An Interview About the Value Creation Calculator with Quest CEO Finn Findley
LT: We’re here today with Finn Findley of Quest Renewables. The date is Friday, June 23, 2023. We’re here today talking about Quest Renewables’ recent Value Creation Calculator. And I’m going to ask Finn to describe what this is. So, what is the Value Creation Calculator?
FF: So, this really started because we were talking amongst the company and with some of our customers about different ways our unique construction method benefits projects and sites, site owners, EPCs. They get benefits that aren’t necessarily reflected in the price of the system, and it was always difficult to communicate how valuable this is. What are the implications of the system for others? So, we started talking with our existing customers about where they’ve received performance benefits and we found that there are a couple major places, and one of those is overall cost. Often our materials for our racking systems cost more than other systems on a dollar-per-watt basis for just the rack, but typically foundations, installation, etc. are all less expensive with Quest and you end up almost coming out ahead. Because of this, EPCs can actually sell our racking for more so there is additional gross profit to them and it installs a lot faster which actually results in savings.
“EPCs can actually sell our racking for more so there is additional gross profit to them, and it installs a lot faster which actually results in savings.” – Finn Findley
To me that is the big innovation here, is understanding the value of being off the site a week earlier and what that does for cost and for risk.
LT: So how are you able to actually use the Value Creation Calculator as part of your process then?
FF: Well, the Value Creation Calculator really doesn’t have any value unless we are talking to a customer about what their experiences are, so it’s a good way to drive a guided conversation about how their solar racking carport projects worked in the past, what things delayed them, what were unexpected costs, and how we can reduce those uncertainties so they can be more confident in their budgets and more confident in their installations. It has everything to do with what our customers’ experiences are in their systems. It’s a tool that we use with our customers versus something we just send out with information. It’s driving a discussion.
LT: What I’m hearing here is that Quest Renewables’ products are so different from the traditional carports in the market, and this gives you a way to compare apples to oranges.
FF: The important part is that it lets our customers see how the process itself yields those benefits. So yes, we do something totally different. Our materials allow people to do construction on the ground which allows them to go faster, and uses typically fewer foundations. You can actually schedule the labor for construction, foundations, and electrical all in a much more efficient way which makes the project get completed faster, which is really great for the customers. It really gets around how the overarching process delivers those benefits.
LT: So as you’ve created the value creation customer and you’ve started to use it were there any surprises about the system and when you’re able to compare it with what customers have been doing in the past?
FF: Yeah, we’ve actually learned a lot actually in talking to folks about this. Because we’ve always said that installation labor will be a lot less, which is true. In the overall cost of the project it’s not actually all that much money, so if you say 4 or 5 cents in installation labor it’s not a lot. But it turns out there are so many other places you save money. That’s the first thing.
The other part of the money conversation is that a lot of uncertainty of cost is eliminated. Let’s say you’re building a system and you’re doing some Geotech, there’s always a risk that you’re going to find something that Geotech doesn’t pick up. And we have fewer foundations. So, our foundations typically cost a little less than others but you shouldn’t do it just for that, but because there’s fewer foundations overall. If you’re going to be a little bit off, having fewer foundations means less of a chance for things to go wrong and fewer foundations that are wrong. So it actually reduces your risk to that line item in the budget just by the nature of its design. And that really surprised us.
The other part that I thought was interesting that folks really focused on was what I call “productivity.” So as one person told us they estimate that building a carport requires $15-30k of overhead for every week they’re building it. So if you can cut several weeks out that’s a lot of money, and there’s cost you can take out of the project that has nothing to do with the rack or anything else. It has to do with other budget line items. It also means that you can go on and do other projects. Like if a construction crew were able to do a whole year of carports with a typical system, and a whole year of carports with just Quest Renewables’ solar carport system, a crew of 6 should be able to put 5 more MW into the ground using Quest’s carport systems because they’re that much faster. The carport system is a lot more efficient. It’s the same construction cost for folks, but almost double the productivity that you normally have in a team just for building those systems so it’s a huge difference for folks.
The third thing we saw that we saw that was interesting is around stacking. Because your foundation team, steel erection team, mechanical and electrical teams can all work in a way that stack together, you don’t have to wait for the first system to be up to move onto the next step. This can reduce the days on site by almost half throughout the whole construction period. This is something we work with customers on. How big is their crew going to be? What is the optimal way to schedule these things? How much overlap are you comfortable building into your schedule? So we can give them a sense of what to expect there.
Then finally the last thing we saw that really mattered to customers is you can build these with fewer people. And particularly right now in the area of electricians it’s challenging to find electricians so if you can build a megawatt with 2 electricians instead of 4 that’s 2 less electricians you have to source. You can work with smaller steel erector crews and still get done faster, you can work with fewer electricians and still get done faster. There’s a lot there in terms of just simplifying the project which again involves the other risk of people being out, bad weather. All those things get reduced when you use our systems.
What I think is most important about this is that the dialogue with our customers has been really informative to us and that’s been great because we look at the system every day but they see value in ways we hadn’t thought about.
LT: So, do the customers actually get to see the Value Creation Calculator?
FF: That’s right.
LT: Or is it more of a conversation driver directly with you?
FF: We do actually share the Value Creation Calculator with the customer and we walk through each area of assumptions. So, we start with inputs and materials costs, so the cost people are spending, or investment in our racking that gives them all these other benefits. Then we go through and look at foundations, speed, and all of our customers’ own assumptions about how this work gets done. So when we’re done we get a really good site-specific, project specific estimate and we get some good targets. We look at installation, crew size, labor rates, all those things. We look at potential risk from inclement weather based on inputs from customers. We look at electrical and the cost of having electrical work done on the ground instead of the air. And finally we look at how much time our customers, EPCs, construction folks, and developers spend. If they spend 10% of the year building a megawatt versus 20%, they can build twice as many megawatts in a year. We work through this with each customer exactly based on meeting them and what their facts are, and we see how it pans out in real-time.
LT: If a customer wanted to start this kind of conversation with you what kind of information would they need to have ready?
FF: Well so really mostly what they need to have is a site that we’ve been able to take a look at. We need to see the size and consider how we would attack it on our end, to get our assumptions lined up to that site. We would also need to set up a call and walk through the set of assumptions we have. This is based on, if folks have built a lot of solar carports they probably have a really good set of assumptions. If they haven’t built a lot of solar carports we can provide a lot of good assumptions. The nice part is, even by just going through this exercise our customers learn what are the typical industry performance metrics for performing solar carports. We’ve done it with enough people now where you can actually see how your productivity as an EPC or Developer compares to others in the market. It’s good because there’s learning for everybody in it and it’s always a really pleasant experience to learn how to make solar carports easier and more predictable to execute.
LT: So far have people typically brought new projects to you or do you ever do comparisons against maybe a project that an EPC did with someone else?
FF: You know most of the time we’re actually just talking about process versus alternates. People understand the benefits of the system and we’re just going back and looking at some assumptions for your budgeting to make sure you are safe. We want everybody from a financial standpoint to be safe. We want them to be comfortable that they’re going to make the amount of money they plan on making. That is an important part of what we work with customers on. We try to make sure everybody knows how it needs to work to meet performance targets, etc. and that’s a lot of what we do along the way. We help people achieve these goals through these conversations.
LT: Is there anything else that you would like to cover or that you want people to know?
FF: I would encourage folks to reach out to firstname.lastname@example.org if you have a project that’s in the 500kW and up range. This is where we typically see the biggest benefits in the calculator over typical systems. So, I encourage you to reach out to email@example.com and ask us to take you through the Value Creation Calculator. We can see what it does for you.