For our last episode of 2022, Adam Kuehne of Summit Ridge Energy joins us to discuss their investment and operation of Community Solar Programs across the United States. Join us to learn about Community Solar Programs, how they play an important role in the energy transformation process and how Summit Ridge Energy operates and invests in Community Solar.
For our last episode of 2022, Adam Kuehne of Summit Ridge Energy joins us to discuss their investment and operation of Community Solar Programs across the United States. Join us to learn about Community Solar Programs, how they play an important role in the energy transformation process and how Summit Ridge Energy operates and invests in Community Solar.
07:31.58
chrissass
Welcome to insider' guide energy I'm your host Chris Sass and with me this evening is Adam Kuehne. Adam welcome to the program.
08:01.79
Adam Kuehne
Thanks Chris thanks for having me.
08:05.92
chrissass
It's a pleasure to have you here. I'm excited. This is one of our last show I think this is our last show of the 2022 year. We're going into the holiday season. So Thank you so much for joining us and I am super excited to be talking solar today. We. We love the energy transition on the show. And I think it would make sense for you to maybe start by introducing yourself professionally who you are and who you work for.
08:30.77
Adam Kuehne
Yep, happy to my name's Adam Cuny I'm the chief investment officer of Summer Ridge energy um I started my career in the us navy primarily operating nuclear power plants on submarines did that for several years before deploying to the Middle East um when I left the service I um I pivoted into finance through an Mba a couple years in New York at an investment bank and for the better part of the last eight or nine years I've been on the developer side of solar so Summer Ridge energy is a company founded in 2017? Um, who is now the nation's leading owner operator of community solar and storage assets where we're a national company. We've got a footprint in all of the major states in which community solar exists which you know is ah, an increasing number. Um you know every day. Um, our strategy is really to get to scale within the markets that we operate in to really catalyse investment into the space.
09:27.70
chrissass
So help me understand community solar help me understand what you mean by that. There's so many budge words in our industry I think it's always fair to ask what I say is the dumb question. So please explain what you mean by Community solar.
09:39.74
Adam Kuehne
Yeah, yeah, yeah, so community solar is going to mean um, a little bit some something different within the market that you're operating in but at the highest level you're talking about a form of net metering that allows for. Participation in clean energy by the entirety of a utilities ratee base. So Third party owned systems. You know so small solar systems that are interconnected at the distribution level owned by companies like summit ridge energy that make the financial benefits of that solar directly available to. Households and small businesses within a utility service territory.
10:17.75
chrissass
Okay, so that makes a lot of sense to me now the obvious question and in the preamble when we were speaking before we started recording. We talked a little bit about storage so help me understand because solar without storage is probably not that compelling how to storage play into your play.
10:34.86
Adam Kuehne
Sure, um so um I think every market that opens up and kind of looking backward every iteration of ah of a market that's already open is really necessitating storage either as a part of solar or as a complement to solar. So. Um, before the inflation reduction act which was passed this year here in the states. Um, the application of storage was really limited based on the economics. Essentially you had to bundle the solar and the storage project together to make them appear as one both. Ah, physically to the grid but also financially you know facing the Irs and so really, that kind of presented limited use cases where the solar itself had to be directly tied to the storage and it really kind of limited you in your application. But 1 of the one of the many benefits of the inflation reduction act was the um, the you know the eligibility of standalone storage for standalone investment tax credit which really opens up the application of storage across the entire entirety of the grid. Really what we see is that. Um, as soon as a significant volume of solar is prevalent right? represents a significant portion of a utilities generation source. You absolutely need storage to help moderate and manage the intermittency and the unpredictability of solar as well as other intermittent.
12:04.60
Adam Kuehne
Renewable resources like wind. So it's essentially it's a complement right? It's ah it's a It's a way of shaping the production of solar which is something that the you know the current state of technology of solar and wind production doesn't allow for on its own.
12:18.83
chrissass
And then so grid scale storage. What are you seeing today. So we've done a number of storage episodes over the last few years um in the north American market today. What is grid scale what does grid scale storage mean to you.
12:27.51
Adam Kuehne
Bigman.
12:31.60
Adam Kuehne
Yeah I think grid scale storage look that that that is a very rapidly maturing part of the energy space a number of large developers emerged over the last four to five years who I think. Ah, anticipated the need for storage at the at the grid level right? at the transmission and high voltage level. Um, they you know these were both you know platforms that had background and project development right? Renewable and conventional asset project development but also energy traders that started to see. Um, you know these phenomena in the markets that that you know you can use storage really as an arbitrage opportunity. Um I think in certain markets like in Texas and ercot. There's also just physical observations. You can make in California as well with you know with blackouts and brownouts. Um. But what we've seen over the past I'd say 3 to 4 years is a really rapid maturation of that space. Um I think the most interesting part of that space to us as a distributed developer though are the applications of storage at the at the lower voltage and the distribution level right. Um, you know the systems that we're developing on the solar side range from 1 to five megs dc you know interconnecting up to you know, maybe thirty Nine Kv but we're generally within the grid of a distribution utility.
13:57.76
Adam Kuehne
I think the unique thing that that we bring and that smaller storage project application brings to the distribution. Utility is the ability to really precisely locate that storage relative to a utilities needs and that's something that you know the large projects just can't do by their nature. You know two hundred megawatt 4 hour systems that are cited at the largest substation. You know where massive you know, massive energy is being imported. They can't serve that critical load. They can't offset capex that needs to be made. You know, further down the chain closer into the load pockets. But something that we as a distributed developer have really in our toolkit now and like I said the inflation reduction act really kind of supercharge that for us by separating solar from storage and really opening up the use case of storage on its own.
14:45.86
chrissass
So are we beyond the point of right shaping or shaving with storage and it's actually delivering or are we still using it for cost benefit.
14:57.94
Adam Kuehne
It's going to range it really ranges from market to market and utility to utility right? and it all goes a lot of that goes back to market design right in ercot. For example, you know in the absence of ah, a capacity market. It's an arbitrage opportunity right? and. You know you're charging, you're charging when energy is low and you're discharging when it's high and you're basically sitting on a financial option right? That's being dispatched into the grid physically through storage. Um, we see we see a lot of other applications though. Um and other and other markets that we operate in such as New York so some of the first battery projects that will that we turn on early next year are located within the 5 boroughs of Manhattan they're smaller systems. You know they're close to 4 megs but they're 4 hour duration systems where really Khan Edison um has sent a market signal to us as developers that says here's where I need storage if you build storage in these you know hyper local pockets of my territory here are the economics that are available to you over a 25 year period to go and get.
16:06.12
chrissass
And then we talked about that so you're talking about the economics and you talked about the inflation reduction act. Um, how in the current economy is financing going. So the economy is not as healthy as it might have been if we talked a year or two ago.
16:21.23
Adam Kuehne
You.
16:23.44
chrissass
Um, you know obviously the inflation reduction act pumped a lot of money into renewables or opens a lot of opportunities I guess with credits and not necessarily money but where you can go. Um, how's the investment sentiment today. So if we go into you know January Twenty three what's the market appetite for investing these projects.
16:43.72
Adam Kuehne
Yeah I think it's as strong as strong as ever. Um, ah, certainly there are headwinds that we didn't face over the last five to six years you know those are those are macro headwinds with just you know, global instability. Um, but rising interest rates is something that you know we haven't had to consider for the better part of I don't know seven or eight years um and so I think I think the inflation reduction act. Um, really, you know as a tailwind to kind of offset those headwinds um serve to really offset any.
16:59.69
chrissass
And.
17:17.21
Adam Kuehne
Decreasing interest that we would have seen from you know global investors I think I think the signal has been sent. You know here certainly domestically that there's a long runway now right? that the inflation reduction act has really enabled a long runway of renewable project development and investment opportunity. Um, where you know you don't have to play the game that that many of us played over the last decade of you know, fits and starts right anticipating extensions that that wouldn't come or um, you know trying to trying to perfectly craft. Ah you know a solar plus storage project that we check all of the boxes of the Irs. I think the playing the playing field is very level across all renewable energy technologies now there's still some guidance that that we await right around some of the specifics of how to actually achieve some of the opportunity that's um, that's present within the inflation reduction act.
18:03.77
chrissass
Are.
18:12.57
Adam Kuehne
Um, but I think I think it was it was certainly um, a well-timed catalyst to the space. Um, you know that that was needed irrespective of what some of those tailwinds were but I think in in the face of all those tailwinds It couldn't come at up at a better time.
18:27.16
chrissass
And then what states are the most legislatively friendly or what utilities have the ability to deal with the distributed environment today and have the. I guess the rules or the regulation behind it to be most friendly this this development.
18:45.97
Adam Kuehne
Sure, um, so the biggest overlap we see is whether or not a state allows for a deregulated utility versus a fully regulated utility or not so. Um, you know, geographically that that generally means that states in the Northeast the Mid-Atlantic the Midwest and certain parts of the west. Ah, you know already have um you know retail choice available to the customers where you know the distribution utility who's physically responsible for. Wires right? and moving energy. You know to your household or to your small business. Um, they are not necessarily going to be actually generating the power owning the owning the projects and generating the power that you consume um you know twenty plus years ago thirty plus years ago when deregulation took cold. Certain markets. You know went all in right? So you think Iso New England New York Pjm and certain markets like in the southeast didn't and so certain of these stakeholders right? The utilities the ratepayer advocates the public utilities commissions. Are already very familiar with third -party owned systems right? Independent power producers retail choice providers to where community solar slots into those market structures a lot easier and a lot more seamlessly than it would if you know, um.
20:13.20
Adam Kuehne
You know, ah you're living in Georgia and Georgia Power is the only source of electricity that you that you can get.
20:18.45
chrissass
So what's an ideal setup for community solar. What? what do you look for? So if you know if you were going to send me a perspective and say hey we're gonna go do this project. What's the ideal community you're looking for.
20:32.32
Adam Kuehne
Yeah I think um, the characteristics that we look for first and foremost are at the market level. So We want to see um you know, ah policies that are enacted that are that are well-defined. Um, that have long runways for development. That are scalable enough that can really justify us making a significant investment within that state over a prolonged period of time. Not just a financial investment but ah, you know a boots on the ground investment. Physically you know, opening offices putting staff you know boots on the ground to develop. Then to build and then to manage the projects. You know that that we'll build in that state and so you know once we see all those you know all those characteristics We're really drilling in on the details of how do we get to the to the rate pair you know what are the economics available to us as a project developer that. That really create the financial opportunity that we'll be making an investment into is the entirety of that rate base available. Can we subscribe. Um, you know, residential customers only or do we also have the opportunity to subscribe small medium and large commercial customers. Are there special provisions that help us to access low to moderate income customers which you know historically was only really a feature of the state level programs. But now at the inflation reduction act obviously has you know its own its own incentives. So really, it's you know what?? what are the broad.
21:59.52
Adam Kuehne
Broad strokes of the market. But then really at the very detailed level. How are we actually going to make this you know the benefits of Community solar available to every single rate pair within the broadest swath of that utility territory as we possibly can you know from there. It's really an evaluation of. You know what is the landscape of contractors look like how much is it going to cost to build and maintain these systems. What does the supply chain look like to get you know to get the modules and the transformers and the inverters and you know to build these systems on Time. It's what is the landscape Of. Um, you know retail providers as well as you know Aggregator Partners You know how easy do we think it'll be to actually subscribe these systems I think a very unique feature about Community solar is you know we very quickly in our in our company history went to guaranteed savings models. So Essentially our value proposition to the customer is you will buy bill credits from our project and we will only charge you a guaranteed discount against the value of that bill credit. But it's still actually it's a costly and sometimes tedious process to actually convince customers. They should want to save money with no money out of pocket right? No, no investment month to-mon termination Very consumer, friendly proposition. It's still and this is really an artifact I would say of ah of Market design. The really the more bureaucratic and byzantine that you make that process.
23:31.97
Adam Kuehne
The more difficult it is to actually bring the savings to the customer because there are so many levels of bureaucracy and paperwork and box checking that you need to do before you can actually physically get that power onto the grid and financially make the benefits of that community solar available to the customer.
23:45.79
chrissass
So I think I just heard you say that community seller in your customer signs up, you're gaining them or telling them. There's gonna be a discount but there's no commitment on their point for term. So there's no, they're not signing a multiyear term with you. They go month to month with you.
24:02.80
Adam Kuehne
Absolutely um, you know, certainly with residential customers. Um, you know where um, you know from a consumer protection perspective. Um the idea of pitching you know a family or you know, ah but a single-family household. Um, making a 20 or 30 year investment in our projects is not something that we want to undertake right? There are other technologies other companies who can do that with rooftop solar you know with storage you know, household storage and they have a certain swath I would say of the market that are both.
24:33.40
chrissass
Okay, but those but those target upper ah upper middle class and better right? You mean if you look at the average cost of a home. But if I'm going to put rooftop solar on and battery storage I have to have a certain disposable income to do that right? So if you look at the averagegage American income.
24:38.20
Adam Kuehne
Absolutely.
24:46.33
Adam Kuehne
Absolutelyre.
24:48.43
chrissass
You're probably not doing that You're probably going to someone like you guys.
24:51.77
Adam Kuehne
That's exactly right, right? because for those systems either. They're looking to sell the system right to a household for which that you know the household needs the money and then moreover they also need the taxable income right to be able to efficiently use the tax credit that's available to them. Ah, in lieu of buying the system those customers are really going to be signing up for a long-term agreement either through a power purchase agreement a lease or a loan agreement where the nature of that consumer fancing really lends itself only to the most you know credit worthy of customers. Really one of the you know the hallmarks of community solar. Is that since this is virtual right? since we have access to the entirety of a utilities rate base all of the customers within it to the extent that a customer defaults or moves or forgets about their subscription and just stops paying. It's very easy for us in the next month of our production to suspend allocating Bill credits to them. And just reorient those bill credits to another customer. So our value proposition is exactly that Chris it's with no money down with no long-term commitment with a month-to-month cancellation right? We can guarantee that if your customer if your utility bill were x the value of the bill credits that we apply against that. We will only charge you a certain percent against that right? So we are guaranteeing you savings on a month to month basis
26:12.13
chrissass
Okay, so but you also said in your earlier conversation that you partnered with the utilities right? You you're providing this service for the utilities and so you're kind of cannibalized in their income. Um, so how excited are they that you're coming in and under cutting ting them.
26:17.80
Adam Kuehne
Absolutely yeah.
26:27.85
Adam Kuehne
Well I don't I would um I would disagree that we're undercutting I don't I don't necessarily agree that we're cannibalizing I think in most well-designed programs what you see is that the utilities can actually recover the costs of these programs right? So to the extent that they have to make significant. Investments in their technology infrastructure for example or they've got to bring on another. You know one hundred person staff just to manage this program. They have a right per statute per these programs to recover those costs from the entirety of their rate base and while the you know in certain markets. The value of our energy may be at the full retail rate no different than. You know an existing net metering program for rooftop solar what you see there also is that subject to certain net metering caps. The utility does have the right to recover the added costs from the entirety of the rate base. So I think there's just a general. Bias away from change at utilities which anyone who's ever interfaced with regulated utilities would agree with right because they're monopolies right? There's the status quo of how business has been done for the last thirty years and we are not necessarily a threat but we can be an annoyance I would say. So really, that's another feature that we look to when we when we look to these markets is you know what is the utility landscape look like have these utilities by their common ownership. You know with other utilities already seeing community solar programs already kick the tires already learn lessons.
27:55.44
Adam Kuehne
You know how receptive and how good of a partner will they be to the you know the learning curve that is inherent and building a community solar program.
28:02.88
chrissass
So A couple things come to mind. The first is we're talking solar and even in your earlier comments you said wind and solar seem to be popular renewables I Mean there's probably some other choices but probably less Mainstream. So. How does community solar play with all these wind projects that are going on or other projects renewable.
28:24.78
Adam Kuehne
Yeah I mean look when it's bundled with the grid obviously in most markets. It's a natural complement what you see in most markets is that the you know the production from solar the profile. The solar production profile is a nice complement to 1 end where. Ah, solar is ramping down generally wind is ramping up that can also be true seasonally right in certain markets. It's not necessarily going to be true and you know what you see as an attractive solar resource in 1 market just may not have an attractive wind resource.
29:00.27
Adam Kuehne
That can you know that can interconnect and produce within that Market. So I think like I mentioned when I talked about the inflation reduction act Now that there's a level playing field for Technologies not just between solar and um, you know, but also new forms of renewable energy and new fuel sources including hydrogen. Standalone battery storage I Think what you're going to see is an increased appetite from all of these stakeholders to let all sources of renewable energy generation onto the grid because you're not going to have to allow one at the sake of the other now right? you can look at all of these so all of these sources of generation really as a. As a basket you know, ah, an uncorrelated basket especially with storage right? that can be used to kind of shape that production to meet your end user needs.
29:47.71
chrissass
All right? So I buy that we talked in the precall a little bit about the finance angle. How are these deals getting done What kind of magnitude are these deals and you know I said my off the cuff is are the ppa and you said well not really, there's some avenues to do things. So how are.
30:04.92
Adam Kuehne
Catched and then.
30:07.50
chrissass
How are these companies financing these deals or how is the community financing these.
30:10.85
Adam Kuehne
Um, so when we when we launched as a company we had the ambition of financing community solar at scale we. We knew that for community solar to achieve you know the possibilities. Um, you know that the market would give to it. Really, you know doing nickels and dimes here and there owning a project or 2 having 1 project in this market and 1 project in that market. Um, you know you could never get to the scale that that you needed to wear community solar would actually be able to live up to its expectations. Um, and so we right out of the gates. Decided that we would only participate in markets where we knew that there was a scalable financial investment opportunity I think that's proven to be the case and in most of the markets so markets like Illinois Maine and Maryland where we've been the most active we have been able to put over a billion dollars to work across those 3 markets. We as a developer are also a owner operator in all of the projects that that we build and we're really arranging the full capital stack. No different than ah, a utility scale solar project would we have tax equity investors that are investing into our portfolios primarily for the investment tax credit and the accelerated loss benefit. We have lenders who are yeah who find ah an attractive risk adjusted return proposition of making loans against the projects and then we have financial sponsors. Um you know tier one infrastructure investors who again like the risk adjusted return proposition.
31:39.96
Adam Kuehne
Of owning and operating these systems over their entirety of their useful life and so we very quickly went down that route I think we've seen a very quick maturation in the space as well. I think initially you know we saw some of the distributed generation developers and owner operators look to tuck in. You know a little bit of community solar as a complement to some of the broader dg portfolio that they would own. We saw some of the utility developers who also owned and operated maybe look just to develop but not necessarily own and operate community solar right? because again these are small or projects right? 2 to 5 megs dc. Um, I think the unique thing about community solar is just because you're a smaller project doesn't mean you're going to have smaller problems right? You still have all of the same challenges and problems that large projects have right from an interconnection perspective from a permitting perspective from a supply chain perspective but all of those all of those problems really get concentrated down into smaller dopp. Dollar capital investments. So I think one of the strengths of these larger programs is that you offer investors the opportunity to really have diversity within a market right? So for example, we did over 45 two megawatt ac systems in the first program of Illinois. With 1 investor and got them to scale through that means.
32:57.36
chrissass
So are you more focused in the management so where does your company's business model is are you the long term managing his assets building These assets what? what makes your shareholders happy right.
33:12.36
Adam Kuehne
Ah, yeah, sure. So I think I think we're where it all comes together right? we are. We're at the very front end of project development. We're signing lease options with landowners. We're working with building owners who have. Otherwise unusable rooftop space right? Large industrial reits who allow for us to lease rooftop systems from or rooftop space from them. We're at the very back end we're managing financially and operationally the systems that are built. We're also co-investing into the projects that we own so that. We're also you know there to take in lessons learned right to ensure that the customer experience. The subscriber experience. The investor expectations are met and then we're doing everything in between and so I would say all of our efforts really concentrate to get a project. Financial closing and issuance of notice to proceed with the contractor if you've gotten the project to that milestone everything that has had to have taken place beforehand has been solved everything that will come together after is in hand and really, you've convinced all of these you know, varied stakeholders. That this is a project that's worth building. It's worth investing in right? It's worth all of the brain damage that went in for the past three or four years with the landowner and the permitting authority and you know the local stakeholders who had concerns that you went back and forth with ah you know for several months with the utilities themselves.
34:43.50
Adam Kuehne
With the you know the retail provider or the aggregator who's out there subscribing the customers and then all and then at the very last you know at the very last minute Your financial investment is made and everyone's Happy. So I would say that's really what makes us happy as a company. That's what makes our investors happy because that's where we make most of our money is from actually doing all of that work. Bringing it all together getting it to notice proceed getting it to financial closing and moving that project through construction and operation.
35:10.81
chrissass
Have you had any pain with supply chain I mean everybody I talked to in renewables in the last year has had a few bumps in the road with supply chain to be polite. Um, how has that impacted your business in the last twelve months
35:15.70
Adam Kuehne
A.
35:23.50
Adam Kuehne
Um, I would say it continues to affect us. But I think unlike two years ago two and a half years ago um the challenges are better understood um, you know at the at the start of covid um, you know, certainly we were affected. We were affected. Not just with the global supply chain right? You know what? what might happen when you know, um, you know covid popped up at a factory in China and they suspended production for four weeks we could see that ripple-on effect that many more months down the line when we weren't getting our modules or inverters right. Ah, but not just on a global scale. We saw you know two and a half two years ago at the very local level right? The impacts of covid and supply chain where um, you know, ah you know it was difficult to reach landowners right? It was difficult to convene permitting meetings in person never mind. Virtually it was difficult to make. Ah, to get people to make decisions because they were you know working from home and you know they had kids at home because schools were out. It was difficult to convince certain um, certain authorities that you know this was critical infrastructure and you know they should allow for our systems to continue to be built. Irrespective of you know pandemic shutdowns so I would say we're through the worst of it certainly most of what we continue to face in the supply chain realm is more macro now you know for a while there it was it was the force labor concerns of the wiir right in China.
36:56.20
Adam Kuehne
Um, and then it kind of pivoted into concerns around and I and I dumping and a tariff circumvention. Um, and you know like I said it's well understood now it's where it's certainly better understood and it's manageable I think we are a developer of scale. Where we have the capabilities and we have the supply chain. Um, you know presence that we can navigate that a little better than smaller developers can but certainly it continues to be a challenge um certain pieces of equipment that five years ago wouldn't have been a concern to us because we could have gotten on a thirteen weekly time we've got to place orders with fifty two weeks lead time now right? So it's just ah, it's ah it's an evolution of solar right? We've always been. Um, you know, challenged by the supply chain because we don't control a lot of it domestically right. Um, but I think I think certainly as a larger developer we're a lot better prepared to manage that than we were five years ago
37:51.20
chrissass
Right? So you understand the inputs you're able to handle the nuance of the current supply chain from what you just described what? what is a project like the asset lifecycle. So when you're when you're doing performance on these right? It's not like the old days when we build a big. Steam generation plant or a coal plant or whatever we knew we're gonna have it for 30 years or some period of time. What kind of performer are we seeing in these community solar plants. How long are they gonna be in existence and what kind of performance I mean if you're talking rooftops get changed every so often right.
38:21.74
Adam Kuehne
Absolutely yeah I mean that's um, that's really the one limiting factor of the rooftop application of community solar is the useful life of a industrial roof is around 20 to 25 years right at which point it needs to be reroofed and it's difficult to reroof with solar on the ah installed right. Um, so but on the flip side what we find with rooftop applications is no one really objects to putting solar on a roof because no one really even knows it's there and so while you may face some nimbyism within any given you know local market for developing on farmland or on private property. Or on any really any piece of land or property that doesn't have by right development you don't run into those obstacles with developing on the roof. However, that comes at the cost of a shorter systems useful life right? If we're only convinced that this project can operate for 20 years we're foregoing revenue for another 20 years really that all that all is accounted for in the financial model right? with our with our investors and with us as a developer we're still getting to attractive risk adjusted returns over a 20 horizon for the typical ground application. What we see is that these systems are built and are expected to be maintained. Ah, for a 35 to 40 year useful life. So we have site control right either through outright purchases of the property or through lease agreements with the landowner that allow for the system to be interconnected and operated for the full you know, economic and physical useful life of 35 to 40 years.
39:53.12
Adam Kuehne
Most of the community solar markets themselves allow for us to participate in the community solar market for anywhere from 20 to 25 years after which our systems would be expected to operate no different than any wholesale or Qf project Really they have a right with the utility. Ah, to it to be interconnected to continue operation. Although they may be getting a less lucrative you know computation scheme at that point in time again. That's all wrapped into the pro Performa.
40:21.28
chrissass
And then you mentioned a number of states in in your examples. How's the grid handling this distributed deployments right? So you hear a lot of horror stories about it and then you know I'll have some from Nationals grid on saying well it's not as big a problem as you might think we're gonna. Take it an increment and we're gonna get there. It's a transition.. It's not a switch that's being flipped So you're living this, You're right in the middle of all this How? how is the grid handling it.
40:42.52
Adam Kuehne
Um, you.
40:47.31
Adam Kuehne
Sure, um, better and better. Um, so I think the challenge is getting it onto the grid right? That's the first challenge and that's what we see in most of the markets is that the interconnection queues themselves right? have. Have so much opportunity that it's almost an incomprehensible exercise for the utilities and for the isos to process whether or not they could accommodate that and even if they could accommodate all of that new sort of all those new sources of generation. What are the. Second and third and fourth. You know, order implications of bringing all that on over even an extended period of time. So the biggest challenge right now is just getting through the interconnection queue we I would say at the distribution level have some advantage generally over the larger projects that. Ah, you know by their nature are larger will trigger cluster studies or have to go to Iso level studies more often than not in the markets that we operate in when we're proposing you know 2 to 5 megawatt systems. We have a bit more of a seamless path through the utilities. Interconnection study process an application and design process than a large system would so that's one of the inherent you know advantages of dg once you know, certainly once the once the solar is interconnected. Um I would say the markets in which community solar.
42:19.46
Adam Kuehne
Also represents some of the first solar generally and we saw this in Illinois in the amaran service territory you know in Southern Illinois um there is a learning curve. There's a learning curve of how do my inverters talk to you know the substation and the transformers on their side. Why are there signals getting sent back and forth that are tripping my inverters right? Why is the voltage not where it should be It's really, you know it's ah's ah, it's an exercise in just working with the utilities to understand what happened is this as simple as just changing one setting or do we need to rethink how we're actually interconnecting. Do we need to redesign this system. You know you know on the next system that we build are we going to trigger more massive upgrades than you had previously contemplated. Um, so I think I think really storage is going to be the key right? that helps them solve all of the problems and these aren't just problems that solar has created right? These are problems that exist on the grid today. The grid is old. The grid is um, you know has not been maintained to the level that it needs to be the grid has not kept pace with the electrification of the household and of businesses right? and so these aren't necessarily problems that are being triggered by solar. But I think I think solar and wind are often really the scapegoat. Because that's when the problems really manifest themselves is when we interconnect when they do see this. You know, irregular production profile and the grid can't maintain it.
43:43.47
chrissass
So all right? So I get all the bits you piecing together here. Um today is a lot of solar energy stokertailed or is it all being used or are you getting to use what you create or is the grid able to handle it in time and is there demand when you're creating the power.
43:59.90
Adam Kuehne
Yeah, um, you know speaking for our own assets and then and then ah you know expanding a little bit within community solar There is very little if any curtailment within community solar and within dg specifically right? you know, but by its nature. We're sitting closer to load. Right? We are serving critical infrastructure needs closer into the you know to the actual end- userer to where all of those major transmission constraints or substation thermal limits are not an issue right? we're past that level of the grid generally. I would say the challenges that we're seeing right now are um, are threatened or anticipated curtailment where certain markets like in Iso New England were being told sure you can interconnect but you can't operate your system for the next five years right so it's not It's not curtailment in the traditional sense. But it's effectively curtailment right? when you know we're not going to commission install and build the system just to sit on it for the next five years before we hope to operate it.
45:00.46
chrissass
So you came on the podcast our audience tends to be mid to senior folks in the energy industry who are your customers who who's your company talking to who do you want to pick up the phone and be talking to you.
45:14.30
Adam Kuehne
Ah, look. Ah, we have customers across the entire value train right? since we so we sit at that nexus right of community solar and storage project development you know construction operation. We talk to everyone is important to us from the smallest developer who has. You know one project that they've been developing in a state that we're operating in to the largest of infrastructure investors who wants to put hundreds of millions of dollars capital work and literally everyone in between you know in in addition to developing our own projects. We buy projects from other developers. You know so we partner with them. You know to give them. Financial compensation that they expect for doing the amount of work that they've done to develop a project. We're partnering with local and region Apc providers. We're partnering with large you know module vendors and you know transformer manufacturers. Um, you know we're partnering with the local communities with ah you know with the advocates of local communities. Um, yeah, you know we're partnering with labor. Obviously that's a huge element of the inflation reduction act that doesn't you know that doesn't get a lot of attention. But really, you know the labor force that's going to be necessary to actually to build and maintain. All of the renewable infrastructure that's anticipated to be built through the inflation reduction act and then you know all the way through the value chain like I mentioned to the ah to the investor universe.
46:37.17
chrissass
And then how do you think? personally as we kind of come to the close of this. We're doing so twenty thirty Twenty Fifty has the us position to get to renewables how are we doing for our grid.
46:50.10
Adam Kuehne
I think we have we don't have any more excuses right? Um, you know while we could have finger pointed up until the inflation reduction act. Um, you know about? um you know the kind of the weaning off of the investment tax credit that we were facing or the cliff that certain technologies were facing. Or you know the ah inability for certain technologies to access that right? We don't have a national energy grid or framework or policy right? and so in in the absence of that but we have our financial tax incentives now. Essentially we have no excuses. For you know our failure to actually build and install the necessary infrastructure right? Renewable energy infrastructure to achieve what are but you know both national goals but also state level goals right? Really the obstacles continue to be at the local level right? they're. Getting our projects interconnected working with the utilities. You know, understanding what the problems are that they see and how we can be. You know a constructive solution to those problems instead of being perceived. You know as a threat to them. You know how? how do we better partner with you know. Local townships and municipalities right to allay their fears about solar and property values and the like right? so really you know the opportunity set is there now right for the next ten plus years we
48:16.21
Adam Kuehne
Financial incentives are known. They're well understood. It's ah it's a liquid market I think we need to see some continued evolution there. We need to continue to See New corporates enter the tax equity universe we need to see you know a liquid and robust market for tax credit purchases. Right? Which is another feature the investment tax or inflation reduction act. Um, so you know those are things that that'll happen right? There's enough interest there's enough players. There's enough opportunity that that those will mature but really at the at the local and the hyper local level. Where these things actually come to fruition. That's where most of the focus I think needs to remain right? And how do you actually get all of these stakeholders aligned with installing you know community solar stay alone storage small distributed generation assets to make the benefits available. Not just to you know the broader grid but to them as a local community.
49:13.79
chrissass
Awesome I want to thank you so much for coming on the podcast. It's been eye-opening did to hear what you guys are up to hear the projects in play you're overly optimistic which is great. You've got a very positive outlook of what's happening in the market. Um. Thank you so much for being our guest on the podcast today. It's been a pleasure for audience. You've listened to another episode of insider's guide to energy if you've enjoyed the content you want to find out more. Don't forget to comment find us on YouTube find us wherever you get your podcasts subscribe share it with your friends and we look forward to speaking to you again next week.