Maryland-based community solar developer New Energy Equity prides itself on early entry into up-and-coming regional markets. After the passage of the Inflation Reduction Act and the inclusion of incentives that apply to community solar installations, some markets that were questionable are now looking much more feasible.
In this episode, CFO Ahmar Zaman talks about the growth New Energy Equity is expecting in the coming years as a result of the federal legislation. An edited portion of the interview is below, but be sure to listen to the full podcast for more insight on the factors that mold a successful community solar development business.
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Solar Power World: How did you get into solar?
Ahmar Zaman: After about 10 years working at Intel, I moved to New York City, and as the Romans do in New York, everybody was working on Wall Street, so I decided to try to get a job on Wall Street. I was lucky enough to get a job as an equity research analyst covering the semiconductor industry given my experience at Intel in 2006. The day I joined, First Solar filed to go public. The investment bank was involved in the IPO (initial public offering) and they needed somebody to represent them as part of the IPO. Because I was the most junior person on my team, I was tapped to be that person.
The week after starting at UBS Investment Bank, I was sitting down with Jens Meyerhoff and Mike Ahern, who were at the time the CEO and CFO of First Solar. They were trying to convince me and convince Wall Street that they could achieve a module cost of $1/watt. At the time, SunPower was selling modules at $6/watt. I think the Nellis Solar Array in Las Vegas was the largest system that was installed in the world at the time at 14 MW, and it was at $10/watt or something like that.
I was one of the early analysts on Wall Street covering the solar industry and so, in a way, I felt like I grew up with the industry.
Did you foresee a day where such an enormous climate bill with all these solar provisions would pass in the federal government?
I wouldn’t say that I foresaw it, but the last time the federal government passed a major piece of legislation that was beneficial to the solar industry was in 2016, I believe, when the investment tax credit was extended. At that time, I was still on Wall Street and we were looking at all the bills that were being discussed. I remember the total cost of that provision was $16 billion. This time around, it’s $370 billion. So, it’s a huge order of magnitude more beneficial.
What will the IRA do for medium-sized solar companies like New Energy Equity?
We are primarily a community solar developer. That’s the majority of our business, and the average size of our projects is under 5 MW, so we’re right in that sweet spot for the IRA in terms of getting the interconnection agreement costs eligible for the ITC, which is huge. It’s a significant opportunity for the economics of our systems. Many of our projects are in the 1-MW range, so even though we support prevailing wage requirements in the bill, a lot of our projects are just below that threshold, so we benefit from that.
Overall, I would say it’s a very attractive bill for community solar. We’re really focusing on new markets in low- and medium-income communities. We could potentially have investment credits up to 50% with all those adders, so that’s extremely beneficial to our business and to our pipeline.
Do you see your company growing to be able to do even more projects with all these incentives?
Absolutely. We were looking at some tangential markets in terms of our pipeline for the next couple of years, and some of those markets were just at the precipice of being economically viable. But with the IRA, those markets are now extremely viable. That is going to significantly add to our pipeline. We’ll now be able to hire in those markets and grow in those markets where there was a question mark around them prior.