Nexamp nabs $520M to build community solar across the US

Nexamp, a community solar developer and project owner, has secured a whopping $520 million to install solar arrays around the nation in one of the largest capital raises to date for this growing sector.

Community solar gives renters, small businesses and organizations the chance to benefit from local solar power even if they can’t put panels on their own roofs. The approach has helped households across more than 20 states access solar that they wouldn’t otherwise have been able to. The Department of Energy aims for 5 million households around the country to sign up for community solar by next year.

Policies differ state by state, but typically, community solar subscribers pay a monthly charge and then receive a credit on their utility bills for the power generated by their fraction of a solar array. This credit is usually larger than the fee they pay. In many states, community solar has gained bipartisan support because of its benefits to low-income households now burdened by disproportionate energy bills.

6.5 gigawatts of community solar have been installed in the U.S. through the first three months of 2024, according to the Solar Energy Industries Association (SEIA). Nexamp, for its part, has 1.5 gigawatts of assets that are operating or in the final stages of construction, its CEO Zaid Ashai told Canary Media. It also has ​“several gigawatts of real pipeline,” he said.

Biden’s climate law provides a variety of tax breaks to further grow community solar, including a credit for projects that specifically serve low- to moderate-income households. Community solar projects also stand to gain from other clean-energy incentives and programs created by the Inflation Reduction Act, such as the newly announced green banks.

Solar arrays deployed in community projects are often around 5 megawatts, a size that allows installations to connect to the distribution grid in spots where utility-scale solar can’t. Larger-scale installations can face delays because of the interconnection challenges plaguing transmission grid operators as well as pushback from environmental or community groups.

Supporters of community solar deployment envision these smaller projects as a way to not only democratize access to local solar power but also displace fossil fuels from the grid. Adding battery storage to a community solar array means that installations can soak up excess solar during the day and discharge it in the late afternoon or early evening hours, reducing the need for fossil gas-fired peaker plants.

Nexamp’s big-money infusion puts the company on a path to build community solar by the gigawatt, across 19 states. The funding round was led by insurance subsidiary Manulife Investment Management, along with existing investors Diamond Generating Corporation (a subsidiary of Mitsubishi) and Generate Capital.

“Raising capital is never easy, especially in a high interest-rate environment, but we’ve noticed investors are still encouraged by the energy transition,” Ashai said. ​“Large insurance companies like Manulife only write big checks and can finally play in the community solar market because it’s achieved the proper scale.”

The firm positions itself as ​“a lot more than a developer,” according to Ashai. While some developers will flip projects and move on, Nexamp prefers to own its projects as assets on its balance sheet. ​“We believe these assets are better served with us as an owner and operator for our customers,” he added.

That means the company looks to manage the complete solar asset lifecycle — from development and engineering to operations, customer acquisition and asset management. 

The CEO also says Nexamp is paying close attention to the ethics of its suppliers: In August of last year, the company launched a partnership with solar module manufacturer Heliene, a North American firm, for 1.5 gigawatts of modules. ​“We wanted to make sure that our supply chain is free of child labor and [forced] labor in Western China — we have strong ethical concerns about that. As I told our team, you can’t do good by doing bad on the upstream in the supply chain.”

The climate law also provides tax credit enhancements if facilities meet certain domestic content requirements for steel, iron and solar modules.

The next five years will see the U.S. community solar market adding more than 6 gigawatts of total capacity and nearly doubling in size, according to SEIA. For that to happen, a lot more funding rounds like Nexamp’s need to occur, because, as Ashai puts it, when it comes to scaling energy projects, ​“capital is like oxygen — if you don’t have capital, it’s hard to continue.”

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