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Sites and Insights: Sol Systems Grows Before Your Eyes

Solar financing? Don't look down...

In Brief

Solar power can raise community power, and Sol Systems builds its businesses to seek that effect. 

The company's work in development and trading shows the loop-de-loops and lurches of life on the "solar coaster," according to senior associate Krisztina Pjecska.

Working with partners from Microsoft down to community advocates, Pjecska said, means navigating high insurance costs and sensitive local politics to make deals pencil- and deliver- for everyone in their footprint. 

Krisztina Pjecska’s been advancing on a mission to extend solar energy’s reach, to the point that she and her colleagues at Sol Systems have started reckoning with a twist in the path. Solar has become economical, reliable and more popular. It’s also become harder to site and insure. 

“The more successful we are,” Pjecska told  students,fellow alumni, and other lifelong learners in a December 1 webinar, “the more we’ll run into permitting issues.” Sol Systems runs three main businesses: managing assets for solar participants, trading renewable energy credits, and crafting solar “solutions” for clients. Solutions mean decisions and methods and emails and phonecalls and calculations to ensure that a solar developer, a solar user and all related investors succeed in delivering solar energy. 

In crafting those solutions, said Pjecska, the “land-intensive and visual” enterprise of laying out solar farms can slow down when local governments decline to issue permits. Another twist, she said, came in “ironic” tones from insurance brokers. Because the climate change that propelled Sol is itself propelling faster, insurers are losing money on policies and starting to charge rates so high that they tangle project deals.  (CEFF will look at insurance’s power to thwart project economics in rural California in an upcoming story.) 

These twists, though, should read as bumps along a trail rather than as places to turn around.  “This is not a crowd that I need to remind about the urgency of action,” she said.  On the “solar coaster” of deals, policy and finance and technology all rev and slow at different points. Pjecska’s talk surveyed evolving dynamics in each. 

In policy terms, federal tax credits due to expire soon may see some sequels (or extensions) in a Biden administration. That capital may flow faster and more broadly to solar projects “in the next year,” Pjceska said, as investment managers seek low-risk holdings like the federal Investment Tax Credit. That credit, due to shrink and expire in steps over the next two years, reduces taxes based on the date that a project begins construction. Until tax credits' future clarifies, developers can do well to seek patient private capital.

More lucid state policies to support investment at different stages in solar development can also encourage more developers to start projects and can foster more ambitious projects.  Even these, though,  run into slowdowns amid more intricate challenges, like the rules and realities driving electric transmission across long distances. 

Sol doesn’t participate in Massachusetts’ market. In summer 2019, that state’s dominant utility ordered a study of how nearly a gigawatt of financed solar power would affect the overall grid. The study proposed  to ensure how the system could handle all the capacity that developers were financing under a state mandate. Some developers cried that it stalled projects at financially pivotal moments. 

Technology, Pjecska said, demands “a lot of systems thinking” like every aspect of the business. Speaking to the price and performance of storage systems, which deliver solar power when the sun isn’t shining, she told the audience that pricing and economics varied.  “There are so many different ways to value storage, depending on the market,” she said. “We have seen areas where an “adder” [ie a surcharge] on a power purchase agreement covered storage costs, and that was straightforward. In other cases, you have a lot more hoops to jump through.” 

Overall, she said, storage figures to form part of most solar programs, as its prices are dropping and its utility becomes obvious. The company has hired two storage engineers, she said. 

On the bedrock matter of land, Pjecska said, Sol sees ideas to explore beyond the troubling cost dynamics of permits and insurance. One involves siting solar installations on brownfield sites that would otherwise deplete tax rolls and harm neighbors’ health. Another involves collaborating with conservation experts to prioritize pollination at sites

A more delicate idea places developers’ need for practical sites, which Pjecska captured as “guys and gals in a truck, finding land that is not too slopey and not near a wetland,"  with communities’ needs. All neighbors and ratepayers merit a say in siting, permitting and hiring decisions.  “We need to listen,” she said. “We work with nongovernmental organizations that know a lot more about on-the-ground realities.” Some investors try to channel development fees into support for environmental justice work, she said, flagging that as a possible model for Sol Systems’ future. 

Pjecska ended the talk as she began: optimistic but serious. Solar projects can deliver predictable returns now, she told the group- and teams that resolve permitting and insurance costs can guide investors toward more ambitious targets.