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Episode #113: 'Reaching New Heights with Community Solar' with Jason Spreyer, EVP at Summit Ridge Energy [an Energy Central Power Perspectives™ Podcast]

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As solar energy technology progresses, the goals our utility and government leaders are setting on how much renewable energy can and should enter the grid is ever increasing. However, one of the key challenges that continues to plague the world of solar energy is the inequitable distribution of installations and the appropriate benefits. While the technology is more affordable than ever before and provides reliable payback periods of under a decade, the high upfront costs still block out certain participants.

The past few years, however, have seen an encouraging growth in a solution to these gaps in solar energy installations: community solar. By taking solar panels off of the customers' rooftops themselves and allowing them to buy in for a smaller piece of the pie, community solar is indeed allowing the clean energy transition to reach new heights. Summit Ridge Energy is a company involved deeply in this area, as a developer, installer, and manager of major solar plants across the United States and the leading owner-operator of community solar across the country. Today's guest to the Power Perspectives Podcast is Jason Spreyer, Summit Ridge Energy's Executive Vice President of Business Development and ESS General Manager. With this inside view of the recent developments in community solar, Jason shares with podcast host Jason Price and producer Matt Chester what all the hype is about and why projects on the ground are living up to that excitement.

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Thanks to the sponsor of this episode of the Energy Central Power Perspectives Podcast: West Monroe.  

 

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TRANSCRIPT

Jason Price: 

Welcome to the Energy Central Power Perspectives Podcast, the show that brings leading minds from the energy industry to discuss the challenges and trends that are transforming and modernizing our energy system. And a quick thank you to West Monroe, our sponsor of today's show. Now let's talk energy.

I am Jason Price, Energy Central podcast host and director with West Monroe, coming to you from New York City, and with me as always from Orlando Florida, is Energy Central producer and community manager, Matt Chester. Matt, today we're going to be speaking with a leader that's looking to instill clean energy into our grid for homes and businesses, but outside of the traditional models of rooftop solar. Can you give a quick overview on what community solar is and how it's solving for certain problems and filling gaps in the clean energy transition?

 

Matt Chester: 

Sure Jason. Well, if I can just steal straight from the Department of Energy's definition, community solar is, it's a solar project or solar purchasing program in a given area in which the benefits of that solar project are divided amongst multiple customers who are buying into it while the energy is generated by solar panels, typically at an offsite system. The idea here is that the economic benefits of solar systems, they're great, but not every climate building or customer type has the mean or the technical ability to install solar panels. So community solar programs in essence allow these types of customers to pool their resources and fund the solar system while splitting those economic benefits, making solar energy more accessible and equitable in nature.

 

Jason Price: 

Thanks for that, Matt. That sounds like a compelling primer as we dive more deeply into the present and future state of these types of solar projects with our guests. Joining us today is Jason Spreyer, the Executive Vice President of Business Development and ESS General Manager at Summit Ridge Energy. Summit Ridge Energy is a developer, installer and manager of major solar plants across the US markets. And as the leading owner operator of community solar across the country, they have unique insights and influence on how these innovative approaches are bringing clean energy benefits to customers and communities that may have otherwise missed out. I'm very eager to learn more what the space looks like moving forward. So let's introduce our guest to the podcast, Jason Spreyer. Thanks for joining us today, chat about this important topic.

 

Jason Spreyer: 

Yeah, thank you Jason. Thank you Matt. I appreciate you all having me on the show today.

 

Jason Price: 

Yeah, and we're thrilled to have you. So Jason, let's dive right in. I want to start by giving you a chance to explain for our listeners the role you play in the utility space. As it seems like Summit Ridge Energy stretches into a couple different arenas, typically covered by solar developers, IPPs and community solar managers. So can you narrow down for us what a developer and an owner operator like Summit Ridge Energy really does?

 

Jason Spreyer: 

Yeah, absolutely. So Summit Ridge just starting there, summit Ridge was launched in 2017 as a community solar developer, owner operator. We've invested over one and half billion in capital across eight markets in the community, solar and community storage type spaces. What does a community solar developer and owner operator like Summit Ridge Energy look like? What we do is we develop and/or acquire projects that have been developed by others. We arrange for the financing, we manage the construction efforts to build those projects and then once they reach a point where construction efforts are completed, we interconnect them in the grid and we operate and perform the asset management on behalf of our joint venture partners across all of those markets. At Summit Ridge, we have a full suite of professionals in the development, engineering, the project finance, customer origination, project management, asset management, and other departments that you would typically see as a larger owner operator even in the unit utility space as well.

We actually work with our JV partners to deliver on the goals and objectives and the business plan would otherwise be set forth when we enter a particular market. Those elements are really kind of looking at developing scale on behalf of our JV partners. When Summit Reach enters a market, we look for scale so as to attract the investor community to participate in those projects alongside of us, leaning on the skills that we've developed internally and with our third party partners that we need to lean on externally to deliver on the investment mandate we've sold to our investor community.

 

Jason Price: 

All right, so given that you're in the world of developing renewable resources and community solar and no doubt you have a lot to say about the IRA, the Inflation Reduction Act, a topic that's top of mind for a lot of our customers topic that's top of mind for many of our guests on the podcast. So what does it really mean for what your goals are and what you're able to do?

 

Jason Spreyer: 

We believe the IRA actually provides several benefits for community solar. In fact, when looking back at the intent of the Inflation Reduction Act, you see several of the different incentives there are provided to incent investment in low to moderate income communities. It's actually provided for the opportunity to include certain interconnection costs in the basis that will be eligible for IPC, for projects five megawatts AC and below, incenting you to build within energy communities, use domestic content in your project delivery schedule as well as your execution. So when you look at those and start to unpack them, what does that mean? Investment in interconnection process is one of the areas that we see a lot of costs in the distributed space, whether it be making upgrades on the distribution level itself or the transmission level, so as to include some of those costs in basis allows us to actually more efficiently interconnect those projects and not see projects die as a result of interconnection costs within those distribution networks.

Investment in 45D or low income communities, that's a census tract area. So when you're investing in those 45D or census tract areas for low income communities, you are bringing direct benefits to those folks that live in those communities. What is that? Tax benefits, the access to potential jobs, the fact that you've got professional investment coming into those communities, really kind of looking at an area to provide clean energy to those folks that otherwise aren't able to benefit from it.

Low income subscribership is another element that's a bit different than citing projects in a low income census tract. Low income subscriptions are actually providing direct benefits to communities or people, rate payers, that meet a certain threshold, where we are providing a discount on their electric bill, therefore directly giving them a savings that they wouldn't otherwise have. Because most folks don't have access to community solar, whether it be putting on their roof or a say rooftop solar because you can't put it on your roof, you're generally in different types of communities that ultimately don't provide for that incentive.

And then the last thing of course is domestic content, bringing investment onto the soils of the United States, bringing the ability to purchase modules or other types of equipment that you put on your project that's American-made. Bringing jobs to the United States. So we see that the Inflation Reduction Act provides a tremendous amount of opportunity really geared towards a community solar business model where we're positioned quite well to deliver on some of those things. Of course, like any other legislation, we continue to see some challenges that we're working through and working with the legislators to define certain of the criteria. What is domestic content, for example. How do we understand what low income subscription looks like and how do we actually apply for and ultimately achieve some of those additional incentives? But overall, we're very excited to have the opportunities in front of us where we actually can lean on some of these incentives, these subsidies, to ultimately enter into new markets and provide different solutions.

 

Jason Price: 

That's helpful, thank you. I know that some common sentiment you've had and you've written in other publications that you described something called the value stacking when it comes to public investments in solar resources and other clean distributed energy. What exactly do you mean by that?

 

Jason Spreyer: 

Yeah, value stacking referenced in many different ways. As it relates to the IRA, the value stacking is quite frankly the ability to go from what is a 30% IPC with interconnection cost now considered eligible invasive, you can have the ability to stack some of these incentives all the way up to a 70% IPC credit, which is pretty significant. How do you do that? Well, you do that by obtaining domestic content and buying domestic content for your project adds 10%. If you're building your project in what's called the energy community and the energy community is generally where a project was decommissioned or you have some sort of brownfield site where citing our projects in locations where ultimately a former fossil burning fuel resource had once operated, that's an additional 10%. Then you have the opportunity to stack another one, which is low income subscribership. That's the former incentive I mentioned in the last questions where we go out and get low income subscribers to participate in our projects and in doing so, we provide them a benefit, which is a discount on their energy bills.

That discount, if we were able to achieve 50% of subscribers on our projects, allows us for another 20% IPC credit. So when you add all those up, we're able to value stack in providing an IPC that's a bit more upsized for investors in our community. When it comes to financing, we then value stack with the different types of investors. So as we're stacking up this IPC, we're also looking at tax equity investors who are interested in investing in our projects. And we do have several different tax equity investors that invest alongside of us. And when we're value stacking these ITC levels, we have to find those tax equity investors that have that type of tax appetite because as you go from 30% to 40% and onward, the actual step changes in the value of the tax equity is not linear. So we have to right size and bring the right tax equity investors to each of one of our projects that allows them to participate in those projects.

We also value stack at the different levels of investments. So tax equity investors of course, participate in our projects to get the tax credits, but also the accelerated losses that are generated by the solar projects as a result of accelerated depreciation. But then we bring in construction and term debt investors that participate at different value life-cycles of a project. And of course our joint venture partners largely come in and invest alongside of us at full notice to proceed on construction and then the rest of their capital when a project is brought to operations. So SRE arranges all of the financing at these levels of a project's set lifecycle on behalf of our joint venture partners as well as our tax equity investors, et cetera. And also one of the things that we do, is we actually go out and seek each one of those IPC investments so that we're ultimately increasing the value of each one of those projects.

 

Jason Price: 

I want to dig that a little further. So I mean, we're talking about an industry that is traditionally collaborative in many respects, and when it comes to funding and innovating for the clean energy transition, do you still find the industry collaborative? Are you open to new entrants of community solar or has the overall general environment become more competitive? And I feel like you're in a good situation to answer that since you've been in business for quite some time.

 

Jason Spreyer: 

Yeah, I think the short answer to your question is yes, I think the environment is continuing to be competitive, but I think there is a collaboration amongst each one of us in the industry, especially as it relates to like the IRA as we've talked about earlier, a number of us getting together in trying to define what certain of those ITC adders look like. How should they be measured? How do they actually help and accomplish the goals, the underlying goals of the IRA itself? Community solar, since 2017 to today in 2023, we've seen a number of new entrants entering this space. Some of those entrants are smaller players just looking to participate in the community solar market because they're value proposition, they ultimately provide more distributed solutions and are more competent in the distributed space. But ultimately, we're also seeing larger players that participate in the utility space, entering the community solar and distributed markets through large acquisitions, and then ultimately developing and building their portfolios through those acquisitions.

So the space itself continues to get more and more competitive, and we see that in both M&A space, in the development space, seeking lands. And it is a very attractive space for investors to ultimately look into. Our strategy in the space, we do see some new entrants that come into markets and they may have two, three projects in the Illinois or Maryland or whatnot. Our strategy, quite frankly, and how we actually get to scale, is to scale up through development and acquisitions in these markets. We're looking to actually provide attractive check sizes as well as diversity to the investors that we're working with. And diversity could be through projects in different locations within the state, maybe the off take mix between small commercial to low in moderate income to just traditional residential customers. And then it could be through markets, diversification through our portfolio projects within a State of Illinois or Maryland or Maine and some of the others that we might actually participate in.

So overall, we benefited from quite frankly, seeing this diversification in the market. It's actually providing us an opportunity to get smarter and a little bit more nimble with how we look at these markets and how we are actually able to basically deliver our products to customers. They're a little bit more competitive, especially with the entrance of new competitors within the market.

 

Jason Price: 

Share with us, what are you able to accomplish that perhaps the traditional central power model isn't able to do? What are the operational benefits to community solar and localized generation model that people may not be thinking about?

 

Jason Spreyer: 

Yeah, good question. The traditional central power model generally is large transmission lines, high voltage facilities, generally a decentralized type of a business model. Large generating facilities where you have solar and/or wind that can benefit from large acres that you ultimately could put large volumes of electricity onto the grid. Storage. Another example where you have a large storage facility that could otherwise be cited against or next to a large utility substation providing capacity and energy or electricity through basically storing and discharging at times that the grid really needs those resources and shaping products.

Our solutions? Community solar gets closer to load and Summit Ridge believes that as the power market and energy in general in the United States continues to mature, that projects are actually going to be cited closer and closer to load, including storage. Why is that? Well, being closer to load provides the opportunity not only to invest in communities that are ultimately consuming those electrons. Which is a tremendous benefit in a number of communities, we see a lot of resistance to projects being cited in utility scale that ultimately those electrons are benefiting communities far away, not necessarily themselves.

So some of those nimby-isms that you see there is really kind of communities rising up to resist. Facilities are being built, but for other's benefits. In our particular case, our projects are actually being cited in those communities. Those communities are the ones that are benefiting from it. And the reason being is, one, the electrons are local. Two, when we actually go out and subscribe projects, we have to actually subscribe projects within that utility district. So we can't actually get subscriptions across state lines or even utility rights. So within a community solar business model, we're directly providing a benefit in the form of tax dollars and savings on their bills, their energy bills. And in large markets like the Northeast where you see significant energy prices continuing to increase, those discounts could be material for customers. And so that benefit really is a local model.

The other thing community solar provides is resiliency, reliability. So in situations whereby you have blackouts, brownouts, you do have this utility, this community solar project that actually can help to energize a particular grid. So that provides value more locally to folks, whereas a transmission line and a bulk transmission system goes down, could cause a situation where you do have power interruptions and service interruptions.

Moving the storage, I think I hinted on that too, it's very similar. Large scale storage sited next to utility scale substations does provide a benefit past the availability of energy and so forth. Our localized storage gets again closer to the consumers and those consumers can benefit from demand response solutions. So we are developing projects in the New York City area, actually we'll be operating later this year. Those two projects, and this year we'll be building a third, will provide demand response. And what it does is it discharges at times that ConEd actually has a peak, what they call a demand response window.

That demand response basically meets the needs more locally during times that quite frankly can get congested. It provides more resiliency and reliability in local situations whereby you are closer to the load, providing voltage support and other supports that allow for us to benefit from an uninterrupted service. So as I mentioned at the outset, looking at the traditional central power model, there's a value proposition there. But certainly as we look at our business and we continue to position ourself for growth, we believe the business model is moving to a more distributed model as time goes. And that community solar, community storage, is an investment space that will continue to grow. We will see states actually invest in these types of solutions because they provide so much more localized values that ratepayers, utilities, and others can benefit from.

 

Jason Price: 

Yeah, the battery storage pilots in New York City have gotten a lot of press. It's coming out of the ConEd utility of the future office. Exciting stuff and great work. Our listeners are coming from the utilities space. A lot of our listenership is work for the utilities and lifers at utilities. So help us understand the relationship between your organization and the utilities. Is it becoming more collaborative? How is it changing over time? Just sort of the general impressions about how you're both trying to achieve and provide affordable, cleaner, reliable energy delivery, but you coming from different directions. So can you talk about that

 

Jason Spreyer: 

Again, traditionally the utility space is the solution that all of us as ratepayers basically get our electricity and our service from. They historically have been the ones that had owned generation until deregulation in the nineties. And ultimately these utilities own these customer lists. We've seen in the community solar space that there is a bit more of a collaboration. I think it takes some time. Like any change, you need to work through what the value propositions are for each space. Utilities can be somebody that will protect their investment, right? They're going to protect the investment that they have, which is the investment in their transmission, distribution, generation, whatever it might be, the hard assets. But they're also very sensitive to their customer list. And when you see a community solar model, community solar comes in and ultimately the customers that we're looking to subscribe are generally customers that have been taking service from these utilities.

So that could be viewed as a threat, but increasingly in our space we're trying to actually educate that there is opportunities here for utilities participating. You see some utilities actually evolving over time into business models whereby they're actually doing consolidated billing. So when you look at utilities, they actually have a lot of the customer information. They basically own that customer information. But since we've built our house and tapped onto the distribution network. And so the utilities in those spaces, they're now providing the benefit. One is you as a customer get one bill. So if you get two bills for electricity, that can be confusing, especially for us that don't ultimately participate in the energy space. But two, they continue to own that customer relationship and in owning that customer relationship, they're providing a service both to us as well as to the customer.

So I do see that in a lot of markets, utilities are ultimately evolving into how can they actually participate in this community solar market, and how do they actually benefit from it rather than resisting in all cases. We do still see some challenges in markets, which wouldn't be surprising. Again, change is difficult. Interconnection can be difficult for a lot of us in the developing communities. Part of that is because the volume that ultimately are put into queues can become very difficult for utilities to handle, especially at the outsets. But a lot of these markets are helping to solve that for the utilities. So ultimately the cost of our community solar models can actually be pushed off to ratepayers. So what does that mean? If I have to hire 15 people to administer a program, utilities can actually go back and include that in their rates and push back to ratepayers. So the cost of these systems are also part of the overall development of the rate tariffs and working that with them provides an opportunity to quite frankly have a collaboration to really kind of understand what is the pressing points for each.

 

Jason Price: 

Yeah, I appreciate the works and the thoughtful response. Well, thank you Jason. So before we give you the final word, we are going to pivot to what we call the Lightning Round, which is an opportunity for us to get to know you a little bit more the person rather than the professional. We have a series of questions we ask our guests. Typically you keep the response to one word or phrase. So Jason, are you ready?

 

Jason Spreyer: 

Yeah, I am.

 

Jason Price: 

Okay. Favorite holiday.

 

Jason Spreyer: 

That would be my daughter's birthday. 4th of July.

 

Jason Price: 

What time of the day are you most productive?

 

Jason Spreyer: 

Well, I would say all day.

 

Jason Price: 

Okay. Any TV shows, movies or books that may have flown under the radar that you'd recommend to our listeners?

 

Jason Spreyer: 

Yeah. Welcome to Wrexham. Story about a soccer team in the UK.

 

Jason Price: 

Is that a TV show or movie or book?

 

Jason Spreyer: 

Ryan Reynolds actually bought the team and has, I think also developed the actual story. It's like a TV documentary.

 

Jason Price: 

Gotcha. If you didn't end up in your current role in this energy industry, what alternative career path might you have taken?

 

Jason Spreyer: 

I originally wanted to be a business teacher and a local high school coach. So that's probably the direction I would've landed.

 

Jason Price: 

What are you most motivated by?

 

Jason Spreyer: 

That's an easy one. I'm most motivated by the work ethic that my father had actually demonstrated in me with running his own business. So always try to strive to live up to what he did for us.

 

Jason Price: 

Well, nice job navigating the Lightning Round. And as this tradition that means you get the final word. So what's the most important message you'd like the Energy Central listeners to take away from today's conversation?

 

Jason Spreyer: 

Yeah, thank you. Yeah, first off, I really want to make sure that our listeners take away the fact that all resources are necessary for us to achieve a decarbonized future. We talked a lot about different competition, whether or not we get resistance from whether it be utility scale developers or utilities themselves. I think there's always an element of competition that will create some sort of tension within these markets. But I think that overall we all have to realize that to decarbonize our future, it requires all types of solutions. Summit Ridge understand that as well. There's a space for not only our distributed solutions, but also on the utility scale side, different types of resources as well, whether it be wind, solar, hydro or others. So for us to all get there, I think that's important for us to realize that we're, we're pretty much all in this together.

The other thing I'd like to really make sure that our listeners take away is just some of the elements that distributed generation developers and owner operators like us at Summit Ridge, we're in the forefront providing solutions on the local level, trying to really figure out what are the problems that they're actually experiencing. How can we actually bring a solution that ultimately solves those problems on a local level, that benefits those communities. Those communities could be looking for resiliency or reliability all the way through to, quite frankly, providing benefits to communities within low to moderate income census tracts, but also to low and moderate income ratepayers themselves. We want to be ultimately as a space, recognized as a group that works with labor, works with communities, provides benefits back, listens, is able to really kind of meet the needs of a local solution and just really, quite frankly be part of those local communities.

So I think it's very important for us and one of the takeaways is to recognize that those real local solutions do real have a meaningful benefit to ratepayers to those communities. And Summit Ridge is at the forefront in delivering a lot of those solutions.

 

Jason Price: 

Excellent. Just really appreciate your insight and your eagerness to share this wisdom in today's podcast and with our audience. So thank you very much for coming on the show and we want to thank you for sharing your insight and we hope to have you back some time in the future.

 

Jason Spreyer: 

Yeah, thank you very much Jason and Matt.

 

Jason Price: 

Absolutely. And you can always reach Jason Spreyer through the Energy Central platform where he welcomes your questions and comments. And we also want to give a shout out of thanks to the podcast sponsors that made today's episode possible. Thanks to West Monroe. West Monroe works with the nation's largest electric gas and water utilities in their telecommunication, grid modernization and digital and workforce transformations. West Monroe brings a multidisciplinary team that blends utility, operations and technology expertise to address modernizing aging infrastructure, advisory on transportation, electrification, ADMs deployments, data and analytics, telecommunications and cybersecurity. And once again, I'm your host Jason Price. So stay plugged in and fully charged in the discussion by hopping into the community at energycentral.com. And we'll see you next time at the Energy Central Power Perspectives Podcast.

 

About Energy Central Podcasts

The ‘Energy Central Power Perspectives™ Podcast’ features conversations with thought leaders in the utility sector. At least twice monthly, we connect with an Energy Central Power Industry Network community member to discuss compelling topics that impact professionals who work in the power industry. Some podcasts may be a continuation of thought-provoking posts or discussions started in the community or with an industry leader that is interested in sharing their expertise and doing a deeper dive into hot topics or issues relevant to the industry.

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The Energy Central Power Perspectives™ Podcast is hosted by Jason Price, Community Ambassador of Energy Central. Jason is a Business Development Executive at West Monroe, working in the East Coast Energy and Utilities Group. Jason is joined in the podcast booth by the producer of the podcast, Matt Chester, who is also the Community Manager of Energy Central and energy analyst/independent consultant in energy policy, markets, and technology.  

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