Kurt Adams, executive v.p. and chief development officer at First Wind, caught up with Senior Reporter Holly Fletcher on why the company decided its wind development expertise is instrumental to building out a solar development platform. The company recently broke ground on its debut solar projects totaling 17 MW in Massachusetts.
PFR: What about the solar market is attractive right now?
Adams: The prices of PV panels have come down the last few years and the scale of the projects has become more complex. Where we have fit in the wind industry is as a developer of complex projects, where strong community support is required as well as solutions to difficult engineering challenges
The way we view the solar business, particularly in our markets, is that it’s at a place in its growth where our particular skill set as a company is needed right now.
PFR: What skills are needed and what tools are you able to bring to the development process?
Adams: We bring to the table a healthy balance sheet; a sophisticated engineering and construction team, particularly in interconnection and transmission capability; a strong permitting background and a very strong financing capability. Those are required for the increasingly complex solar development projects that are coming up around the country.
PFR: Will you describe the current projects that you have?
Adams: We have just broken ground on our first solar development, it’s four projects totaling 17 MW A/C in Massachusetts. Behind that we also have been awarded a number of PPAs in markets to the west. We’re not at liberty to disclose where they are yet because of confidentiality agreements with our offtakers. But suffice it to say that we have a significant solar pipeline going forward that is going to fuel a significant amount of growth for us.
PFR: What about solar is becoming increasingly complex? Over the last few years we’ve seen a shift from the mammoth projects being developed to a crop of smaller ones in the 5-50 MW range. Not to mention an emphasis on distributed generation. What have you seen change as you’ve been out there to start projects?
Adams: The landscape is changing primarily in the opportunity set being broader. We are seeing projects now in the range that you described and larger. These projects are interconnecting on utility systems in areas that are weak or need significant support or clever engineering to solve interconnection problems.
In addition, and this has been well documented, the solar industry particularly on the larger projects is subject to some significant permitting challenges. Wind developers have a lot of experience in that regard. Transferring those skills to utility scale solar projects is something we feel comfortable that we can do well.
PFR: What sort of permitting issues are similar to wind? Or
are wholly separate?
Adams: It’s typically an easier permitting environment in solar than wind because of the scale of the projects. But permits for projects that cover a significant land area are challenging to secure depending on the jurisdiction. This is not the same as a 1 MW project that takes up a relatively small area. Projects in the 5-50 MW range cover a very large area and typically have storm water runoff implications as well as impacts on the habitat. Understanding those implications and being able to mitigate them and manage them is something that we’re very good at.
PFR: In terms of the pipeline you mention you’ve got an undisclosed number of projects in parts of the West. Do you all have a target number of megawatts that you want to see either in construction or online by say 2016?
Adams: We don’t have a target per se. We’re fairly opportunistic particularly in the M&A area but we have sufficient capital to commence construction and complete construction on hundreds of MWs of solar between now and 2016.
PFR: That leads into my next question: Do you want to do greenfield or do you want to buy some stuff?
Adams: We’re doing both. The first projects that we have broken ground on in Massachusetts were late stage acquisitions. We’re also doing greenfield development in our core markets.
PFR: What are your core markets?
Adams: Our core markets are where we have wind assets—so the Northeast, the West and Hawaii.
PFR: What sort of characteristics do you want in projects you might purchase?
Adams: It depends on the stage of development. Let’s say it’s a mid-stage development project. On a mid-stage development project we’re looking for a project that has sufficient land to execute on the project, an interconnection position, an offtake agreement or in late stage negotiations for an offtake agreement, strong community support and strong community benefits. Those are the key elements that we look for in any project that we develop or that we would buy.
PFR: In terms of how you want to finance these projects, are you going to look to commercial banks or do it on balance sheet or look at other options?
Adams: We typically project finance our developments. It’s typically a more efficient capital structure to finance a project and it is good discipline to be financing your projects. That tends to be the way we approach these.
PFR: Have you had to branch out and hire people who have solar expertise or do you find that the in-house staff already fit the bill?
Adams: We’re finding the platform that we have in place to successfully execute wind projects is largely, if not completely, transferable to successfully executing the development of solar projects.
PFR: How do you see the next two to three years for solar versus wind?
Adams: I think both solar and wind are going to be subject to market forces to become grid equalized in terms of pricing. I think it’s a continuing story for renewable energy and renewable energy is rising to the challenge. There’s an increasing expectation that solar and wind projects be competitive with grid-based power with very few subsidies and I think both of the technologies will be there within the next decade. If you look at the price decreases that we’ve seen for wind and solar over the past decade there is no reason why wind and solar cannot be there.
PFR: Do you think that solar development is going to be complementary to wind development or is it going to be an equal initiative?
Adams: I believe that our platform is applicable to renewable energy technologies whether they be solar or wind. So for us, we’re going to be opportunistic. If a solar development makes more sense than a wind development in a particular location or to serve a particular customer then we will do that -- we will execute on solar. If it’s wind, then we’ll execute on wind.
One of the benefits that is afforded to companies like First Wind in the current market is that we have a platform that is applicable to both technologies. I think what you’ll see going forward is companies like us executing on a menu of projects that are solar and wind. The mix will change from year to year depending upon what serves customers well.
PFR: Last one. You’re called First Wind and now you do solar. Any plans to change the name?
Adams: There’s no current intention to change the name. First Wind has a very strong brand in the renewable market place. We believe it represents a big part of our history. We are expanding our marketing effort and our branding effort to talk about more solar and our solar projects. But First Wind—we’ve had a great run of it and we certainly wouldn’t want to change it now.
