy storage technology in the United States, in Europe, and in China, they vastly exceed the investments that are going into internal combustion engine technology. It really is a decision for the United States to make. Do we want to ride out the last 10 or 20 years of combustion and then end up importing electric vehicle technology from China and Europe? Or, do we want to have some growth, from an industrial perspective?

There really isn't a way for internal combustion to get to the level of energy efficiency of an electric motor. And, from where I'm sitting, batteries are already good enough to win the entire transit market. It's already happened. Now it's an adoption curve that we work through.

Stephen Lacey: The future of transit, according to Ryan Popple. Ryan's the CEO of electric bus maker Proterra. They are based in the San Francisco Bay Area, and also have a manufacturing facility on the East Coast here, in South Carolina. Ryan, thanks a lot. This was a fun conversation. We'll see how some of those predictions play out.

Ryan Popple: Thank you, really enjoyed it.

Stephen Lacey:  This was a big week for stat-lovers. On Monday, The Solar Foundation released its report on solar jobs, finding that 1 in 50 new jobs last year came from the solar industry alone. That was the fourth consecutive year that solar jobs grew by more than 20 percent. Then, on Wednesday, Bloomberg New Energy Finance and the Business Council on Sustainable Energy released a fact book on the American energy economy, finding a continued decoupling of emissions from economic activity, and new records, left and right, for renewables.

Let's talk about both. The Solar Foundation report. Jigar, I thought of you last night when I was listening to the show "Marketplace", which is a very popular public radio business show. On the week that this news was released, this solar jobs report, Marketplace decided to run a big story on whether coal jobs would return under Trump, and ignored the solar story. And this hearkens back to your media criticism piece in September, in which you lambasted Marketplace, and other journalism outfits, for the way they dismiss things like solar and continually favor industries like coal, even though there are far more people working in solar than oil, coal, and gas extraction combined. Did you notice that was absent from their reporting, as well, this week?

Jigar Shah: I did. I mean, I listen to Marketplace almost every day. And I was disheartened because Andrea, looking over The Solar Foundation, told me that Marketplace was actually interested in the report. I was disheartened to see that they didn't actually include it in the broadcast. But, the Bloomberg New Energy Finance report was pretty amazing, that came out this week. And the fact book- We really talked about how, as you've said many times, that we've, sort of, decoupled GDP growth from energy growth.

I think the one thing that is important to bring forward here is Jevons paradox, where- There's this whole body of academic literature that shows that when people use less energy, because of energy efficiency, then they end up buying more energy-hog houses, or bigger cars, or doing stuff, and then end up using more energy. I think what's happening here, which is fascinating, is that energy costs are going up by the same amount that people are reducing energy consumption, because we have such old infrastructure that we've got to invest a lot of new money into the energy infrastructure. Energy costs are going up by 3.6 percent, or 4 percent, or 5 percent, while energy usage is going down, so their bills are staying the same.

Stephen Lacey: All right, so that was a quick transition into the fact book. And we might as well talk about that a little bit as well. We can blend the two together. This BNEF fact book was packed with some pretty impressive trends. And, basically, the top-line takeaway from that was that energy productivity's getting better. The American economy is using less energy to fuel growth. We're using record-low coal, record-high renewables and gas, and we're spending less on electricity as a share of our household income. And that's what you were referring to, Jigar.

While prices are going up a bit, consumers are using less and they're devoting less than 4 percent of their total annual household spending to energy. That was a 2016 number, and that's the smallest share every recorded by the government in America, which is pretty remarkable. You have all these records being broken. Meanwhile, renewables were supposed to kill the economy and make everything more expensive for consumers. But the combination of renewables, gas, and efficiency means that consumers are spending less on energy, at least in electricity.

Jigar Shah: Yeah. There's a lot there, so let me just unpack it for folks a little bit. Since 1960, electricity rates only went up by 0.6 percent per year, which is far below the rate of inflation. It wasn't until around 1999, 2000, 2001, that electricity rates started spiking up. They were going up by 3 percent, 3.5 percent percent per year. What happened was, a raft of renewable portfolio standards were passed, a lot of energy efficiency portfolio standards were passed, and a lot of real effort was put into getting the cost of energy down again.

One of the main things that we did was fund renewable energy. Renewable energy has had almost an imperceptible impact on the cost of electricity, but has really done a great job of reducing wholesale power costs around the country, because on the margins, we've been able to provide zero incremental cost, zero variable cost energy to the grids. In the last three or four years, wind and solar have had an out-sized impact on wholesale markets, and have really done a great job of keeping the cost of electricity low. It's been, sort of, a win on all fronts: energy efficiency, keeping the cost of energy low, and freeing up money to invest in infrastructure, because we have an old transmission distribution grid that required more money.

Katherine Hamilton: Yeah, and it seems like investment has continued apace. Utilities are investing in additional reliability and infrastructure, and then also corporations are investing to move to more decarbonized solutions for their own businesses. It seems like investment is going forward, even with costs dropping. And polices have also helped, which is like, PACE financing, infrastructure of transmission sighting. The Clean Power Plan and CAFE standards have also been really important. Some of those may be shifting, and yet, it doesn't seem like that has dampened, yet, the trend in investment.

Jigar Shah: Yeah, I mean, in 2016, 75 percent of all new capacity additions were not natural gas or fossil fuels. Right? 75 percent of all new capacity additions were solar, wind, improved hydro, and improved nuclear. It's pretty damn cool.

Stephen Lacey: And solar dominated for the first time, installed more capacity than wind or natural gas for the first time in history.

Jigar Shah: Over 50 percent when you count DG, because I think that EIA only counts utility-scale, which is like 9,000 megawatts. But there was another five gigawatts of distributed generation that was added, I think. It's just extraordinary.

Stephen Lacey: And that's why I set up this discussion with a look at media coverage, which I thought was actually quite lacking. You had your usual reports from Chris Mooney at the Washington Post, Vox, Greentech Media, a bunch of trade journals. People are focused on many of the impressive stats coming out of these reports. But, many of the other mainstream press outlets are completely ignoring this story. And I don't say that from an advocacy perspective, because I'm talking about selection bias. You can look at this pretty straight, and you don't have to take an advocacy stance on this, and just say, "You guys are ignoring one of the biggest stories or our time."

It kind of flummoxes me that, in a week that we had some of the most impressive stats ever, posted by these industries, and a very clear shift in the electricity sector, more clear than ever before, that outlets across the spectrum are largely ignoring this story.

Jigar Shah: Yeah, look, I think that's right. The one thing I would say is that I don't think our industry has done a good job of promoting what we've done, including our elected officials on Capitol Hill. I mean, the folks who really love us should be touting us. I mean, Chuck Grassley should be talking about this, about how much new capacity was added in Iowa, and Utah, and other places.

Part of the reason for that is because, as you guys may know, there were large layoffs at First Solar and SunPower in the fourth quarter. As utility-scale solar has, sort of, leaned off, they've laid off a lot of people that were working in those areas. And they were all hired into the DG sector, but those were outside of their company, so I think they didn't want to highlight all the folks that they were laying off.

Katherine Hamilton: Yeah, there's also just a lot of other noise out there, Steven, so I could see how this wouldn't get picked up. In some ways, I want us to keep our powder dry, where it comes to the politicians, so that we can keep chugging along, keep investing, keep deploying, keep lowering the price of clean tech, despite what they're doing.

Jigar Shah: But why would we keep the powder dry on that Katherine? I mean, we have real champions on renewable energy, in terms of Capitol Hill. Why wouldn't they want to tout their role in promoting extraordinary job growth? 51,000 people, 1 in 50 people, in 2016 were hired by the solar industry. Why wouldn't they want to tout it in their own districts?

Katherine Hamilton: Yeah, I mean, I definitely think that they should. And I think it's a huge, positive news story. It's just that, right now, the tone is pretty confrontational up there, so I can see how this would have gotten lost in the noise. And hopefully, when they go back home during their breaks, they will hear these stories, and will be able to tell some good news and recognize that it's really beneficial for their local economy.

Stephen Lacey: Yeah, that's right, there are other things going on aren't there? Well, speaking of other things, let's tell our listeners something they don't know. Here's some of the interesting stories that we're picking up in our daily lives. Katherine, what is yours this week?

Katherine Hamilton: Yeah, so I just wanted to give everybody a little bit of an update on FERC, the Federal Energy Regulatory Commission. There are five seats that are always at FERC, three for the party in charge of the White House, and two for the minority party. And while they are divided like that, it's not like a court where you can stack it up with everybody in your party. They really just split it three and two, depending on who is in control of the White House. And it's not generally thought of as a very political organization at all. It's really a process agency. And it's autonomous also, it has some autonomy.

Right now the acting chair is Cheryl LaFleur. She came out of National Grid. She's one of the only commissioner's who's ever come out of the utility industry, so she really does understand that industry, which I find very helpful when I talk to her. She's always been very, very supportive of efficiency and demand-response, and she really understands those markets very well. She's just the acting chair until the president then puts three- He's got three seats open for GOP members. I'm assuming one of those would become the chair, and she would then go back to being a commissioner.

And then Commissioner Honorable, her term expires in June of this year. But that seat is a democratic seat, so then Chuck Schumer would then put someone forth for that. And there's been a lot of discussion as to who could potentially be nominated by Trump. I don't even want to speculate. I've heard a lot of names, and some of them seem like they would be very competent people.

But how do they get things done? Because, there are only two commissioners, there's no quorum. So what they did was, they passed a rule, when Chairman Bay left, that the director of the Office of Energy Market Regulation, who is Jamie Simler, who had been the head of Office of Policy and Innovation- She's done a lot of different things. She was Bay's chief of staff, as well. She's there, and so she's going to be able to cast a vote on rate filings to accept or suspend filings, to extend time for action in cases, to do waivers for uncontested filing. She can weigh in so they can get some things done, because there are a lot of things that are out there in the public interest that have to get done, that you can't just do with two commissioners. So she's able to weigh in.

And this, just for the folks who listen, shouldn't hold up, at all, the Notice of Proposed Rulemaking on storage and aggregated distributed energy resources. Those comments are due early next week, I think Monday. And that should not- Because it's a proposed rulemaking, the staff will still be going through all of those filings. That will still be progressing forward. So I think, the way it stands now, is things that are really highly contested are probably not going to be decided on. But the way they're working, they've figured out a way around it, where they can get this director to weigh in.

Stephen Lacey: For those of you who don't speak FERC, buried in that is a very important point here. We have two commissioners out of a five-member commission. Without a quorum, they can't really approve anything. So a lot of developers, mostly gas pipeline developers, have applications sitting in a queue. They're waiting anxiously. Months will go by before their applications are approved, potentially very costly. And a lot of people are concerned. Is that a fair way to wrap up, basically, what you just said?

Katherine Hamilton: There are dozens of confirmations that have to go through before- I mean, I haven't heard nothing on when FERC would be up. But there's a lot that the senate has to get through before they can even put anybody in place there. And we don't even have any nominees yet.

Stephen Lacey: Right. And I'm sure when we get some of those nominees. As you said, a number of names have been floated around. I've seen Barry Smitherman out of Texas, Neil Chatterjee out of Mitch McConnell's office. We'll speculate, or discuss, some of those potential commissioners and what they would bring to FERC, which is an extraordinarily important agency in the electric sector and natural gas pipeline sighting sector. Okay, good story. We'll keep our eyes on that one. And, Jigar, what is yours?

Jigar Shah: I was looking at the data in Europe and, basically, wind energy is now at 153.7 gigawatts in Europe, on shore. Which means that it's now 16.7 percent of all of the capacity, electricity capacity. Not the megawatt-hours, but just the capacity in Europe. So it's overtaken coal in terms of capacity as of this year, which is pretty phenomenal. And they're still investing extraordinary amounts of money in offshore, so that number's going to keep going up. And I think it will be the number one largest source of capacity by the end of the decade.

Stephen Lacey: This is now the second time this happened. I was going to talk about that report out of Europe as well. So, thinking on my feet here, I guess I'll talk about the Ivanpah plant, which is co-owned by NRG Energy, the former company of David Crane.

In March of last year, the Wall Street Journal asked, bluntly, "Is Ivanpah about to shut down?" If you remember, the CSP plant had been struggling to keep pace with the projected electricity production as part of its contract with PG&E. It was burning a ton of natural gas. But now, according to media reports- I was reading some stories today and yesterday. Plant operators say it's back on track. And I do know that they're burning a ton of natural gas, more than they thought, actually. California released data for 2015 and the pollution threshold, for a power plant of that type, was double what it should have been. Then EIA recently released some data showing that natural gas consumption had increased throughout the first half of last year. We don't have fully up-to-date data. But, anyway, an interesting time for Ivanpah, for CSP, shows the troubles that the co-owners of that plant have gone through. But, at least for now, it does not look like they will default on that contract. So, a good piece of news for the company, I suppose.

Okay. That's it folks. Thanks for listening. You can catch everything, every show that we've ever done, on SoundCloud, on iTunes, on Stitcher Radio, Overcast, NPR One, anything that you choose to listen to podcasts with. And you can go to GreentechMedia.com for a lot of the stories that we cover and talk about, and we've got show notes there of all our podcasts. Send us an email at [email protected]. We take your show ideas into consideration. Katherine, enjoy your West Coast trip. Safe travels back to the East Coast.

Katherine Hamilton: Thanks so much. I can definitively tell you that any drought out here is over.

Stephen Lacey: And there's no drought of snow out here, so Jigar, enjoy. When you hang up, I'm sure you'll do business, but you should be outside rolling around in the snow.

Jigar Shah: I do love snow, and this was one of the bigger snow falls New York's had this year, so I'm going to enjoy it.

Stephen Lacey: I'm going to go strap on the skis and head up north this weekend. With Jigar Shah and Katherine Hamilton, I'm Stephen Lacey, and we are the Energy Gang, a production of GreentechMedia.com. We'll catch you next week.