Last week, in a move that took some by surprise, a leading designer and maker of solar products, SunPower, announced plans to buy SolarWorld Americas and its factory in Oregon, and build a domestic manufacturing presence. This move came after the Trump administration's decision earlier this year to impose a 30% tariff on most solar imports into the United States.
To discuss whether the Trump Administration's trade policy is working when it comes to solar manufacturing, and what an acquisition of SolarWorld would mean for the industry, host Bill Loveless speaks with Tom Werner, chairman and CEO of SunPower, on a new episode of Columbia Energy Exchange.
Tom and Bill discuss whether the tariffs are likely to trigger a revival in U.S.-based production, the outlook for solar power in the U.S. and government policies that support it.
View the transcript
Bill Loveless: Hello and welcome to the Columbia Energy Exchange, a weekly podcast from the Center on Global Energy Policy at Columbia University. I’m Bill Loveless. Timing is everything and that's certainly the case with today's guest Tom Werner. Tom is the Chairman, President and CEO of SunPower a leading designer and marker of silicon photovoltaic cells and solar panels.
The company is based in San Jose, California with manufacturing plants in Asia and Mexico, just one day before we met Tom announced that his company would buy SolarWorld Americas an Oregon company whose controversial trade complaint prompted the Trump administration to apply say 30% tariff on most solar imports earlier this year. Tom fought the trade case brought by SolarWorld and another company Suniva. He warned that the tariff sought by the two companies would disproportionately harm SunPower.
And he was joined by virtually the entire U.S., solar energy industry, which said tariffs would have a chilling effect on the nations booming solar sector. But SolarWorld and Suniva won the trade battle, though the tariffs are lower than the company sought and now in a move that is shaking up the industry SunPower plans to buy SolarWorld and its Oregon manufacturing plant. So, does this mean that the Trump administrations America first policy is succeeding when it comes to the U.S., solar industry?
And are the tariffs likely to trigger a revival of U.S., based solar manufacturing. And what in general is the outlook for SolarPower in the U.S., and the government policies that support it, that's what Tom and I talked about in this timely conversation outside of the Center on Global Energy Policies 2018 summit in New York. Here's that conversation. So, Tom Werner welcome to the Columbia Energy Exchange.
Tom Werner: Thank you it’s great to be here.
Bill Loveless: It’s good to see you again. Say let’s get right to it Tom, you’ve got some big news -- just yesterday you announced that SunPower would be acquiring SolarWorld Americas. This of course is one of the two companies that had sought trade action tariffs from the Trump administration and succeeded in getting tariffs. You opposed those tariffs at the time, now you're buying the company, what's going on?
Tom Werner: Well I -- so I’m 15 years into this role and I’ve learned a lot about policy and all energy is policy driven you know, some energies are incentive driven. And just the nuances there are important. We've always been advocates at SunPower of free markets and sort of the American way. We're a Silicon Valley company and founded by Stanford professors who were sort a like we will innovate our way out.
So if there’s policy we need to know what it is and then we'll innovate our way out. We'll get a premium and that was our mantra. So, over the years the last five, six years there were duties put in place they didn’t impact us, so we just sort of kept – we'll innovate our way out and didn’t participate.
Bill Loveless: That was sort of an important point, this isn’t the first tariffs have been placed on solar imports.
Tom Werner: Yeah, so the same two petition five years ago said hey, unfair competition, its impacting our business. They got duties put in place. They were actually solar one and solar two duties. The subsequent duties were skirted by the Chinese moving to different countries. So then they found 201 which I didn’t know anything about.
Bill Loveless: Section 201 –
Tom Werner: Now there’s 201 there’s 301, there’s 332, I’m learning a lot about these things. Som anyway back to the acquisition in SolarWorld lo and behold the ideas to put tariffs on all imported solar, vigorously I opposed that -- unsuccessfully. So, then we find ourselves dealing with realty so, I still believe in my original position, but it doesn’t matter.
Bill Loveless: Yeah I was going to say and you were rather forceful and empathic in your opposition to those proposed tariffs at the time. You said that you know we would be disproportionately harmed by the tariffs in the quarters that some have proposed.
Tom Werner: Yes, so here we find ourselves with a 30% tariff and we have the world’s highest efficiency product it is more difficult to make therefore has higher cost, upfront cost. And there’s energy listener, so it’s not equivalent on energy cost, but the upfront capital cost is higher and that's what you get tariffed on the -- at the lower arm tariff. And so oddly we're an American company paying the highest tariff never Chinese subsidized, so that was our argument, exclude us or don’t even do the tariffs. We didn’t succeed yet.
So, they also said we care about American manufacturing, make it sort of important to swim with the current and supposed to opposing it. So, we bought one of the petitioners, for the one that was actively producing and that transaction was announced yesterday.
Bill Loveless: SolarWorld Americas a German owned company one of two companies along with Sunvia that's sought the trade action in the past year or so. But did you ever imagine yourself some months ago taking the step that you did yesterday?
Tom Werner: Well, no and in fact I was asked by somebody important in the process on – in one of the agencies would you acquire it and I said no. I’d say they are under scaled. Their technologies are late. I --
Bill Loveless: You're talking SolarWorld?
Tom Werner: SolarWorld or Sunvia and the response I got from somebody important its one of USTR commerce _____ [00:05:56] said well, if the tariff is high enough I bet you will. And I honestly didn’t think we would, but you can imagine something like this doesn’t just happen. There’s incredible amount of negotiations and effort. And what we found with SolarWorld was better than we thought.
Sure it was under scaled that's accurate, and the equipments are a bit dated because solar is expanding so rapidly it’s hard not to be dated. However it’s better than starting from scratch and that's our alternative with this administration that was our view.
Bill Loveless: What prompted you to do it? Was it simply that you felt as though -- you know, if you can't beat them join them or --
Tom Werner: Yeah.
Bill Loveless: -- in terms of the tariffs and the Trump administration?
Tom Werner: Yes and yes. I mean I’ve been or I will be very candid and transparent that there are tariff that's a catalyst. The Trump administration has been super clear, they want American solar manufacturing. And not working with them is not worked so far, so the idea of buying SolarWorld was catalyzed by the tariffs and by the deserves of the administration. Now we're not going to make bad business decisions to align with the administration.
So, we're going to turn this into a good business decision. We'll expand, we'll implement new technology. We had a team in their offices yesterday and we think there’s upside because what they make is complementary to what we make. And since we're number one in America with rooftop solar we think we can expand here, because of this.
Bill Loveless: How much will you spend on this acquisition?
Tom Werner: That's a really good question, one that I don’t answer. I -- there’s not a lot of upsides us giving numbers because then there’s going to be all kinds of scrutiny. Oh you pay too little, too much. If we pay too little the selling parity is unhappy. If we pay too much my board is unhappy. So, I don’t see a lot of upside so we're sort of focused on as you can imagine how do we get the deal done and it still have to go through the approvals and then how do we turn this into a winner.
Bill Loveless: Right, right. And of course Total the French based major oil company is a 55% owner of SunPower, what -- I mean what sort of reaction did you get from them?
Tom Werner: Well, this is -- you know there’s a lot of super interesting things here, this would one angle. This is like three negotiations going on simultaneously. And one of course is with the counter party, but the counter party is bankruptcy administrator and the creditors. So, you could argue there are more than two in that case --
Bill Loveless: And the bankruptcy in this case you're referring to the owner of solar power --
Tom Werner: Yes.
Bill Loveless: The German based.
Tom Werner: Exactly so you have the German based administrator then you have the creditors and your working things out with them and then of course I need board approval appropriately. And the board approval is independent directors at SunPower and the Total directors at SunPower. And let’s just say that the interaction with Total was equally challenging to the administrator and the creditors.
And with the right interest in mind we are making a good business decision, but the CEO of Total will personally evaluate, is it a good business decision accrued details. So, the last day we're closing the deal I spent as much as time with Total as I did with the bankruptcy administrator and the creditors.
Bill Loveless: Yeah, kinds of question would you ask.
Tom Werner: Rigor, rigor. You know, this turned out and it’s unusual this isn’t an asset sale we actually bought the company, which means that what implies we own the company. The people, liabilities, assets everything and so how did you -- the questions were mostly about of course the economics. But also what are the potential upsides and downsides and as soon as you give one upside or downside then the nature of the CEO of Total is to want to pull on that ball of yarn and really get into details up which he did. To his credit he's an amazing guy, super big thinker and so quite a challenge though.
Bill Loveless: Interesting, well your SolarPower is the second largest U.S., solar company today after First Solar correct?
Tom Werner: Yes.
Bill Loveless: And this would make -- would this make you the largest --
Tom Werner: Yeah, it depends on the metric so usually people use market cap or revenue and First Solar and SunPower over the years have come and gone or changed places several times. First Solar is currently on a great run, so revenue and market capital are much higher than SunPower. We will be back, so we're close second and I think we're turning the corner this is a move that I think is obviously a step in the right direction and we'll see, time will tell.
Bill Loveless: You know, there’s a lot of controversies over trade these days and the Trump administrations trade policy. But you know, yours is the second largest solar company in the United States and you're making this move. Is this an indication that President Trump’s America first commitment, is working at least when it comes to solar energy in the United States?
Tom Werner: I think yes. The jobs in Oregon were unstable at best and there are approximately 300 manufacturing jobs there, now they are stable. And is what they wanted yes and so we are the first state appoint for solar where those policies are working. Now we need to make it work time will tell, but obviously the odds of sustainable employment in Oregon that could expand have gone up dramatically with our acquisition.
Bill Loveless: And how much might it expand, the labor force --
Tom Werner: Well, the facility is scaled -- they call it 500 megawatts. It’s running at about 250 -- between 200 and 250. So, you can see the upside in capacity, over time we'll expect to expand to that capacity potentially more and then with big scale employment consistent with that. Now nothing is linear in business so, it’s not like next week there will be x, y, z in fact there’s an integration team that will have SunPower employees and SolarWorld employees on it. And they will actually guide these decisions. So, it’s a little early to project timing, but the general trend is clear.
Tom Werner: Now it’s sort of you serve the part -- the point of having this integration team, but what I can say is its way more stable and likely to expand, highly likely to expand.
Bill Loveless: What about when you look across the landscape or other solar companies in the United States or companies are looking to manufacture in the United States, now likely to take similar steps. You know, as you know, there were some skepticism about whether that would happen. Here at the Center in Global Energy Policy there was a report that raised questions about whether or not renaissance, would it be likely to occur as a result of the tariff. You know, for one thing the reports that the tariffs would remain in effect for just four years, not enough time for a company to build the facility and make much money on it before the tariffs run out.
Tom Werner: I think all true, the – another aspect of this is the solar industry is _____ [00:13:12] 80, 90 gigawatts of which 80% or 90% of that is produced in China. Remember the capacity of SolarWorld was 500 megawatts and so even if we expand it to full capacity and beyond that it’s a small facility in the grand scheme of things. So, you have the tenure of the tariffs, the scale of the facility and I think the way to win against those head winds is to innovate.
So, we'll take that facility and we'll upgrade it with technology we acquired from an American company two years ago, where we will take their solar cells, we'll slice them with a laser into six pieces. Really poxy them side by side to create one large solar cell of which six of those we're going to remodel and it will be a point or two higher efficiency. And so in the near term we'll improve the product and then command a premium two fold, one made in America to superior efficiency and that's how you win.
To win on cost is difficult and what we need to do is capitalize on the ingenuity and the innovation capability of Americans and that's SunPower has done in its heritage and we think we can do that in Oregon. So, that's our hypothesis, that's the code not can you have a renaissance in the core commodities solar -- the commodity part of solar cells, it’s tough to do.
Bill Loveless: Let me see if I get this straight so, you're hypothesis is that you acquire this company you sink some money in it, you bring in your technology which your company considers to be superior to other company’s technology. And you simply build a better product, so that's several years from now when these tariffs expire you will continue to manufacture in the United States?
Tom Werner: Yeah the idea is that channels to market is an angle or another aspect that bring out that generally speaking our foreign competitors don’t have nearly the maturity and sophistication in the up bound channels in America, that SunPower does. And we could expand down there -- that channel – so the go-to-market channels gives us feedback from the customer that we can build into the product.
So, we think two fold we can take that feedback build a superior product with higher efficiency as an example maybe different sizes, integrated micro electronics, integrated storage, so there’s a number of innovation horizons. Also we think customers will pay more for buy American, you can -- you know where it’s made, it’s made in Oregon. And we will of course leverage that, so that's really the hypothesis. Now there are products in SolarWorld that we will continue to make, we'll just confer --
Bill Loveless: Make it broad, make overseas.
Tom Werner: No, the -- some of our products will still sell some of what they make and then we'll convert some of it. Then the idea is that our core product will qualify for an exclusion from the tariffs the so-called interdigitated back contact that Professor Swanson invented or designed. We would expect -- maybe expect isn’t the right word we've requested an exclusion.
We meet the criteria objectively and we'll see in the next probably month if in fact we'll be excluded tariffs for that IBC product. Then we'll have kind of a good, better, best or I like to call it better and best offering to our customers made in America, plus the highest efficiency that's not made in America.
Bill Loveless: So, that inclusion, the exclusion from the tariffs of SolarPower so what's important, still important even with the acquisition?
Tom Werner: Huge, huge. Yeah, think this quick stat, tariffs to SunPower are $2 million a week when we're fully importing, $2 million a week. It could be spent on American R&D and American manufacturing. You had the author of Taming the Sun on a podcast he quoted me in saying that to pay those tariffs we have to reduce American R&D and I confirm that is in fact a fact. SunPower doesn’t have a balance sheet to spend $2 million a week on tariffs.
We have to come up with the money somewhere and since almost all of our spend is in America we have to cut America spend. Now it’s completely unethical to the whole process. So, I’m hoping that logic and so far the receptivity at least the understanding is very high. So, that $2 million a week if we're excluded we will invest in American R&D and in now the Oregon facility.
Bill Loveless: you continue to manufacture some product in overseas and southeast Asia and Mexico --
Bill Loveless: You -- you continue to manufacture some product in oversees in Southeast Asia and in Mexico, correct?
Tom Werner: Yes.
Bill Loveless: And -- and, you mentioned before the channels that you hoped that this acquisition of SolarWorld would bring the company, -- but until now I mean you had -- you made things aboard and brought it into the United States and sold it here. Those channels seemed to work pretty well then.
Tom Werner: Well, we have a great you know we’re number one chair in commercial and industrial type we’re first in residential. So it is fair to say it was working. We -- I would like to and number one in those channels by the way is called a 12 to 15% market share. In other industries, you see significant players being 25, 30, 40% market share that’s our goal. So, by acquiring SolarWorld we worked towards that goal that plan. We think that scale matters and scale will benefit our customers and so our -- our goal is super clear.
Bill Loveless: Yeah. Again, it’s just such a -- a radical departure from the business strategy that you had six months ago?
Tom Werner: Well you know I think that being nimble is important. I think of that Apple introduces a smart phone in 2007. It’s 2018, 11 years later and get off an airplane and people can’t give their -- you know they can’t make it five feet without looking at their smart phone. The world changes rapidly. I think solar changes even more rapidly. It’s such a massive market opportunity that I like to say capitalism works. So it attracts all this competition sometimes you know rationale you know we want to get it foothold and this huge market opportunity. And if you’re not nimble, if you’re reacting then I think you’re dead.
Bill Loveless: You have to take advantage of the opportunity that’s right in front of you right now.
Tom Werner: Well, I like to say businesses were in transition. Imagine there are business since there are couple of staple things are changing much sounds a lot like a commodity to me where you have transitions that’s where the great business is capital of A see this transition -- transition before it happens and we capitalize on it. And that’s our goal that’s our plan. So yeah we didn’t plan on this three months ago. There’ll probably be something else in three months.
Bill Loveless: Ah you’re not ready to predict what that might be who knows?
Tom Werner: It’s my job that I know.
Bill Loveless: But you -- you know you’ve made this move and again it seems -- you say it’s an indication the president’s policy on tariffs is effective here. Are the companies likely to take -- to do the same thing?
Tom Werner: I -- I think yes. The issue is exactly as you said does the math work so you can produce in America with a tariff and make money where you can get an ROI in a three year period maybe four. Now hard -- hard to do. Our view point wise green field harder meaning starting from scratch because it takes time to build the facility. When we acquired SolarWorld when it closes and call it 30 or 60 days we hope we’ll be running. So we’ll be getting the -- the improved economics right at day 1.
So there is a difference between green field and round field or acquisition in green field, but hard. And then there is other angles here or other factors degree of automation which technology are implementing are you doing sales and modules, are you doing just modules we’ve already seen Jinko solar commit to a module manufacturing in Florida.
Bill Loveless: Right.
Tom Werner: So there will be more it’s just not clear what more means.
Bill Loveless: Yeah. And how and on what scale it might be. I mean -- I mean do you think it’s possible that we’ll see a substantial return to manufacturing -- solar manufacturing in the United States as a result of this policy?
Tom Werner: I think it’s quite possible like if you look at the value chain there is Hemlock who makes probably silicon, there is Fokker who makes probably silicon in America in Tennessee and Michigan. Michigan in the case of Hemlock at scale. There is glass manufacturers, there is aluminum manufacturers, there is cabling, there is electronics. So the value chain is here and to compete you need that scale and you need that that proximity for -- a logistics advantage. So the potential is there for that.
Bill Loveless: And the -- and these tariffs could be the catalyst you seem to be saying for that sort of development?
Tom Werner: I -- I think yes and you have to innovate though because it’s just math. You can’t pay somebody five times as much to do roughly the equivalent work and expect to compete and it’s simple math. So you have to have differentiation and in this case have that same labor implementing something that is hard to do that’s unique and then the math can work.
Bill Loveless: And because it has added value?
Tom Werner: It has added value. Now you can have higher productivity and you can automate, but that’s super hard to get five X the productivity. So, you need the productivity and the ingenuity you’re the innovation.
Bill Loveless: Does productivity necessarily mean there will be a lot of automation involved --
Tom Werner: Yes.
Bill Loveless: So in this new factory that you have and to some extent that keeps down the number of people you might employ to do?
Tom Werner: Well, it does. There is a shift there too to hire paid people because they are designing that automation. They are coming up with those new ideas and there is a great labor pull in Oregon you know in Dallas. I am suggesting we’re going to hire their people, but they felt an environment of well trained people and the university system is great. So that was a factor in our decision. So -- for the employees in SolarWorld that might listen to this, there is plenty of work to be done, but over time they expect to be very motivated to be leading edge automation, new features, integration of storage, grid immigration and be super fast at that because that’s what America does well.
Bill Loveless: Tom, let’s talk a little bit about this solar industry in the United States in general where you see it ahead. It has been a phenomenal growth in recent years as the cost of solar products have come down substantially they’ve been adding jobs for the most part there were concerns that threats of tariffs might put chill in things, but by in large things are still going relatively well. Still when you -- you look out ahead especially from a policy perspective, you wonder how -- how this might play out. There is no indication for example that we’ll have a price on carbon of the United States anytime soon. The tax breaks that the industry enjoys going to phase out in several years as a result of negotiations the industry had with the government. Where is the industry headed where is -- where is solar headed in the United States?
Tom Werner: Well solar energy in America is the horse that’s left the barn. So it’s a little hard to put the genie back in the bottle. It’s a little hard to you know policy has been incredibly important the scaling of American solar. However, it’s worked and the cost have come down to a point where to say tax policy or the ITC or other changes RPS has been the various state policies those are head wins, but the horse left the barn costs have come down to a point. The challenge now is we know the ITC is stepping down --
Bill Loveless: So how do we get cost the investment tax credit?
Tom Werner: Yeah, yeah. And how do we get cost -- thank you. How do we get cost down in lockstep with that or better so we can make money and competition works that’s why we believe in free markets. So and at some point we said solar -- the American solar industry said we need to stand on our own and there won’t be an investment tax credit forever and RPS forever and it’s worked.
We’ve scaled 80% cost reduction in five years. Now what has to happen is cost reduction has to move in other parts of the value chain. So far it’s been led by solar cells and modules. There is financing, there’s probably silicon, there is electronics, there is aluminum, there is installation. And each of those soft cost areas or other parts of the value chain will be attacked vigorously over the next five or10 years. And we’ll see cost continue to come down rather aggressively because there is lots of room in those areas I think.
Bill Loveless: Yeah. And you see that across the board in terms of utility applications as well as distributed by commercial and residential?
Tom Werner: Yeah. The -- just broadly speaking to your question about are the tariff’s slowing things down or not? And I’d say in longer term meaning in solar that means more than four quarters, no. In the near term, think the utility scale system the figure of merit is maybe a dollar or what to install. The tariff might be 10 to 20 cents so that’s a lot on a utility scale system. So things just paused in utility scale, but we’ll sort that out over the next year or so. I find SolarWorld just step in that direction.
Commercial systems two blocks, residential three blocks. So you start 10 or 20 cents on $2 less impactful still matters and then residential even less impactful. So those two markets probably keep rolling along and then it’s all about utility scale. But this you know you thought the utility exacts the facts are in you know in 2016 solar was the number one new energy generation resource in America. So if you’re one of the traditional thermal energy producers and you’re watching solar be the number one energy generation resource where you’re putting your resources and that’s capitalism and that’s how cost are going to continue to come down and the size the opportunity is one of the biggest industries in the world. The solar opportunity is massive. Now the key is can you make money?
Bill Loveless: Which is always the key, right?
Tom Werner: Yeah.
Bill Loveless: Especially for persona and position such as you. Well you know speaking of innovation and all that that author you mentioned Varun Sivaram the author of the new book Taming the Sun and Varun of course is with the counsel in foreign relations, he’s also a senior researcher here at the Center on Global Energy Policy. Varun told in that podcast that you know he -- he mentioned that your interest in -- in innovation in R&D, but you said when it comes to investment in this country, we need to get beyond the traditional solar technologies, the silicon technologies and get on to other things. He said you know he still felt there was too much of a focus on sort of old technology and he wrote another thing this week I believe it was in the Washington Post where he said that you know the discussions shouldn’t be so much about sort of traditional solar issues, and this is a discussion for the solar industry, but rather in innovation in the utility sector as a whole two different subjects there you know solar technology and – and, but where should you be -- where do people like you in the industry where do you need to be thinking ahead whether it’s a technology?
Tom Werner: Yeah I have read his book and know him. I recently well he’s super very intelligent guy. And he is he is time horizon that he is sort of optimizing things over much longer than a publically traded company. You know he is talking about 2030. And you know the average tenure of a CEO is probably five years so that’s four CEOs or three on if it were the average tenure. So -- and we all talk about how the public markets value companies in quarterly driven or annually driven and not decade driven generally speaking.
Now our parent company has investors thinking 2030, so we got kind of a mix it’s on par. So if you look out 10 or 15 years I think what Varun is pointing out as you do at the tyranny of the now which is what works now to make money that’s what a -- public traded company is looking at. What he is looking at is, to have the two degree scenario so to speak, play out, you need massive amounts of solar energies and other energies low carbon energy so there is been a massive amount of solar. And the more you have the less it’s worth because there is access treatment when the sun is out. so either you get cost down faster or you find a way to store it and use it at other times which is both are expenses or hard to do.
Bill Loveless: You’re talking storage energy storage, batteries --
Tom Werner: Storage and -- and can you get cost down to the point where instead of today it might be three or four cents, kilobyte hour for utility scale system how do you get down to even lower. So the tie to the utility on the utilities that he is focused on is you need a flexible grid because you have energy when the sun is out that you want to use when the sun’s not out and you like arbitrage that, you like to be able to sell that your neighbor who maybe is running something that who consumes a lot of energy when the sun’s out. Yet we have a one way grid and so you can’t be rewarded today or I should say can’t be it’s hard to be rewarded for energy that you produce that you access energy produce. Now there are leading edged states like Hawaii, like New York there are rough process where they are working on polices where you would you could monetize that. And innovation alone happen unless you can monetize it in the public sector or in the public trading companies. And so the policies that drive the utilities to allow things like energy arbitrage will drive innovation and that’s both utilities and companies like Sun Power.
Bill Loveless: Where -- where should the -- where should public policy focus today and is it currently focused in the right place?
Tom Werner: So first of all, all energy sources are public policy driven some are more hidden. So the oil and gas industry is public policy or part of law that were put in place decades ago so we don’t talk about them. Mastered limited partnerships are certainly nice and we’ll love to have those in the solar industry. So first policy is part of what we do and longer term it’s clear solar energy, wind energy, low carbon energy you can no longer make the argument that you can’t have low carbon at low cost that argument is done.
So then the question is how do you harness that? And I think that policy I would agree that we shouldn’t panelize traditional sources, but we shouldn’t panelize renewals either. So how do we allow the competitive markets to decide and but yet encourage on low carbon sources which requires wholesale markets for example to allow energy arbitrage. In other words, time _____ [00:32:54] energy to build and we can do that automatically and we can store it and sell it back to the grid at night and net metering is another example. So there is a bunch of policies that prohibit the flexibility that’s going to required in the future and so broadly I’d say let the market work and then encourage a flexible grid.
Bill Loveless: And, but when it comes to the government where the government should be putting it’s money where does it where should it go I mean should it be looking that much farther ahead or should it be focused much as it has been in the past and say storage that’s been the big issue most recently?
Tom Werner: Yeah, I think that for Varun in his book he’s -- he’s got some things that I would completely agree with it the early stage research is hard to do is publically traded companies are focusing on some of the early stage research and things that are needed say 10 years from now is clearly one thing. DoE just announced a 100 million dollar solar program as an example for early stage research in number of areas.
They have a grid monetization initiative and that’s absolutely critical. I’ve -- I’ve was on the board of an advanced metered company or smart grid company and the technologies there we need to get the various markets whether they’re wholesale markets or it’s within states to be more nimble to allow flexibility. So there is two things there research at DoE working at things that are 10 years out 15 years out and then policies that allow monetization of new features that are more policy driven.
Bill Loveless: Yeah.
Tom Werner: My folk inter phasing with wholesale markets as an example.
Bill Loveless: Yeah there are so much out there in terms of so many issue and so many more that we could discuss if we had the time, but unfortunately we’ve run out of time. Tom Werner, thanks for joining us in the Columbia Energy Exchange.
Tom Werner: It was lot of fun. Thank you.
Bill Loveless: And thanks to our listeners too for tuning in as always. If you have a few moments give us a rating on iTunes and tell us what you think of the podcast. We love to hear from you. And for more information on the center on global energy policy go to our website at energypolicy.columbia.edu or follow us on social media at columbiauenergy. For the Columbia Energy Exchange I am Bill Loveless. We’ll be back again next week with another conversation.