In this week's episode, Gil Jenkins sits down with Steve Raeder, the founder and CEO of Summit Ridge Energy. As a leading player in the community solar market, Summit Ridge Energy (SRE) has made significant strides since its inception in 2017, deploying over $1.6 billion into clean energy assets. With a robust development pipeline of more than 2 GW, SRE will have more than 400 MW of solar PV online by the end of 2024, powering 50,000 homes and businesses. During the conversation, Steve opens up about his journey from SunEdison to founding Summit SRE. He breaks down the incredible value proposition for community solar, which offers guaranteed savings to both residential and small commercial customers while underscoring its pivotal role in the broader energy transition. Steve also discusses SRE’s growth strategy. Giving his outlook on the future of the community solar market, he details how the company is positioning itself to capitalize on this sector's continued growth. Additionally, Steve talks about the company’s solar panel supply partnership with Qcells, which was announced last year and is the largest domestic community solar purchase ever. He also shares insights into their innovative sustainability apprenticeship program in Chicago. Note: Summit Ridge Energy is a client of HASI.
In this week's episode, Gil Jenkins sits down with Steve Raeder, the founder and CEO of Summit Ridge Energy. As a leading player in the community solar market, Summit Ridge Energy (SRE) has made significant strides since its inception in 2017, deploying over $1.6 billion into clean energy assets. With a robust development pipeline of more than 2 GW, SRE will have more than 400 MW of solar PV online by the end of 2024, powering 50,000 homes and businesses. During the conversation, Steve opens up about his journey from SunEdison to founding Summit SRE. He breaks down the incredible value proposition for community solar, which offers guaranteed savings to both residential and small commercial customers while underscoring its pivotal role in the broader energy transition. Steve also discusses SRE’s growth strategy. Giving his outlook on the future of the community solar market, he details how the company is positioning itself to capitalize on this sector's continued growth. Additionally, Steve talks about the company’s solar panel supply partnership with Qcells, which was announced last year and is the largest domestic community solar purchase ever. He also shares insights into their innovative sustainability apprenticeship program in Chicago. Note: Summit Ridge Energy is a client of HASI.
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Episode recorded January 24, 2024
Chad Reed: I'm Chad Reed.
Hillary Langer: I'm Hillary Langer.
Gil Jenkins: I'm Gil Jenkins.
Chad: This is Climate Positive.
Steve Raeder: One of our goals is to start opening some of these purple and even red states where the message is largely around job creation and tax revenue and offering farmers a diversified way to generate income, right? Where they can carve off a piece of their total land holdings and generate predictable lease income for a number of years. That takes away some of the unknown. That's where this needs to go.
Gil: For this week's show, we spoke with Steve Raeder, the Founder and CEO of Summit Ridge Energy, the nation’s leading commercial solar company. In our conversation that follows, Steve details his transition from SunEdison to founding Summit Ridge Energy in 2017, highlighting the importance of the community solar market in the broader clean energy transition. We explored Summit Ridge's growth strategy and also got his perspective on a variety of market dynamics at play Additionally, Steve shared an update on their major solar panel supply partnership with Qcells announced last year, which is the largest domestic community solar purchase ever. Towards the end, Steve shared insights into their innovative sustainability apprenticeship program in Chicago, and a whole lot more. So without further ado, here's my conversation with Steve.
Gil: Steve, thanks for joining us on Climate Positive.
Steve: Thanks, Gil, thanks for having me.
Gil: Maybe to start this off, let's do the background on your journey and what led you to found Summit Ridge in 2017.
Steve: Yes, so I was at SunEdison and I was the general manager of our East Coast commercial business, and we had really started some great work on virtual net metering structures, which I think is the precursor to community solar. Things really ramping up, and the company went in the wrong direction on a number of levels. Unfortunately, I had to file for bankruptcy. I had been thinking about peeling off in anticipation that things might not go particularly well at SunEdison there at the end. I started having some meetings with some of the folks that were on my team at the time and some conversations with folks who were at other companies that I had always wanted to bring over to SunEdison to be a part of my team. Brian Dunn being one of them who was over at Hunt Companies, who's my partner in crime here over at Summit Ridge at this point. Really, there was a sense that we had started something that had legs and that had tremendous growth potential. I frankly thought that we could do it better than SunEdison was doing. I thought that there were some very simple execution tweaks in doing things in a different way that didn't require that much outside-the-box thinking or creativity, ingenuity to do it right. I think our space is complicated. I think we've done things over here better than most. We've had a tremendous growth trajectory since starting the company in 2017. Initially, I think the vision was just to pick up where we left off and..
Gil: Execute, right? It wasn't that classic cocktail napkin moment, it was just about, here I got this experience here, this space is emerging, we have the right people and team, and let's go, right?
Steve: Yes, I was one of the ones at SunEdison that really helped move the business off the rooftop onto the ground, right? Was at the front there in terms of going out and building these ground-mount systems and on farmland and then turning around and selling the net metering credits, build the bill credits to customers, largely commercial customers at the time. You could see where things were headed with community solar. Again, it was really the precursor to community solar. There wasn't much residential customer rate payer involvement, residential rate payer involvement at the time. It was apparent that that's the way things were moving. I'm not going to say it was mindless at all. We had a plan, we saw what we could do when we were at SunEd and said, hey, if we broke out, threw a couple of our own bucks in, raised a little bit of money on the side, this thing would have legs, would have tremendous growth potential. I think we've exceeded, frankly, where we thought we'd be
Gil: Yes, I want to come back to but before we get any farther, for the uninitiated, I assume our audience has a pretty good sense of the various segments within solar and other renewable asset classes, but I want to hear from you. Can you break down the value prop for community solar and its place in the broader energy transition?
Steve: Sure. We've been doing this for close to seven years at this point. We officially launched in July of '17, but Tyler Holden and I, who's one of the partners here, really hatched this thing up in the fall of '16. We've been at it a while. Community solar, there was traditionally this designation between community and behind the meter and C&I. Community solar really is C&I solar at this point, right? It's not just the fastest growth segment within the commercial vertical. It represents the largest number of megawatts by far. Community solar is this simple concept. It allows us to build solar farms either on farmland, green fields, brown fields, or on rooftops, largely industrial rooftops, and then turn around and sell a derivative of the power, usually in the form of a bill credit, to customers. The net result is just that we can provide guaranteed savings to both residential and small commercial customers on a monthly basis.
Gil: Can you break down-- Because I think what's unique about this. I've been a community solar customer myself since 2019, since we started working with you guys, subscribed to the Simba project. The experience of the role of the aggregator for a residential customer who's subscribing, could you talk about the unique role of the aggregators, companies like Arcadia, Neighborhood Sun in my case. I don't think people sort of understand that model on where they come in and manage your utility bill and so forth.
Steve: Yes, we don't have that rate payer facing group here at Summit Ridge, right? We purposely not, we have stayed away from trying to build that capability internally. The aggregators are responsible for going out and signing up the customers, frankly. It's not that simple. There's a lot to that. We do work with the likes of Arcadia and IGS, and a couple of others. Those are the three primary groups that we work with to go subscribe both residential and small commercial customers for us. Those same entities are now helping us subscribe LMI customers, which is a fantastic benefit of community solar. We can sell not only to folks that live in wealthy neighborhoods, which I think traditionally was the case or historically, but we can turn around and sell to folks located in apartment complexes, folks in subsidized housing developments, which is fantastic, and provide that same level of guaranteed savings, in many cases, provide greater savings.
Gil: Yes, I think that's what's so compelling to me about the democratization of solar with community solar in terms of who you can bring it to. You alluded community solar is C&I solar at this point. I think community solar by the analyst, it's still one of the fastest growing segments when broken out that way. I was looking at WoodMac's forecast saying that U.S. community solar market will more than double in the next five years. Tell me about how Summit Ridge is positioning itself to capitalize on this continued growth momentum.
Steve: We are very focused on executing over here, right, and continuing to do what we do, optimizing our portfolio, taking advantage of some of the IRA tax incentive adders, the ITC adders that we can leverage to build in places where we historically have not been able to build because the economics haven't justified the effort. That's front and center in terms of our strategy, optimizing the IRA. Again, the ability to take a project to 50, 60% ITC really opens up doors for us, not just in terms of being able to build in areas where we historically haven't, but to offer more meaningful savings to certain segments of customers. We're heavily involved in the regulatory front in a number of markets. I think we've been instrumental in driving forward policy in several community markets. It's not to say that we've been front and center by any means in every community solar market, but the sandbox, frankly, still isn't that big. One of the things that we are trying to do is to grow the sandbox by getting a couple of these new markets opened up. Pennsylvania is a great example, Michigan, Wisconsin that have been I'm not going to say on the cusp of opening for years, but there's been a lot of discussion for years. I think there's a clear path in a couple of those markets that I just mentioned, a couple of those states.
Gil: Let's stay on that. Summit Ridge is active in 22 states, is that right?
Steve: Yes, I'd have to check. It's probably more like 15. We're primarily active in a handful of states, right? We have the market leading position in Maine and in Maryland and Illinois and in Virginia at this point. I think we represent over half the capacity either awarded or built in a couple of those markets. We've got land positions and we're actively developing in several additional markets. We're actually constructing projects in other markets as well. We're active in Delaware right now, for instance, we're active in Minnesota. New Mexico is a market where we're active, but unfortunately, there aren't really 22 markets where we can build or acquire projects at scale, not yet. That's the goal.
Gil: You alluded again to the policies and your involvement in the regulatory. Can you unpack the policies that are driving this market at the state level? It's things like the solar carve-outs and renewable portfolio standards. How are you thinking about that as part of the growth strategy, and where is the model really working?
Steve: It's RPS standards in certain markets, but the markets that are wide open and active are the blue states that you would expect to be more receptive to community solar I think one of our goals is to start opening some of these purple and even red states where the message is largely around job creation and tax revenue generation, right, and offering farmers a diversified way to generate income, right? I think Leslie Elder says this well, where they can develop their back [unintelligible 00:09:13], they can carve off a piece of their total land holdings and generate predictable lease income for a number of years, right, with the fixed escalator. That takes away some of the unknown. That's where this needs to go, Gil, to really take the next step. We can't just keep focusing on the same Northeast or largely democratic controlled state legislatures. I think there's a real opportunity to take the message and open up some of these markets to some of these more purple and even deep red Republican states.
Gil: I love that. Maybe on that theme, you had some huge news in April of '23 with your partnership with Q Cells, where they'll provide 1.2 gigawatts solar panels to help supply you all as you grow the project portfolio in many new states we talked about over the next four years. You had a big announcement ceremony down in Dalton, Georgia where the VP spoke. Give us a little behind the curtain on how that deal came about and how it's still going. I think the factory's up and running perhaps, but that was a huge moment, I'm sure, just as an observer. I'd be curious, having not talked to you about it, what that experience was like.
Steve: We've been working with Q-Cells with Hanwha for years at this point. First and foremost, a fantastic company, great partnership, executive team that we trust. We've been working with the same set of folks for a number of years now. Domestic content aside, which I'll get into in a second, I think we'd still be working with Q Cells, right? There are cheaper modules that we could go source from different manufacturers, sure. I don't think we would choose that route even if we wanted to at this point, putting domestic content aside. Q Cells has been at the forefront, though, in terms of planning to capitalize on domestic content adders that are now available through the IRA package that passed, I think, in the summer of '22. All the modules that we will be purchasing from them starting in Q4 of this year will be manufactured in a facility in Cartersville, Georgia. Awesome announcement in Dalton, went down and spoke with the vice president, which was really a neat experience. Those modules are assembled in the US, but they don't qualify for the 10% domestic content adder. The modules that we will be receiving starting in Q4 of this year will be coming from another Georgia facility that they're building currently in Cartersville, Georgia.
That gives us the opportunity to, as a base case, really, taking a step back, all of our projects at a certain point this year will be at a 40% ITC base case because we'll be using domestically manufactured product coming out of the Cartersville facility, which again, enables us to build in areas that we wouldn't otherwise be able to build, and frankly, offer a level of savings that we wouldn't be able to provide.
Gil: That's excellent. I can't talk about the positives while also reflecting on the past couple of years when we're talking about manufacturing, and supply chain has been interesting in the solar business. It's easing, right? I know you all experienced some challenges there, just like everyone in the sector, but how is it easing, in part, because of the-- [crosstalk]
Steve: Oh, I thought you said it was easy. Of course, it's-- [crosstalk]
Gil: No, no, easing, not easy.
Steve: It's super easy. There's never any hiccups.
Gil: Yes it's perfect all the time. You've learned a lot, I'm sure, during those challenges and COVID and subsequent-- [crosstalk]
Steve: Yes, we haven't experienced the supply chain challenges I think that others have, in part because we've been working with Hanwha almost on an exclusive basis for so many years now. Yes, commodity pricing was and is higher than it was, I'd say, pre-COVID. That might not be exactly accurate in terms of steel pricing, although I think, in general, that statement is true. The cost to build these things has gone up, right, with the need now to use prevailing wage labor, which we support, obviously.
Gil: Sure.
Steve: It does cost more to build these systems than it used to, but the supply chain and the pricing of the components that we use to build these solar farms has eased, right? Module pricing has come down over the past 18 months here. I think the general trend is moving in the right direction. Our bill costs are still higher than they were a few years ago, but starting to get back to a stable place.
Gil: Climate Positive is produced by HASI, a leading climate investment firm that actively partners with clients to deploy real assets that facilitate the energy transition. To learn more please visit HASI.com
Gil: We talked a little bit about IRA, and again, thinking about what that will do for growth. The administration, I think, has a solar-specific goal that 30% of US electricity generation by 2030. Certainly, we're going to need policy stability and an increasing solar workforce that is expected to grow to more than a million workers.
One of the cool things I know you guys have done on the workforce level is this solar apprenticeship program in Illinois that trains veterans and others for solar careers. I wonder if you could talk about that and through that experience, how you're thinking about how we build this workforce to meet the moment and all the growth we're expecting in the years ahead.
Steve: Yes, the Sustainability Hub in Chicago is something I think I'm personally extremely proud of. I'm involved working with [unintelligible 00:14:43] Enterprises now at the board level and think what AJ and Rob are doing is just fantastic and is a model that should be replicated in other cities. Frankly, something that Rob Wallace with a group called Power 52 that he founded has been doing for many years at this point. It's a simple mission. It's to train folks, largely disadvantaged folks, many of whom need a second chance, to train them up on how to install and I think eventually maintain solar farms, right? Providing lifelong job skills in an industry, I've said it many times, but build to last in an industry that has a extremely strong growth trajectory. The graduation rate has been tremendous, and more importantly, I think most of the folks that have graduated so far, if not all, have received job offers, right? We provided some seed funding to the Sustainability Hub last year. In fact, I think it might've even been at the end of 2022. We've since provided additional funding and feel really good about the work that's going on over there. Again, it's a model that can and should be replicated across cities across North America. That will have a fantastic impact in terms of bolstering the workforce that's needed to realize the growth that's projected over the next few decades here.
Gil: Before we get to the hot seat, let's do one crystal ball prediction. When you're up late at night and you're thinking about all the possibilities, how we're going to do this, how do you see this market evolving in five years? What trends are you most excited about that we should be watching that you haven't already hit on?
Steve: I think development and construction activities in markets that don't have programs, right? Building solar farms in states where no community solar program exists is not only entirely possible now, but that opportunity will only increase as time goes on as our construction costs continue to get a little lower and we become more efficient, right, in terms of the equipment that we're using, the modules that we're using, right, higher efficiency, leveraging the tax credit adders, the ITC adders that we can either through domestic content or through serving LMI customers or through citing projects and energy communities or [unintelligible 00:17:39] zones as we call them. Those things will allow us to build in areas where we haven't before, right, where the irradiation is better and in areas where interconnection might be easier and where it might be slightly where it should be cheaper to build, but outside of an established state funded program, right? I think the untethering from state-level incentive programs is a trend that will increase over the next five years. It's not going to happen overnight. Opening these programs and receiving that state-level support is still tremendously important, especially when you're in parts of the country where the sun doesn't shine as bright, where your irradiation is lower.
You need a little more help, right? There are numerous markets in the United States right now where we should be developing solar where we're not, right? The fact that Summit Ridge owns a huge portfolio in Maine I'm proud of, but man, it'd be easier to go in that portfolio in one of the [unintelligible 00:18:37] states, right?
Gil: I bet, in the [unintelligible 00:18:39], sure, in the [unintelligible 00:18:40] states. Well, we're getting there. I think it's exciting to think about the cultural resonance and political power of an industry that's growing in those purple states and red states, and that's really where we need to be. You got so many great projects, and I'm not just saying that because we're a co-investor with Summit Ridge and I'm a customer. Do you have a favorite that comes to mind when I ask you about some of your installations of late?
Steve: The Bomber [unintelligible 00:19:11] is one that always comes to mind. I believe it's either the largest or the sole marvel comic book printing facility in the US.
Gil: I didn't know that. Wow. That makes it even cooler. It's the largest rooftop community-- [crosstalk]
Steve: Community solar project. Believe it or not, we have two or three that we're working on right now that are much bigger. Yes, but The Bomber, it's awesome getting on top of that roof, and really it's hard to see from one side to the other. Doing it in our backyard here in Maryland is awesome. We've built far more rooftop projects than I had anticipated when starting this thing, and for what it's worth, too, coming out of the environment that I did and really beating the pants off the old company that I came from and really becoming the largest commercial solar company provider in the country has been a tremendous source of pride. I'm proud of my team. I'm proud of what we've done. We've done it with a relatively small group of folks. We still only have 125 employees. The volume we've been able to churn out over the past six years has just been awesome. The Bomber is symbolic of that. More to come on the rooftop front. We've got some really cool things that we're doing.
Gil: Okay, let's turn to the hot seat where I ask you a series of mostly fill-in-the-blank questions. The most important piece of advice I have followed is?
Steve: Well done is better than well said. I believe a man named Benjamin Franklin said that at some point.
Gil: All right. How about bad advice? What's the most important piece of advice or feedback you have rejected?
Steve: Solar is a flow business.
Gil: Tell me why that stuck with you.
Steve: It hopefully will be someday. It is not right now. Very few businesses are. It's not a widget manufacturing business. There's a lot of thought and hard work and engineering expertise and financial expertise and all kinds of other things that go into successfully developing solar projects, solar farms, and building them.
Gil: The word or phrase I most overuse is.
Steve: Maybe force multiplier.
Gil: That's a military thing.
Steve: I said that with our executive team a few times, I remember, in one session, and they were like, you keep saying that, so maybe that.
Gil: How about your productivity? What's the key ingredient to your productivity?
Steve: First, you're assuming that I am productive. If I am productive, my management style is one of movement. It's one of talking to-- I run a fairly flat organization. I talk to my staff fairly openly. Certainly, I have an executive team that I communicate with the most, but I am constantly moving around the office, popping into folks to see them, whether they're sitting in a cube or in an office themselves. I've always been one to communicate to the most junior ranks all the way up to the executive ranks because I think you have a much better understanding of what's happening in your organizations and challenges that you are facing and potential solutions if you do so.
Gil: The most challenging part of my job is.
Steve: The most challenging part of my job is we are probably the most transactional shop in solar, certainly commercial solar, hundreds of closings a year. Me distilling or receiving a information set that is appropriately distilled down so that is at times challenging. I tend to try to sometimes jump in the weeds. Getting that information in a very concise, high-level format is something that I think that I've gotten better at over the years. As we've grown, managing our growth has been fun but challenging at times.
Gil: Good problem to have. Best part of my job is?
Steve: I've got an awesome team. Just coming in here and spending time and rolling up my sleeves and winning with folks, and at times, losing with folks. Doing what we do, which I firmly believe in for a number of levels. I'm all in on the business side of what we do. I'm also an unabashed environmentalist. I believe in what we do. I believe in my team. I've been blessed with the talent that we've been able to attract and the team that we've built over here. Just fun coming in the office and winning with such a great group of largely young folks.
Gil: The book that has influenced me the most is?
Steve: John Kotter’s book I loved when I read it many years ago. It is called A Sense of Urgency.
Gil: Why?
Steve: It is anything but fluffy, strategic business advice. It outlines what we all at our core know to be true and what I've witnessed in business over the years is that you've got to want it, and you need to instill a healthy sense of urgency in your folks to accomplish tasks and to execute. A healthy sense of urgency doesn't mean that it's a sense of stress. It just means a genuine desire to succeed and to execute and to complete tasks and to reap the rewards that hopefully follow.
Gil: One final fast signature question. Finish the sentence. To me, climate positive means...
Steve: I think we are moving in a bad direction. There's a point when it becomes extremely difficult to reverse the trend. I think just taking action in the near term such that we slow the negative trajectory that we're on. Then, over time, hopefully more and more renewables come online globally, and emissions are reduced and we start to see a positive trend in terms of climate change because I do believe it's an existential threat to our civilization over time. I feel like these storms that we're seeing will only get worse and that we're going to be leaving a planet to our children and grandchildren that is far worse off if we don't take action.
Gil: Steve, thank you so much for the time.
Steve: Thanks, buddy, appreciate it. Thanks, Gil.
Gil: If you enjoyed this week’s episode, please leave us a leave a rating and review on Apple and Spotify. This really helps us reach more listeners.
You can also let us know what you thought via Twitter @ClimatePosiPod or email us at climatepositive@hasi.com
I'm Gil Jenkins.
And this is Climate Positive.