Interview with Dan Shugar, CEO and Founder of NEXTracker

Catherine: I’m Catherine McLean Founder and CEO of Dylan Green, and today I have with me the Daniel Shugar, founder and CEO of NEXTracker. Thanks for joining me Dan. 

Dan: My pleasure, thanks for the invitation. 

Catherine: You have an impressive background, from early years at PG&E, President of Powerlight, President of systems at SunPower, to CEO of Solaria Corporation, to founding NEXTracker. You’ve also been dubbed the King Midas of solar. What would you say was the most critical factor in your career success? And what is some advice that you can give to others?

Dan: I really appreciate that, we’ve been really fortunate with how things have worked out. I’d say, if I may, there’s maybe three factors. The first is having a vision and a purpose for existing that’s something bigger than making money for yourself or for a shareholder or something. Through all those companies that I’ve been fortunate to be aligned with, folks that shared the vision about – Hey, we want to mainstream solar, we want to make solar the largest source of energy generation in the world and we want to contribute to clean air, clean water, and leave the planet in a better place. Having an organizing mission, but in order to do that you need to make money because you have to get to scale and you have to operate a business responsibly. The second thing would be to focus on customer value. Having lofty ideas is great, having a product concept is fantastic but what’s really key is relentlessly delivering customer value where it’s enabling them to help them grow their business and being very tuned into what that is. So through all these companies, and at NEXTracker, we’re really focused on ‘How do we deliver on customer value to help them succeed while we are fulfilling our mission.’ The third leg of that stool, for building successful businesses, is really around the team and around the relationships you have with your team. You want to hire great people and you want to cultivate great people, and give people space to achieve their full potential, to let the best idea not the loudest voice win, to have a functional organization where you keep improving and getting better. Through these companies we’ve been able to cultivate a culture that allows that to grow and allow everyone to achieve their full potential. By doing that, people also feel like you have their back and you encourage them to take risks, that if they don’t succeed you’re going to back them up and make sure the customer is supported. Sorry for the three part answer, I think those would be our ingredients. 

Catherine: That’s great, I really appreciate that. I know that NEXtracker is involved in Renewables Forward, which is a CEO-led Diversity Equity Inclusion and Justice initiative alongside other organizations like Sol Systems. Can you talk about what specific work NEXTracker is undertaking as it relates to DEIJ?

Dan: Yes, I really want to compliment Yuri Horwitz, the CEO of Sol Systems, for catalyzing that particular industry focus group. I’d like to pull back, if I can speak a little bit of the context of NEXTracker. We operate a global business. We have people in 10 countries, which include India, Australia, Brazil, China, United States, and other places. Each one of these places has its own variant of the diversity inclusion and some of the issues we have seen in the United States, that really got amplified this year with the death of George Floyd and Brianna Taylor and others, so we have no ethnic majority in NEXTracker, which is part of the incredible strength of cultural diversity and it has made us a much stronger company. We’re starting from that place. What I loved about this program was that it was very action oriented, so to put specific processes in place so that we are part of the solution across the board, from reducing inherent biases that everyone has, to doing what we can to foster people of color in this country that have been systematically disadvantaged for generations. And to articulate a vision for, in particular we have this big mission to make mainstream clean energy, that we are also doing in a way that empowers those communities. We wholeheartedly appreciated and supported that program and have been working with our other collegial solar companies in this space. 

Catherine: That’s amazing, it sounds like such a great movement. I want to talk about all the work you guys have done with mentorship. According to 90% of solar employees surveyed, by the Solar Foundation last year, formal and informal mentorship is critical to advancement. Yet only 37% of clean energy companies specifically offer mentorship programs. NEXTracker is one of these. I want to know about the program that you’ve designed to connect female employees with mentors and the impact it’s had on business.

Dan: Right, thank you for the question. You started that by referencing Solar Foundation, which was started by Andrea Luecke, who’s a fabulous female solar industry entrepreneur and executive, I had the pleasure of serving on her board a few years ago. And the work that they do is really critical. I’ll touch on mentorship two ways, one is we try to provide some mentorship but we also encourage our people and female staff to be mentors. Let me just mention a few of the programs we have. A number of our top executives at NEXTracker are female, one of them is our incredible Vice President of Marketing, Kristan Kirsh, she in particular drove a lot of programs on the ground in our community and extended community to bring high school kids, kids of color, female students, to NEXTracker for mentorship and learning. We actually provided, let’s start there and we’ll keep building up. We had a program with a great organization from East L.A., called Girls Inc., where we had 50 kids come to NEXTracker. We have at NEXTracker an awesome facility called the Center of Solar Excellence, it’s both an operating solar power plant in our building, it’s a rapid prototype we call form fit function facility, we have a world class bifacial test facility there, then we have a public engagement learning center as part of that facility. So the kids participated in that component of it, and we have had, in addition to them, 500 high school kids in the East Bay area of San Francisco come through the program. We have produced Earth Day videos where the kids are actually speaking about what solar means and their vision on that. Kristan and our Vice President of Human Resources, Dorothy Serdar, started the NEXTracker Women’s Network, they’ve had a number of events, both in India in our Hyderabad office, in our Nashville office, and in Fremont. Actually in Fremont, we had the CEO of our parent company, FLEX, is an Indian woman, Revathi, she came and spoke and participated in that. Another thing that comes to mind is that for five years we sponsored the Women in Cleantech & Sustainability program, we have been a major sponsor. We’ve had some of our NEXTracker female engineers speak at that event, we’ve coached them and mentored them, sort of in a TED talk coaching way, and they’ve provided opportunities for them to speak, both in that forum but also in the industry. If you look at our materials, we have tried to actively promote our technical staff, both to give them the opportunity for career development and being ambassadors for NEXTracker as well as then encouraging the next generation of young women engineers. 

Catherine: That’s amazing, oh my God! Congratulations! It sounds like really admirable work. I want to switch a little bit to your music, that I know is really important to you. You’ve previously said that having a great company is like having a great band. And you want to give space for everyone to contribute and listen to what is happening. So tell us a little bit about the band you formed, SPI the Interconnectors, and some examples of how you’ve seen this metaphor play out at NEXTracker. 

Dan: Sure, that’s a key passion, thanks for the question. There is a quote that we believe – if you listen to great improvisational music, the best of it happens when people are pulling back and then riffing off what each other doing – and it’s the same thing with innovation so there are some real direct analogies. A good friend of ours, Johan Alfson, and his colleagues founded the Solar Battle of the Bands about 10 years ago. And that has been a great way to bring the industry together. We wanted to build on what they did and take it a little bit further to the next step. So a few years ago we supported the CALSSA, which is California Solar and Storage Organization, at a fundraiser and they took over Solar Battle of the Bands. We actually sponsored at the War Field, which is the best venue in Northern California, it holds over 2000 people and we packed it to capacity with solar executives and engineers and everybody in the solar industry. So instead of a Battle of the Bands, after that we put together a program, sort of a galactic solar jam and improvisation session. We had 15 musical artists from a range of solar companies, everyone that put their hand up and wanted to participate we found a space for them. We organized the program, I had the privilege of serving as musical director, and we were able to incorporate, we did 8 or 10 songs over about an hour and half, and put together, with no rehearsal, this live performance in front of 2000 people, it came together nicely, we produced it, and that’s out there on YouTube. So from that, we created this band, the rhythm section at the end, we called the Interconnectors, we have Adam Dietrich from Solaria, and Tom Yancy from Renew Financial, and TJ who is CEO of Inovateus Solar.

Catherine: That sounds awesome! I wish I could have been aware of that when I went to my first SPI last year. 

Dan: Well if you type “Interconnectors Solar Warfield” on YouTube, I am sure that that gig will pop up.

Catherine: Well, it is Friday night, it will be my Friday night anthem. So I want to talk about this global presence that NEXTracker has. You guys are everywhere, from Mexico to India, Spain, China, Latin America, Australia, and I have also read about NEXTracker’s recent deal in the Middle East. Congratulations on that. So what is the secret sauce, and how have you guys become so successful in the pandemic?

Dan: I really appreciate that. Our DNA, even for our companies, we were always a global company, we basically go where the market is, listen to the customers, find ways to add value. Our mission, of making solar the #1 energy source, we can’t do it sitting home in the US. We need to do it here, definitely, but also do it in these other places. We have staff in 10 countries and we basically stood up these business units and were able to achieve and deliver very solid results. We are really focused on proven performance, so going into regions and then delivering a successful project, having a good experience, and then, within that market, having the customers being our ambassadors. There’s nothing better than to build on success, than to start with success. For example, I will share a specific region and story. It was over 5 years ago, we were competing and helping a customer develop the first large project in Australia. It was a 70 Megawatt project called Mauree, and we were just coming out with commercialized self powered trackers, and what that means is that the tracker doesn’t need to be connected to the grid, it has its own solar panel which powers it, which is possible in our case with a really small solar panel because our systems balance it uses an order of magnitude less energy than most of the other designs. So we were just commercializing that, and the customer really wanted that because it would save them a lot of money in running AC power out to the field, amongst other benefits. That system is 7000 miles from our corporate headquarters, down in Australia, but we made the decision to go ahead and support them and fulfill that order. And we have recently received another very large repeat order from that same client. On the same site, there was also a very unique situation, the soils on that particular site, in parts of Australia, they have this expansive clay, and if you drive down the street in some of those areas you will see the telephone poles or power poles are not vertical, they are all different angles because of this expansive clay, so in order to save a very deep, like 20 or 25 feet deep foundation we found and worked with a local partner and developed sort of a screw anchor foundation and so forth. So, I just use that project as an example, the client had a need, they wanted to hit their budget and achieve their financial return, we needed to solve the issue about running AC power out to the field, and we needed to solve their structural and geotechnical engineering problem, and we came up with solutions that worked, and we have stood by them and we are continually recognized with repeat business from those customers. And every project is like that, we are asked what’s your secret, and there’s no basics, it’s about delivering value, creating expectations, meeting those expectations, if you make a mistake or have a problem then fix it quickly and be transparent about it and then the customers love you even more. Our team, we have invested in processes and systems to be able to keep really exemplary metrics, while we keep innovating with the product. It’s essentially innovation combined with fierce customer loyalty and service, that has been our approach.  

Catherine: What I learned from that story is it’s coming out with reasons to say yes instead of reasons to say no to customers. That’s a great story. So the next question is on clean energy jobs and policy. You’ve said before that SEIA’s vision of 20% solar power in the U.S. by 2030 will save U.S. rate powers over $10 billion dollars a year, while creating hundreds of thousands of additional jobs. You also recently testified, on behalf of SEIA, to the National Resources subcommittee on energy and minerals, about how we can cut the red tape to create more clean energy jobs. In short, how can we accomplish this? 

Dan: There’s two pieces, and thank you for the question, one is the public lands piece and the other is what do we need to do with solar policy to keep it going. First, let’s start with solar power is the lowest cost way to generate power in most of the world today. That is a very powerful statement. If you talk to people about solar, everyone is supportive, but I think two years ago when solar may have been more expensive than traditional and polluting power, that’s not the case now. I’ll just throw out some specific examples. Public knowledge, many years ago, about 3 or 4 years ago, we did the largest solar power plant in the western hemisphere. Our customer was NL, it was an 835 megawatt plant in North Central Mexico, that went in with no subsidies of any kind, they aren’t available in Mexico. NEXTracker manufactured and with our partner Swinnerton did the installation of that project as well. We installed 100 megawatts a month for 9 months in a row and that plant started generating power six months ahead of schedule. And the price of that power is about $35/ megawatt-hour, which is 3.5¢/ kilowatt-hour, which compares to double that for new coal today. That was 3 years ago, today large projects are going in for under $20/ megawatt-hour in places like Dubai. You mentioned the project in the Middle East, we were just awarded a one gigawatt project in Dubai by Aqua Power, which is the largest developer in the Middle East. As a matter of public record on that, the rate was under $17/ megawatt-hour. Large projects are being done in the US, it’s a little more expensive in the U.S. because we have tariffs on solar panels, so in the U.S. you can think of about $24/ megawatt-hour for a very large project would be a typical rate. So, even assuming no additional cost reduction, I have worked with the CS staff, and we analyzed based not on what new fossil is, which is a lot more expensive, but based on the old stuff, the old coal, the old nuclear, the old gas, which is on the grid, which is lower cost because it has been amortized, substantially amortized, paid off, the average cost of power in the grid, according to the US Energy Information Administration was in the mid-$30/ megawatt-hour range. If you compare that with where actual firm contracts are being sold over the last year in the U.S., for solar, and you do the math, which we did, going from where solar is today to 20% of the grid will save over $10 billion a year. While we are creating incrementally, to the 250,000-300,000 jobs we have, many more hundreds of thousands of jobs. We didn’t do the exact math, but we would probably triple or more the size of the solar employment in the U.S. while we’re contributing to clean air, clean water. While we’re enhancing national energy security and making our businesses, factories and manufacturing products more competitive because the cost of the power is lower. I thought it was very important when, given this opportunity to testify in the Natural Resources Committee, to really articulate, this isn’t just a clean energy story, clean air and jobs story, but it’s also let’s save over $10 billion dollars a year story. While we’re doing this all we’re going to save a ton of money and we are going to create additional value-added manufacturing content in the United States. And we are going to create local content in a variety of sectors: the financial sector, the services sector, the power electronics sector, other areas. So we started with that, and then it was like, OK what are the specific policies, it’s sort of happening but how do we build on that and really achieve the full vision. We basically said the policies are: #1 the only real major incentive solar has in the United States today is the investment tax credit. There is a 26% investment tax credit, the problem is that in light of Covid and the significantly lower tax rates that happen with the tax bill that happened last year is that there is not a whole lot tax being payed right now. In th past, during crises like Covid or economic recession, a proven policy, bipartisan supported, is to a refundability or a direct pay. So instead of a tax credit you do the same thing but you actually get a check if the tax equity is no longer available. We put that forth as the top policy initiative. Secondly, we thought that because we have lost a year with Covid, let’s extend the ITC by a few years to help build on our success. We talked about transmission and some other things that are available at our home page which is www.NEXTracker.com. I do a blog there and our policy is supported. So we hit the big policy initiatives and we were speaking not only behalf of NEXTracker but the solar industry and we aligned with some of the major solar developers. Now specifically with the lands piece, as it relates to solar land, the Bureau of Land Management, which is a large federal agency that controls over 200 million acres that is predominantly in the seven western states which are really sunny. The existing rules, there’s essentially a couple problems with those: 1) the rates being paid by developers are much higher than the value of that land, 5-10 times higher. We propose a simple fix for that. The other thing is that it gets reset every 5 years, so developers don’t know what they are going to pay, so basically a project less than 10% of development of solar is happening on public lands, which is bad because we want taxpayers to receive royalty income for those and we want those lands available. Some of those lands have much less value than private lands or agricultural land, we want to use those lands in an environmentally responsible way. So we proposed some very simple pragmatic, common sense approaches, which are let’s set the value of that land based on what grazing leases. So if you are going to lease that land for grazing, those values are known, how many dollars per acre per year, those values are known what they are for grazing. Because the Natural Resources Committee typically historically supported an extraction industry, to pump oil out of the land or mine something out of the land, which is a depletion mentality. They have a different loyalty structure than they are for something that sits on land, which is not depleting anything, it is just collecting the sunshine which would otherwise fall on the land. There was a lot of partisan bickering on that call, it was like ‘things happened in prior administrations,’ and I’m like look guys, it’s been 4 years, so let’s just come together, put some common sense policy in place and get on with it to start leasing out this BLM land, and instead of a 3 year plus process, let’s get it down to a 6 month process with some common sense rules. And taking what we’ve learned about environmental best practices for siting projects and applying that to that 200 million acres. 

Catherin: That’s really incredible work and thank you for doing that for all of us, not just in the solar industry but globally it is such an important thing in so many different ways, as you have highlighted. So thank you for fighting that fight. The last question we have today is, I want to talk about your son, David, who is also an incredible man in the solar industry. Recently he ran SEIA’s webinar focused on voter engagement. So why is voter engagement this season so critical for clean energy growth, and what are some of the ways SEIA is facilitating greater voter engagement?

Dan: Well thanks, I really appreciate that. I think what folks, pretty much anywhere, would agree to is that if folks participate in the democratic process that is a good thing. David Shugar, my son, runs our family foundation, and we partnered with a number of other companies, entrepreneurs, and the Solar Energy Industry Association to talk about voter participation and voter engagement. We want to enfranchise especially younger people, people of color, and people in disadvantaged communities to be part of our democratic process. We did a webinar with SEIA, last Friday, it’s available on their home page, or you can contact us at NEXTracker and we will make that available. We put forth a number of excellent organizations that we’re supporting that are making that happen, such as the Voter Participation Center, Black Votes Matter, the National Redistricting Organization and so forth, to ensure that folks that want to vote are able to do that and do it by mail, especially in light of this pandemic situation we’re living through. So it’s very practical stuff, we’re like hey we’re going to ensure that people get it by mail —- , and if a ballot comes to their house and they fill out and send it in. But it’s bipartisan, it’s not focused on a political party, and we put a tremendous amount of effort on that this year. And we are appreciative of everyone supporting that. We also think that it really is a great way to address the issues which have happened with people of color and disadvantaged communities because to the extent that they have political engagement, political power, they will be better treated in society. So we think it is a double win for both clean energy and for addressing some of the issues which have been raised in the Black Lives Matter movement and some of the other movements. That’s what that was all about. It was a very educational webinar, in terms of understanding the process and where things stand, and very thoughtful, we had a number of guests on that program. I’d encourage everyone to look at that. 

Catherine: Well, thank you so much for your time Dan. I really appreciate it. 

Dan: My pleasure. Thank you very much for your program. I’m a big fan. And for the opportunity to participate, Catherine.