We are delighted to highlight another valuable member of our team here at Distributed Sun - Alex!
 
Alex attended the University of Virginia, double majoring in System Engineering and Financial Economics. He worked as the Investment Director and Senior Financial Analyst for a financial planning firm in Charlottesville, Virginia, before returning to school in DC to earn his MBA.
 
In 2016, Alex joined Distributed Sun as a Project Finance Analyst. He focused on tax equity modeling and municipal code analysis during this time, but soon worked his way up to become our Project Finance and Development and Associate. Alex is now Senior Director of Development and Analytics and is primarily responsible for generating proposals for new development activities and expanding the scope of existing deals.
 
Project finance was a brand new topic for Alex when he started as a Project Finance Analyst. Although he spent his early year in the finance side of business, he took a turn toward the development in 2018 and was able to apply his education from his Systems Engineering undergraduate degree. Utilizing his strong knowledge base in ArcGIS and Python, Alex has strategically streamlined our development process through the incorporation of automation into our pricing analysis, policy research, and development tasks.
 
Thanks in part to Alex’s tremendous work throughout the years, DSUN continues to successfully adapt to the ever-changing solar market. Alex is optimistic that our team will keep up with advancements in the industry:
 
“What we have done as a team lets us stay small. Because we are small, we are flexible and are able to change priorities based on what the market is telling us. We tend to be successful where we put our focus, and we have the ability to focus on a large number of things at any given time.”
 
DSUN has become one of the largest community solar developers in the country but also demonstrates an ability to expand to adjacent and relevant technologies. We greatly appreciate all of Alex’s work to enable these accomplishments and we can’t wait to see how he continues to enhance our capabilities!

In early September, initiatives from federal and state government agencies amplified the Environment Justice movement across the United States. In its Solar Futures Study, the U.S. Department of Energy (“DOE”) highlighted equitable distribution of the benefits of clean energy. In the same week, the New York State Public Service Commission announced that disadvantaged communities will receive 40% of the benefits associated with its $6 billion Clean Energy Fund. In support of the DOE study, the National Renewable Energy Laboratory (“NREL”) released its technical report Affordable and Accessible Solar for All: Barriers, Solutions, and On-Site Adoption Potential. This article analyzes the NREL report, highlighting its major implications for low- and moderate-income (“LMI”) customers.  

The NREL report argues that technology advancements resulting in lower electricity costs must provide supplementary assistance to LMI electricity customers in cases where their utility bills increase. LMI households represent 43% of all U.S. households, and the energy burden on LMI households is higher than that of other U.S electricity customers – 8.1% of LMI household income goes towards paying for electricity compared to 2.3% of other households.  

The report focuses on rooftop solar, but NREL notes that less than half of off-site community solar projects include LMI households, and only 5% of these projects include LMI households as a “sizable share.” 

LMI-owned households account for 31% of estimated solar PV capacity for all single-family homes. Therefore, deployment of solar on these rooftops is an essential component in meeting the DOE’s aggressive goals to decarbonize the US electricity system by 2035 and decarbonize the energy sector by 2050. Historically, solar deployment on LMI household rooftops has lagged significantly compared to deployment on non-LMI household rooftops.
 
LMI economic incentives resulting in energy savings are immediately spent in the local economy, which contribute to community development. 

In general, LMI households are more severely impacted by climate events and fossil fuel emissions due to community placement. With a focus on these vulnerable communities, the development of renewable energy could combat the negative impacts of emissions and climate crises, thereby reducing overall healthcare costs, long-term negative health effects on children, and costs of disaster recovery for LMI households. In turn, our society and economy would benefit from renewable energy development through decreased need for mitigation efforts. The construction of renewable energy facilities near LMI households would displace fossil fuel plants, allowing for a cleaner environment through reduced emissions. Additional reductions in emissions can be accomplished in the transportation sector. By focusing on the electrification of school buses, government vehicle fleets, and commercial truck fleets that service these areas, emissions that directly impact the communities can be substantially reduced. 

Inclusive renewable energy programs are an important part in promoting justice and fairness. By providing LMI households accessibility to renewable energy, participants, especially future generations, engender a greater sense of autonomy and empowerment. 

However, the challenges of accessibility and affordability are significant. The DOE’s Solar Futures Study uses NREL models to review the potential role of solar in decarbonizing the U.S. electric grid, and broader energy system, while summarizing solutions for regulatory barriers to low-income solar access and affordability. This approach is challenged by the confinements specified in the NREL models. The NREL models rely upon: (1) net metering, which is undergoing review in California with the NEM 3.0 CPUC process, (2) the continued decrease in the cost to deploy solar, (3) the expanded legislation and regulations in individual states, and (4) federal incentives for LMI that may or may not occur. Without these assumptions holding true, the growth of LMI household solar may not reach its full potential.  

The key to obtaining the funding required to ramp up LMI household renewable energy growth starts at the top. It is imperative that the recognition of the true value of renewable energy generation come from the federal mandates to the states to meet minimum criteria. It is important that the conversation around renewable energy, especially for marginalized communities, shift away from the “incentive” or “subsidy” narratives towards capturing the inherent value of accelerated deployment with renewable solutions. 

Financial, housing-related barriers, ownership, and access to education all present challenges for LMI customers to adopt solar energy solutions.  

Because of the high upfront cost of rooftop solar, many LMI households face a substantial financial barrier to clean energy. One solution that has been deployed in the past is third-party ownership, eliminating the need for upfront capital. However, those third-party models often reduce the financial benefit to LMI customers compared to their ownership model counterparts. High income households use more energy, while LMI customers often use less energy, resulting in a smaller total reduction of their overall bills from transitioning to a cheaper electricity alternative like solar. Due to these smaller savings, even a slight increase in utility charges to LMI customers can quickly eliminate any savings. 

Housing-related barriers in adopting rooftop solar include roof suitability and faulty or dated electrical wiring. LMI families are more likely to live in older homes that may require complicated repairs due to asbestos, lead, and mold. This is an additional upfront cost that restricts many customers from installing solar, and most solar companies will not risk the liability of an older roof’s integrity. 

For renters and residents of multi-family housing, solar incentives may be split between the building owners and the tenants, or the tenants may have their utility charges included in their cost of rent. LMI households face many of the same barriers with off-site solar as with traditional rooftop solar, including financing, education, and outreach. Legislation is lacking in many states to support community solar and to encourage LMI participation. 
Some available incentives and financing mechanisms are not as accessible to LMI customers, as they may require high credit scores or the “right type” of taxable income to be advantageous. Almost 90% of solar adopters have prime or super-prime credit scores greater than 680. 

Because of all the barriers and clear disadvantages stacked against LMI customers, these communities are rightfully distrustful of energy saving promises. Additionally, this customer base has been the target of scams and exploitation in the past. While educating LMI customers on the savings from beneficial programs may prove promising, complications arise due to the lack of broadband in a large proportion of these homes. A staggering 44% of households with income below $30,000 a year do not have access to home broadband services, limiting accessibility to online educational material. 

The impact of solar savings and implementation is clear, but high income households receive much higher benefits than LMI households from solar deployment. 

Single-family, owner-occupied households adopt more solar energy solutions overall due to their higher energy consumption and the disparity in suitable roof space between single-family and multi-family homes. Lower solar prices drive greater impact in moderate-income than low-income, with incentives providing the greatest change for low-income households. 
First-year utility bill savings from solar are much greater for single-family owners ($525 to $870) than other categories of households, which could be as low as $40 to $50. NREL modeled incentives that would raise the savings for other categories. These incentives would significantly reduce the energy burden on LMI household budgets, providing “48%-49% of LMI households with solar systems, resulting in $69 billion - $101 billion in total net first-year utility bill savings.” 

To ensure adoption, the report outlines short- and long-term actions in finance and funding, community engagement, site suitability, policy, regulation, resilience, and recovery. 
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Environmental justice requires taking steps that go beyond simply providing economic relief to LMI households. Measures must be taken to focus on the communities most directly affected by the changing climate. ​

 We are excited to introduce you to another excellent addition to the Distributed Sun team – Stephen O’Connor, our Head of Land Acquisition. 

Stephen majored in History and minored in Architecture at Penn State. It was during these years that his interest in solar energy sparked as he had the opportunity to design a passive solar house for an architectural engineering class. Passive solar homes were quite popular in the late 1980s as a result of their efficiency and the hope was that photovoltaics would soon catch up in popularity, as they did. 

Prior to joining Distributed Sun, Stephen worked in various industries ranging from real estate to journalism. Stephen started his career in the US in the real estate brokerage and development sector where he worked for a few years before heading to Eastern Europe, where he switched gears to investigative business journalism. After the fall of the Berlin Wall in Germany, Stephen successfully founded a media company comprised of investigative weekly business journals in Hungary, Poland, and the Czech Republic. Thanks to his entrepreneurial initiative, more than 1,000 people were employed for over 14 years. 

Afterwards, Stephen spent several years between Russia and the US, working in various commercial real estate development and media occupations. It was at this time that Stephen decided he wanted to be involved in something new and different. With a deep understanding of business and real estate prospecting, he decided to apply his skills to the solar industry, convinced of renewable energy’s meaningful and bright future. 

Stephen currently manages the Land Acquisition process at Distributed Sun, establishing and maintaining relationships with landowners interested in solar while working closely with our engineers to ensure the most efficient and environmentally conscious solar system design. He also assists with new market prospecting. 

Stephen thinks “Building face-to-face communication with landowners is one of the key differentiators of Distributed Sun. Being able to reach out directly to the community and explain the value of solar projects is the right thing to do,”  

He notes that Distributed Sun has done a tremendous job in focusing on utility-scale and community solar developments in different states and will continue to have a proactive role. Stephen proudly says, “I think the states are catching up with solar and people are increasingly becoming more accepting of it.” 
​
We are very happy to have Stephen on the Distributed Sun team and look forward to bringing more solar projects online, while adding value to communities that embrace solar energy and its importance. ​

The U.S. solar industry has flourished over the past decade, with annual project installations growing exponentially since 2010. One well-known reason for this growth has been the rapid drop in solar equipment costs. However, solar growth has not only been a result of supply-side factors. Since 2015, a powerful source of solar demand has emerged – the direct purchase of solar power by companies with significant electricity needs. 
 
Why are companies interested in solar energy? 
Thousands of companies across the globe are making clean energy commitments to reinforce their relationships and brand value with their own customers. Because U.S. electric utilities have generally moved towards decarbonization too slowly for many companies to meet their internal goals, these companies have taken the initiative to sign direct contracts with clean energy projects. Figure 2 below shows the rapid growth of this market, which has primarily come from large-scale solar and wind projects. 
 
 
 







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Source: Renewable Energy Buyers Alliance
Figure 2 - Annual Utility-Scale Solar and Wind Projects Supported by Corporate Contracts
https://rebuyers.org/deal-tracker/ 
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How are the solar contractual agreements with corporate clients structured? 
As new corporate customers entered the solar industry, the solar industry transformed to serve a new set of needs. From 2010 to 2015, most large-scale projects pursued fixed price Power Purchase Agreements (PPAs) with electric utilities. In a fixed price PPA, a project sells its output to the buyer for 20 or 25 years at a set price and the PPA itself is signed prior to construction. 

A long-term fixed price contract can deliver benefits for both project and buyer. A solar project needs price certainty to be attractive for its own investors, and an energy buyer can lock in costs at an advantageous rate for the long term. A homeowner who has considered a 30-year fixed-rate mortgage versus a 5-year adjustable-rate mortgage can relate to the benefits of locking in long-term costs. 

Because the general corporate market has different needs than electric utilities, solar projects had to innovate within their business model to appeal to these customers. Investor and accounting pressures on large companies (especially publicly traded companies) make it much more difficult for these entities to sign long-term PPAs compared to utilities, even if those contracts would provide savings to current and expected energy costs. However, this creates a conflict with the project’s requirements for price certainty on a long-term capital investment. 
The solution to this problem was a hybrid contract: an upfront fixed price contract period that is shorter than a classic fixed price PPA with a “tail” period subject to market price fluctuations. Solar projects use the shortened fixed price period to achieve a minimal level of investor payback and then manage to fund their projects using variable cash flow projections. Figure 3 illustrates the distinction between fixed price PPAs and hybrid contracts. 

Fixed Price PPAs vs. Contracts with a Variable Price Component ($/MWh) 
Innovative business models expected in the solar industry 
Ultimately, the hybrid contracts shifted some risk to the solar project. However, because this new risk came paired with a large new marketplace, solar developers and investors figured out how to make the deals work. 
Considering the bright future of solar energy adoption, there will be a need for evolving business models and innovative debt and equity financing schemes. Active cooperation with utilities and local authorities will continue to add value to the financial feasibility of solar projects.  
If the U.S. power grid is to make further progress on decarbonization, Distributed Sun expects to see and help create further business model innovations in the solar markets. Only through reaching as many customers as possible will the solar industry be able to claim its rightful place on the U.S. power grid. ​

Written by Paul Holshouser 

This post puts the spotlight on another valuable member of the Distributed Sun team: Paul Holshouser!
 
Paul is the Senior Director of Project Finance here at Distributed Sun. He is a part of Distributed Sun’s key decision making team for deal valuation, review of legal documentation, and retention of partner relationships.
 
University of North Carolina at Chapel Hill is where Paul decided to earn both his undergraduate BS in Business Administration and his MBA a few years later.
 
In between his time in Chapel Hill, Paul spent six years as a Risk Officer at Wachovia Corporation in Charlotte, North Carolina. It was Wachovia that introduced Paul to renewable energy when his team began making tax equity investments into large-scale wind farms. This experience opened his eyes to emerging business opportunities in clean energy and he decided to redirect his career to focus on renewables.
 
After graduate school, Paul served the wind industry at the American Wind Energy Association for five years, providing market analysis to the wind finance industry and working to convert market data into effective tax policy.
 
Since joining the Distributed Sun team, Paul has closed financing for projects commencing operation, supported the sale of operating assets several years into operation, and managed sale negotiations for development assets. Paul supported the full development cycle for Distributed Sun’s SUN8 portfolio – a 110 MW portfolio of solar projects that is now fully constructed and generates enough energy to power over 20,000 homes.
 
As Paul excitingly states: “Distributed Sun’s role as a policy innovator in New York helped us to deliver much of that portfolio to “shovel-ready” status within months of rulemaking. Our speed to market helped the state prove the viability of the community solar model”.
 
During his years working in the solar energy industry, Paul has witnessed how community solar in New York enhances the potential of solar projects to create win-win situations across many parties. The essence of community solar is to reach customers that are unable to install solar directly (roof conditions, home ownership, etc). Moreover, landowners and local counties benefit from significant lease and property tax revenues, while neighbors can sleep comfortably knowing that their local energy supply will not impair their water supplies or air quality. These wins are also reflected at a macro scale, where the local utility is able to decarbonize their grid in a highly cost-effective way.
 
However, to effectively coordinate all these actors and make deals happen in a dynamic environment is not a trivial task. This is why Paul believes that de-risking projects and expertise in amplifying the winning synergies across so many parties are among what distinguishes Distributed Sun in successfully bringing solar projects to operation.
 

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We are excited to highlight another member of our team here at Distributed Sun - Chet!
 
Chet joined Distributed Sun in 2014 and brings a great amount of engineering experience to our company. He began as an Operations Manager but took on the role of Director of Engineering in 2017.
 
Chet attended the University of Maryland where he earned his bachelor’s degree in Civil and Environmental Engineering. He then went on to complete his graduate degree at the Imperial College London - one of the top technology schools in the world and at the time one of the few schools, along with MIT and Stanford, to have a renewable energy graduate program.
 
Chet had the opportunity to work under Professor Jenny Nelson, a leading figure in organic solar cells and the author of Physics of Solar Cells, and was inspired to write his thesis on the deployment of thin-film photovoltaics in rural Africa. His key finding was that solar home systems in rural areas are an effective way to provide electricity to households that otherwise cannot access it. As an interesting parallel in 2013, energy storage costs were still one of the larger barriers to adoption of renewable technologies in these areas.
 
Prior to his work at Distributed Sun, Chet spent six years working with Bechtel Corporation taking a number of roles from hydraulic engineer to field geotechnical engineer to hydrologist. Chet had the opportunity to work in the domestic power sector and on international mining projects. Chet was excited to see the Southern Vogtle plant come online after running calculations on water systems almost 15 years prior. He also worked at the electric generating facility in the Mojave Desert and this is where he got an introduction to the large-scale world of renewable energy.
 
Once joining Distributed Sun, Chet helped the team deliver Cornell University on their first MW-scale solar array at Snyder Road. This project was the second MW-scale project to be installed in Upstate NY - a huge achievement for the company and the state of New York as a whole. Since then, Chet has continued to help Cornell with the execution of almost 40 MW for their renewable energy portfolio.
 
His experience with Distributed Sun has been varied in terms of tasks and projects. He has worked with everything from preliminary simulations to energy simulations to systems layouts, closing with landowners, negotiating PILOT agreements, and handling due diligence with institutional investors.
 
Chet notes that Distributed Sun has made great strides since when he first began. Distributed Sun began with the ownership and operation of 50 kW solar arrays in the Mid-Atlantic, but it since has gone on to find many new opportunities in states and industry segments that at first were unexplored. He is excited to see how Distributed Sun will continue to grow.

As a renewable energy development company, Distributed Sun is proud to contribute to improving the energy system by decreasing the emissions impact of every incremental megawatt to come onto our local electricity grids. All our electricity is emissions-free, and for all our projects, we ensure that stormwater flow quantity and quality are maintained at our sites.

However, as a new technology (at least in the eyes of many of the rural communities in which we work), we often get the question of “how will your solar array affect long-term land use changes?” Of course, we are leading with many of the best management practices from concrete-free racking foundations to pollinator-friendly grasses to forward-thinking decommissioning plans. With modular equipment and a lack of moving pieces, we can plan for a much lower impact on the implementation of civil works.

On this Earth Day 2021, we are proud to add that we can safely support and co-exist with endangered species. We have recently coordinated with the New York State Department of Environmental Conservation on a Net Conservation Benefit Plan to preserve habitat of the New-York-State-listed short-eared owl (Asio flammeus)!

At one of our project sites in Upstate New York, our team discovered 35-year-old reference to the short-eared owl breeding in the area. In order to responsibly continue on this project, we engaged with qualified environmental consultants who visited the site and confirmed the presence of this beautiful bird. As this raptor,  like many other species, is finding challenges in segmented habitat, we drove our stakeholders (the project, the NYSDEC, and the landowner) to find a mutually agreeable solution.

NYSDEC wanted to ensure that the owl could have pristine, preserved habitat to help its owlets survive the challenges of ground nesting. Our landowner agreed to help and set aside land with the caveat that he wished to continue his family’s hunting on the property, as it has always been. In an inclusive process, Distributed Sun engaged the parties and found the happy medium – a permit was issued and the project will go into construction this spring.

So please connect if you want to learn more about how we can help keep the skies clear and the land safe for our species of concern.