Sustainable Infrastructure Developer: Carbon, Hydrogen, Agriculture, Renewable Energy — Aaron Ratner President of Cross River Infrastructure Partners

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Aaron Ratner, President of Cross River Infrastructure Partners, a sustainable infrastructure developer, delivering next-generation climate positive projects, including carbon, hydrogen, sustainable agriculture, and renewable energy.


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What does Cross River Infrastructure Partners do?

Cross River Infrastructure Partners is a platform of development companies deploying climate technology and capital into sustainable infrastructure projects. We do two things. We co-develop projects with development teams that have very focused expertise in a particular vertical, and we also partner with technology providers to become a developer of their technology as a service into the market. We currently work across carbon, hydrogen, sustainable agriculture, and renewable energy, which are increasingly intertwined. The model is to have a platform to catalyze the early commercialization of projects and technologies. Our goal is to bring together corporate partners, investment capital, and talented technology developers to get early players accelerated up the technology adoption curve.

One of the interesting things you mentioned there was describing your offering “as a service.” Could you expand on this approach and how it makes it so much easier for customers to say yes?

I was lucky to be able to spend a couple years at Generate Capital early on, and I learned a lot from the people there with regard to what it means to market and sell infrastructure as a service. Today when a company is looking to demonstrate and sell a new technology into the market, there is often a certain customer demographic that is interested in the technology (e.g., early adopters) and has the balance sheet to purchase it, but frankly, no one ever wants to be the first customer in physical infrastructure. 

In addition, it often takes six months to a year to build a project and get it to steady-state, so there is a gap between the first sale and the time at which everyone involved can rest easy at night knowing that the project is stable. As a consequence, there is an opportunity to help these technology companies offer their infrastructure solutions as a service to smooth out these early deployments and sales hurdles before a technology can be proven and solidify its position in the market. 

A good example of this is the work we are doing with BayoTech, an onsite hydrogen production technology provider based in New Mexico. They have a great technology and sales team and are just starting to sell units into a pipeline that has been growing for years. We have been able to partner with them and structure long-term fixed-price hydrogen contracts to the same customer demographic that they were targeting, which reduces risk for these initial customers who do not want to take any technology uncertainties that are associated with infrastructure ownership. By purchasing the units directly from BayoTech, and then deploying them to supply hydrogen for the end-users, we help both parties, driving unit sales for the technology company and reducing risk for end-users, and this greases the wheels of the technology adoption curve.

Your explanation reminds of a quote by Amory Lovins (of RMI fame) to the effect of “we just want cold beers and warm showers,” but we care less about how they are provided. Similarly, you all are able to provide a valuable service at an affordable price but without the risk of technology ownership, right?

I think that is particularly true in the hydrogen space where battery electric vehicles have been far more successful partially as a consequence of the ease of use for the vehicle owner who simply plugs into an electric outlet, whereas hydrogen has been a less widely available commodity which has clearly constrained market adoption of fuel cell electric vehicles. We are aiming to address that with the BayoTech solution by deploying units for a corporate customer that wants to convert their fleet to fuel cell electric vehicles. We can supply the hydrogen onsite and ameliorate this constraint. The closest analogy would be to diesel vehicles, where the end customer does not want to own the refinery, but simply wants access to the fuel. 

What makes Cross River Infrastructure unique and different from other companies across the renewable energy development space?

There are a lot of great developers and more talented teams coming into the market all the time. At the same time, I think there are relatively few instances of competition between players given the size of the market opportunity and the need for urgency in these development efforts. Nonetheless, one of the benefits that our team brings is a very strong background in the investment side. 

My partner Andrew Wilder, who started the firm four years ago, was the CFO and CEO of a multibillion-dollar hedge fund, while I was a partner at a sustainable infrastructure fund. We understand how to underwrite these projects. One of the drags in the sustainable development market right now is that a lot of developers haven’t been through the institutional financing process and consequently don’t have the experience and expertise to navigate what can be a very challenging exercise. It is certainly a lot harder than venture capital or private equity fundraising, given the complexity and sheer amount of documentation that needs to be completed in order to consummate a transaction. As such, you often see projects slip and never get across the finish line. We bring an institutional finance lens to our projects, allowing us to properly structure projects early on to ensure that they will be underwriteable for our capital partners. 

What brought you to Cross River Infrastructure?

I think one of the most interesting dynamics within this space is the sheer number of players involved in these transactions. There are entrepreneurs, financiers, developers, engineers, advisers, and the list goes on. As a consequence, for many professionals coming into the space it takes a little time to figure out how you want to position yourself within this ecosystem. I had been on the investment side for six years and began to realize that I wanted to push the envelope a little bit in terms of getting projects done that were slightly more cutting edge. At my previous firm, I had been involved in financing some very good anaerobic digesters and landfill gas projects, but my interest was increasingly oriented towards the trillion-dollar scale industries such as hydrogen and carbon capture. I had been working with the team at Cross River on a project for Tyson Foods, and it became very clear to me that my skill set and the way in which I view the world was better aligned with the project developer side of the table. Ultimately, I decided to make the transition, though i can’t take credit for the timing. Covid accelerated a lot of things obviously, and we were able to set ourselves up last year to enter 2021 with a lot of momentum.

That’s great, I think the opportunity to switch roles provides a lot of value in being able to view problems from different angles and lenses of experience. Often my favorite investors to work with are those who have been in the trenches doing the work of the companies that they are funding.

Yeah, I think both are really important. As an entrepreneur, you have to wake up every day and get things done with a lot of blue-sky energy. As an investor, it can be really challenging to value and finance projects in this space. Both can be very difficult, and I think it's particularly rare for someone to be good at both at the same time, so it often forces a choice to one side of the table, though you can certainly take elements of your learning wherever you go.

I want to go back to an early question where you had mentioned that the four sectors across which Cross River integrates are becoming increasingly intertwined. Can you expand on that a little bit?

An example of this interplay would be BayoTech, who use steam methane reformation to produce hydrogen. This process, when done on-site, is more affordable than green hydrogen produced by electrolysis using renewable energy. But there is an increasing market demand for hydrogen to be as clean as possible with generated carbon emissions being accounted for with carbon capture. So, we are also working with several modular carbon capture companies that can upcycle those carbon emissions into a monetizable product which makes both the hydrogen but also the project economics more sustainable. Carbon upcycling is something that we are spending a lot of time on, and we are currently developing a large project that will ultimately sequester two million tons of carbon per year. 

That’s very interesting. I read an article the other day in which a company was capturing carbon and turning that waste product into diamonds, which would seem to be a very unique but incredibly valuable end-use case.

The company you're referencing is called Aether Diamonds, which in and of itself is a strong demonstration that the tide is changing as customers increasingly look for more sustainable solutions in all products they purchase, from diamonds to the cement in the building you are working in, or clothing, or even food. While the economies of scale are not there yet, customers are still willing to pay more for something that reduces their planetary impact.

Flashing forward 5-10 years, what does the platform of Cross River Infrastructure look like, and how are you going to measure it?

Our vision is to have built a platform that enables nascent but proven climate technologies to accelerate their deployment and get more projects in the ground by bringing together corporate customers and institutional finance. An additional aspect of the platform would include systematized vetting of technologies, which is a very difficult task. There is really a small window of opportunity, in which a technology is neither too early, risking relationships and capital, nor too late, wasting time and market opportunity. We are going to continue to refine our criteria for this type of project and technology evaluation.

Regarding what the firm looks like in 5-10 years, specifically, my primary hope is that we continue to attract and retain great people, from interns through partners inside and outside of the firm. We have a great group of aligned, smart, and hardworking people at the company right now, and I hope we continue to maintain and further develop this corporate culture going forward.

Regarding metrics, the number of projects in the ground is the one that really counts. At the end of the day, good intentions are great, but measurable impact comes from deployed infrastructure. We are currently developing billions of dollars of projects with some very large ones in the carbon and hydrogen spaces and further efforts in sustainable agriculture.

We have alluded to the fact that the climate problem will largely be addressed by capital solutions. For the most part, we now have the technologies capable of reducing carbon emissions, but deployment remains a hurdle. Do you have any thoughts or advice for others bringing FOAK (i.e., First of a Kind) projects to the market?

One thing we’re working on is a seed/venture stage strategy that we are deploying, called The Carbon Foundry, where we are partnering with early-stage technology companies in carbon capture and upcycling to help them think about how to capitalize their company to optimize for early commercial-scale projects. We are working with our engineering partners to help these early-stage companies think through engineering strategies to help save months of time as well as capital.

More broadly speaking, I think there are two key questions that have to be asked in a FOAK or early-stage project. Is the leadership team prepared and ready to execute, and is the technology proven and capable of achieving the necessary objectives? It is not possible to go from lab bench to commercial deployment, there must be a referenceable project such as a smaller scale commercial development. Additionally, it is important to have patient and supportive corporate customers who are willing to be somewhat flexible for these early projects. Putting these three things together, it is possible to push financing to the project level rather than the corporate level, which ultimately makes this scalable.

Finally, one thing I would add, is that there are more and more large companies getting into sustainability. For people that are early in their careers, this is a great opportunity to go work for one of these companies in order to get a practical understanding of how energy and infrastructure work. I think it's roughly akin to students just out of school going to work at Microsoft or Google 15-20 years ago. At these large firms, there are a tremendous amount of resources and a lot of pragmatism with regard to how the world works. In conversations I’ve had with many young people, there is an urge to seek out the next multibillion-dollar startup, and while there is certainly a need and lot of value created there, in many ways the energy world operates very differently from software, so there is a lot of merit and a huge learning opportunity in these corporate roles early on.

As we know, entrepreneurship can be really hard. Do you have a story or experience that speaks to some of the challenges you have faced and how you navigated or overcame them?

I have been fortunate to have fallen down more times than I can count at this point in my life. Everybody answers that question on the basis of their life experience, but I would just say the following: Infrastructure is a “get rich slowly” type of game. It takes a long time to get it right. So, my advice would simply be to be patient. Outside of some recent SPACs, there are few examples of infrastructure companies that develop billions of dollars of value within two or three years. Instead, I would recommend adopting the mindset of building something that will outlive you and deliver tremendous value to the world. There is really no shortcut, and anything done to accelerate the process just adds risk. You have to build, test, and iterate and sometimes mother nature is the constraint on the pace of that iteration, at least in the case of sustainable agriculture.

It would seem that the corollary to the long-term nature of the value creation process within the infrastructure industry is the large dollar amounts and high impact of these projects.

Do you have a book that you would recommend to the Entrepreneurs for Impact audience?

My favorite book last year was The Infinite Game by Simon Sinek. The book really focused on finding one’s “just cause” and orienting one’s life around a long-term goal that will be meaningful beyond your lifetime. My experience is that when I and others I know have focused on this orientation, it both provides immediate fulfillment but also relieves a lot of pressure to achieve an endgame or given goal by a given time. Ultimately, we are playing the game to be in the game, and to make sure the game is robust so that when we are gone others are playing it better than we are.

Do you have a quote in which you find meaning?

Here’s a great one from, Shido Bunan Zenju, a Zen Japanese Master: “If you think of everything as training, your suffering will disappear.” Circling back to how you recover from setbacks, it requires a mindset change. Are you playing the long game to create value? If that is the case, then there is no failure, but rather a training setback and something to improve upon.

Do you have a podcast that you would recommend?

I have enjoyed listening to Ben Greenfield's podcast. He is one of the top biohackers in the world and somebody that is constantly exploring the potential of the human body and mind with experiments in nutrition, physiology, and mindfulness. As an analogy to sustainable infrastructure, I think nutrition is an apt fit. But more generally, I’m interested in always learning and trying to be a better human in all forms.

Do you have any closing thoughts or recommendations for others?

There are two things I would close with. The first is that the climate space consists of an amazing community of people. More than any other business community that I have ever been a part of, I find that people in leadership are incredibly accessible. When young people reach out for a quick phone call or a question of advice, I always do my best to offer some helpful advice, and I know others do as well. So I would encourage young people to communicate efficiently with people that they want to learn from and to be out there networking. There is a groundswell coming in this space.

The second thing that I would mention is this: It’s time to go on offense. Clean energy has been on defense for a long time, frankly since Rachel Carson wrote Silent Spring. I think the change came over the last four years in which there was a government that was intentionally squandering the resources of the planet. There has been a change in the US administration, big corporates moving in this clean energy direction, and consumer preferences are changing as well. I think this transition naturally occurs with the addition of passionate young people that will ultimately be the ones to carry it forward. 


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THE TORCH is an interview series from Entrepreneurs for Impact. We profile CEOs and investors mitigating climate change. Our goal is to highlight their work and inspire others. As we deal with multiple crisis, from Covid and racial injustice to climate change and economic recession, we need some of this positive light in what seem like dark times. Onward and upward.




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