Convalt Energy is planning a 330,000-square-foot solar manufacturing plant near the Watertown International Airport on Route 12 in the town of Hounsfield. The $62 million facility would initially employ about 200 workers, operating 24/7 and could eventually have a workforce of 4,000, NNY Business sat down with the company’s CEO and founder Hari Achuthan to find out more about the project.
So, why not Watertown is usually the question I get asked. The request for proposals that we sent in Q3 2020, went out to five or six different county in development organizations in New York. Watertown came up on top of that list, when we evaluated all the responses that we received. What attracted us to Watertown is the fact that the county was extremely willing to work with us, structuring a transaction that worked for all, and the ability for us to hire from Fort Drum is a key factor. That doesn’t mean that we won’t provide opportunities for all the people here locally. I think they’re going to get an equal opportunity, as well, to work with us. So, if you look at the labor pool coming out of Fort Drum, plus the location, and the land that is available, proximity to an airport, a lot of these factors came into play. When we analyze these factors Jefferson County came up on the top of the list. The second part that was important for us is Dave Zembiec, Marshal Weir and Lyle Eaton (Jefferson County Industrial Development Agency officials) who spent a lot of time asking a lot of questions and got deep into understanding our company and what we’re doing for both energy and digital platforms.
You are hoping for spring construction start. How does that look at this point?
I think we should be able to start construction on June 1, no later than July 1. If we can get the approvals, I think we might be able to speed up a little bit. But we’re also dependent on the lenders. We have just selected a lender platform to work with us. It’s not announced yet, but I’m hoping to announce it once we get credit approvals. And that’s at the very latest July 1 and then have it live by February or March 2023.
What is the first phase going to look like? How big is that and how many jobs?
A 330,000-square-foot factory between 150 and 200 jobs when that plant starts to go live. It’s a 24/7 operation.
How many panels will that manufacture?
Year one, we should be manufacturing two million panels. Our goal is to have the second factory up and running by June 2024. And that would be a total of eight million a year.
Who will be your customers?
Initially the solar panels are going to be sold to the large projects, but by December 2023, we will be selling into the retail market. So homeowners, at that point, should be able to pick up the phone, call us. Starting in the New York Tri-state area, we’re going to start installation. So we will come, we will install it for you. We make the panels, we install it for you, we maintain it for you. Any homeowner or any property, we want to make it in the New York Tri-state area and then expand out nationally after that.
Fort Drum plays a big part in what you’re going to be looking for in labor force. There are approximately 600 soldiers on Fort Drum that leave every month. The hope is to get what from those 600?
If we can get 10 every month out of that 600. So, our number is not 100 out of 600, our number is not 50 out of 600. The number is 10. So if you have 10, in a period of six months to nine months, you’ve got 100, 120 people.
You looked at other states. What was about New York?
New York is one of the largest consumers, if not the largest consumer of electricity here in the Northeast. And, you know, we’ll have a substantial amount of commitment to renewables, as we’ve seen. So, you know, if you’re in the renewable business, you need to focus on New York, given the size of New York and the amount of consumption that you’re going to have, you know, and renewables.
What do you say to your skeptics?
I don’t really pay any attention. I just take it in one ear and out the other. I know, you’re going believe in the machine that you have, and you go out and execute. You know we’ve executed so far. Right? So, you know, there are a lot of people who said Elon Musk is blowing smoke. And you turn around later today and dial back five years ago, and tell me how many people would have believed that Tesla was going to survive?
You’ve had to overcome some obstacles along the way. And any surprises to those obstacles?
Well, I mean, the key surprises for us, and I wouldn’t say these are surprises, this is more long already in the market. You know, we budgeted, went out and bought a bunch of contingency. And then the lumber prices are up 40, 45%. Very recently we have a 280% increase in transportation costs from what we expected. So these are extremely volatile times, which I don’t know how you can budget. Everybody’s facing it. It’s a national problem. And, you know, what ends up happening is, you have to get extremely creative, and look at ways that you can adapt to it. And, you know, in some cases, you really can’t do anything but accept reality, and reality is what it is. So what we ended up doing is working harder to generate more revenue, so we can, you know, pay the higher costs.
One of the issues you’ve had is getting electric. Where does that stand at this point?
I mean, at this point, after we had some initial dialogue with National Grid, and we basically said, ‘Look, you know, we’re more than happy to be on our own and not take power,’ I think they’ve come back and reconsidered that and provided another option, which would have been the option in the first place. It’s an extension of the three-phase line coming out of Paddy Hill going into the factory, which is about a mile long, and an extension of a three-phase line.
It delayed the project. How much does that hurt?
Time is money, right? I mean, you’re burning through cash, you got operations, you got people you got, you know, you need a factory up and running as fast as you can. So you can generate revenue, right?
Where did you grow up?
Well, I was born in India, was in Ohio, and then Oregon and then New York.
So what is your background? How did you enter renewables?
Well, it’s a long story. So I got fired from a bar, then got a job as a data table operator at Morgan Stanley working nights. Did really well there and I got onto the trading desk as a support guy in tech systems. Then from there, I got onto the equity debit of desk as a sales trader, learning all the tech and then I learned the business and sales writer, and then from a sales trainer, then I moved to the pension solutions group at Lehman. And then from there, I went and ran that business at Credit Suisse (a Swiss global bank and financial advisor company), got exposed to the private equity fund to funds team and then went to asset management for a year, came across a lot of renewables stuff.
So tell me about the projects you’ve done in the past and in the country, the other countries.
So our first project was a 300–megawatt solar project in Burma, Myanmar. And we started that in 2012. So exited that in 2019, about a year in advance of the military coup. Then we have a large project in Lao which is going through its final approvals now I think we should be okay there. That’s a 250–megawatt solar project. We also own a waste-to-power plant in India; we’re looking at acquiring ways to power plants here in the U.S. now. And then we’ve got developments here in the U.S. between New York and Maine. We’ve got a couple of projects in Africa that are going through development. We’ll have other projects that are coming live this year and next year, small solar projects, and then the large solar projects.
What do you like about Watertown?
I like the people, it’s almost like the Midwest in a way; you got a Midwestern feeling right. And, you know, I spent a lot of time in Ohio, early years, and people in the Midwest are pretty solid. And I feel the same way about the north country.
How will the project here play a role in what you’re doing in Maine? And how will Maine play a role here?
We have a vertically integrated approach, which not many firms globally do. And what that means is when you manufacture the panels, we construct them, we install them, and own and operate them. So on the value chain, we are across the value chain, right, so we have manufacturing, construction, and owning and operating. Very, very few firms, if any, actually have been able to pull that off. The hard part is the development part where you develop assets where you are a developer and you go develop a solar farm or a waste-to-power plant or a large transmission project that is very complex and requires a lot of wherewithal and staying power. We cut our teeth on that. We went to some really difficult countries and execute it. So if you really look, out of the 70 firms that were looking to do deals and Myanmar, only two ended up with a bankable power purchase agreement. So that shows what you can do so. One was awesome, the other one was a government of Singapore on some court. So we have the track record, we have a track record of actually operating and executing in very difficult environments. So that gives us the confidence, not overconfidence, it gives us the confidence and the ability for us to be able to execute. So, the vertical integration is crucial for us, because of where I see the world going. Without vertical integration, it’s just tough, really difficult. So you’ll have your developers, you’re going to have your construction companies, you’re going to have your manufacturers, but we’re the only one that kind of just, you know, putting it all together right now.
You’ve talked a little bit about the workforce. What’s your thoughts about the labor force?
So, you know, in our last one year of going through it, what we have found, and this is actually a global national issue, and not just an issue in New York. If people don’t feel like they are working on something that they truly believe in, or they’re not fairly compensated for it. They’re not just taking on a job. And that’s reflective of the labor pool that you currently have. So we have a clear vision about what we want to do. And, that is constructing with capital part of the conscience. So the three C’s are what we look at, right? So you’re constructing new things, with capital, and with a conscience, right? So in an environment, when you’ve got canceled culture, or culture, this culture or whatever, you’ve got a whole host of things that are running around right now rampant, we can only focus on the fundamentals of what we think is right. And, that is a path that balances out between fossil fuel and renewables and whatnot. The answer today is not a knee-jerk reaction that basically says that, you know, forget oil and gas, you just got to do it, renewables, I think the answer is, we have the transition to renewables. And that transition time period requires all of us to work together in harmony. And what we’re focused on very heavily is the renewable piece, where we don’t have the experiences and fossil fuels, we don’t have experiences or gas, those are well done by the Exxons and Shells of the world. And they know that so we don’t have, we don’t have find that game. Because we don’t have the depth of expertise in it. What we do have expertise on is, you know, understanding renewables, understanding solar power, understanding, waste-to-water, understanding transmission grids that need to be built to adapt to the environment that is forthcoming. So that we understand and that’s what we’re going to focus on. So going back to, can we find the labor pool, we now need to be able to say, here’s the vision, this is what we’re trying to do, and we want you to come, work and build his vision of what we were trying to accomplish. And that requires people to commit to it. So whether it’s people from Fort Drum, or whether it’s going to be new kids that are graduating out of Syracuse, or Cornell or Jefferson Community College, or whatever it may be, we want to give them opportunity as well to consider working for us. And if we’re the top two, top three in the country, then we should be able to attract more high quality engineers and more workforce that works on the factory floor. You know, historically, look at this region. And we look at Rochester, you look at Syracuse, you look at this region, we have had manufacturing before they all went away. But now the workforce is demanding more; they want to have equity in the company, they want to know that the company has a vision about building for the future. And that we have and you know, so what are the core fundamentals that they can relate to. And the core fundamentals again, goes down to constructing with capital and conscience.