The podcast discusses the founding story of Nexus PMG, their transition to a low-carbon focus, and observations on declining investment returns in wind and solar projects. They also cover challenges in sustainable materials, turnaround of a distressed biomass plant, team dynamics in project success, trend forecasting in sustainable projects, and the potential of government subsidies in renewable energy.
The strength of the team, including their expertise and ability to navigate risks, is crucial for successful project development in the infrastructure sector.
Nexus PMG anticipates rapid growth in sectors like green hydrogen, sustainable aviation fuels, and renewable natural gas, supported by government initiatives and increasing capital deployment.
Deep dives
Nexus PMG: Reducing Carbon Intensity and Enhancing Resource Efficiency
Nexus PMG, an infrastructure advisory and project development organization, focuses on reducing carbon intensity and enhancing resource efficiency. The company provides risk assessment for project development capital, advice for infrastructure startups, and insights into the future of infrastructure deployment. They have expertise in project finance and have worked on diverse projects like metal refining facilities and biomass power plants. The company has also ventured into operating distressed assets and investing in renewable energy projects. They identify key factors for success, such as securing a reliable and consistent feedstock, partnering with strong management teams, and leveraging strategic investments from organizations like Microsoft and Amazon. Nexus PMG anticipates substantial growth in sectors like green hydrogen, sustainable aviation fuels, and renewable natural gas, driven by government support, technological advancements, and increasing capital deployment.
The Importance of Team and Risk Management in Project Development
One of the key factors that Nexus PMG emphasizes in project development is the strength of the team. They believe that evaluating the expertise, track record, and ability to navigate risks within the team is crucial. This includes assessing the team's understanding of contracts, feedstock supply, and off-take agreements. Nexus PMG also highlights the significance of thoroughly analyzing risks, being transparent about potential challenges, and proactively managing them. With a focus on risk management, they work closely with clients to identify and mitigate risks at every stage of project development. The company's success stems from their commitment to finding and investing in strong management teams that can effectively handle risks and navigate the complexities of infrastructure projects.
Growth and Opportunities in Sustainable Infrastructure
Nexus PMG is optimistic about the future of sustainable infrastructure and anticipates a rapid acceleration in capital deployment. They believe that early winners in sectors like green hydrogen, sustainable aviation fuels, and renewable natural gas are emerging, and substantial infrastructure capital is ready to be deployed. With the support of governments, venture firms, and strategic investors, Nexus PMG foresees an unprecedented scale of infrastructure development in the next five to ten years. They emphasize the need for rapid growth in these sectors to address pressing environmental challenges. Nexus PMG also highlights the increasing role of insurance companies in de-risking projects and the importance of differentiating between technology risk and development risk in evaluating investments.
Ben Hubbard is CEO and Co-founder at Nexus PMG, an infrastructure advisory and project development organization dedicated to reducing carbon intensity and enhancing resource efficiency. Ben co-founded Nexus PMG in 2013 after multiple years of working on complex metal refining facilities in locations including Mongolia and Saudi Arabia.
In this episode, Cody and Ben cover how Nexus PMG got started, what key risks the firm explores when assessing a project for development capital, Ben's advice for infrastructure-heavy startups as they scale, and how he sees the next five years of infrastructure deployment playing out. And they cover a whole lot in between, including the criticality of feedstocks, the role of insurance, opportunities for private equity, and first-of-a-kind project finance.
In this episode, we cover:
[01:56]: Ben's early mining experience in extreme climates during the 2007 recession
[05:24]: Nexus PMG's founding story
[11:51]: Abandoning all fossil-fuel projects and full transition to low-carbon focus
[17:01]: Observations on declining investment returns in wind and solar projects
[20:39]: Challenges in variability and quality of sustainable materials
[27:15]: Turnaround of a distressed biomass plant in British Columbia
[30:08]: Launch of Nexus Development Capital for scaling businesses
[36:04]: Recent shifts from strategics investing to meet ESG goals
[38:17]: Why team dynamics are critical to project success
[42:50]: Trend forecasting in sustainable projects: hydrogen, sustainable aviation fuels
[46:01]: Ben’s optimism about capital deployment in the next decade
Episode recorded on Jan 8, 2024 (Published on Feb 5, 2024)
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