Nat Bullard is known for his research and reporting in the clean energy industry. He has spent almost 15 years analyzing the market and informing everyone from senior executives to the broader public about how the industry is evolving. Like H.G. Wells, he’s a prominent, forward-looking thought leader, who has devoted his talents to advancing one of the most critical causes of our time — the development of clean energy.
In this Solar100, Nat weighs in on his experience researching the industry, how solar technology has evolved over time, his predictions for battery storage and hydrogen, and his advice for young professionals.
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RICHARD MATSUI: Starting all the way back — I know you studied art history and architecture as an undergrad, then went on to a graduate degree in international studies. Can you walk me through that career arc and how you landed at BNEF?
NAT BULLARD: Yes, I studied art history as an undergraduate. I picked that major, because it was a small department, and I was able to get a lot of face time with professors. The major also focused on what they called “formal analysis,” which is a structured way of inquiry. I realize it sounds like an unusual segue into thinking about business, but it was actually quite useful – a structured way of looking at something, considering it, and describing it. It would have been a fine background for a management consultant (and I had classmates in the department who did just that). But I ultimately decided I didn’t want to be a business or management consultant, so I took a job as a teacher at the American International School in Cairo instead.
I returned from Cairo thinking I would study international affairs or international relations development, but I also realized I wanted to focus my studies on something measurable. In my case, that ended up being energy trade growth, and that’s where I ended up in graduate school.
When I graduated, I was looking for a job and I did not have the traditional technical skills that someone would need to work in energy at the time. Most people came from an engineering background, a physics background, or a finance background. However, I was one of a few people that had a background in development economics and climate science, which was useful in the fast-changing part of the global energy sector, so I managed to get hired by Ethan Zindler and Michael Liebreich, at what was called “New Energy Finance,” based in London (I worked from DC).
The trajectory for me and for our research firm followed a familiar arc: I focused on solar, we got acquired, and we became part of a much bigger company, Bloomberg. That’s when I moved to San Francisco, and then I continued to broaden out my research from there — more content direction roles, overseeing some of our custom work, and later four years of living and working in Asia before returning to the U.S.
MATSUI: Is that where your focus remains today?
BULLARD: I would say my role is divided into three equal parts. The first is our management committee. Our group has a small management committee, since the whole company is roughly 250 people. We support the business of BNEF, the research group. There is another third that is external facing, which includes channeling our work for senior clients into materials like a board briefing or a Bloomberg event. Finally, the last third is my weekly writing.
I developed that last part about seven years ago now. We were discussing new projects and my team asked me what I wanted to do. I said I want to write an email to people, but I want to send it to them on the weekend and I didn’t want to send it to everybody — I want to send it the boss of the people that we typically worked with. So, we put together a weekly briefing for executives that I sent out on Saturdays. I started out with a distribution of about 175 people, and it’s now grown to 160,000.
It’s hard to keep good information bounded, so we opened it up with subscriptions and then eventually moved to Bloomberg Opinion. Then about two years ago, Bloomberg began a new editorial vertical called Green, and the editors asked if I would join that vertical instead. That’s where we’ve been since then. Today, the email still has my name on it, but it includes a broader package of topics that we write about, including transportation, climate, finance, climate science.
LESSONS LEARNED & CURRENT TRENDS IN SOLAR
MATSUI: Over those years you’ve written about so many different angles on solar. What are your thoughts on how far we’ve come as an industry and what are the latest trends you’re seeing?
BULLARD: I’m perpetually trying to determine how far along the journey we are. I often try to think about the electricity sector in the United States as a whole and how renewables fits into that story. On the renewable energy side, for wind and solar specifically, we’re at about 10% of the total electric capacity. So, on a linear basis, there’s 90% of capacity left which might become wind or solar.
Now, we may run into limits of exactly how much of that capacity becomes renewables, because it’s not going to necessarily be 100%. Part of figuring out how much capacity becomes renewables hinges on whether we’ve done the groundwork to substantially decarbonize the global economy through other means.
In terms of the latest trends, something I wrote about recently is the slowing of
“asset rotation” in the industry, which essentially means projects are changing hands less. This is happening, because the stable returns from renewables look positive on a balance sheet and companies are increasingly able to refinance their assets advantageously – some with the help of your Solar Revenue Put — to gain more capital without actually selling the project. It’s unclear how this will impact the industry in the long-term.
MATSUI: Any surprises, from the research?
BULLARD: Solar provides a very particular lens on thinking about the energy transition. It’s a field with an extraordinary amount of aggregate success and an extremely high specific failure rate. If we think about many of the companies that we would have dealt with a decade ago, more likely than not, they no longer exist due to acquisition or exiting the industry altogether.
Certainly, the history of the solar business was the aggregation of millions of marginal transformations, but it was generally the people with a bit of a crazy vision and the skills to implement that vision that succeeded. In retrospect, I think many companies survived by having allocated part of their vision to a particular part of their staff. Good developers were generally agnostic about technology, but absolutely rigorous about location, planning, permitting, money, all those kinds of details and making sure they had the right people to execute on them.
MATSUI: As a market watcher, what makes for good business in the renewables industry?
BULLARD: That’s a great question. One of the advantages of solar and wind is that you might have locked up some land, but that does not preclude other people from employing sun or wind – it’s not an exclusive resource. However, being early is definitely beneficial. Being thoughtful about where you build a pipeline is good. Having capital helps, especially the ability to recycle capital if you’re an asset owner. Creditworthiness is big. The things I’m describing here are rather dull in the sense that these are attributes of other industries as well, like the real estate business.
MATSUI: Relatedly, what do you think makes for a sustainable competitive advantage that one can have in solar? Is there such a thing?
BULLARD: It’s a fundamental question. I think the combination of balance sheet, domain expertise, and human capital helps determine a company’s competitive advantage, although I’m not sure that any advantage will be perpetual. I think this sector as a whole has, outside of probably wind turbines, relatively little durable competitive advantage at a company level, but the renewables industry and solar, in particular, is still so young and a lot can change.
MATSUI: You’ve been watching the industry for a long time. Can you remember times when people in the industry were right or wrong about where the industry was headed?
BULLARD: Yes, definitely. Over a decade ago, everyone – including myself — believed that solar thermal would win out in power generation versus solar photovoltaic (PV). They were competing architectures and competing logics, if you will.
Solar thermal was a solar inflected version of industrial architecture. Downstream of the solar field, you basically maintained the same thermal-energetic system, so everyone in the sector was familiar with how that worked: you had a lot of things that were hot, you had things that rotated, and you had things that needed integration. The pitch for solar thermal was that the plants were very reliable and the grid operator could treat it like a gas plant.
On the other side was PV. PV was run with batch manufacturing in the early days, and then later on small scale manufacturing. It had measurable unit success, so you could look at each plant and measure cost and efficiency. The pitch for these projects was that the plant will be able to deliver some significant savings in time on large pieces of unused land.
As we know, PV won, because you could measure it, and it had a lot of visible iterations. Also, frankly, you had a lot of good sharing of information. We were able to find out more information about what was happening in the PV world.
In short, there was a competing logic of high frequency, low latency development on one side with mega projects on the other [solar thermal] side. It's been ten years now, yet I still return to this as my durable learning on logic — Megaprojects versus high volume manufacturing.
My other lesson from the PV versus thermal debate was about being perpetually on the margin. PV is the marginal new unit of power in almost any power system in the world right now. That means that it can be built at whatever scale is needed at the time and place – be it a gigawatt of capacity, or a module on a roof. That position, being on the margin, is a great place to be! You have the chance to try new things, to provide new products and services, to meet incremental demand growth and displace retiring capacity.
MATSUI: What other innovations do you think enabled the growth of solar?
BULLARD: One of the biggest innovations happened in the polysilicon industry. Around 2004, solar panels were essentially using the offcuts of the semiconductor grade polysilicon industry. People started buying polysilicon at 5 or 6 “9s” purity levels for solar, rather than at 13 “9s” purity levels for chips for computers. The polysilicon product for solar was technically an inferior product, but the industry used it. It started as a small piece of a high-margin business, then became a separate business where that “inferior” product was being produced intentionally. The story of polysilicon and solar is a very classical disruptive innovation in that way.
Back then, solar only made up a small part of the polysilicon industry. I remember when we developed a tracker to identify when solar became the main driver on a volume basis for polysilicon. It was a while ago, but interestingly, we saw a similar pattern happening with lithium-ion batteries rotating their main demand driver from consumer electronics to vehicle applications.
PREDICTIONS FOR BATTERY STORAGE & HYDROGEN, THE NEXT FRONTIERS IN ENERGY
MATSUI: Has developing a framework for solar’s growth helped you in your other, more current iterations of technologies in the Energy Transition?
BULLARD: Absolutely. I’m always thinking about the governing laws for different aspects of the industry. For instance, the wind sector has one set of governing laws, manufacturing has another, and so on. So, the companies that were the leaders in wind turbine manufacturers a decade ago are still the leaders. There are new ones, but there is sort of the industrial logic that that process hasn’t changed. As we look at the new technologies that are arriving, it’s worth us asking how they compare to existing technologies.
That kind of interrogation helps me think about the future of emerging technologies, like direct air capture. For example, I often ask myself questions like, “What’s the future of direct air capture? How many direct air capture units are we going to build? Are we going to have 200? 2,000? 200,000?” Any of those figures might work and they may even have similar economics, but the logic of getting there and the ownerships behind them will be very different. That’s when I use the PV-thermal metaphor I described earlier.
Lately, I’ve been using that line of thinking to investigate hydrogen specifically.
MATSUI: What’s your take on how hydrogen will unfold?
BULLARD: I think what’s going to be the most interesting aspect to watch is the margin of competition, similar to solar PV and thermal. Three years ago, most people thought heavy-duty trucking would likely be molecular (e.g., liquid fuels), because that’s how we would energize these kinds of vehicles. What we’re now seeing, though, is that the molecular side does not move as fast as the electron side (e.g., electricity). So, now we’re seeing manufacturers producing high volumes of batteries and providing me a forward curve of what the batteries are going to cost in the future. This kind of behavior is obviously going to support the growth of the electron side and I think that’s where the industry is headed today.
CARRER ADVICE FOR RENEWABLES
MATSUI: What advice would you give to someone looking to get into renewables?
BULLARD: There are a lot of companies in this industry – both established and start-ups. So, my advice for people entering this sector is to ask yourself what needs to be true for the industry to thrive and from there, narrow down where their time and talents may be best suited.
So, I’m looking at a company, a technology, a sector. What needs to be true for it to be net zero emissions within its domain? Is that a question of science, a question of policy, a question of money?
Take policy for example. What kind of policies do we need to enact? Does the industry require a national net zero standard? Does it require a tax benefit? Does it require land access? Does it require intellectual property regulation? Then on the technical side, does it have a learning curve that we can measure, or might it? And again, back to my industrial logic, are there a small number of very large things, or a very large number of very small things that are going to make the industry move? The other factor to consider is competition. And then one might consider the type of people that are going to be attracted to this work.
Asking these questions can help people figure out which companies to target in their job search. There are lots of facts that need to be true for companies to be successful and impactful, and if you build it up your case in an evidentiary way, then I would encourage someone to try it out.
