SunShare's Santa Fe project delayed due to New Mexico community solar program delays

SunShare’s Santa Fe community solar project is presently in limbo due to longer lead times getting interconnected to the grid in New Mexico and grid upgrade costs, said the company’s founder and CEO David Amster-Olszewski in an interview with NPM.

The Denver-based developer had six bids selected for New Mexico’s community solar program, one Southwestern Public Service Company (SPS) project in Portales and five Public Service Company of New Mexico (PNM) projects in Rio, Clayton, Deming, Santa Fe and Lordsburg.

These were following two waitlisted SPS bids and one waitlisted PNM bid.

After the bid was awarded to SunShare in April 2023, the 5 MW Santa Fe project was forecasted to be shovel ready later this year with a total cost of about USD 12m. However, it is unclear when the developer will get cleared to execute an interconnection agreement from PNM and once executed grid upgrades will take about 10 months.

The grid upgrade cost for the Santa Fe project alone is estimated to cost from USD 500,000 to USD 1m, which is double what the developer typically sees for a project this size.

Although Amster-Olszewski explained the costs could end up being lower as this sometimes happens in new markets. He referred to the beginning of Minnesota’s community solar market—the second in the country.

“I remember when Minnesota opened, we got these high interconnection costs and there was discussion that we’d have to cancel the projects,” Amster-Olszewski said. “But by the time we got to the final cost, they were 60 percent less than what the utility was estimating.”

He continued saying New Mexico does not have a decade of cost data to base their estimates on, so the projected costs are only high to be conservative.

SunShare’s highest grid upgrade cost in New Mexico’s program is USD 4.5m.

Despite this, Amster-Olszewski is confident in the community solar program’s success once costs and timeline issues subside.

“I think they've built probably the best community solar program I've seen in terms of fulfilling the ethos of community solar, and I've seen a lot of these markets,” Amster-Olszewski said.

The reason for his confidence is the fact that legislators and the New Mexico Public Regulation Commission (PRC) structured this program to ensure benefits to the communities.

Although there are caps involved, which are not typically favorable, the program allocates projects based on community impact with strict low-to-moderate income (LMI) requirements and other considerations.

Approximately 1.7 GW of projects were entered in the program and only 200 MW were awarded, meaning only 8 percent of applications got an award.

Amster-Olszewski said a big reason the Santa Fe project was selected was because over 50 percent of the energy is going to serve low-income families and there is a dryland agriculture aspect, working with the Navajo Technical University to fund workforce training.

“This is really nothing short of astounding and I think it's also going to lead to the longevity of the program,” Amster-Olszewski said. “When all of these products are built, they're going to be incredibly popular in their communities because of the positive benefit that they're serving.”

Business model and Expansion Plans

SunShare’s development team is 100 percent focused on community solar, as they built the first community solar garden in the country in 2011.

They find partners for EPC, but all subscriptions management and O&M are managed in-house.

With a pipeline of about 1 GW, the developer is active in eight other states such as Colorado, Minnesota, Wisconsin, Michigan, Ohio, Pennsylvania, Maryland, and New York.

The team projects about 35 MW to reach NTP by the end of this year, not including New Mexico, and they are eyeing Michigan, Wisconsin, and Ohio for expansion.

With expansions over the last year, SunShare has seen a big shift in its business to offering more benefits for LMI customers, as everything on schedule to build in the next 18 months has over 50 percent LMI customers.

SunShare is also in talks for its first solar-plus-storage project next year, possibly in New Mexico.

The developer had obtained a USD 30m equity commitment in September 2021 from Ember Infrastructure to grow the business. The following year, SunShare hired CRC-IB (formerly CohnReznick) for an additional capital raise.

*This story was originally published exclusively for NPM subscribers last month.

NPM US (New Project Media) is a leading data, intelligence and events company dedicated to providing origination led coverage of the renewable energy market for the development, finance, advisory & corporate community.