Since the creation of competitive electricity markets over twenty years ago, competitive power suppliers have driven progress for energy customers and the environment. In this Competitive Power Spotlight, Rockland Capital’s partnership with Colorado-based solar company SolRiver shows how competition can drive deep decarbonization.
As our nation continues to seek more affordable, reliable, and cleaner energy solutions, private equity company Rockland Capital is making this energy future possible – with SolRock, a major investment partnership with SolRiver, yielding nine solar projects from Oregon to Virginia, with several others likely to begin construction over the next several months.
Founded in 2003, Rockland acquires and develops selected investment opportunities in power and energy infrastructure markets. Rockland professionals have deep and focused electric power industry experience, which enables them to take a hands-on, operational eye to managing assets. The company also boasts a diverse portfolio, with investments spanning natural gas, coal, biomass, oil, energy storage, wind, and solar resources. In 2019, Rockland partnered with SolRiver, a firm specializing in acquiring and operating distributed solar PV projects to expand its solar investment opportunity set.
What Drives Investment Decisions?
Rockland seeks to find opportunities in the power sector with an attractive risk-adjusted return for its investors. As the energy transition progresses, the company has been keen on increasing its solar generation presence, but in many cases have found it difficult to justify the relative risk to reward in a sector that has attracted huge amounts of capital.
Through the SolRock platform, SolRiver and Rockland have been building a portfolio of distributed generation solar projects typically acquired in late-stage development or just prior to construction. This strategy has provided the company access to the sector in a manner that allows enough value-add to achieve the returns its investors expect – without taking on inappropriate risk. A partnership such as this requires not only getting comfortable with the assets and the market but being comfortable with the abilities and integrity of the partner.
Environmental and Economic Benefits
Distributed solar facilities do not require the same vast amount of land as utility scale solar and wind. These facilities can be more easily connected to the grid and therefore have more options for where they are located, usually on otherwise unused land or commercial rooftops.
Some of these projects are connected at the distribution level and help decrease the “net demand” on the system, providing further benefits to SolRocks’s customers. By facilitating projects on otherwise unused land, Rockland’s partnership creates something out of nothing for the local landowners and economies, allowing a strong economic benefit for the region. The partnership yields more than just economic benefits. At the Whitetail project in South Carolina, a biodiversity plan was implemented within the project site. Excess wooded areas were set aside to preserve habitats. A variety of bird boxes, bat boxes and turtle tunnels were installed, as well as special pollinator plants to help the local eco-system.
How Competitive Power Markets Make Clean Energy Investment Possible
All of SolRocks’s projects are developed as independent power projects, which, unlike monopoly utilities, have no captive customers to provide guaranteed return on investment. Ultimately, these projects only get built if the economics are justified through an agreement between a willing seller and buyer.
Competitive power markets require SolRock to do whatever it can to offer the best price and service to customers, focusing efforts where the most successful projects can be built at any particular time. This helps ensure a continuous effort to bring carbon-free generation online, and one that requires making sure Rockland and SolRiver do so at the lowest cost possible.
Another benefit of building clean energy and other power generation resources in a competitive market environment is that customers are shielded from investment risk. This means that private companies and investors like Rockland cover development costs and absorb any losses if expenses run high or the project is not completed. In a vertically integrated utility model, these operational costs, overruns, delays and losses can be folded into customer bills. (For an example, explore how delays building a nuclear plant in Georgia stand to increase monthly power costs for utility customers.)
Looking to the Future
Rockland has been actively investing in renewable energy projects to accelerate the grid of the future, while also pursuing investments in natural gas peaker facilities. This investment strategy provides reliable power to the grid while also enabling renewable build-out, which is exactly what Americans want when it comes to their energy future.
Competitive markets need to properly value the attributes different generators provide. Solar is carbon free, but there’s no consistent way of valuing this attribute across the country and piecemeal solutions result in today’s pricey policy patchwork.
Today’s mixed bag of state energy and climate policies has created a challenging regulatory environment for businesses and policymakers. This patchwork approach will lead to inefficient outcomes over time. But it doesn’t have to be this way.
Rockland, along with EPSA, supports a national program that puts a price on carbon. Competitive markets that incorporate both environmental and reliability requirements will yield the lowest cost set of resources and technologies that jointly produce the greatest emission abatement while keeping the lights on. A recent study from Energy + Environmental Economics (E3) shows a carbon price will decarbonize the power grid at the least cost – saving PJM region consumers $2.8 billion annually with more emissions savings plus the benefits that come with regional competition.
Additionally, the energy transition will stall if reliability is compromised. Markets need to be properly designed to ensure reliability, even as we move further away from grids dominated by fossil generation. Intermittent renewables like solar and wind – technologies that are integral to making progress on decarbonization – can only thrive if reliability is being ensured for customers.
Read EPSA President and CEO Todd Snitchler’s timely reminder of why reliability must be priority number one as we transition the power grid.
Today’s markets have played an important role in facilitating carbon reductions by promoting scale and diversity across broad geographic footprints, allowing more efficient generation dispatch, and encouraging faster retirement of older, less efficient resources – all thanks to competition.
A just and equitable energy transition is within reach, but markets must be able to operate as designed so more projects and partnerships like SolRock are able to flourish in this environment.
More Competitive Power Projects Driving the Energy Transition:
Our nation’s energy landscape is changing rapidly with exciting new potential for cleaner, more reliable and affordable power. What cutting-edge technologies are being deployed thanks to competitive energy policies? What goes into building a successful project in a competitive power market environment – and how are consumers, the grid and the environment benefiting now and for years to come?
Because competitive power suppliers follow market signals to improve operations and efficiency, as well as to decide when to retire older power generation technology and invest in newer, more cost-effective and cleaner approaches, EPSA member companies are uniquely positioned to lead investment in new technology and innovative solutions to electricity generation.
From Coal Reserves to Solar Fields: CPV’s Maple Hill Shows How Competition Is Transforming the Power Grid
Stay tuned for more special projects, new acquisitions and community outreach by competitive power suppliers propelling our power grid forward, and learn more about how competition makes it possible.