FIVE THINGS You NEED to Know About Community Solar Subscriptions

Hey guys, this is Dakota with Community Solar Authority. We've unlocked access to $22 million plus in future electricity savings using the community Solar program. A big piece to our success. Working with large energy users has been getting them fully educated on the opportunity as well as delivering all of our work turnkey throughout the entire process. Sometimes people have never heard of the strategy before we meet their team. So here are the five things I wish our clients knew before talking to us about a community solar rollout. All right, so the first thing I want to talk about is how community solar works in the first place. So first of all it is state level legislation and it is really a result of these states coming online and saying hey, we're going to be 100% renewable within X amount of time. What actually happens are these states have a bunch of different ways that they go about doing that, but ultimately it comes down to how do we clean our energy grids. And community solar is one of these driving solutions. Mechanism behind it is really a symbiotic relationship between the utilities, the solar developers and the actual subscribers or end users participating in these projects. So here's how the flow of community solar works. States come out with renewable energy legislation saying hey, we're going to clean our energy grids next. Solar developers take advantage of this legislation and again it may look like federal funding from the inflation reduction Act. It may look like state level funding or other incentives that allow the deployment of clean energy assets. The solar developers will then go ahead and finance and build these assets and then lastly the end user and for us we're talking about large energy users or anchor tenants in Community Solar participate in these projects to monetize the bill credits being generated from the clean energy being sold back into the grid and thus creating a trifecta of a relationship between the utility, the solar developer and the end user actually participating. So you may have guessed it. In order for this to actually work, it needs subscribers or off takers to actually participate. And that's why it's called Community Solar. So this energy is not coming back into our clients facilities, it's actually going straight back into the grid. And again, in exchange for participating in these solar projects, the subscriber gets to keep a portion of that revenue generation from that clean energy going back into the grid. The anchor tenant gets access to enhanced sustainability, improved operating profit on a zero dollar investment without installing solar. Community Solar is one of the most shovel ready clean energy programs in the US to date. It is highly effective in states like Illinois and New York. And for the last half decade, we've been supporting large users of electricity in accessing the program Turnkey. I hope this is making sense for how community solar works. It's a way for states to meet their renewable energy commitments. It's a way for solar developers to deploy renewable assets. And it's a way for end users or tenants or subscribers to benefit from lower electricity costs without much risk at all. Now I want to talk about community solar savings and how this all actually works. And I'll give you a good example of a deal we are finalizing right now with a large energy user in upstate New York. Now, before I get into this, community solar is nuanced, which is why you want to work with experts, because you may talk to Community Solar Company A and then Community Solar company B and, and they tell you two different things and neither of them could be true. And so that's why we guide our clients. That's why we deliver our work. Turnkey. We consult alongside some of the most significant solar developers in the US and every single week we are having conversations with them about subscribing and filling community solar pipelines. So get some peace of mind. We know what we're talking about. Now, this particular client was spending around two and a half million dollars a year on energy. Now, in New York State there are program limitations where we can only subscribe certain amounts of energy before it is capped off. And my belief for the reasoning behind this is they originally did not want one giant off taker to take up all of the available community solar capacity because community solar is really meant for a community of people to benefit. And this gets into energy equity, allowing other people to have access, etc. Whether that is correct or just an assumption, right or wrong, it doesn't matter. The facts are that we could Only subscribe about $2 million before we reach those program limitations on these specific accounts because certain meters had lots of spending. And again, you're only allowed to enroll a certain amount of energy per utility account in New York state. From that 2.5, we're now down to 2 million. This would maximize their community solar savings. What we do when we are helping our clients understand how much they can save is, is we typically subscribe clients to about 90% of their usage to give them a buffer in case they were to do things like energy efficiency and lower their usage. And also a buffer for the solar asset so that they are not over crediting customers because nobody can monetize it. And it's pointless to do 80% of 2 million is about 1.8 million in spend. And so, rough math. Assuming a 10% discount on community solar would deliver about $180,000 annually in savings. They spent $0. We did all of the work, they didn't have to install anything. And in less than 90 days, they unlocked access to a hidden $180,000 a year in savings. Pretty crazy, right? This is the power of community solar and this is why we're such big believers in helping large energy users understand the strategy. Whether you are trying to enhance your sustainability roadmap or you are trying to understand how you can find additional OPEX reductions, community solar should be at the front of the list if you are in these available markets like New York and Illinois, because it is such an easy way to save money. Quick tip here is as we're going into 2025, I mentioned that we assume a 10% discount, but with the demand of community solar soaring because so many people are getting into the stratosphere and hearing about the availability of community solar, you know, first of all, it's very limited. There's only so many solar projects built every single year. But the demand for people that want to lower electricity costs on a $0 investment is through the roof. And so what we're actually seeing from a market basis are these discounts going down. You know, even previously in New York, discounts were higher than 10% and now the market's really settled out. And again, as we enter and go through 2025 Q1, we are starting to see these discounts go down. We're seeing 5% offers in the market. And so my call to action for you here is if you've seen slap down a community solar strategy, I highly recommend that you book a call@communitysolarauthority.com and we could talk about how do we maximize your savings, including getting you the highest discount possible. All right, next I want to talk about the importance of anchor clients in community solar and how they are such a critical piece, meaning the subscribers are such a critical piece to making community solar work. Think about this from a financier's perspective. They are looking for a long term partner that's going to subscribe to their community solar asset or or many community solar assets. I had mentioned that an anchor tenant typically takes up around 40% of an asset. So not only are they participating, but they're taking up a majority share. For a financier, it's all about balancing risk. How much subscription capacity do they give out and how much solar access do they give out? Across their portfolio of projects in order to again balance the risk. Speaking on this, they do this for a reason, meaning they give a majority share to these large credit worthy customers because it helps them de risk the project. Oftentimes anchors are amongst the first subscribers to be put on a solar farm before it's even built. And so the reason why is because when you can get a commitment from a large energy user saying hey, we're going to participate in 40% or 50% of this solar project, that actually serves as an unlocking mechanism for the financing to take place. Financiers then feel comfortable underwriting that project, essentially giving it the green light to be built. And that anchor tenant played a crucial role because without it, that project may have not have been financed. Think about it, they are finding credit worthy, stable long term tenants to again stabilize their portfolio. Being that these Solar assets last 25 years in most community solar markets, top of de risking it. From a financier perspective, by also unlocking the ability to build these community solar assets, they're actually paving the way for energy equity and allowing people who traditionally cannot benefit from solar to also participate. So if they're taking up 40%, that leaves 60%. Sometimes it's other commercial off takers, sometimes it's small businesses and sometimes it's residential customers. Our company specifically works with large energy users. We've worked on both sides of community solar subscriptions. So mass market being the smaller 60% portion and, and the anchor being the larger clients taking up a 40% portion. Either way, these anchors are opening up the door for energy equity and really providing access so other people can benefit from these available savings as well. Just with these two points alone, going back to the symbiotic relationship between utilities, solar developers and end users. Without that critical piece, without the participating end user, there really is no community solar. And that's why it's so important for, for the legislation to be built in a way that is beneficial, that makes subscribers want to stick around. And again, when they get to keep a portion of the revenue, when they get to generate 5% or 10% savings across their total spend, this is when it becomes really powerful and a reason for them to stay for the entire life cycle of the project. Now you know why financiers underwrite projects this way and look for stable off takers. But it's not always about net worth. And that's why I want to get into the next segment which is getting into credit worthiness. Credit worthiness is crucial for community solar approval. So we have Clients that are public and private and non profits and everything in between. We work with so many different verticals of large energy users that we've really seen it all in the space. So some of their financials will be publicly available, others might have bond ratings, and others might have credit worthiness reports from Moody's, Fitch, Forbes. Sometimes if they're private, they don't even have audited financials. In either case, we work with all of these scenarios to make sure that we can get these clients approved. In the cases where we do not have audited financials or we do not have public financials, we will review typically two to three years of profit and loss statements plus balance sheets to essentially shadow rate your credit worthiness and ultimately get you approved for communication. Solar There are some instances where we can subscribe anchor tenants without any financials, but it is typically them needing to take up less than 20% of any given project. And so again, if they are a large energy user, 20% of a given solar asset may only be 10% of their total usage. So it's not maximizing their savings, but it does allow them to take part in a solar project. If for whatever reason we can't get them qualified or they don't want to share financials, there still is opportunities for them to participate. Sometimes companies don't understand why we require financials or ask for them, and sometimes they just don't want to show them. And we understand that sometimes we're working with privately owned companies, family companies, and sometimes people just aren't that open about sharing their profit and loss statements. So our standard process is to put a mutual NDA in place between the client and subscriber and and the solar developer so that they can review your financials privately. You have peace of mind, knowing that it's not going anywhere, we never look at them, and you can still get qualified for the community solar program. The reason we need to determine creditworthiness in the first place, which is why I wanted to talk about this, goes back to the mechanism and the trifecta of community solar in the first place. So the way that it actually works is again, the utility needs to clean their energy grid, the solar developers build the project, and the subscriber participates in the project. But what I haven't mentioned is that the subscriber initially for participating in this project, they receive 100% of these bill credits that are generated up front before the developer takes back their cut. So again, they keep 100% of the bill credits on a 10% discount. The subscriber would keep 10 and then 30 days in arrears. 30 days after you already received the benefits, the developer would take back 90% of those bill credits. So they are looking for stable long term customers who they know and feel confident are going to be able to get them back their share of the bill credits consistently because they are receiving all of the benefit up front in the first place. If it's generating a million dollars in bill credits every single year, technically that developer and financing team are relying on the subscription subscriber to pay back 90% of a million dollars. And again, the scenario is that you'll always receive the savings before the developer comes and takes their share of the bill credits back. So there's never a case where you're not receiving the benefit first. But it's a little bit of a game of trust and ultimately that's why financials and reviewing creditworthiness is important. Let's assume we got you approved, we looked at the financials and we are ready to start sourcing you. Community Solar. The next thing I want you to understand, and that I wish my clients had a better understand of before we talk to them, is all about billing. Community Solar has two billing functions, primarily in New York and Illinois markets. And these are called utility consolidated billing and non utility consolidated billing. Just here is you either have all of the bill credits that go back to the developer trued up right on your utility bill every single month. Turnkey, no questions asked. The other consideration for non utility consolidated billing is again, you receive 100% of those bill credits up front. The savings get applied to your bill and then 30 days later, typically you receive an invoice from that solar developer taking back their portion of the bill credits. So again, at a 10% discount, you would receive a bill 90 days or, excuse me, 30 days later with them requesting the 90% back. And the difference between that revenue you kept is your actual average monthly savings. UCP is obviously the easiest to understand. You get 100% of the bill credit, everything gets trued up on the utility. It's very simple. You never have to pay the developer anything. There's no invoicing to be done. The utility directly sends those bill credits back to the developer and it's easy as cake. The world of non ucp, you're obviously getting a second invoice from the developer. This is good for some companies because they like to track how much they're saving every single month. There are also instances where, you know, we're working with multi location commercial properties, sometimes thousands of electric accounts all onto one Community Solar subscription. And so summary billing becomes really important where a CFO or a person in charge of this stuff every single month can take one look at the Community Solar invoice. They can see all of their accounts listed, all of the bill credits applied, all of the invoices, amounts that are due for each account, all in one place. And it's a very seamless way to track your savings every single month. Ultimately they work exactly the same. You keep a portion of the revenue generated, the rest go to the developer. And it's a really simple way and a really simple billing mechanism for you to participate in Community Solar without adding all of these extra, you know, billing or invoicing sops into your business. Maybe some more peace of mind here. We talk through this with all of our clients and really figure out which would be most important to them. A UCB or non UCP option. Sometimes there is only one option available, but our job as consultants for large energy users is to not only maximize your Community Solar opportunity, get it done for you turnkey, but deliver it in a way that makes the most sense for your company. Alright guys, those are the five things I wish all of our clients knew before we ever had a conversation on Community Solar. Obviously there are going to be some nuances between these conversations, but we wanted to give you some foundational education so that you are walking in prepared. If you guys have any questions, you can connect with me on LinkedIn@LinkedIn.com in DakotaMillone. Thanks so much for tuning into this YouTube. Let me know if you guys have any additional thoughts. If you are looking to book a complimentary strategy call on a Community Solar rollout, you can get started@communitysolarauthority.com thanks again for tuning in and we will catch you on the next one.