Community Solar Gets Big Thumbs-Up From Global Financiers

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The community solar field started off slowly back in the early days, when the cost of solar energy was high. Now costs have come down, and the movement has spread from individual ratepayers to include support from commercial and industrial stakeholders, too. That has caught the eye of the global investment community, which continues to seek new opportunities in the US energy transition regardless of the current political atmosphere.

The Many Benefits Of Community Solar

Community solar projects are relatively small in scale but they can have a big impact on costs for local raterpayers, because subscribers typically receive a discount on their electricity bills. That’s a complete 180-degree turnaround from the early days.

Community solar started as a fringe movement around 2010, pursued by ratepayers who volunteered to pay a premium for solar power at a time when local utilities were slow to invest in renewable energy projects. The idea was to make solar power accessible to every ratepayer, not just those who could install their own rooftop solar panels.

Voluntary, opt-in programs are still common, but New York State has been exploring the potential for leveling up the movement with a new opt-out system, in which local ratepayers are automatically subscribed to a new solar project. Anyone who wants to opt out and pay more for their electricity is free to do so.

Community solar projects also support the decentralized, distributed model promoted by the US Department of Energy as a grid resiliency improvement, and they can double as agrivoltaic projects that benefit local agriculture, by incorporating local pollinator habitats and grazing for livestock (see more community solar background here).

Catalyzing The Community Solar Movement

The big question is where to make space for new community solar projects, in a day and age when local residents are inclined to organize against renewable energy projects on farms and other bucolic lands. And, that’s where things get interesting.

Commercial and industrial property owners have begun to adopt community solar projects, anticipating that the use of pre-developed land for solar arrays will mollify potential opponents while building goodwill among supporters, while providing an opportunity to reduce local electricity rates, including their own.

In combination with the community solar movement, the interest of private property owners has helped catalyze new activity in the Independent Power Producer field, a category of electricity provider that exists outside of the conventional utility-based framework.

That brings us to the aptly named IPP firm Catalyze. The Texas-based startup is new to the CleanTechnica radar but they have been very busy since launching in 2017.

In the latest development, on March 14 Catalyze announced that it has earned a $400 million multiyear debt facility from ATLAS SP, a branch of the global firm Apollo.

If “debt facility” rings a bell, that’s another way of saying credit facility, a means of enabling multi-tasking developers to finance new projects without having to go through a burdensome, repetitive loan application process for each one. Credit facilities have become a familiar feature in the solar financing field.

“The financing will support the construction and aggregation of Catalyze’s growing portfolio of commercial and industrial, community solar, and battery storage projects across the United States,” Catalyze emphasizes. “The facility is designed to provide Catalyze with flexibility in its growth plans while streamlining financing for future projects.”

By streamlining and flexibility, they do mean rapid acceleration. The company currently has a current portfolio of 300 megawatts in operation and construction, and they expect all 300 megawatts to be up and running by the end of this year. With the new debt facility in hand, they expect to  add more than 1 gigawatt from their project development pipeline.

The Smart Global Money Follows Community Solar

In addition to from Apollo, Catalyze also counts the leading firms EnCap Investments and Actis among the supporters of its scale-up plans.

EnCap was founded in 1988 and launched an Energy Transition branch in 2019. It currently counts 25 institutional investment funds on its roster for a total of $47 billion, more or less, with more than 350 US and international investors under management.

Actis describes itself as a leading global investor in sustainable infrastructure, emphasizing that it creates “create global sustainability leaders at scale.” The firm also notes that it has signed onto the United Nations Principles for Responsible Investment.

One Step Backwards, Two Steps Forward

One setback in the community solar movement did occur earlier this year, when the Trump administration took steps to dismantle the national Green Bank established through the US Environmental Agency, under a provision of the 2022 Inflation Reduction Act.

However, in addition to private sector firms, state-level public financing can still support community solar financing. Last May the newly established New York Green Bank, for example, authorized a $100 million financing package for Catalyze to construct a suite of community solar projects totaling 79 megawatts, all to be located in disadvantaged communities. Catalyze notes that the package supports New York’s 6-gigawatt goal for distributed solar capacity by the end of this year, towards a 2030 goal of 10 gigawatts.

As for private sector support, one need only look at the global real estate powerhouse CBRE to get a handle on the powerful impact that commercial and industrial properties can make when they are enlisted to host solar and energy storage facilities, with state and local renewable energy goals among the motivating factors.

Another global real estate stakeholder, Cushman & Wakefield, is also in the mix. Last July the firm joined Catalyze in a strategic partnership with the goal of expanding solar and storage throughout the US commercial and industrial real estate profile.

Keep an eye out for new EV charging opportunities in the distributed solar field as well, an important development considering that the federal government has backtracked on EV charging station buildout.

Catalyze attributes the new partnership with Cushman & Wakefield to the success of its contributions to 66 Galen, a new commercial life sciences building in Watertown, Massachusetts under the umbrella of a joint venture between the Boston firm Davis and Boston Development Group. Along with a 252-kilowatt (DC) solar array and a 125-kilowatt (DC) energy storage system, Catalyze also installed 15 EV charging ports at the site.

Photo (cropped): The community solar movement in the US continues to attract support from global financial stakeholders, with or without support from federal energy policy (courtesy of Catalyze via businesswire.com).