When Michael Polsky, MBA’87, first ventured into the field of renewable energy in 2003, he thought he’d missed the boat, believing people were well ahead of him in building clean energy projects.
Today, he said we’re barely in “the third inning” of the renewables game. The founder and CEO of Invenergy, one of the largest renewable energy companies in North America, Polsky believes it’s not a question of if but when the United States becomes completely energy independent of fossil fuels.
Paul Rand: From the University of Chicago, this is Big Brains with Paul M Rand. Conversations with pioneering thinkers that will change the way you see the world. Michael Polsky is one of the world’s leading entrepreneurs of renewable energy. He also happens to be an alumnus of the University of Chicago’s Booth school of business. He began his career as a power plant engineer, but today he runs one of the largest independent energy companies in North America. In addition to renewables, Michael’s also investing in the next generation of leaders to the Polsky Center for Entrepreneurship and Innovation here at the University of Chicago.
Paul Rand: I visited Michael at his offices in downtown Chicago to discuss his journey from the Soviet Ukraine to the United States, as well as his efforts to build the largest wind farm in the country, and why he says it’s not a question of if, but when we will become energy independent of fossil fuels. Today, we have Michael Polsky with us who is the founder and CEO of Invenergy, and he also happens to be a University of Chicago trustee. So thank you for being with us today.
Michael Polsky: Thank you very much for inviting me.
Paul Rand: Absolutely. And one of the things that we try to do on Big Brains is have people to talk about the big insight or an invention or discovery. And it was a little more challenging with you because there’s four areas that we could talk to you about that you’re pretty compelling in. Number one, being an entrepreneur, a renewable energy pioneer, a philanthropist, and also kind of being a new venture guru. So I’m hoping we’re going to squeeze all four of these things under the discussion here today. And so I wonder if we can just start by having you talk a little bit about your company and what you do.
Michael Polsky: Invenergy, we’re an energy company. We can describe ourselves as a company that develops, owns, operate various power generation facilities around the United States and abroad as well.
Paul Rand: Well, you started off if I can say, as a power plant engineer and start us of how you ended up coming to the United States.
Michael Polsky: I came to United States in 1976 as a refugee from the former Soviet Union from Ukraine. I went to school in Ukraine to a place called Kiev Polytechnic Institute, and I get their master’s degree in mechanical engineering. So when I came here, I didn’t speak any English, but I had masters degree, which proved to be better than speaking language. And eventually I end up in Chicago working on design of various power plants.
Paul Rand: Okay.
Michael Polsky: At that time, it was mostly coal plants as well as coal generation plants.
Paul Rand: And then in 1978, something pretty dramatic happened, is that right?
Michael Polsky: What interesting happened was that after oil embargo and United States and shortages of oil, in mid seventies, the Carter administration changed the law or introduced promulgated new law called PURPA Public Utility Regulatory Policies Act. And there was first of a kind of legislation around the world, which allowed private companies to own power generating for certain kinds of power generating facilities. So historically utilities owned those plants, not really private companies the utilities that had, so the monopolies for certain territories to generate and distribute electricity. The first time of a private people can generate electricity and sell it to the grid. So this law was challenge in number of courts, and then finally in 1982, it was affirmed by the United States Supreme court. And that’s really was the beginning of sort of as we call it, independent power industry.
Paul Rand: So, I wonder, Michael, if you could talk a little bit about what business your first two companies were actually involved in.
Michael Polsky: So the first company that I co-founded, we were developing building operating we call co-generation power plants. There was a power plants that produce electricity that we supply into the grid and plus steam. And normally steam would be going to the industrial use. So this plant with a dual use, that’s both steam and electricity. The second company that I founded, we were doing also co-generation power plants, plus at that time we start also building regular power plants. Just power plants that produce only electricity, either for base load or peak in plant, we call. We produce electricity only during the period of high use.
Paul Rand: And so at some point, did you see yourself as a green entrepreneur and you thought when this CR when the renewable thing came, that that was either this hit a passion for you, or did you just think this is just good business?
Michael Polsky: Yeah, actually everything started again from a little different direction. Is more, again, we had a massive overbuild in late 1990s, early two thousands. So when I started in 2001 Invenergy, clearly the need for conventional power plants was not there. So we started thinking really, if we want to continue to be a developers, building something new, what that something new would be like? And we had a good relationship with a company named General Electric and General Electric at that time, bought a wind from Enron when Enron collapsed. And we thought, oh, maybe we should start looking at the renewable energy, particularly wind at the time. Because remember it happened, it was September 11, so people start thinking about other options that they might have to generate electricity.
Michael Polsky: The natural gas prices started going up. Obviously people start talking about national security, people start raising more environmental issues, particularly with coal. And when we look at wind, we thought, a lot of this issues that people are raising, we can address with wind. So it seems to be it just a good business proposition to move into wind.
Paul Rand: And so if you think about where we are as a nation and as a world, when it comes to renewable energy, where are we in the life cycle?
Michael Polsky: We got into renewable in earnest in 2003, I thought we were too late. I thought there were already people build projects and maybe we just, nobody realized the really potential of this. Everybody look at this at the time as kind of a niche industry. It may be a few of these builds, but nobody kind of understood the magnitude. But very quickly I realized, at least in my mind, the magnitude. Because I saw not as environmentalist necessarily, as a person who understand technology, the potential. Okay? Environmental is more sort of one of those issues that help, but not necessarily controlling issue.
Michael Polsky: So there is a lot of opportunity here. There is a lot of room to grow. So from very early on, I started saying, this is just the beginning. So now we’re sitting here in 2018, with 10 times as much a wind that we had before when I started and tremendous amount of solar that did not even exist at the time. And I still believe that in United States, we still, I can say with the very beginning, but we probably only in a third inning of the game.
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Paul Rand: You gave the convocation address at the Booth School of Business back what? Two years ago.
Michael Polsky: Yes.
Paul Rand: I have to tell you it, it is one of the most thoughtful moving convocations I think I’ve read. It was inspiring.
Michael Polsky: Thank you.
Paul Rand: And the thought that went into it, the lessons that came out of it, of entrepreneurship, of perseverance, of ingenuity came to life in an incredibly personal way. How did you get involved with the university of Chicago and talk a little bit about what your role is there today?
Michael Polsky: So, as we discussed before, I moved to Chicago in 1980, and remember I was an engineer with a degree from Kiev Polytechnic Institute was very unknown in this country. And I also did not have, coming from Soviet union, I didn’t have a lot of knowledge in economics and sort of in business side of business. I was very technical guy. So I always thought, it would be nice to go to a good business school.
Paul Rand: So now we’re in Chicago, when you think about Booth. It was GSB at the time, right?
Michael Polsky: There was a GSB. So I took my GMAT. It was still, it was pretty good math part, the quantitative part, but it was still very low verbal part, but my math was good. They took me in without even an interview. So I was very pleased with that.
Paul Rand: And then you also made a pretty big commitment to the university. I think as we’re here and this we’re talking about this during the kickoff of something, which is called Innovation Fest, but you have a lot behind all of this. And I wonder if you can talk about what you decided to do there and why you did it.
Michael Polsky: So I was one of the early entrepreneurs when entrepreneurship was not as popular, I would say, as it today, in ‘85 were very few and far in between. And I also operated in suburbs of Chicago, so I was not really connected much to the community. And I always felt like being entrepreneur as sort of being different. Nobody’s sort of paid attention to you. You’re not recognized, you kind of operate this in your own world. And that kind of feel in some way, I feel sort of, I don’t belong anywhere. Neither I belong to traditional business community. There was no really other new business community. So I was sort of, kind of circulating on my own.
Michael Polsky: And then as I sort of more or less succeeded financially and professionally, particularly after I sold my second company, I always felt that, that’s something that has to be more recognized and more visible people that really go starting their own companies. And I remember there was also, at that time, the IT business internet started booming and in nineties and people start new companies. But I also fell that in the area of, it’s not just IT, but there are other businesses that people start as well. After that, I call university of Chicago and I said, ‘‘I really would like to contribute something back to you.’’ Because I felt like, I’ve succeeded and part of my success belong to the university as well.
Michael Polsky: And then new dean came in, Dean Snyder, and I think in early 2002, he came to my office with some sort of a slide presentation on paper. And I saw on the front page center for entrepreneurship. I was so excited, not only with this, but that major school like this start to recognizing entrepreneurship as something that they want to teach, or they want to be a part of the school. And to me, it was like a revelation, oh, wow. I’ve been saying preaching for this for years and years and years and years, and finally it’s happening. I was like ecstatic.
Paul Rand: You know, it’s interesting, we, to they get ready for Innovation Fest, did a survey and we found that over 70% of all Americans don’t think that the United States is doing enough in innovation, but they actually are looking toward universities to be a major driver of innovation and growth. So the thinking that you had in the point of paying attention to it in the way you did seems to be incredibly on target.
Michael Polsky: I always believe that educational institution really form people, form their minds and really help people to decide what they’re going to do next. A lot of people used to go to business school without really knowing, understanding whether they want to do. They want to change career, some maybe didn’t like what they were doing at the time. Some of them simply just look for new things or some maybe want to continue the way it was, but they were introduced to other areas, but nobody really was introduced to entrepreneurship, innovation in the sense that there is other way to do things. Not just necessarily the way to a particular technical area or some other area of employment, but by just the way to do things, just the way to think, the way to operate. And the way you maybe control your own destiny in the future.
Michael Polsky: And I’m so happy that that finally it’s really taken a lot of traction now. And I feel that it’s absolutely essential for every or most educational institution, including University of Chicago to have that area in order to be essential and give young people what they really want to do opportunity to what they want to do in the future.
Paul Rand: Some of those folks are coming and the new venture challenge is coming in and other things, one of the questions that students right now that are in school are graduating, if they’re engineering minded are scientists are probably saying, ‘‘Well, what’s next?’’ If I was going to get started doing something entrepreneurial today and making a difference, where shall I put my energy? If you were providing advice to those folks, where would you guide them?
Michael Polsky: I don’t know if I qualify, give sort of broad brush advice, what what to do. But my view is just to keep your eyes open and look for things, and look for opportunities. And to be an entrepreneur, and in the way there is not necessarily invent something new that did not exist before is sometimes just to do things better than other people already doing things. And it could be a small change, it doesn’t necessarily not everybody would invent another Facebook because there are a lot, I mean, the efficiencies out there. In a lot of companies and corporations, they do things sort of the way they used to do.
Michael Polsky: I think there are so many opportunities there. I always tell people I was lucky, maybe I was at the right place at the right time when kind of a brand new area of business have started. Okay. But nevertheless, there are many, many opportunities right now. And as a matter of fact, I’m invested in a number of other things that other people are doing very, very interesting things. And not everything is revolutionary. It’s fine if business just a pivot of something existing to something else.
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Paul Rand: And now if I understand it right, you’re building the second largest wind farm in the world?
Michael Polsky: That’s what we believe it’s largest in the United States and probably the second largest in the world after China.
Paul Rand: And where are you building this?
Michael Polsky: In Oklahoma.
Paul Rand: What can you tell us about that?
Michael Polsky: So this would be a very massive wind farm. It will be have a capacity over 2,000 megawatts, which is roughly two nuclear power plants.
Paul Rand: And so the equivalent of two power plants, how much actually energy is that and what can you do with it?
Michael Polsky: So just put it in more conventional terminology here. The electricity produced by this wind farm would be sufficient to power 1.1 million households. So it’s a lot of electricity.
Paul Rand: A lot of electricity.
Michael Polsky: It will cover about 200,000 acres of land. But turbines will be covering relatively small portion, but there’s going to be spread around. So it’s going to be around 800 wind turbines on 200,000 acres, and like I said, generate massive amount of electricity.
Paul Rand: And how did you decide on Oklahoma to place this?
Michael Polsky: Because when you build wind farms, you go where the wind is, because if it costs you the same bill, the same amount of money to build a wind farm, whether it’s windy or not windy. And if you already spend money building a plant, and if it’s windy area you generate much more electricity. So by definition cost is going down because you utilize your plant much more in a windy area compared to other areas. So, it’s very natural. It’s in a wind tunnel of the United States sort of speaking. And it’s a area that is a fairly scars populated. So you really don’t encroach in people’s houses and affect their life and so on. So it just a place, again, this is one of those things that make sense.
Paul Rand: And when do you expect the operation to be up and running?
Michael Polsky: We expect by the end of 2020.
Paul Rand: Okay,. And so when you think about it now and for the listeners that we have, how do you think about the size of the renewable energy market today, where you think it will be in five years, 10 years, 20 years?
Michael Polsky: Okay. And maybe, I don’t want to sound sort of opinionated here or partisan in any way, but I really believe, as an engineer, as a technical guy, as a person who’d been in the energy field for almost 40 years, as somebody who’s in the ground all the time, I really believe that future of this country and around the world is a renewable energy.
Paul Rand: Okay.
Michael Polsky: It’s a question is when are we going to get there? It’s not a question whether we’re going to get there. We will get there.
Paul Rand: Okay.
Michael Polsky: So I believe that for many reasons that I can go through, we just don’t have the time renewable energy make a lot of sense. And that’s why it would prevail, that’s why world would see a lot more renewables that it’s now because it makes a lot of sense. It’s not only for environmental reason, it’s not for right or left reasons, it’s because it makes sense reasons. So I really believe that eventually, and it’s a question of when, this country will be always 100% renewable energy. It may take half a century, but we’ll be there.
Paul Rand: So do you use this word earlier, do you see yourself at this stage as an environmentalist?
Michael Polsky: Even if renewable energy will bring zero environmental benefit, assuming.
Paul Rand: Yes.
Michael Polsky: It will still be there because it makes sense for many other reasons. Environmental is just one of the reasons, it’s not the only reason.
Paul Rand: Right. But it’s become important to you, I imagine?
Michael Polsky: I think important to me because I believe we’re doing the right thing. It’s not important to me for ideological reasons. It’s important for me for technical reasons. I mean, just same people in high-tech you do 3G phones and then 4G and the 5G is not, changing this because for right or left reason, because it provides better value, it’s better for consumers, better for the user. I think same with renewable. It just a better way to generate electricity.
Paul Rand: Thank you for the insights and all the ideas and for being a guest on Big Brains with us.
Michael Polsky: Thank you for inviting me.
Paul Rand: Big brains is a production of the U Chicago Podcast Network. To learn more, visit email@example.com and subscribe on iTunes, Stitcher, Google play, and wherever else you get your podcasts. And if you liked Big Brains, you might enjoy another U Chicago podcast, Knowledge Applied: Taking You Inside The Research, Reshaping Everyday Life. Thanks for listening.
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