Chris Elrod is a renewable energy entrepreneur. His firm, Treaty Oak Clear Power, builds large photo voltaic tasks that present electrical energy for giant companies and utility companies.
It’s growth instances for electrical energy mills because the likes of Google, ChatGPT, and Amazon scramble for dependable sources.
How, precisely, does an organization construct a solar-generating plant after which promote the electrical energy to finish customers? I requested Chris these questions and extra in our latest dialog.
Our complete audio is embedded under. The transcript is edited for readability and size.
Eric Bandholz: Who’re you, and what do you do?
Chris Elrod: I’m the CEO and co-founder of Treaty Oak Clear Power, a renewable vitality developer based mostly in Austin, Texas. We construct giant photo voltaic and battery tasks that join on to the grid and energy enterprise customers and tens of 1000’s of houses. I’ve spent about 20 years within the vitality trade, primarily in challenge finance and large-scale infrastructure.
Earlier than Treaty Oak, I co-founded AP Photo voltaic, a Texas-based agency targeted on utility-scale photo voltaic tasks. After seven years, we exited the corporate, and my companions and I used the proceeds to type Treaty Oak with a broader mission and bigger geographic footprint. We launched in 2022 and offered the corporate to Macquarie Asset Administration, a non-public fairness investor, in the identical yr. I proceed to guide the enterprise as CEO.
It’s been a journey from early company roles to scrappy two-guys-in-a-truck entrepreneurship to operating a PE-backed nationwide developer. Each step has sharpened our strategy to constructing and scaling renewable infrastructure.
Bandholz: How huge are these tasks?
Elrod: They’re fashionable energy vegetation unfold throughout 1000’s of acres. We safe land, get hold of entitlements, construct the technology infrastructure, and combine the tasks into the grid. Electrical energy demand, as soon as flat for years, has surged on account of AI and industrial onshoring. The grid wants much more technology, and large-scale photo voltaic and storage may be deployed at velocity and scale.
This yr, we’ll elevate roughly $1.1 to $1.2 billion in third-party capital. About $800 million will finance two Louisiana photo voltaic tasks, with a 3rd below building in Arkansas. Collectively, they symbolize roughly 500 megawatts [the equivalent power needs for roughly 400,000 homes per year].
Bandholz: Stroll us via the financing of a big photo voltaic set up.
Elrod: Mission finance depends on predictable long-term money flows. Photo voltaic property sometimes have a 40-year helpful life based mostly on warranties and expertise. Battery tasks run about 25 years due to cell degradation. Lenders don’t lend for the total period. They often analyze an 18-year window and decide whether or not they might get better capital.
Most tasks refinance round yr 5 of operation. Lenders need compensation earlier as a result of their funds aren’t structured to carry fixed-rate debt for many years. We pay down a portion via scheduled maturities after which refinance the remaining. Lengthy-term rates of interest, not short-term, drive our financing prices. The first lenders on this house are giant European and Japanese business banks.
Most offers use a membership construction the place a number of lenders share the debt equally to stability threat. An alternative choice is underwriting, the place one or two banks decide to a big preliminary ticket and later syndicate parts to others. It speeds execution however prices extra.
We’ve gone hands-on, working instantly with a number of lenders as a substitute of counting on a single underwriter. It requires extra effort however provides us higher management of phrases and relationships.
Between debt and fairness, it’s primarily a cost-of-capital determination. Rates of interest are nonetheless a number of proportion factors above 2022 ranges, which impacts infrastructure returns. Even so, debt stays cheaper than fairness as a result of shareholders require larger returns. So long as challenge fundamentals assist it, debt is extra environment friendly and preserves fairness whereas enhancing total economics.
Bandholz: How do macro occasions reminiscent of tariffs and provide chain disruptions have an effect on your tasks?
Elrod: We monitor macro elements continuously — rates of interest, regulatory shifts, and particularly tariffs. Tariffs convey actual uncertainty. Some insurance policies could serve a strategic goal, however others have an effect on parts that the U.S. can not but manufacture on the required scale or price. Volatility is essentially the most difficult side as a result of tariff actions can change rapidly.
We shift threat to prospects and suppliers the place doable, and keep agile. If coverage indicators recommend a tariff may hit, we could speed up procurement or import parts early. It’s much less about an ideal technique and extra about knowledgeable, speedy adaptation.
Photo voltaic panels are a big price driver, however so are metal pilings, racking programs, copper and aluminum cabling, and engineered supplies. Some manufacturing exists within the U.S., and extra will develop, however not sufficient to fulfill present utility-scale demand on the required value or high quality. World provide chains stay important.
Tariff threat is precisely why contract construction issues. We are able to’t decide to pricing and later take in sudden price will increase that get rid of challenge margins. We’ve averted that to this point by locking in supply-chain phrases early and retaining buyer pricing steady from the beginning. Our objective is to defend prospects from volatility whereas defending shareholder worth. That requires fixed coordination, nimble procurement, and efficient threat switch.
Our prospects — main companies and operators — want dependable, clear energy to assist accelerating electrical energy demand. Photo voltaic technology mixed with storage stays the quickest, most scalable resolution.
Bandholz: How have you ever constructed your group?
Elrod: Our energy markets group manages gross sales end-to-end. They determine prospects, reply to requests for data and proposals, submit tasks, and run procurement and communication. I assist them, however they lead the method.
Our firm has grown from about 17 folks once we offered to Macquarie in 2022 to over 100 at present. Constructing the proper tradition has been important. Our message is “execute with excellence,” and which means staying vigilant throughout each a part of the enterprise.
Hiring has been difficult. Put up-Covid labor dynamics and the U.S. Inflation Discount Act in 2022 elevated competitors and wage strain. We typically employed too rapidly to fill roles. Now we use structured scorecards for senior positions, with clear standards aligned with the corporate’s aims. Our folks and tradition group works carefully with hiring managers to make sure every candidate is the proper match. We keep transparency and quarterly efficiency alignment to maintain groups targeted and accountable.
The U.S. nonetheless affords monumental alternatives. Demand for electrical energy, infrastructure, and clear technology is increasing quickly, and the market has the capability to assist substantial development.
Bandholz: The place can folks attain out to you or get recommendation?
Elrod: Our web site is TreatyOakCleanEnergy.com. Attain out to me on LinkedIn.
