by Stephen Lacey
December 19, 2016

We're now offering Squares transcripts to our two podcasts, The Interchange and the Energy Gang. Below is an edited version of our latest episode of The Energy Gang.

Stephen Lacey: From Greentech Media, this is The Energy Gang, a weekly conversation on the changing business of energy and cleantech. I'm Stephen Lacey.

Well, we made it. There are just two weeks left of 2016, and you know what? This is it. This is the last show of the year. It's been such a crazy 12 months that we are packing it up early, and I for one am grabbing my backpack and my girlfriend, dropping my computer and microphone, camping out in the Chilean Andes for a few weeks, seriously. But before we call it a year, we are obligated to strap you in and take you with us on a ride through all the twists and turns of this Year of Our Lord 2016.

My co-hosts are with me, the trusty companions to all of us this year. Katherine Hamilton is a partner at 38 North Solutions. She is in Washington, D.C. Katherine, what are you doing to close out the year and start 2017 with some positivity?

Katherine Hamilton: Well, I might drop my mic at the end of the show too, but we stay here and have all of our children come and visit us. We're closed between Christmas and New Year's, and so I just hunker down with hot cocoa and all my kids and watch Holiday Inn and other, you know, Home Alone movies and have a great time with my family.

Stephen Lacey: Can't beat that. I had the Christmas tree up extra early this year to give myself some extra comfort.

Jigar Shah is the President of Generate Capital. He's in New York City. What about you, Jigar? Are you closing out the year with anything special? Taking a shower? Dumping stock? What?

Jigar Shah: Well, you know, I don't have a presidential campaign to fund, so I didn't sell a bunch of stock. Well, we're going to Chicago. Both of our parents are from there, so we'll spend some time with the grandparents and then we're going to Pennsylvania, to Amish country, for New Year's with a friend, so it will be fun.

Stephen Lacey: Well, let's just get this going, because we have so much to cover. For this year's review, we've chosen our top stories in federal policy, state policy, international trends, business deals, and technological advances, and we're also firing up the Predict-O-Meter for 2017 to see if we can wager some bets and also see if Jigar will have to buy me some more cocktails in 2017. This is going to be a little bit more rapid-fire than usual because we have so many areas to cover.

So let's get right to the federal story that is at the top of everyone's mind this week, Trump's latest cabinet picks. You could not choose a cabinet that looks any different from the last eight years, and this has to be my federal story of the year. Exxon-Mobil CEO Rex Tillerson was chosen for Secretary of State. Texas Governor Rick Perry was chosen to lead the Energy Department. If you'll remember, he famously called for shutting down DOE in 2011 but forgot which agency it was during a primary debate. Oklahoma Attorney General Scott Pruitt will lead EPA, a guy who has fought environmental protections over the course of his career. Tillerson has been lukewarm on climate. Perry and Pruitt are outright climate deniers. Katherine, aside from curling up in a ball in the corner, what's your reaction to these picks.

Katherine Hamilton: Oh, and don't forget Congressman Ryan Zinke from Montana for Interior Department. Yeah, so it's really kind of horrifying to think that you get people into agencies who don't believe in the mission of the agencies. I think that the silver lining is that there are a lot of really good career people in those agencies who have been doing work through multiple administrations and understand how to keep going in a way that's still very productive, so that's where we have to kind of hope on the inside of those agencies, and then on the outside, I think people really have to just continue to put pressure on them, because the public really does want to have clean air and clean drinking water and to continue to make sure that EPA upholds its mission to protect human health and that all the other agencies continue to do what their missions are and have the public and outside organizations put support on them to do that.

Stephen Lacey: We were discussing this before hitting the "record" button. It's really hard to fire federal employees because of union representation and because of all the legal minutiae associated with their benefits. So just completely eliminating an agency is very difficult, right Katherine?

Katherine Hamilton: It really is. I remember when I worked at the Department of Energy. It was a while ago, but there was a woman in that office who'd been there since the Eisenhower administration, and yeah, so there are a lot of career people that are really driven by the mission of their organization and are willing to live through various feast and famines in their leadership and still continue to work.

Stephen Lacey: Jigar, what do you think about Tillerson?

Jigar Shah: So, you know, I choose to look at the glass half full. Right? Because I'm not looking at this from a climate perspective. I'm looking at this from a clean tech perspective. I think having a Secretary of State that's really steeped in energy is a big deal, and I do think that there's a difference between someone who is representing their corporate interests and their corporate shareholders in terms of spreading climate denial or all those things and someone who is now serving the public and in a lot of different conversations with governments. There are many governments around the world who simply don't have oil and gas to frack. I mean they have wind and solar to mine. Right? And so when Rex Tillerson's trying to cut a deal and getting a government official to do something that the US wants him to do, what he has at his disposal is American wind and solar companies that want to export to those countries.

The same thing's true with Rick Perry. There's a guy there that basically was the longest serving governor of Texas, so he clearly knows how to manage the politics of Texas, which is very, very difficult, and he presided over the largest expansion of wind power in the nation's history, and I think when you look at where solar is predicted to go under the next 10 years or next five years in Texas, it looks to be the largest growth state in the country. So I don't know, I choose to look at the glass half full here.

Stephen Lacey: I think that's generally how I'm looking at it as well. We do need to separate climate policy from energy policy. Now, will Rick Perry go in DOE and probably strip down programs? Yeah, I think that's definitely possible. Will he go in there and completely try to eliminate whole swaths of DOE? My sense is that when he gets in there, he won't try to do that, and I do think you're correct, that he has been shown to be an energy pragmatist. What we do have to remember, though, is that Perry sits on the Board of Directors for Energy Transfer Partners, the company that is trying to build the Dakota Access Pipeline. He has a lot of financial stake in fossil fuels, which he will obviously have to divest when he goes to the Department of Energy, and this guy, given his support of wind and wind-specific policy in Texas, I think he'll probably have an open mind about renewables, but the emphasis on fossil within DOE is very likely, given his close ties to the oil industry.

Katherine Hamilton: And remember his whole approach in the RPS in Texas was pro-business, so they have a lot of natural resources, so wind and solar as well as oil and gas make a lot of sense in Texas. So his whole approach is a business approach, and so we'll have to kind of see how that jibes with what DOE really does, which is research. Well, actually, most of what DOE does is weapons and managing the nuclear arsenal, which is not pro-business, but the rest of it, maybe he'll be able to figure out how do we connect what we're doing on research to business, and that would be really a positive movement. But I think there's a lot of education that has to be done first, in order for someone coming in who has not had any experience, and this is true for all of these people who have been nominated, to come into an agency that they don't understand and try to come up to speed on what that agency does, what its mission is, and what are all the pieces and parts that move within it.

Jigar Shah: I also think that we haven't had a real energy plan in this country since the Carter administration. Dick Cheney and George Bush tried to put together an energy framework by which they passed the Energy Policy Acts of '05 and '07. But the reason I don't like a physicist as the head of DOE is they don't actually know how to be a politician, and I think Rick Perry does know how to be a politician and will hobnob with all the congressmen that are on the relevant committees in the House and the Senate, and they will try to figure out what the consensus is around energy policy.

Whether we like it or not, this country needs an energy policy, and I think that a politician is more likely to create an energy policy and an energy consensus with all all the relevant decision makers.

Stephen Lacey: Still, that may be the case, but this will be fossil-heavy energy policy.

Jigar Shah: I don't agree. I'm still sticking by my numbers. $400 billion is going to go into new solar and wind over the next six or seven years. All I'm saying is I just think that when you think about somebody who's pro-business, it's about having a point of view and having that point of view sort of discussed openly with Wall Street bankers and other folks. Right? I think that when you think about all the relevant politicians, whether they're in Iowa or Kansas or Nebraska or Oklahoma, a lot of these states are the epicenter for wind. I mean, Wyoming, and the same thing's true for solar, whether it's Nevada or Eastern Oregon or Eastern Washington or some of these other places, that is where we're looking to build 100 megawatt, 50 megawatt power plants. So I do think that these secretaries will be responsive to the congressmen and senators from those areas that want to see economic development in their territories.

Katherine Hamilton: So now we have to make sure we get to Congress, though. That's definitely where I think we need to be leaning is on Congress and making sure they understand where those jobs, because then they can come back and help educate their secretary.

Jigar Shah: Yeah, the solar and wind industry have been piss-poor.

Stephen Lacey: Whoa, whoa, whoa, how have they been piss-poor?

Jigar Shah: In terms of reaching out to their congressmen and in terms of actually explaining to them the positive stories that come out of their projects. They've always been uniformly focused on extending the ITC, but they have not been good at actually getting faces to the numbers that the Solar Foundation puts forward in each district, such that these congressmen actually know a person or multiple people who actually work in their district creating jobs.

Stephen Lacey: Over the last six years, we have seen a blossoming of ribbon cuttings and local events for projects that feature members of congress and people who work at local solar businesses. So you cannot say that the solar industry has not attempted to put a face to those jobs.

Jigar Shah: I just did say, and when you look at the write-up that I did in Greentech Media about how the environmental groups have largely been the folks who have told our story for us and have told it in a way that we're like soft sunflowers blowing in the breeze. We are not considered fracking, which we should be. When you think about the engineering marvels that GE has had to figure out to ship wind turbine parts around the country to be able to put these up, we are just as robust and strong in American innovation as anything in the oil and gas industry, but we're viewed as this fragile flower.

Katherine Hamilton: I think it's less about who we talk to and how many people the industry is getting in to see as in how we talk about it. So that's something going forward next year, when we talk about 2017, that I want to cover is how we talk about these jobs and economic growth engine.

Stephen Lacey: A lot more we could say about those picks, and when they actually get into office and start making decisions, we'll discuss them more. Katherine, you've got a pretty sizable list of top federal stories for 2016. What are they?

Katherine Hamilton: Right, so the year started with a bang on January 18th, Martin Luther King Jr. Day, when the Supreme Court handed down the decision to uphold six to two Order 745 of FERC, which upheld demand response in the energy markets, which was a red-letter day as far as I was concerned, and then the bookend to that is that on November 30th, in the Federal Register, FERC issued a storage and distributed energy aggregation NOPR, which is a proposed rule-making announcement that people are going to be commenting on in the new year. So to me, this just signals FERC is moving forward on trying to open up markets to innovation and is having great success and has avoided being politicized, which I love. Should I go onto other stories also.

Stephen Lacey: Yeah, list them all out.

Katherine Hamilton: So another big thing, of course, was EPA's clean power plan and understanding that that will be under assault, it was a huge thing to get done and finalized this year. Investment started shifting, and it also sent a signal internationally that we were moving forward. Whether or not that continues, I think we're already going down that road.

Also, I don't know if everybody noticed, but yesterday EPA released their final report on impacts from fracking activities on drinking water, and they've really doubled down on the fact that it can impact drinking water resources and has listed the dangers of what those are, so that was a big deal that just came out. So that's EPA.

Jigar Shah: Well, we definitely pushed that on The Energy Gang, and I'm glad that they listened.

Katherine Hamilton: They did, definitely. Their final report was much more bullish than their previous one. Then Department of Interior has done a lot of wildlife regulation to varying degrees of success for birds, bats, and eagles. The eagle rule is expected to be issued either at the end of this year or early next year before the end of the administration. Then their methane rules, the pipeline issue is coming out of Interior. So Interior was really, really busy this year. Then on Congress, unfortunately, while they were busy, there wasn't as much accomplished. The energy bill never made it over the finish line. Those orphaned tax credits that the solar and wind folks got in the omnibus at the end of 2015, but the orphaned CHP, fuel cells, and all those guys did not make it in at the end of this year. So unfortunately that didn't get over the finish line, but still a lot from the administration in 2016, Obama's definitely going out with a bang.

Stephen Lacey: Also an indication that a lot more could potentially change within these agencies than just the clean power plan and general direction on climate policy. You are talking about clean water regulations, wildlife regulations, these methane rules as you pointed out, pipeline siting. There's just so much in here that's going to be impacted, so we can't ignore those. How much do you think can be unwound, given what was accomplished in 2016? I mean, can this just be an overnight unwinding, Katherine?

Katherine Hamilton: Not when you have final rules. There's a process you have to go through, and it will take some time, and it will take some very skilled work to do that. That's not to say they can't, but when you go through a rule-making process, most of which takes years to accomplish, you've already started shifting industry. Industry is part of the stakeholder process and has already had an enormous amount of input, so another set of regulations that were just issued were some more appliance regulations and appliance standards, and those are in part very supported by industry that's already started shifting their investments and started shifting the way that they manufacture and sell products.

You may be able to do some things on the agency level. It does take time, but then it's very hard to turn back industry once they've already made investment decisions.

Jigar Shah: Brad Plumer did a great piece on this in Vox, where he interviewed Jody Freeman, who basically went through this point by point and basically said it was impossible.

Stephen Lacey: Who's Jody Freeman?

Jigar Shah: So Jody used to be in the Obama White House. She's a Harvard professor and former climate advisor to Obama, and she's looked at this extensively. The Bush administration tried to roll back a bunch of stuff under Clinton, and the courts have ruled that in fact the government is required to take the side of the existing arguments that they used to put the policy in place. So the government actually can't change their mind officially once they go through this process. What they can say is, "We did this wrong, and using the exact same arguments, we actually come to a different conclusion." But they can't actually say, "We have a political bent, so we're going to change it," so the Bush administration tried to change like 40 rules, and only officially got one changed. So it's almost impossible to change these rules.

Katherine Hamilton: Well yeah, and the agencies can slow walk, so they can underfund the people who have to execute on the regulation, but you're right. It takes a lot to overturn it.

Stephen Lacey: Jigar, how about your federal pick or picks for 2016?

Jigar Shah: Well, given the extensive list that Katherine went through, I don't know that I'm going to add a whole bunch, but what I would say is that there's a new rule that the administrator is trying to push through by inauguration, which is allowing electric vehicles to get credits under the renewable fuel standard. They've already got a pathway designated. There's already two applications. It's under public comment right now, and the public comment period will end four days before the end of the Obama administration. So she's got a four-day window to make it final, and it'll basically allow for electric vehicles to qualify under the renewable fuel standard through helping dairy farmers with anaerobic digesters.

Katherine Hamilton: I don't know how they can physically get that done, Jigar.

Jigar Shah: I know, but literally every auto maker is on top of this, so every single auto maker's lobbyist wants this to happen. The White House and Brian Deese in DC and Dan Utech and everybody is on top of it. I don't know if it's going to happen or not, but this is something the administrator could physically do, because the rule was published early 2016 already, so they can just make that final, and all the comments that are coming in right now are positive, so I don't know. We'll see.

Stephen Lacey: The key take-away here is that the major changes that people are predicting under this new administration don't just happen easily, and there's a lot of legal maneuvering and many years of work to start unraveling this stuff, beyond the executive orders, that is.

Okay, state policy. Katherine, you've got another sizable list here. Lay it on us.

Katherine Hamilton: Yeah, so I'll just mention a couple of things. One is solar has continued to be under assault in some states, and yet there have been some big wins. The conversation is really shifting away from net metering to more of a value of distributed energy resources, so that's become a new part of the conversation: How do you value all of these resources since solar does no longer operate necessarily on its own anymore? So that's been a big shift. Energy storage has continued to be a big source of state policy. Massachusetts issued that State of Charge report on storage, which was pretty groundbreaking and I think will lead to a mandate in Massachusetts and potentially in other states.

Then finally, something that happened kind of recently was in Illinois. They passed a law that will bail out the nuclear power plants. They did do a little fix on the RPS, but that's something we need to watch out for, because the nuclear plants are not cost-effective. They're not able to participate and meet the auctions, so there have been calls for more bailouts for other plants. We'll kind of have to see how that goes.

Stephen Lacey: Jigar, you were following that particular policy development in Illinois very closely. Does that top your list as well?

Jigar Shah: Yeah, I think the two biggest stories in my mind is the New York RPS story and then the Illinois deal, which both basically utilized the nuclear energy industry and got them to partner with the renewable energy industry. The other story that I would just highlight in a really big way is that we unlocked Florida this year, and I think Florida is going to be one of the fastest growing markets in the solar industry next year.

Stephen Lacey: I have another positive trend going into 2017, and that is that the majority of states, 33 states plus DC, have already decoupled their emissions from economic growth. So from 2000 to 2015, America grew its national GDP 30% while emissions declined 10%. A few of those years after 2007 can obviously be attributed to economic troubles after the recession, but there were many years before then and after then where we saw this split from GDP growth and emissions. What this tells us is that clean energy federalism is alive and well. Nuclear power and natural gas prices had the biggest impact, and obviously shifts to service-based economies, which can be both good and bad, all that stuff is playing into decarbonization within states. That trend will likely continue, whether or not we see the Clean Power Plan, and these 33 states are probably going to continue to lower their emissions.

It's a complex set of factors. Renewables are still playing a limited role in most states, but I think it's another positive story to hang onto in 2017, because federalism is going to be the most important driver for renewables and decarbonization going forward under this presidency, and that has already taken hold.

All right, we expand outside of local stories in the US to our top international stories, and I guess I'll just go first. Mine was the rise of auctions in solar procurement. More countries are setting up competitive bidding systems for solar, and the results have been pretty stunning, actually.

Mexico saw record procurements after market reform this year, and throughout Latin America, the same story's playing out. This is causing record low prices, so in May, solar bids in Dubai came in at 2.99 cents. In August, a bid in Chile came in at 2.91 cents. In September, a bid came through in Abu Dhabi for 2.4 cents, and I think it's still unclear if these companies are going to make any money off these bids, but it's an indication that, surprise, competitive bidding works, and we've exited the era of feed-in tariffs and entered the era of auctions, and this is definitely the future of solar policy around the world.

Jigar Shah: So I don't love that. I mean, I think auctions lead to unsustainably low prices and projects that don't get completed, but that's an argument for another day. I think you're right on the trend.

My story is that India built the largest solar plant in the world, which is kind of surprising. Right? You would have thought it came out of China, but they built a 648 megawatt project, which kicks the former champion, Topaz in California, which had 550 megawatts. On the back of that, I think, with the Trump election, there was a lot of extraordinary comments coming out of China, India, Brazil, and others about how they thought that they were going to maintain the Paris agreement, because it was good politics and business for their countries, which I think is an extraordinary international story that we weren't expecting just last year.

Katherine Hamilton: Yeah, definitely, my story is the Paris agreement, 115 parties, 193 signatories, that was inked on April 22nd and became effective November 4th. The big piece of that, again, is that Obama and Kerry worked so hard to craft that deal with China and have also been working with other countries such that now those countries are seeing this as a real competitive advantage if we don't go forward with our own greenhouse gas emission reduction. So I like that. I like the fact that we were able to participate wholeheartedly, get a lot done before Obama leaves office, and then others will continue.

Stephen Lacey: It's a pretty remarkable feat too. I was talking to Andy Revkin, formerly of the New York Times, now of Pro Publica, about this. He said what it tells us is that over 190 countries can come together and agree that the perfect is the enemy of the good and that we can build off of this agreement. For the first time after basically decades of negotiations, countries were able to come together and agree on a voluntary framework, which is so difficult to do, and a lot could be said about the limitations of this agreement, but the fact that these countries could come together and say, "We don't want a perfect agreement. Here's how we can create something that we can then build off of in future years," is fairly remarkable.

Jigar Shah: Well, I'll add to that and just say it's a vote of confidence for my angle, which has been climate wealth, which I think we really screwed up in 2009 in the Copenhagen negotiations, and I'm glad we pivoted to how this actually is a source of wealth creation and not shared sacrifice.

Stephen Lacey: To be fair, the situation was so different in 2009 compared to 2015.

Jigar Shah: You just had to believe in 2009.

Stephen Lacey: Yeah, exactly. What are the top business deals of the year? Jigar, you go first on this one.

Jigar Shah: Well, so there's certainly a lot of business deals that we can talk about. I think one of the top business deals is the solar plus storage project that was completed in American Samoa by Tesla. I really do think that getting that done and showing that you can actually provide power to people that live there is a big deal.

The other big deals that I wanted to highlight were the fuel cell space. Whether it's Bloom Energy or whether it's Fuel Cell Energy that got a big deal done with PNC Bank or Plug Power that got a big deal done with us, I think the fuel cell space, which has not gotten a lot of love...

Stephen Lacey: Particularly from GTM's Eric Wesoff.

Jigar Shah: I think fuel cells have had a breakout year, and I think going forward, that will get even better. So, I mean, those are maybe more obscure deals that aren't necessarily in the headlines with solar and wind, but I do think that we're getting this broader base of support from the finance community and the business community to clean tech applications.

Stephen Lacey: Katherine, what about you?

Katherine Hamilton: Yeah, the two big business stories that I paid attention to this year, one was the demise of Sun Edison, which was just heartbreaking and I did not think how to happen the way it did. Luckily, the incredibly talented folks who worked there, most have gone forward and started new companies or are working with existing companies. So that was one of the big stories. Then the other one was offshore wind. Block Island just finally came online this week, and I think that's a really good sign for offshore generally.

Stephen Lacey: I have four deals that I'm going to rip through really quickly. One is Oracle's acquisition of Opower for half a billion dollars, a decent exit for Opower, I think not what people necessarily expected after they went public in terms of their performance, but it shows how tough selling software to utilities is. Anyone who's in this business knows how incredibly hard and long these sales cycles are, and it was very clear that Opower needed Oracle's scale to get to the next level.

My next one is Total's acquisition of Saft for $1.1 billion. It is indicative, in my opinion, of the next wave of oil industry investments in distributed energy and renewable energy, just one of a few big announcements from oil majors on that front. We have to remember that this is still just a percent or a couple percent of the total capital expenditures of the top super majors, so I don't want to oversell this, but there were a few deals among the super majors and among massive utilities for that matter, in 2016, that showed the biggest energy companies in the world are starting to take these sectors seriously.

We can't forget about Tesla's acquisition of Solar City for $2 billion. The question I have is: Under Tesla, will Solar City become more of a product-focused company, and what will be the jobs impact of that acquisition in 2017? Certainly sweeping change is to come next year.

Finally, NRG bought up $144 million of Sun Edison's assets, which I think says a lot about Sun Edison's collapse this year but also about NRG's renewed renewables strategy. They divested from electric vehicles, from personalized power, but still kept up the pace in CNI energy management and in large-scale renewable energy power plant development, and buying up $144 million of Sun Edison's assets proves that they're still investing heavily in renewable power plants.

Finally I have one here on my list, which I put on at the last minute, and that is the approval of EDF's Hinkley Point Sea Plant. It's a 3.2 gigawatt nuclear plant in Great Britain. It'll provide 7% of Britain's electricity, probably cost more than the $24 billion price tag. At the same time of this approval, the UK has eased off of renewables. Of course, it is in the process of exiting from the European Union, and it is pressing the accelerator on nuclear. So this is an important test case, I think, for the economics of nuclear versus renewables in developed countries, and that was a big development in 2016.

We move on now to technological advances. Katherine, what makes the top of your list?

Katherine Hamilton: Yeah, there were two things. One was this extraordinary declining cost of storage. I've been involved in the World Economic Forum for this is going to be my second two-year cycle, and two years ago when I went for my first meeting on the future of electricity, I started talking about energy storage, and everybody looked at me like I had two heads. They said, "Like, is that a thing?" This year, two years later, I walk in and everybody's talking about energy storage and saying it has to be at the top of the list. It's a thing that I don't even have to talk about anymore, because it's there, and that's phenomenal to me.

Then the second big story is autonomous vehicles. Uber's already breaking the rules on self-driving cars in San Francisco, but this is an industry that's kind of taken off on its own, and I think that's another huge technological advance.

Stephen Lacey: Yeah, when we start off the year, we're going to be talking about autonomous vehicles with Joshua Goldman of the Union of Concerned Scientists, who has been studying this area very closely and talk about what could make or break autonomous vehicles, and more importantly, how they can be used to clean up the transportation sector, because it could actually be bad for transportation emissions if policy is not constructed in the right way.

On the storage front, completely agree. I think I said this after the ESA Conference this year, the Energy Storage Association Conference. Storage is starting to feel like a real industry, and last week we had our storage summit at GTM. What really stood out to me in my conversations with folks in the hallways and on stage was that people can now talk about real-world deployments rather than theoretical procurements or business models. So 2016 was when the storage industry started coming into its own and we could start to judge performance in terms of deal making and grid services.

Jigar, how about you?

Jigar Shah: Well, as many of you know, I am certainly a real Luddite when it comes to technology, because I'm trying to figure out how to finance it. So I guess my picks are going to be things that I think the finance industry is finally paying attention to. So one area is micro-grids. We've talked a lot about micro-grids, but I don't think that they actually have come together in ways that people thought they would a few years ago, so I think that you'll see a tremendous amount of progress, I think on software in particular on the micro-grid side over the next year. So I'm really jazzed up around that.

The second one is thermal storage. I mean, this is a 50, 70, 100-year-old technology around ice storage, but I think that with the Southern California Edison contracts for Ice Energy and Evaporcool as well as with CALMAC, I think that you're seeing a resurgence in the project finance capability of those companies in that space. So I'm really looking forward to that piece of it.

I guess the third piece of it is that solar hot water, which has, God knows, been around since Carter put it on the White House, is finally converting itself into solar thermal writ large around solar thermal for air conditioning, solar thermal for other purposes.

Stephen Lacey: Process steam.

Jigar Shah: Yeah exactly, so I think for a long time we focused either on solar hot water for domestic water use or CSP plants like Ivanpah, and now I think that folks are starting to realize that they actually need to come into their own. So that I think is an application that a bunch of finance providers are looking at right now.

Stephen Lacey: And on thinking about how business models are evolving in terms of bringing different technologies together. Developers like Ormat are starting to pair solar projects. Actually I think Enel a couple of years ago paired geothermal and solar together. Ormat is procuring more storage and thinking about how to do storage on its own or perhaps storage with a geothermal plant. So the people, the industries that have not done well in the last few years are thinking a little bit more creatively about the sectors they can branch out to, the applications they can serve, and who else to partner with.

Jigar Shah: Yeah, I just talked to a geothermal developer who is having a tough time getting a power purchase agreement, who just realized that they could make twice as much money if they co-located with a greenhouse and sold the greenhouse heat and electricity as opposed to worrying about a PPA.

Stephen Lacey: Absolutely. I'm going a little bit further out on the fringe and talking about Blockchain. That's my pick of the year. It's not a new concept obviously. Blockchain is this ledger system underlying the crypto-currency Bitcoin, that allows all parties to verify transactions and simultaneously track those transactions. It's like a distributed security system of sorts for digital transactions. 2016 was the year that people started applying this for real in the energy sector and built real pilots. Earlier in the year, you'll remember that we had Paul Brody of Ernst & Young on the show. He was formerly of IBM, and he talked about applying Blockchain to smart devices in the electric grid. It was actually one of my favorite shows of the year. Soon after that, we saw a few pilots using different versions of Blockchain for energy transactions, and most recently, Siemens partnered up with this startup, LO3 Energy, to use Blockchain for peer-to-peer transactions in a micro-grid in Brooklyn, New York. We're talking about a really small project here, but with many of the world's industrial giants behind the concept, it's now being taken more seriously, and we'll likely see a few more interesting projects in 2017 where this concept gets proven out.

Jigar Shah: Yeah, on that front, I'm on the board of the Rocky Mountain Institute, and I'll let them explain exactly what they're doing from a press release, but just as a teaser, they've put together a pretty great group of people to actually get to a product that will work for the energy sector in the shortest amount of time. So I agree that Blockchain is really entering the commercial fold.

Katherine Hamilton: Yeah, it's really cool. It blows my mind, and I really liked that episode too, Stephen.

Stephen Lacey: Yeah, Paul was really articulate, and it's just such a hard topic to wrap your head around. He did a great job of explaining how it can actually be applied. On that front, I'll say another application is monitoring efficiency on a meter level, and I know that the EE meter run by a guy, Matt Golden, in California, who's a real advocate of metered energy efficiency, he's been using Blockchain in his meter that he's developing to track energy saving. So it's happening in small areas.

Okay, ladies and gents, it's time to fire up our solar-powered, geothermally heated, battery-backed 2017 Predict-O-Meter, made with of course recycled shipping containers and LEED-certified bamboo. We've been tinkering around with the Predict-O-Meter all year, and it's now fully built just in time before we close out the year.

So Katherine is currently punching in her personal identification number, and the Predict-O-Meter has just spit out her prediction for 2017. What does it say, Katherine?

Katherine Hamilton: Okay, you know I am not going to be able to give just one prediction, but federal and state policy. So on the federal side, Congress, guess what. There is no more gridlock. We've got to defend all of our solar, wind, credits. We need to watch out for things like repeal of PURPA or pulling back on anything that could affect Federal Power Act, and instead, focus on infrastructure and getting more storage and transmission provisions in any federal legislation.

Then on the state, I really think the Southeast is going to open wide up. I know we've talked about Florida, but I think other states are going to open up. But I think we need to shift our messaging to not just grass roots but very much conservative messaging to get to the legislatures that are in red states and really push solar, because once you get it in there, they don't want to give it up.

Stephen Lacey: Jigar is now yelling at the Predict-O-Meter. He's just dumped a martini in the backup generator. It's now doing its calculations. What is it telling you now?

Jigar Shah: Well, I think the first thing is that I want to give kudos to Bill Gates and company that put together the billion dollar fund. I think that billion dollar fund will shift away from investing in new technology and instead focus on the first commercial deployments of these new technologies, largely known as that "Valley of Death," and I think you'll see that fund focus on the "Valley of Death," so that'll be my first prediction.

I think my second prediction will be that I think that small hydro will finally get their day in court. I think under the Trump administration, a lot of the cabinet picks and other folks have been big fans of small hydro and haven't figured out how to really get that into the conversation. So I think you'll see small hydro take on a much bigger focus for the Trump administration.

Stephen Lacey: Okay, it's my turn now. Just making some adjustments to the drive, putting it into fortune cookie mode, and here we go. It's spitting out my prediction. Okay, let me read the piece of paper here. It just says, "Meh." Oh wait, that was last year's prediction for 2016. Okay let me see here, making some more adjustments and here it comes. The Predict-O-Meter says, "Theories get you thinking. Sweat gets you results."

Okay, in all seriousness, that is an actual fortune I have on my fridge at home, and I'm actually using it to make a somewhat bold prediction, and feel free to hold me to this if the wheels start to fall off the car in 2017. This is basically an extension of what we were saying during our cabinet picks discussion. As I've said a couple of times on this show, the Trump administration does not represent doomsday for renewable energy. I was talking about this at the Young Professionals in Energy event last week with Jigar, actually in San Francisco, and I think we do need to separate climate change policy from the drivers that are helping renewables. It's becoming clear that we're in a world of trouble when it comes to federal climate policy. I really do think that there's going to be a lot of dismantling that takes place. But we all know that renewables are mostly succeeding because of favorable economics, because of state policy drivers, utility regulation, and we all know that they have ridiculously strong bipartisan support around the country.

No matter who Trump puts into office, the administration just can't take that away. Right? For example, none of our growth scenarios at GTM Research take into account the Clean Power Plan, and we expect to see very strong growth for distributed energy because of the local factors. Could we see valuable programs at DOE stripped down by Governor Perry? It's likely. Is that a problem for America's competitiveness for developing future technologies, the stuff that Bill Gates wants to promote, as you said, Jigar? Yeah, potentially. I don't think we should gloss over it, but I don't think we're looking at a doomsday scenario.

Now, the word of the year is "normalization". Do I want to normalize the decisions that are likely going to be made? Do I want to make people think that this is normal? No, absolutely not. But the industry has succeeded in the face of lost funding, inconsistent policy, opposition, because of the unshakable passion of people who want to see it succeed, and obviously that's more important than ever. So a lot could be said about President-Elect Trump. Clearly he's malleable, and he puts a lot of faith into business leaders, and guess what: This business speaks. Advanced energy is worth more than the pharmaceutical industry. There are more jobs in solar and wind than in oil and gas and coal. More Republican districts than Democratic ones benefit from wind, and Fortune 100 companies say they're going to do more deals for renewables than fewer under Trump. So sweat gets you results, and that's the best asset for this industry in 2017, your sweat, your ability to get deals done, and your ability to prove that the clean energy transition is the most important economic opportunity of our time. So that's what I've got.

Jigar Shah: And The Energy Gang podcast will give you the insider information needed to put all that effort in the right direction.

Katherine Hamilton: That's right.

Stephen Lacey: Amen.

Katherine Hamilton: Yeah, speaking of religion, I would love, Stephen, to give a big shout-out and thank you to all of those people who listen, who come to the Church of The Energy Gang religiously, whether it's every week or just on major holidays. It's great to know that there's so many people out there who listen to us.

Stephen Lacey: Yeah, this is our time of the year to thank each other and to thank all of you, because the passion that comes from our listeners is really infectious, and it's why we enjoy doing the show. Whether you disagree with us or agree with us, I think we all find common ground in trying to digest the crazy roller-coaster of stories that fly at us week after week. So we're here trying to figure out this stuff just the same as you are, and I think that forms a special relationship. So thank you to everyone who listens to this show.

I guess with that, it's going to do it for us for 2016. We'll be back on the week of January 9th to see if any of our predictions play out over the year and to help you prepare for the wild ride we're all in for. Please help us spread the word about The Energy Gang. If you can leave us a review or rating on iTunes, it does go a long way toward helping us promote the show and lift us up the ranking in iTunes. You can also leave us a rating on Stitcher as well and pass this podcast on to your friends or colleagues. We also want to hear from you on what you want us to cover in 2017. We can always be reached on Twitter, and you can send an email to [email protected]. We will be sure to pass your note around. Thanks again to everyone who makes this show possible, and as always, Thanks so much to Katherine and Jigar. Katherine, happy holidays and happy new year.

Katherine Hamilton: Thanks to you too. You guys have been amazing, and it's fun to talk to you every week.

Stephen Lacey: Absolutely. This is my favorite part of the week, as I always say. Jigar, same to you. Hope you close out the year well.

Jigar Shah: Thanks. Oh, and one other thing. We forgot to mention the biggest business deal of the year, the acquisition of GTM by Wood Mackenzie.

Stephen Lacey: Absolutely, plays into the trend of the big energy companies. Obviously Wood Mackenzie serves the top 100 energy companies in the world, and they're really interested in getting into the renewables space. So, a good marriage for us, and this podcast stays the same within that partnership, and we're going to continue to help you understand everything that's going on, both in fossils and in renewables.

With Katherine Hamilton and Jigar Shah, I'm Stephen Lacey, and we are The Energy Gang, a production of greentechmedia.com. We'll catch you in 2017.