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Latitude Media, covering the new frontiers of the energy transition. highly complex, stretching across markets, policy, capital flows, and the institutions that connect them all. Now, I've listened to a lot of infrastructure podcasts in my day, and most of them are, well, let's generously call them dry. This one is different. It's hosted by Crux CEO Alfred Johnson. This is someone who started multiple companies, worked in a senior position in the Treasury Department, and now sits at the intersection of capital markets and clean energy. And in each episode, we hear from guests who are deploying dollars, structuring deals. Navigating policy or building companies at scale. And Alfred acts as a translator between those worlds to help listeners understand how macro forces turn into real-world decisions about infrastructure. This episode you're about to hear is with Jessica Bailey at Nuveen, an institutional investor with over $1.4 trillion in assets under management. And Alfred and Jessica talk about the megaforces that are reshaping how a giant like Nuveen funds infrastructure. If you like what you hear, there are lots more episodes on the Critical Capital feed, including. Conversations with Harvard professor Graham Allison about U.S.-China relations, former British Foreign Secretary David Miliband about global energy access, and former trade representative Sarah Bianchi about the new rules of industrial policy. There's a link right there in the show notes where you can subscribe to the pod. And now on to this episode of Critical Capital. The infrastructure economy is entering a period unlike anything we've seen in a century. An aging U.S. power grid is reaching its limits, just as demand from data centers, electrification, and manufacturing is surging. Meanwhile, investors are awash in capital and looking for the best way to finance the next generation of energy and digital infrastructure. Infrastructure that they need to deploy fast enough, smart enough, and with the right financing structures to keep pace with this unprecedented moment. But at the same time, there's uncertainty around federal regulations, permitting, and a growing public backlash against hyperscale data centers. It all makes sense. For an exciting and challenging market environment. I think of the kind of convergence of these things is actually where a lot of the excitement is right now. This is Critical Capital. I'm Alfred Johnson, the CEO of Crux. We're the capital platform for the clean economy. My guest today is Jessica Bailey, the global head of infrastructure at Nuveen, an institutional giant with over $1.4 trillion in assets under management. They've been investing in infrastructure since the start of the firm in 1898. Jessica previously worked in philanthropy and has played a key role in developing Seapace Financing, a financial tool that helps decarbonize buildings. She eventually co-founded Greenworks Lending, which was acquired by Nuveen in 2021. Today, she helps direct $40 billion in infrastructure investments across the energy transition, digital infrastructure, and the energy sector. She's also a co-founder of Greenworks Lending, transportation, and the built environment. And I've gotten to know Jessica and the terrific team at Nuveen over the last year as we've developed and announced a large new debt facility to scale Crux's investments in clean and critical infrastructure. Jessica Bailey, welcome to Critical Capital. Thank you. Excited to be here. I want to jump immediately into it. So you have talked about the fact that we are witnessing this generational redesign of how we build and invest in global infrastructure. And you said that it's unlike anything that we've seen in the last half century. What does that mean? And what do you think are the primary forces that are driving the transformation? Yeah, when you when you phrase it like that, I sound a little bit hyperbolic, right? But I actually think it is that big. It is that generational. If you think about infrastructures like the fabric on which societies are built, what I feel like we're witnessing right now is this fundamental reshaping of that fabric. And we spent a lot of time talking about the kind of political or ideological piece of that. And I think it's a really important piece of that. And I think it's but I really think, you know, there's three fundamental things happening right now that are having massive transformational effects. And that's the energy transition that we're seeing electrification or digitalization or however we want to talk about that. And then just a really old kind of aging traditional infrastructure that all needs to be rebuilt. So you get those three things together. It's really hard not to be kind of dramatic about the hugeness of what we're all facing here. Yes, I want to get into the three themes in a second. But first, I want to ground in in Nuveen, because you know, we've been talking about this for a long time. And I think it's a you have such a cool platform. It's been around since 1898. I think if I have it correctly, and I heard you say that you've been investing in infrastructure since the beginning. You just talked about how we're in this transformational moment that's unlike anything that we've seen in a long time. Do you think that the capital solutions that have been applied in the past are the right ones here? How do we need to think about the capital side of the equation differently? Yeah, I mean, I think you go back to like the highways, the bridges, the railroads that sort of fueled what I think of as sort of infrastructure. And I think it's a really cool platform. I think it's a really cool platform. I think it's a really cool infrastructure 1.0. And we were kind of structuring the original municipal bonds to supply financing to build the roads that were necessary to move goods and services around. There's definitely a level of sophistication that has hit this market that probably wasn't around 100 years ago. And we all started doing this. It was a little bit more kind of vanilla ice cream type financing of infrastructure. I think because of some of the kind of innovation in the financial markets overall, we're seeing a lot of really cool structures that have come into this market that are meeting the needs of the people. And I think it's a really cool both of the builders of the fabric of this new infrastructure, but also the investors that are putting really huge sums of capital into this market right now. So that's exciting. That's the fun stuff about what we get to do as sort of a specialist infrastructure investor. We get to help define what those new financing tools are, how they're used. That's been a lot of fun to be a part of. What's an example there that you're proud of? So we can talk about CPACE, right? So CPACE is a type of financing that I have some fingerprints in helping to design over the last couple of years. It stands for Commercial Property Assessed Clean Energy. Really horrible name and an equally horrible acronym, I admit. But essentially what it was, was a policy innovation that allowed for clean energy upgrades in real estate to be financed using the municipal tax rules. So we kind of take a municipal financing structure, we marry it up with what kind of feels like a little bit of a commercial mortgage structure, and we get a type of financing that is helping to renovate and it kind of started as an ABF type structure where we're using the securitization market to bring capital into the rated notes that were coming off of the financings that we were making. We've now moved it into more of a fund model where U.S., primarily U.S. insurance companies are able to move pools of capital into rated note feeders, not to get too technical here, but you're asking about financial structures. But these are, you know, these are kind of innovations and they have had massive efficiencies and allowed, you know, huge markets to grow. And what I think of as part of this infrastructure 2.0 thing that we're talking about. So, Jessica, your background in C-PACE is the history of the industry. And I particularly find it so interesting that you were at the Connecticut Green Bank as the structure was starting to hit the market. Can you tell a little bit of that story and the evolution of the market through your eyes as a primary innovator within it? Yeah. And I mean, I'll take you back even a couple of years before that. I actually started on C-PACE sitting in a seat in philanthropy, which is not necessarily where you think of like entrepreneurs starting their lives. But I was sitting as a program officer at the Rockefeller Brothers Fund with the mandate of passing policies to promote climate change solutions in the U.S. And I was approached by someone who was setting up a nonprofit to try to bring nationally something that was happening in Berkeley, California, that was using the garbage collection assessment system to finance rooftop solar on homes. And the guy came in, he explained it to me. I'm quite literally being seriously serious with you when I say I had to Google what is a municipal bond after the meeting because I had no background in any of kind of the public finance side of the business. That was sort of the beginning of C-PACE. That probably would have been like 2008-ish and then got the first nonprofit started to start moving this policy around the country. Got really excited about the potential for this policy to have an impact on decarbonizing buildings. Care about climate change. You got to care about buildings because they contribute a lot of emissions to the to the planet here. But I got a little bit frustrated that we weren't we weren't actually seeing the policies turn into action. And so left to work for the state of Connecticut, who just started their Connecticut Green Bank, trying to figure out ways that the public sector could create structures to scale private capital. And I said, hey, I'll totally do that. But have you heard about C-PACE? Let's see if we can get that done in Connecticut. So we sort of incubated a program in the state of Connecticut. It worked quite well. But after about a year and a half of doing that, we decided it it was time to see if we could do it outside of Connecticut. Right. If you really want to have an impact, it's hard to make the case that you can do it with three million, three million people in Connecticut. So we left. My partner and I founded a company and kind of nationalized C-PACE, brought it to now I think it's 40 plus states that it's in. We just got laws passed in Canada. So it's been a it's been a cool story. Jessica, what do you think obsessed you about that initial problem? Why did you get interested in the Berkeley guy with the garbage collection and the property assessments? And why did you see that as such an elegant solution to something that you cared about? So I think at the time, maybe still even there's a idea that the role of the government is to throw money at society's problems. And that's the way they're going to get solved. And, you know, whether it's climate change or anything else, the focus turns to the government of how can you fix this? And what I liked about C-PACE policy was that what we were asking the government to do in the market was what governments are pretty good at, which is setting a market structure. That gives an investor a price signal so they can move the capital in to scale the solution. And so for me, it sort of had this ability to not just be like a like a pilot project where the government say, look, look what we can do. Instead, it was the government saying, sure, we'll we'll allow a law to be passed that meets the societal goals that we're we're aiming for here. But you investors, private sector, you're going to be the ones that need to scale the solution. And for me, that was just a really kind of elegant way for everyone. To stay in the lane that they ought to stay in. As you think about public private partnerships and ultimately, as we know, you know, elections change and appropriations change. And there's really not many examples of the government having the ability to stay at something for as long as they would need to stay at it in order to scale a solution. Whereas the private sector, this is this is what we do. Right. You kind of give us a market. We can build it. And that's been a really fun piece of seeing how C-PACE has grown these last few years. I think it's really interesting. How essential tax related strategies are to energy infrastructure. And if you take it back, even before the creation of tax credits for energy, we've been incentivizing oil and gas through various tax incentives since before World War One. I've also thought about it as a politically durable structure. Even as we saw the IRA have some amount of damage applied to it in OB3, you saw tax credits maintained for many of the large categories. Like battery storage, solar for a longer period of time. It's protected, obviously, for four years as the credits are wound down. And then all these other categories like manufacturing, critical minerals retain the tax credits. And so there is this distance from the executive branch that things like the loan programs office don't have that I think makes tax credits a really interesting tool. Do you agree with that? Yeah. Well, as you're saying that it's like a tax credit give, if you will, if the government's going to give a tax credit, you know, a tax abatement or whatever it's going to be, they're sort of saying we're OK not receiving future money. And maybe that's politically easier than saying we're going to kind of give you money we've already got. Right. So it's just sort of like the other side of the ledger. And there's always more calls upon the capital that the government has than there are dollars. So maybe it's easier to say, like, well, we'll kind of forego future capital through, you know, you not paying us taxes, but we can't give you anything we've got currently because it's all spoken for. Totally. And it distances the government from the role of having to be the arbiter. Of the capital decision. So when I was at the U.S. Treasury at the beginning of my career, it was during the Solyndra era where a single investment provoked all this response. Tax credits rely on external investors doing the underwriting and the execution in order to get the credit. Transitioning from there, tax equity has become such an important financing tool. It's awfully esoteric, but it's awfully large. It's a 40 billion dollar market or so as of 2025. Tell me how. You at Nuveen see the tax equity market as an accelerant for building out energy infrastructure. It, of course, relates to the deal that we just announced together. Yeah. Yeah, yeah, for sure. And I mean, I think this is another, you know, you see Pace's example, but these sort of, you know, these hybrid partnership flips, these innovative tax models, I think, are another really exciting way that we're seeing capital flow into these markets. So in my mind, like the hybrid structure that we've got right now has become dominant because it's solving for the problem that developers have. And investors have at the same time. And it's really unusual to be able to solve both parties' issues at the same time. So, you know, for developers, you've got this ability to effectuate a tax step-up basis. The project owner is now going to get their tax credits based on the fair market value of the project versus what it costs to build it. So that's really good for a developer and kind of gets these projects off the ground. And then for an investor like us, we're able to keep the kind of debt-like characteristics of these investments that we really like and need. So we're going to get our, you know, scheduled priority payments. We're going to have seniority. We're going to have the capital structure. We're going to have our downside protections. All while we're still getting the kind of lift or the upside potential of like an equity-like investment. You're sort of taking characteristics of both. You're putting them together. And both sides of the transaction are like, oh, yeah, this works for me. And then you start to see it kind of scale out from there. Totally. So, Jessica, let's go back to the macro, right? You've talked about these three big intersecting themes, which are the energy transition, digital infrastructure, and the legacy. And then you talked about the changing legacy system of power production that we have around us. How do you see those themes intersecting in the market today? Well, I think that's the interesting thing about these themes. They're not disparate. It's like a loop, right? They all kind of feed each other. And so if you talk about digitalization, you can't not talk about energy, right? That's sort of like the critical thing to be thinking about. There's some statistic I saw, like the number of announced data centers versus the amount of energy available to fund them. It's like there's like a 70% gap, right? So we're needing to link these trends. And I think that's something that we're trying to do in a way that we haven't seen before. And I think for someone like Naveen, that's really exciting, because when I look backwards, the last five years, Naveen has been very smart about bringing in specialist capabilities to kind of balance out our scale and our breadth of being, as I was saying, kind of a large infrastructure investor. It's hard to do this well in this market without having specialist capabilities to really go deep on some of these big trends. So energy transition's a great one to think about, right? But that energy transition story starts to feed into the digitalization story and allows us a better lens as we're evaluating data centers or where they're being cited or how they're being powered or what the underwriting assumptions need to be. So I think of the kind of convergence of these things is actually where a lot of the excitement is right now. Jessica, how much room do you think we have to run here? So I'm always struck by the next largest figure that comes out in the news or on Twitter of the CapEx that the hyperscalers are going to deploy. It was $600 billion before it was $700 billion and $800 billion. How much more do you think that we will see, and how does that influence the way that you think about allocating capital? So I hate the question of, like, how much more can it grow, because I keep wanting to say, like, there's going to be a natural ceiling, and I don't see anything that backs that up right now. So it feels, like, insane to say, like, it's never going to stop, right? And so I'm not going to say that. But you sort of believe it. Yeah. Like, it just sort of feels. Like, I don't know what's going to slow it down, except things like energy supply, water conservation, community pressure, right? So I think the governors, if you will, on the growth are not really going to necessarily be capital, because you're seeing investors, you know, like us, but others, too. There's so much capital moving in there. So it's almost like capital is not the constraint as it normally is when you're seeing a market like this. So it's more going to be constrained on things like, how are you going to power them? Where are they going to be? People don't want them. What are you going to do about the water issues when you're talking about putting some of these in, like, Arizona or places that already have water scarcity issues? So it feels like we're going to have almost like a kind of political governance governor on it rather than an investor governor, which is sort of unique, right? You don't see that too, too often in markets like this. But that's probably going to be the next wave of conversations. We're starting to see it already. Okay, so let's go deeper on that. So Gallup has a poll out recently that has 71% of Americans opposing data centers. The New Republic had this fun headline about that, which is that Americans have finally agreed that we all hate the same thing. And in that same poll that they found, a majority of Republicans also oppose data centers. Tell me how you're seeing the local opposition take form. How does it influence the way that you underwrite assets and think about the places to play? Well, I think fundamentally, like, what a miss on a PR strategy that the AI industry had. I don't know, like, who came up with the idea of, like, let's just tell everybody that we're going to take all their jobs. And we're going to, like, dramatically shift everything. And we're going to have massive unemployment. And the robots are taking over. And expect that everyone's going to be like, this is amazing. Sign me up. Like, people are scared, right? At every level. Like, we've got, like, people in my kids' generation that are, like, the, you know, seniors in high school. They're nervous. You've got people, like, our parents' generation. Like, it kind of alienated everybody. So I don't know who came up with that strategy. But, like, somebody needs to get them better talking points. I think you might be reading talking points from Dario Amadei. Of Anthropic. Who is very active on that. But I take the point. Yeah. I mean, I just, I think leading with the excitement of what AI is going to do from the economy is hard not to do, right? Because it is tremendously exciting. But I think that, like, kind of quickly pivoted folks to becoming a little bit perhaps too comfortable talking about all of the kind of outcomes that were going to happen from this that, you know, frankly, aren't going to be good for everyone. So then that leads to all the political backlash that we're seeing, right? I think the wait in Virginia to get connected to the grid is, like, seven years. years. Like that's a long time. So we've got both like a political issue where the kind of messaging was a little bit off. Someone will figure that out eventually. But then you've got more of just like a structural issue where there's simply not enough energy. And so we're going to have to figure out how you do that. And then you've got a couple of these companies agreeing to sign the voluntary pledge saying, well, we'll bring our own energy. But then what does that look like and how does that feed in? So it's pretty complex right now. Yeah. You talked about politics and governance being the governor on the space. It is interesting. I think about this a lot, how in infrastructure we have to invest on 15, 20 year timelines, but politics and policy can change all the time. How do you think about navigating that particular governor when you're thinking about making investments in assets that have very long, useful lives? Yeah. So having started a business that depended upon a public-private partnership, I'm very sensitive to this question. And I think about how you interact with the government in this space in two different ways. I think about how you interact with the government in this space in two different ways. One is, is the government like an enabler and sort of like a tailwind if the political winds are blowing in your favor? Or on the second hand, is the government intervention required for you to have your business? And you kind of have to have both of those lens when you're kind of underwriting regulatory risk or political risk into a business. So again, to use the CPACE example, we needed the government, the state government to pass a law that said energy upgrades are a public benefit. And so you can use the tax collection mechanism, to secure and collect the repayment of these loans. So we needed that to happen at the state level. But then once that law was passed, it was incredibly durable. So we got this law in red states and blue states and everywhere in between. And the government wasn't asked to put a nickel in. They were just asked to kind of allow for this structure to exist. And we've seen that to be very durable and no rollbacks to these programs. People love it. It's private capital moving in. So that's like a really good way to interact with the government. There's a lot of other examples, of course, where you build a business that requires a government subsidy or some sort of, you know, a feed-in tariff. Those things have demonstrated a lot more variability. And then you're, you know, underwriting a project based on something that can move when an election shifts. And that becomes, I think, really, really very scary. And you've got to be very conscious and very disciplined in what the assumptions are, particularly in the outer years where, you know, the kind of massive swings that we're seeing in kind of government support really can upend underwriting assumptions, right? Your analogy of tailwinds and headwinds. 2025 was a windy year. There was a lot of different kinds of winds that were hitting the industry. We started with a really strong tailwind from the IRA that was driving a ton of infrastructure development. There was then the headwind from the tax law over the summer of last year. We've come out the other side of it with a tailwind coming from AI and the infrastructure buildout. It seems like the conversation in D.C. is starting to shift towards electricity prices going up and the need for more domestic supply chains of various things, transmission, etc. How do you see the winds right now in the industry? So I think the political winds are being overtaken by the economic winds. So we talk a lot about, you know, where's the political wind? And obviously from Biden to Trump and, you know, is it offshore wind or solar, you know, battery storage or whatever it is? I actually think a lot of those more political conversations have been muted by just the massive economic demand for energy, which I think is good news. I think it's good news for all the stuff that, you know, we worried would get shut down because the political winds change. Turns out we still need them because without them, we're not going to be able to meet the dramatic energy supply gap that we've got. So I think economics can trump politics. It feels like that's what we're seeing right now. And it becomes an all of the above strategy. And, you know, some on the far left won't like that because it's going to include some hydrocarbons and some on the right aren't going to like it because it's going to include some wind. But the reality is we're going to need it all. So we were super excited recently to announce this tax equity GP financing with you guys. It's an amazing team and the team is growing very quickly, deploying a lot of capital. I know one of the big areas of focus within that team is manufacturing finance. How do you see the need for more domestic manufacturing and how are you playing it? Yeah, so I think that's another trend, right? Maybe kind of it falls under the electrification digitalization, but this kind of onshoring, I think that's tremendous. It's tremendously exciting. And I think where we're playing is, I think we call it like the picks and shovels behind it, right? So what are the financing needs that are enabling the onshoring of manufacturing? And we're seeing a lot of really interesting opportunities there. This is another, you know, we talked a little bit about the kind of innovation and financing and structures that are allowing big pools of capital to move into kind of newer industries because it's structured in a way that's protecting the downside for, you know, folks like a new bean or an insurance company client that needs a investment grade or a near investment grade rating on where they're moving their capital. You know, these kind of asset-backed structures, I think, are quite exciting, especially finance companies that are coming in and helping to bring capital to some of the onshoring of the manufacturing. It's complex, but this is, I think, where the specialist model and the origination capabilities that we've got within our team, you know, you mentioned the energy infrastructure credit team that I know you worked with on your deal. You know, they're out there, like they're in these deals. They're kind of unpeeling the onion and figuring out what's going on. Yeah, I think it's such an interesting time in manufacturing right now because we went through these successive shocks, right? There was COVID where we all realized that our stuff came from everywhere. Then there was the trade stuff from last year. Then there is changing tax policy. And when you look at that, there's been a lot of discussion of the particular choke points that may exist in rare earths or other kinds of components, the huge backlog on trade. Transformers for the grid. Where do you see the areas of particular dislocation where we need significantly more finance to solve the problem of bringing the right manufacturing back to the US? I would say an area that I'm particularly excited about is just on storage. I think there's been so much advancement that we're seeing on battery storage. And that was always the reason against doing more solar or more wind was that we can't store it. And as we continue to make advances there, I think we're seeing that open up new opportunities for more renewables. Okay, so we're in this huge infrastructure boom. The headlines are dominated by the hyperscalers and the mega data centers. There are lots of subsectors of energy. We just talked about manufacturing and components. What other subsectors of energy other than storage are you particularly excited about and very active on within Nuveen? Distributed generation solar would be another place that we're really focused. We've got retail power prices that are double what wholesale power prices are. So that gap is huge. So that gap opens up some opportunities there. The smaller projects that have kind of smaller permitting requirements seem to be moving a little bit faster. So you don't have, you know, seeing that kind of the seven year wait in Virginia, which everyone's holding out is like kind of manifestation of the crisis. The smaller projects, we're seeing timelines more of like six months to two years. And with the need to deploy capital in real time, that helps. We do a lot of kind of energy as a service. So that EAAS, that's the acronym is just as bad as CPACE. But this is allowing customers to do a lot of energy as a service. So those businesses, we think, have a lot of runway, especially as we're trying to kind of reduce demands upon the grid. So a lot of these businesses are, you know, they're hard to scale. But because of all of the pressures around the grid and the need for energy efficiency, we're getting pretty excited about what that could mean. And then the built environment, I mentioned this earlier, you know, if you care about energy, you care about the grid. You think that data centers are gobbling up all the energy, then you've got to look at buildings and figuring out a way to reduce the energy consumption of buildings is really critical. And the best way we have seen to do that is to create a smart financing option that's allowing a building owner to make those energy improvements in their building without having to go out of pocket for money that would be better spent on kind of core business outcomes. So, you know, that kind of CPACE is a financing solution to decarbonize or reduce energy consumption. And that's another area that we're really bullish on. I hope you feel it too. And I say to my team all the time, like, there's not that many people in the world that get to be in the seats we're in in the moment we're in. And like, this is our job. And so, you know, I take the responsibility really seriously. But there's a bunch of stuff that keeps me up at night. I think the big one is, like, are we moving fast enough? Right? Like, you sometimes have this, this like overwhelming moment of the amount of change that's happening, the pace of that change, you know, are the right grownups in the room making these decisions of, you know, how we're going to do this? How the deployment of this capital is made? Do we have the right, you know, regulatory frameworks to make sure we don't look back 10 years from now and say, oh, man, we should have put some guardrails around that. That moved too quickly. So as an entrepreneur, I'm like very comfortable, like moving fast and breaking things. But I take the responsibility seriously to invest for the future. We have this tagline at Nuveen, invest like the future's watching. Like, that's very central to me. You know, I care a lot about the legacy we leave behind. So I would say the thing that worries me the most is that I know full well that not everybody thinks that. And when you think about the amount of money that's moving, if you've got decisions that are being made with huge impacts that don't have any controls on them yet, you can have some pretty bad outcomes. Well, Jessica, it has been a real pleasure to have you on the show. Again, you bring this really rich and unique perspective across lots of different aspects. And personally, the fact that you have been a founder, I think is one of the things that really excites me about the partnership with Nuveen and with you guys. So thank you for your time. Yeah, right back at you. Thanks for having me. Jessica Bailey is the Global Head of Infrastructure at Nuveen. Nuveen and Crux recently announced a $500 million financing to scale our investments in clean and critical infrastructure projects. Critical Capital is co-produced by Crux and Latitude Media. Our production team includes John Sheehan, Jenna Herzog, Anne Bailey, Stephen Lacey, and Sean Marquand. Matthew Filler mixed the show. Additional production by Emily Hughes and the excellent team at Crux, the capital platform for the clean economy. You can find Critical Capital on Spotify, Google Play, or on our website at criticalcapital.com. Apple, or wherever you get your podcasts. I'm Alfred Johnson. Thanks for listening.