Dan Shugar has been trying to move solar panels around since the 1980s. What started with a few experiments as a young engineer has turned into Nextracker, one of the biggest solar tracker companies in the world.
In 2012 he founded Nextracker with a single product. Since then, Nextracker has revolutionized tracking technology through an array of innovative products.
This week, host Lara Pierpoint talks with Nextracker CEO and founder Dan Shugar about product innovation and customer relationships, and how Nextracker made it through the pandemic.
Credits: Hosted by Lara Pierpoint. Produced by Erin Hardick. Edited by Anne Bailey and Stephen Lacey. Original music and engineering by Sean Marquand. Stephen Lacey is our executive editor.
The Green Blueprint is a co-production of Latitude Media and Trellis Climate. Subscribe on Apple, Spotify, or anywhere you get podcasts.
Transcript
Tag: Latitude Media Podcast at the Frontier of Climate Technology
Dan Shugar: You can bring solar panels into a lab and fire hailstones at the panels through a hail cannon. I mean, I look at these young engineers this, I’m like, I can’t believe we’re actually paying you to do this. This is so fun. You get to shoot hail balls at solar panels out of a hail cannon and measure it.
Lara Pierpoint: Dan Shugar is the founder and CEO of Nextracker. The company has the largest market share of solar trackers installed around the world, and although it might not sound like it based on the product testing he’s describing, Dan takes innovation very seriously. It’s been the main through line of his career.
Dan Shugar: When I got involved in the industry in the 1980s, I had the pleasure of working with Howard Wenger, who’s currently at Next Track or as our president, and really we downselected then new single Axis horizontal trackers as sort of the killer app for the industry for a variety of reasons.
Lara Pierpoint: That decision to focus on just one type of tracker. The single axis horizontal technology led to a very innovative idea.
Dan Shugar: We working with others came up with this backtracking idea to generate more yield with how trackers actually work, and so we then really commercialized it in the 1990s.
Lara Pierpoint: By the mid 1990s, Dan had officially joined the company Howard had founded called PowerLight as president, and within a decade they were working on world record breaking projects,
Dan Shugar: Working with tech. We had developed working with tech, others had developed and really focused on that through a variety of companies and projects that were landmarks. For example, back in 2004, we did the world’s first 10 megawatts solar project.
Lara Pierpoint: Today the US is installing 50,000 megawatts of solar a day in 2007, PowerLight was acquired by a leading manufacturer, SunPower. Dan spent a few years there after the acquisition, but by 2010 he was onto his next venture called Solaria.
Dan Shugar: I was CEO of a solar panel company called Solaria that had a low concentration module technology At that time, we were doing it, we needed a reliable tracker. We tried partnering with some other folks in the industry and we just saw there was an opportunity to go back to tracking clean sheet. And our chief technology officer, Alex Au, came up with this balance tracker concept that had an independent row
Lara Pierpoint: And that was the premise for Nextracker, a new independent row tracker that could meet the needs of a modern solar panel company.
Dan Shugar: When we launched the company back in 2013, we had a goal to be number one globally in three years. We actually achieved that in two years, and we’ve maintained that position for nine years by really just focusing on innovation, innovation that adds value to customers, and then really focusing on delivering with operational excellence, incorporating customer feedback.
Lara Pierpoint: That last part about incorporating customer feedback, that’s the heart of Nextracker’s innovation strategy, and it’s made them the biggest tracker company in the world. So how do they do it? I’m Lara Pierpoint and this is The Green Blueprint, a show about the architects of the clean energy economy. We’ve already invented most of the solutions needed to decarbonize the global economy, but many of these technologies are not yet commercial and they need to get financed and built at scale. We don’t have decades to get them commercialized. We have years this week I talked with Dan Shugar, the founder and CEO of Nextracker, about how customer-centric innovation drove the company to become the global leader in solar tracking systems.
Dan Shugar: I’m very much a believer in partnering with customers early when we have new technology to let them pilot it, trying a small amounts, getting their feedback on the actual product and then having their ideas become part of the solution.
Lara Pierpoint: From day one, Dan built Nextracker with a focus on understanding and solving customer problems. Their trackers are designed to address real issues that solar developers face in the field.
Dan Shugar: We’ve made a lot of product introductions over the years and they stick generally as we announce new features. You’ll see we’re actually selling it because we’re delivering the value because in large part, customers have told us that they need solutions to certain problems, and these products and solutions are really targeted right in the middle of what they need.
Lara Pierpoint: One of these solutions came in response to a customer’s devastating experience with hail damage at a solar facility.
Dan Shugar: So it was about four or five years ago, we had a customer, a very senior executive from a major customer in our office. He was quite despondent. He had just had a major hail event happen on one of his projects in Texas. It was on not a Nextracker system, but a different system. But the upshot was they had to replace all the solar panels on the entire project. It cost over $70 million to deal with that.
Lara Pierpoint: The damages were so big that the insurance company who covered the project was wiped out after the payout and after that insurers started to cap the amount of project could collect on a single loss.
Dan Shugar: So while we were speaking with the customer, we came up with the idea, it’s like, Hey, I think we have a technological solution that will significantly reduce the risk. And so came up with this Hail Pro idea.
Lara Pierpoint: The concept behind Hail Pro is simple track when a hailstorm is approaching and tilt the solar panels to minimize damage.
Dan Shugar: The concept was that if there was risk of an incoming hailstorm based on information that’s available to operators that used Doppler radar that can characterize the diameter of a hailstone, the proximity to site and the probability of occurrence, the operator could then command the system to go to the maximum tilt. In our case, it’s 60 degrees.
Lara Pierpoint: The concept quickly turned into reality. It only took Nextracker about six months to design and implement Hail Pro at the customer’s site.
Dan Shugar: We rolled it out for this customer’s fleet while we then kept productizing this idea and then rolling it out for other customers. Today, this is operationalized on hundreds of utility skills systems in hail regions in the Nextracker fleet.
Lara Pierpoint: This is just one example of how Nextracker’s customer centered approach to innovation has propelled it to the top of the industry. I talked with Dan about how they decide what products to develop their design and testing strategy and their unique take on manufacturing and supply chains. How did these conversations start when a customer, for example, comes to you with an idea? Is this happening on a daily basis? Does it happen every so often? How do you know which ideas are the ones to focus on and how does the sort of initial conversation go between you and the customers who have something that you think might be the kernel of a great idea for a product for you?
Dan Shugar: And we don’t have to overly constrain how innovation happens or customer feedback happens or whatever. I mean, yesterday I was on a job site with a customer. We’re doing quarterly business review with one of the leading EPCs in the space, and we had a review in the room. We asked them what’s going well. We asked them what are the opportunities for improvement? And then we hyper-focus on those and then try to really listen to those. And then we actually go out in the field and look at certain products. And a lot of, there were a number of specific things that come out of each one of these engagements. Not all things come from innovations come. I mean at Apple, no one was asking for the iPod or some of the features in the iPhone. Similarly at NEXTracker, when we came out with our adaptive tracking software true capture, no one was asking for that.
So we knew that there were opportunities to get more energy out of the systems. And lemme go way back here. So when I was a young engineer in my twenties, I was actually working at pg e at the time and I had the opportunity to work at the time, the solar or a new technology program. We did some public engagement, we built this little solar trailer and I physically brought it to a fair on a Sunday afternoon. And we’re out there and we are making popcorn electrically with the solar panels. And I set the panels at what should have been the correct tilt angle for that time and that time of year and that latitude, and I was looking, there was an analog and meter that showed how much current was coming off, but it was an overcast day. It was putting out whatever, five amps.
And I was like, huh, it’s really overcast. I wonder what would happen if I set it flat. And so I brought the panel angle down to horizontal and it went to like six or seven amps and I’m like, wow, the sky is basically a big diffuser on a cloudy day and you can get more energy out. We knew then that the backtracking technology we had developed in 1991 was good. It was a step improvement over what was called true tracking or just following a clock. So that was better than that, but we knew there was additional opportunity, but we didn’t have the control technology until we had launched the Nex Horizon platform. So then we started thinking about, well, how do we measure the sun real time? And then we at X Tracker actually acquired this machine learning company called BrightBox about eight or nine years ago and had some super talented people that came into the company and through that team and some of the people at Nextracker, they came up with this idea that actually on a hilly site, we need a customized backtracking algorithm to get even more energy out with a backtracking algorithm in the early morning and late afternoon.
For example, if you’re building over a hill and the sun is setting in the late afternoon, the systems that are downhill toward the sun are doing just fine, but the ones that are uphill, one tracker would be shading the other if they’re all at the same angle. And so you’d want to have an optimized angle. So we were able to come up with this idea, which was a new idea. When people showed me my office, I’m like, what? I don’t get it. How does this work? Are you crazy? But they did the math and we saw it. I was like, it was a great idea. So that’s something we came up with. We then socialized that with customers, got their feedback in particular the commercial terms of how that we would structure that, so it’d be a win for them also then how we would validate it.
So when you introduce a new technology like this, you want to have it validated as you go to market or before you go to market. So in this case, we work with some early adopter customers. We had several utility scale full versions of our true capture actually operating in the field with a measurement and verification protocol. And there’s ways to do these that are rigorous and valid. So basically you have measured data of a control system, measure data with your tech, and then in our case, we would swap those. So like you have a control area, the part with our technology, you operate it a day and then you change it so that the control error becomes the test area and vice versa. And then you do that continuously and that removes experimental error and those kinds of things. So when we come to market, we’ve already socialized that information with independent engineers, with customers, and people believe it. And also through that process we discover things in the tech that can be improved. And so this measurement and verification is essential for everything we do.
Lara Pierpoint: And so as you’re thinking about then translating these innovations to deployment where you’re really deploying at scale at a global level, can you talk a little bit about your strategy around manufacturing? How did you think in the beginning about what to manufacture or assemble on your own versus rely on contracts and suppliers and how has that changed over time and how do you do things? Now?
Dan Shugar: We have a similar approach as some other technology companies like Apple. We really focus on where we can design and product position, strategy, customers and so forth. Rather than trying to run a world-class manufacturing facility, which is its own animal and skillset, what we do is partner with companies and then that allows tremendous opportunities to geographically position some of the supply chain activities in the more logical places. For example, two years ago we announced a major manufacturing facility with our partner James Steel, physically on the campus of the newest steel mill in the United States, which is in Sentin, Texas. It’s actually operated by steel dynamics. It’s a 3 million ton steel mill and they do coating. And so literally on their campus about a mile from the actual mill, we bring master coils of steel in that are then cut down and then made in some of our components by our partner JM Steel, which operates dozens of steel facilities around the world versus I asset Nextracker insourcing and doing all that activity and trying to manage all that.
We’re better focused on the other aspects of creating value that I’ve mentioned. And so that type of model has served us extremely well. It’s very capital efficient, but on some areas of developing key manufacturing technology, that’s where we’ve leaned in and we’ve developed some technology that we then have purchased equipment and consigned it to our suppliers or have directed them to incorporate next generation manufacturing technology that we’ve come up with into our product set. For example. We make electronic controllers and we’ve developed a lot of testing and approaches to that that we’ve then, as we increase our supplier base, we’ve been able to help them accelerate and have a more consistent product that’s more reliable and more cost effective as we continue scaling.
Lara Pierpoint: I love that. I mean, I’m gathering between your global deployments and your supply chain that you probably have some of the most awesome frequent flyer status of anyone that we’d speak to on the show. But one other question about this, do you have any advice for folks as they’re thinking about globalizing, particularly their supply chains around how you manage things like disruptions? How did you all weather the covid times? Was there anything crazy about that moment for you? Anything that you did that enabled you to keep moving forward as a company during that moment?
Dan Shugar: That’s a great question, and we were caught off guard.
Lara Pierpoint: We’ll hear from Dan on how Nextracker weather, the Covid pandemic, how it changed their business, and more about commercializing the Hail Pro after the break.
Dan Shugar: So what happened is prior to covid, customers want low cost. We were manufacturing all around the world. We didn’t have that much in the United States. We had a very small footprint of manufacturing here, and the company was in great shape. Prior to covid, I was thinking, wow, we were really geographically diversified. We’ve markets all around the world, we’re manufacturing all around the world. I was feeling really good about the company. And then in the early days of the pandemic, the global supply chain in particular, logistics went off the rails. And so we saw in about one to two quarters, steel roughly doubled and logistics costs tripled in some corridors shipping from point A to point B in like four to six months. And that was not something that we had anticipated and most of the other companies had not. But we then reassessed and pivoted and it ended up being, it made us so much stronger.
So what we decided to do is sort of what I call a hybrid strategy where manufacturing strategy, where in most of the key markets around the world, we want capacity within that market that’s right sized for serving the market, but also has excess for export if conditions, warrant, and then also to be able to continue importing into key markets. So in the US in particular was we had the lowest ratio of capacity to demand that we did compared to other major markets. We embarked on a massive program of building out capacity with key suppliers. I mentioned the JM Steel facility in Sitton, Texas. Well, we did Today we have over 20 major manufacturers in the US shipping finished goods, and that gave us the opportunity to be able to serve customers with very high on-time delivery metrics that we weren’t beholden to an overseas port that might’ve been shut down due to government mandated COVID restrictions.
Or at one point the largest port in the US is at Long Beach, California. There were over 80 ships at anchor waiting to birth to offload their goods and then getting materials out of the port were very difficult. It’s funny, we had a customer meeting happening and the customer’s like, well, I don’t understand why this stuff’s late. And before we had completed the build out in the US and while we were sitting there, the waiter came over and said, yeah, sorry, X, Y, Z is not on the menu due to supply chain issues or stuff. We can’t get this stuff out of the container in the port. So I just said, okay, time out. At this point in my career, I’m not going forward like this. We are going to massively solve this issue. And so we really leaned in. We’re sourcing from three of the top four steel mills in the United States that have multiple manufacturing locations.
The other thing we hadn’t fully appreciated prior to that was how much cleaner the steel is in the United States. And so we started working with local suppliers and really understanding the embedded carbon content and other emissions associated with this deal. And from that, we were able to conceive, launch and start selling a new product called a low carbon tracker. So that’s basically how we responded to the changes that we saw in covid and in running a company, problems are to be anticipated. If it’s a problem with a customer, those are to be anticipated. Every problem with the customer is really an opportunity to deepen your relationship with the customer by how you approach it and how you solve it. In our case, with the pandemic, we maintained pricing with our customers. We then retooled our supply chain and popped out the other end with a cleaner product that was faster to be able to deliver and also package it in a way that was more compatible with their needs. And from an internal standpoint, these challenges are opportunities to make the company stronger and more competitive.
Lara Pierpoint: I love that. I mean, it was definitely a really wildly disruptive moment and it’s really nice to hear these stories about folks who managed to weather it and honestly have a better company on the other side. That’s super cool. Let’s switch gears for just a second and talk a little bit about one of your specific newer and most exciting products, which you’ve already mentioned, which is your NX Horizon Hail Pro product. I would love to just get a little bit more around the story here. What was the genesis of creating this as a product that you offer?
Dan Shugar: I mentioned our systems balanced and it’s individually activated. It, it communicates with a wireless mesh network. So our systems moves very quickly and we can command this very, very rapidly. And then what we started doing is saying like, okay, we sent a command. Well, how good was the system in responding to it? And then we started testing that and training operators and then simplifying the graphical user interface, the gui, and then doing periodic tests with customers to make sure that the efficacy of this thing really worked. So we started rolling out this program and also meeting with underwriters and brought in arm in arm with our customers in some cases and really helping socialize this with the insurance folks so that to help reduce rate increases or in some cases lower rates that had been increased. So we were all in on this program. I personally was involved with a standing weekly meeting on this just to really support the team, make sure it was adequately resourced. Then we saw an opportunity, some customers like, Hey, that’s great. You’ve radically reduced the severity of the danger. We want to take it to the next step. And so then we introduced a new product where instead of going to 60 degrees, it actually went all the way 75 degrees. We announced that that’s being shipped. I physically was on a job site where that’s out there. Customers are really happy with it.
Lara Pierpoint: Couple quick follow-ups on this. When is this fundamentally a software solution or did you actually have to reinvent some elements of the hardware particularly to get to the 75 degree angle?
Dan Shugar: Both.
Lara Pierpoint: Both. Okay. Yeah, I would imagine. I also want to pick up on something you said rather subtly that I think is actually a really fascinating piece of the story, which is that you brought insurance underwriters and to take a look at this as you were developing it. So can you say a little bit more about that piece of the story here? Because I think part of what we see in particularly early commercializing climate tech is that insurance could be a really huge unlock and it’s challenging to get the underwriters comfortable with particularly sort of first of a kind technology risks. So do you have a longstanding relationship with insurers? Did you get a sense very quickly on how much data they needed to see to get comfortable changing insurance costs for these installations? Were your customers involved here? I would just be curious to understand a little bit more about your interactions with the insurance side of the industry.
Dan Shugar: We did both. We were directly involved in some underwriters and some insurance companies, and we also had customer requests to sort of go arm in arm with them and talk about the measures we were doing. One of the things they asked for the insurance industry is they’re like, okay, that’s great. We understand conceptually how this works. Can you show us forensically times your tech was deployed and near misses? So in other words, oh, there was a hell event at this site. Your stuff was deployed, there’s no claims. And we thought that was a good ask. So we started implementing like, okay, let’s start really collecting information about how often this thing is deployed and then what actually happened on the site. And we’ve been supporting that ask. And there are some cases where we’re aware that customers were able to reduce their insurance costs by really good documentation on this stuff. It’s still early days. The insurance industry has had some big payouts, and then they want to basically see how this stuff evolves over time, but we’re confident that the right engineering, the right operations, the right, and then focus on asset management, that’s really operationally excellent to make sure that the tech is as simple as it can be. The operators are well trained stuff when these events come along that the right commands are issued or that those are automated and set up in a right way to happen without human intervention. Both technologies are available.
Lara Pierpoint: Well, I’d love to get into a couple of reflections on where you are with this business, and one of the things I’d love to ask you about is that you’re one of the few shining examples out there of a hard tech climate company that has had a successful market exit and is now a multi-billion dollar company. So can you talk a little bit about, and one of the reasons I actually I’m specifically asking about this is that one of the things that we’re seeing right now, again in the climate tech innovation ecosystem is it’s getting harder and harder for particularly some of the mid-stage investors to have faith that more exits are going to happen, particularly IPOs, but also even acquisitions, some of the other sort of traditional exit pathways. So can you talk a little bit about your exit moment for the company and was it obvious and easy to kind of do an IPO or was it a little bit more challenging than that, or any advice you have as folks are trying to think about how to set themselves up for success for that exit moment?
Dan Shugar: I think the main thing, if I were to give advice is to basically build a plan that you can hit despite unknowns when you launch, don’t over promise and under-deliver, do the opposite. It doesn’t mean you sandbag. What it means is that you can set an aggressive plan, but that you have to assume that some things are going to be harder or take longer than you might want. In an ideal world, when we went to go public, the market had been pretty much closed for five or six months. I don’t think there was a single IPO or certainly not a big one, and we had a very successful IPO. It was a little bit over two years ago now, and it was a good experience when we did it, and we’ve really focused on making sure that we’re able to achieve expectations we create out there.
What’s primary is having the right mission, vision, and culture to be able to inspire a team and really focus on what the customer really needs at the end of the day. So focusing on a culture where for us, it’s really about innovation that delivers tangible value for the customers, and then focusing on, well, what are the customer needs? Being able to execute on that with hyper-focused to make sure that what you’ve promised you actually do, and then having the right team to basically be able to do that. The company’s not a family, it’s a team.
Lara Pierpoint: I have to ask one more really quick lightning round question, which is just with the rise of AI and the future of solar and climate change as an increasingly dire issue, any predictions about what the future holds for solar as an industry and for an X tracker? Within that picture?
Dan Shugar: Eight years ago, nine years ago, we were able to use AI and machine learning in our adaptive tracking software. So we’ve been able to incorporate that in our products. I think there’s an opportunity for companies to use some of those technologies to make their businesses more efficient in contract review and things like that. Probably coding, computer coding, things like that. But we’re already seeing significant increased demand for solar, for AI data centers. There’s this narrative out there and that like, oh, hey, this 24 7 load, it needs base load power. I don’t really fully agree with that. I think there’s some cases where that could be true, but generally speaking, if you look at the difference between the peak in a utility in the us there’s 3000 utilities and overseas there’s a lot more obviously. But if you look at like, Hey, here’s the peak in the middle of the day versus five or six in the afternoon, depending on where it’s happening and three o’clock in the morning, there’s a huge difference in those.
We’ve seen energy storage go from one hours to two hours to four hours. Are we going to be six hours in a few years probably. And so if you look at solar plus storage, that gets you really far down the road in terms of addressing the peak. What we’ve seen the largest utility in the world next era say we agree with, which is the most cost effective forms of energy are renewable, solar and wind. And then for capacity, what they’re focused on are batteries and gas. And so there might not be, from an actual energy standpoint, most of the energy is going to come from the renewable stuff. As you look forward, might there be some gas out there for capacity? Yeah, sure. I guess so. But at least in the near term. But we see this as driving. There’s many projects we can point to at the company where you have hyperscalers with power demands that are fairly constant across a 24 hour period driving renewable energy, significant amounts of renewable energy coming in.
So up to a few days ago, the data we had was, yeah, five years prior, solar was 10% of the US grid, and then it was 50% of the power generations added to the grid. Then a few days ago, the report came out that in 2024, we just saw the latest data, solar and storage account for 84% of the capacity added to the grid. I think 50 gigs of solar was added. I mean, that’s unbelievable. The most of any energy technology added to the grid in decades in a single year. So I’m very optimistic about the growth of our industry and the ability of us to keep serving with reliable, affordable energy that also provides capacity with storage. Well into the evening after folks go to bed,
Lara Pierpoint: Dan could not appreciate this more. This was such a fun conversation. Thank you for joining us.
Dan Shugar: My pleasure. Thanks for having us on the program. Lara.
Lara Pierpoint: Dan Shugar is the founder and CEO of Nextracker. The Green Blueprint is produced by Latitude Media in partnership with Trellis Climate. The show is hosted by me, Lara Pierpoint. Our producer is Erin Hardick. Ann Bailey is our senior editor. Sean Marquand is our technical director. Stephen Lacey is our executive editor. If you’d like to suggest topics or guests for the show, send an email to the greenblueprint@latitudemedia.com. You can listen to The Green Blueprint at latitudemedia.com or subscribe wherever you get your podcasts. And if you have fellow clean energy or climate tech travelers who would benefit from the insights in this show, send them a link. This is The Green Blueprint, a show about the architects of the clean energy economy.
