YouSaid · the spoken record

Jigar Shah

lines on the record: 62
first: 2023-10-06
most recent: 2023-10-06
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“And what we use that for is to put a loan loss reserve in place. So I might say our average loan is rated B minus, right? What you guys would call junk bonds. So by definition, when we issue the loan, we are saying that it will likely have a default of, let's say, maybe a 12% risk of default or a 22% risk of default, but it's not a 1% risk of default. And so then we put that much money to the side in a loan loss reserve. The Congress is saying you have this amount of money to quote unquote lose, right? And that's the amount that they allocate through a budget process. And what we've averaged to date is that we put aside $5 in loan loss reserve for every dollar of actually realized losses we've had. So we put together roughly $5 billion of loan loss reserves and we've lost about $1.05.”
2023-10-06 · Odd Lots · Jigar Shah on the Pathway to Clean, Cheap, and Abundant Energy · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, a prophet is a very strong word, right? Because we don't really make a profit in the government. So I don't think about it that way. I think the way I think about it is Congress gives us a couple of things. So let me just maybe help you understand how the money flows. So, you know, when we give somebody a loan, the U.S. Treasury Department theoretically issues bonds and then we issue that loan. So the US government has to pay back those bonds. And so there's a certain cost to the U.S. government of that thing. So if I'm charging someone, U.S. Treasuries plus $37.5 basis points, which is a lot of our loans are at that rate, then the money I'm getting in for the U.S. Treasury bond coupon, I'm not viewing as profit per se, because that's just going back out the tour to investors. So it's a 37 app basis points that, you know, was coming in abovehand, right? Separately, the U.S. Congress gives us something called credit subsidy.”
2023-10-06 · Odd Lots · Jigar Shah on the Pathway to Clean, Cheap, and Abundant Energy · IDENTIFIED FROM THE TRANSCRIPT · source
“An investment banking profits on this, I'm not going to use my tier one capital for this, right? There's a bit of a friction, right? Because on the other side, you got the Federal Reserve and the OCC commissioners who are saying that looks like a risky load. We're going to make you put more tier one capital against it, right? And so there's lots of reasons why you have friction in the marketplace. But before we were active, most of these companies had to 100% equity finance everything. They would just have to raise a billion dollars in the marketplace and then do that. And you can imagine there's very few companies that could do that. So then we were restricting innovation and restricting it's getting commercialized.”
2023-10-06 · Odd Lots · Jigar Shah on the Pathway to Clean, Cheap, and Abundant Energy · IDENTIFIED FROM THE TRANSCRIPT · source
“passing up to the global financial crisis. For a lot of these banks, if they don't actually have investment-grade offtake agreements for some of these things, like I'll give you an example, like for a lot of these critical minerals projects, there's no history whatsoever for someone to say, you know what, I'll pay a fixed price for that lithium for 10 years. Generally speaking, it's like, well, whatever the lithium price is, we're going to benchmark to that price. Lithium has gone down by 45% already this year, right? And so the government is actually willing to take that risk because we know that we're going to have all these electric vehicles purchased over the next 10 years. The world's going to be short lithium. So even if in the short term, lithium prices went down. In the long term, you're going to need these resources. That formula under a bank's rules would require a huge amount of Tier 1 capital to be set aside for that loan. So you can imagine them saying, I'm not making”
2023-10-06 · Odd Lots · Jigar Shah on the Pathway to Clean, Cheap, and Abundant Energy · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a couple of reasons that I'll go through. One is the Department of Energy has 10,000 expert scientists and engineers on the platform. Most of the fundamental patents on these technologies were invented by one of those 10,000 people. So when you have a methane pyrolysis project like monolith materials that we gave a conditional commitment to in 2021, there's somebody at a national lab who actually invented it. And so when I go to him and I say, hey, you know, like, what do you think about this thing? Yeah, we've done like 18 demonstrations of this project and we think this will work and the way that they're approaching it's going to work, et cetera. There's nobody for JPMorgan to go to for that. They're going to be like, this scares the crap out of me. I'm not going to do this deal. And so you can imagine that there's a lot of technology risk that is perceived by the banks that we can actually manage because we have all these experts on our platform. The other piece of it though is that with the Basel III rules,”
2023-10-06 · Odd Lots · Jigar Shah on the Pathway to Clean, Cheap, and Abundant Energy · IDENTIFIED FROM THE TRANSCRIPT · source
“But I definitely don't feel pressure to put the money out the door. I think that the money should go out the door if it deserves to shut the door. We have 300 people who work for us at the Loan Programs Office, and so they are the ones actually evaluating and doing the work to get the loan to the finish line. I certainly have a lot of subject matter expertise, so I can be somewhat helpful. But honestly, the biggest part of my job is to get people to trust us, right? So getting the growth companies to trust us was something that was fairly easy for me because a lot of those people are my peers from my professional life. But getting the electric utility companies to use us, I mean, that was not an easy task. And now I've got to get the oil and gas companies to get to use us, right? And that's not easy at all. Many of them feel like they're going to.”
2023-10-06 · Odd Lots · Jigar Shah on the Pathway to Clean, Cheap, and Abundant Energy · IDENTIFIED FROM THE TRANSCRIPT · source
“A lot of that really means that we got to do a lot more outreach. We got to convince them that this is a place that wants them because you know how hard it is, right? I mean, you have to get permission from people. You have to get a permit. You have to get a governor who actually wants to put together an economic development package for you, right? And if you haven't done it in 40 years, then it could be that it's a little bit harder to do it here.”
2023-10-06 · Odd Lots · Jigar Shah on the Pathway to Clean, Cheap, and Abundant Energy · IDENTIFIED FROM THE TRANSCRIPT · source
“Next generation transmission lines or next generation hydrogen facilities. I mean, they were in a lab getting some like $50,000 grant 10 years ago. And then their thesis worked out, then they decided to get an A round and then a B round. Some of them may have spacked prematurely. I remember. And so, you know, I think that the goal for me is not to, you know, puff myself up, but to recognize that we have all these people and honestly, the ecosystem that we have in this country to take them from the technology works to connecting it to the American worker, building the facility here, doing all this stuff here. Frankly, we haven't done in 40 years here, right? I mean, most of our technologies went to Asia or went to Europe to get commercialized. And now I think with the inflation reduction act, it's sort of my job to convince them to use these resources to stay here and to do it here, right?”
2023-10-06 · Odd Lots · Jigar Shah on the Pathway to Clean, Cheap, and Abundant Energy · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, look, I think that when you think about my own background having started Sun Edison and then generate capital, I think I have a unique understanding on how this stuff works, which is that we have these extraordinary people who, frankly, bust their hump for 10 years in obscurity before they get to where the loan program's office can help them, right? When you think about a lot of these companies who have figured out green cement or green steel or”
2023-10-06 · Odd Lots · Jigar Shah on the Pathway to Clean, Cheap, and Abundant Energy · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think, so when I first came into office, it was roughly $40 billion of loan authority. Today, if all of our loan authority was used, it would be closer to $400 billion. We have no idea whether it'll all be used, right? So the largest program there is this refurbishment program, which is $250 billion. Interestingly enough, it really is taking off. So I think when we first started talking to electric utilities and oil and gas companies and others about using it, I think they didn't want any part of it. They didn't really see how it was valuable. Today, I think we've already got about $56 billion worth of loans either received or being actively prepared that we've seen early drafts of. So we are seeing a lot of interest in that program. And so, you know, whether we get to that number or not, we'll be determined whether that program is successful.”
2023-10-06 · Odd Lots · Jigar Shah on the Pathway to Clean, Cheap, and Abundant Energy · IDENTIFIED FROM THE TRANSCRIPT · source
“Old coal plants in terminal nuclear plants or old transmission lines and double them up or figuring out what to do with old refineries or tank farms. And so we have a much larger scope today. So we've got a lot more resources today.”
2023-10-06 · Odd Lots · Jigar Shah on the Pathway to Clean, Cheap, and Abundant Energy · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, thanks for having me back. The loan programs office was started in 2005, and the whole point of it was that for a lot of this technology that DOE is awesome at inventing, it tends to not be able to get commercial debt for commercialization. So a lot of these projects might be a billion dollar project. And going to get debt from the commercial markets for a first-of-a-kind project, you know, namely like, you know, the Tesla's first loan or some of the large solar and geothermal projects we did was just not feasible. But what's more interesting is today our remit's been expanded substantially. So it used to be we had this innovation bucket and then we had this vehicles bucket, basically. Today we have a tribal energy program. We have this energy infrastructure refurbishment program, right? So figuring out how to take”
2023-10-06 · Odd Lots · Jigar Shah on the Pathway to Clean, Cheap, and Abundant Energy · IDENTIFIED FROM THE TRANSCRIPT · source