The Community Solar Movement Beats Coal, Again

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Back in the days of coal-fed furnaces, many buildings used to have a coal chute door on an outside wall. You can still spot them here and there, but those days are long gone and they are never coming back. Exhibit A is the Texas-based community solar developer Catalyze, which turns unused parts of commercial and industrial properties into revenue-generating powerhouses. Try doing that with your coal furnace….

More Community Solar For The USA

Community solar refers to relatively small, local solar power plants to which local ratepayers subscribe. The idea is to open up solar access to everyone in a community, including those who don’t have room on their own property for solar panels.

In the early 2000s, community solar was typically more expensive than the grid mix. Subscribers had to be willing to pay more for their clean kilowatts. Now that costs have come down, subscribers typically pay less, community solar is wildly popular, and it was only a matter of time before solar developers like Catalyst began enlisting commercial and industrial properties to host solar arrays.

This approach enables the property owner to improve community relations while providing the developer with new opportunities to avoid conflicts with local residents over land use. In addition to deploying rooftops, parking lots, and other grounds around a property, converting hazardous waste sites into solar power plants is another area ripe for development.

Catalyze launched in 2017 and it did not let the community solar grass grow under its feet. Last month the company announced a new $400 million multiyear debt facility, backed by the ATLAS SP branch of the global firm Apollo.

Debt facilities enable solar developers like Catalyze to finance multiple solar projects and plan for future growth, without having to start from scratch for each project.

The Smart Money Is On Community Solar

The $400 million infusion of financing is old news now. Earlier today, Catalyze announced another $85 million earmarked for 75 megawatts worth of community solar projects to be located on commercial and industrial properties this year.

“This latest investment reinforces Catalyze’s ability to secure tax equity financing as it continues expanding its distributed generation portfolio, which now totals 300MW of projects in operations and construction,” Catalyze explained.

The transaction was supported by RBC Community Investments, a firm that has raised more than $19.8 billion in equity with almost 100 institutional investors, which is a pretty good indication that the idea of popping a community solar project onto the roof or grounds of commercial and industrial properties is a financially sound one.

RBC (not to be confused with Royal Bank of Canada) is better known for its work in the affordable housing market, but it also has a strong footprint in financial transactions related to renewable energy tax credits.

“RBC’s investment supports Catalyze’s growing pipeline of distributed renewable energy projects, helping to drive the deployment of clean energy solutions that benefit property owners, businesses, and communities alike,” Catalyze emphasizes.

Follow The Money

The $85 million builds on Catalyze’s ongoing relationship with RBC. Other continuing supporters are two private equity sponsors, EnCap Investments and Actis, and they are no small potatoes.

EnCap bills itself as a “leading provider of growth capital to the independent sector of the U.S. energy industry.”

“The firm has raised 25 institutional investment funds totaling approximately $47 billion and currently manages capital on behalf of more than 350 U.S. and international investors,” EnCap notes.

EnCap launched in 1988, when wind and solar energy were barely a twinkle in someone’s eye. The firm continues to drive activity in the oil and gas industry, but in 2019 it also launched a new Energy Transition branch to catch a ride on the booming renewable energy train.

Actis represents the continued interest of overseas infrastructure investors in the US solar industry, despite the abrupt shift in federal energy policy alongside various state-based attempts to thwart solar development.

The London-based firm is also among those not shy about using words that are sure to trigger public officials on the prowl for “woke” targets. “Actis is a signatory to the Principles for Responsible Investment (PRI), an investor initiative supported by the United Nations,” Actis says of itself.

“Actis believes that the firm’s decades of global experience, operational know-how and strong culture allows it to create global sustainability leaders at scale,” the firm emphasizes.

Whither Coal?

In its latest global energy forecast, BloombergNEF anticipates that renewable energy will surge 84% by 2030. Natural gas will also continue to grow its footprint in the global power generation market, though at a slower rate. As for coal … well….

Earlier this month President Trump issued four documents embellished with his signature, as part of his pledge to breathe life back into the dying US coal industry. Trump made the same pledge back in 2016, when he campaigned for the White House for the first time, and look how that turned out. One coal power plant after another bit the dust during his first term in office. By 2019, he was already switching gears to gush over coal’s closest competitor, cheap natural gas.

Executive orders or not, the prospects for bringing back coal are dimming by the minute. On April 15, the renewable energy think thank Institute for Energy Economics and Financial Analysis added up the numbers, noting that the a total of 23 coal-fired units at 15 power plants are expected to stop burning coal this year alone.

Those are not seat-of-the-pants decisions. As IEEFA notes, a change in power plant operations takes years of planning and coordinating with state and federal regulators. All that time and money will go to waste if power plant owners are forced to switch gears in midstream.

Besides that, coal is more expensive than natural gas or renewables. Oh, well. Ratepayers won’t mind picking up the tab, will they?

Meanwhile, Community Solar…

While power plant owners duke it out with federal agencies over that, community solar developers have not been letting the grass grow under their feet, and Catalyze is just one example of the community solar movement’s embrace of commercial and industrial properties.

In an especially significant development, leading global real estate and property management firms have picked up the community solar ball and are running with it. “Over the past 10 years, community solar has experienced an average annual growth rate of 80%, reaching approximately 6.49 GW at the end of 2023,” noted the commercial real estate services firm CBRE in a report last year.

Leading US brands are also picking up on the opportunity to build up their community relations while saving money on their utility bills. A franchise management firm in Illinois, for example, recently signed up for community solar subscriptions at 30 of its Wendy’s and McDonald’s in Illinois.

Against this backdrop, earlier this week the US Environmental Protection Agency posted a list of 47 power providers that operate almost 70 coal fired units, which the Trump administration has released from Biden-era clean air regulations. In other words, they can all continue continue releasing mercury, arsenic, benzene, and other pollutants into the air over the next two years.

“Among plants receiving exemptions is the Colstrip Generating Station, a massive power plant in Colstrip, Montana, that emits more toxic air pollutants such as lead and arsenic than any other U.S. facility of its kind,” Associated Press notes.

Ouch! Who wants that in their backyard, or, for that matter, on their corporate community relations profile.

Photo (cropped): Global investors continue to support the community solar movement in the US, including PV arrays located at commercial and industrial sites (courtesy of Catalyze).