INTERVIEW: Scout Clean Energy CEO talks new projects and geographic growth
Scout Clean Energy is seeing 2024 “start off with a bang” as it pursues projects in three new states and looks ahead to adding 1500 MW to its capacity every year in the next five years.
Michael Rucker, CEO of Scout, told NPM that the development company is riding momentum carried in from 2023 with lots of growth planned for the future, including moving into a new office in Boulder, Colorado next week.
“It’s also the year where we are blossoming because we were acquired by Brookfield in 2022 and during the course of last year we spent a lot of time on integration, establishing governance procedures and a day-to-day relationship with our sponsors,” he said. “Things are fine-tuned.”
Since 2024 began, Scout has signed several power purchase agreements (PPAs), including its first solar project which is now in construction with panels having recently been delivered. The PPA for that project—Markum Solar Farm near Waco, Texas--is with Colgate. Scout also signed a PPA for a project in Texas for AdventHealth and is working to bring new counterparties into the mix.
A second PPA in Texas is expected to be announced shortly, as well as one in California in the CAISO market.
The California project is a combination of wind and storage, which Rucker explained is a rare hybrid. This is the Gonzaga project, which is fully permitted, contracted, and Scout is putting it into Notice to Proceed for construction this year.
“They’re hosting the wind farm we already operate there, and this one will completely replace that with new technology,” Rucker said, stating that the project will go from 17 MW to 148 MW of wind plus the new storage system.
He added that it will not be long until Scout announces PPAs for Gonzaga, and that “I can say, at least, is a CCA, California’s own form of quasi utility, more or less. We are looking to contract storage in those markets and Gonzaga will be our first storage project fully contracted.”
Coming online this year is Markum Solar. Scout is also planning to start construction on a total of 600 MW spread across three projects in three new states.
“Diversification in different markets is now hitting the ground,” Rucker said. “As a developer, we’ve always focused on diversification so have been involved in almost every power market but now some seeds we planted are yielding large-scale wind projects.”
These projects include one in Arkansas, which Rucker said is anticipated to be the first wind farm in the state. The other projects include Gonzaga in California, which is one of the largest wind farms in the Golden State, and another planned in New Mexico that Scout is working on securing a PPA.
“That is in progress,” Rucker said about the New Mexico project, adding that it will hit Notice to Proceed for its first phase before the end of the year.
Looking back at 2023, Rucker said that Scout’s projects did well and had relatively high pricing, particularly in ERCOT. He said the Texas market yielded quite a lot of revenue and Scout was happy to see that, “but those things change over time.”
Starting out in 2024, the winters have been generally mild in the southern US and Scout has seen a lot of solar coming online in Texas in particular, which has depressed prices in the course of the day, making Texas more and more like the California market.
“Going forward, I don’t think we’ll necessarily see the outlying numbers we saw for power prices in Texas in the last year,” he said. “It will probably revert to whatever long-term planning is.”
Market focus
Rucker said that Scout is always active in the greenfield and acquisition side, with a development pipeline of 19 GW in 22 states. Year-to-year, Scout puts plans together for what regions to focus on but generally tries to stay diversified in all markets.
Currently, Scout is bringing on projects it started in MISO Central and North where last year it added “quite a few” in MISO South.
Scout is also staying active in the Pacific Northwest, a region that is bracing for capacity shortfalls and where any new electric energy development will be renewables due to legislation up and down the West Coast.
“We are anticipating that and building into that,” he said.
Additionally, Scout is adding projects into the WECC, Utah in particular but also Idaho.
“We try to focus a lot of our greenfield capability on wind because not many developers are active in wind,” Rucker said. “The market tends to be short in wind and is a longer, more challenging process overall in terms of permitting and logistics, but we are also active in solar and bringing solar in all those markets. But as more solar is installed, wind for us becomes a differentiator and a valuable niche product.”
On the topic of M&A, Rucker said it is somewhat opportunistic with projects coming up in various regions. Lately, “a whole lot’ of solar projects have been coming up in ERCOT where there is a lot of turnover being seen.
One of the fastest growing regions out West, though, is the desert Southwest. Rucker said this is mostly driven by demand in Arizona due to growth not only from people moving in but corporations, including data centers.
“That is an exciting market and we are looking to serve that as well,” he said. “Throughout the region we are seeing a lot of demand, driven also by retirement of coal plants. Generally, WECC is one of the higher growth regions in the US so we are excited to work in WECC.”
Rucker highlighted Scout’s Power-to-X program which has a focus on the development in hydrogen markets and data centers. Right now, a lot of demand is being driven by data centers fueled by AI for example. Whether it is PPAs with those who own or serve data centers, Rucker said the tech sector will be a huge consumer of energy going forward.
On the topic of hydrogen, Rucker said the market is still pretty early. Though the 2022 Inflation Reduction Act (IRA) created significant and meaningful support for the market, the problem remains that there is uncertainty around guidance in how the market will be regulated and the fundamental demand for the product.
“Our interest is in providing green electrons,” he said. “We could do electrolyzers if the deal required it, but we have no interest in the marketing or distribution of hydrogen, so we are looking for partners to do that.”
Rucker explained that until the market develops, it will be a slow development cycle for hydrogen. However, he pointed out that it seems to be faster in Europe where there are tighter energy supplies.
Interconnection Queues
The interconnection queues remain a long-term challenge in the industry, Rucker pointed out.
“It seems no matter how many queue reforms we do, how many FERC orders we institute, the problem doesn’t get much better at all,” he said. “With so many applications and money running around chasing down projects and entering them into the queue, we’re seeing queue positions that vastly outstrip the installed capacity in these markets.”
For example, in California there are 122 GW in the queue waiting to enter the market while there is roughly 25 GW of existing capacity. Similarly, PJM has 164 GW of capacity and 68 GW of installed and ERCOT has 110 GW in the queue in a 75 GW market.
“The attrition rates in the queues are going to be very high moving into the future and that guides a lot of our thinking in terms of our strategies,” Rucker said. “Even though the queue numbers are so high, good projects will still get through. For us that means a lot of work on the front end to make sure any project we pursue is one that prevails in the end.”
He added that Scout is lucky in the sense that it is not a recent start-up but has a large portfolio of large active late-stage queue positions.
Looking ahead, he said that Scout is planning quite a bit of growth in terms of installed capacity. In the next five years, the company plans to get about 1500 MW per year in capacity additions.
The below NPM Interconnection Chart highlights Scout's pre-operational project pipeline based on NPM's market research.
*This story was originally published exclusively for NPM subscribers last month.
New Project Media (NPM) is a leading data, intelligence and events company dedicated to providing origination led coverage of the renewable energy market for the development, finance, advisory & corporate community.