Ines Serrao and James Wright discuss the world of distributed generation and community solar, featuring guest Bret Labadie, CFO of Pivot Energy. They explore growth, unique benefits, and evolving challenges of community solar, and explore how an industry leader is navigating new opportunities and market forces.
Intro: Welcome to The Energy Shift, a podcast series focusing on the rapidly evolving energy landscape with hosts Ines Serrao and James Wright.
James Wright: Hello everyone, welcome back to The Energy Shift. On today's episode, we're going to focus on distributed generation. We'll be exploring the landscape and rapid growth of community solar, along with the challenges and opportunities facing the industry at the moment, and how distributed generation providers are scaling up to meet the demands in a pretty challenging energy landscape. So Ines, good morning. Today's topic I know is pretty close to your heart, right? You spent a lot of time working in the DG space. Why don't you touch on that to help kick us off?
Ines Serrao: Awesome. Thank you, James. Yes, I'm very happy to be covering the topic of distributed solar and community solar. Financing of community solar was a big part of my work when I was at Silicon Valley Bank. And I'm very proud to have spent many hours working with companies like Pivot Energy on this type of assets. Just to set the stage with some data, community solar is currently available in 20 states, including DC, with a total install capacity of 8.6 gigawatts as of early 2025, according to McKinsey. And to help us navigate this topic today, we are joined by my dear friend Bret Labadie, the CFO of Pivot Energy. It's great to have you joining us, Bret.
Bret Labadie: Yeah, thanks for having me.
Ines Serrao: Absolutely. And to start, Bret, could you give our listeners an intro on your personal background and how you ended up in your current role as CFO of Pivot Energy?
Bret Labadie: So I actually spent the first decade of my career in traditional energy. And in 2015, I made the intentional switch to get into solar and specifically distributed generation or DG solar. In doing so, I landed at really the country's first community solar developer. This was really spurred by some initial legislation in Colorado in the early 2010s. So the last 10 years have really seen many ups and downs along the solar coaster, but the industry has continued to mature and is now, we believe, really an important part of the broader set of solutions as we solve to meet growing energy demand. You know, Pivot as a company grew up during this period, and thus many of the key people leading the company met in the early days of DG and Community Solar. And this just gives us an incredibly deep background of experiences to lean on as we continue to innovate and grow the segment. In 2021, Pivot was acquired by ECP, which is Energy Capital Partners. They're one of the largest private owners of renewable assets in the country. And we've since transitioned from a develop and sell business model into a fully integrated independent power producer. So at this point, with over three and a half gigawatts of projects operating in construction or under development, we've really become one of the leading distributed generation solar companies in the country. This is something we're deeply proud of and excited by the opportunity we see in front of us for Pivot, but really for the broader space as we continue to drive impact in this energy transition we're helping drive.
James Wright: That's awesome, Bret. We love that positive energy on this podcast, but maybe just to help, I mean, take us back one step. For the listeners who aren't familiar with the asset class, could you just give a quick primer on community solar? Should we focus on community solar in its broader sense or DG? How do you think about nomenclature there and what are some of the key benefits of community solar compared with other renewable energy asset classes?
Bret Labadie: Yeah, community solar was, you know, if you take a step back, know, DG more broadly really, you know, covers residential rooftop, but then also kind of CNI on-site systems and then, you know, community solar. So for community solar specifically, over the last 10 years, many states have adopted policies like net metering that enable homeowners to install solar, be compensated for excess generation back to the grid. What's often left out of that conversation is the fact that most households in this country can't participate in rooftop net metering because either they don't own their home, they don't have sufficient credit, or they don't have a roof that's suitable for solar. Community solar, therefore, has been an effective policy tool to expand access of clean energy to folks like this that cannot do systems on their rooftops. So taking a step back of DG more broadly, I think generating power close to where it's needed is really beneficial for all ratepayers and the overall system. The delivery of power, particularly over the transmission grid, is really costly. And I think everybody is starting to grapple with just how costly that is as these costs continue to rise. A recent RMI study that we reviewed is showing that the transmission distribution costs as a portion of total retail residential utility bills has grown from around 10% to almost 30% just in the last 15 years. And so this is just showing a pretty dramatic trend in the cost of transmission and how that ultimately is going to impact retail rates for consumers. know, distributed generation projects, community solar, By their nature, they're sited close to the load. They're on the distribution grid. And this reduces the reliance on large transmission build-outs, ultimately, hopefully reducing the overall cost of that power to the grid. And then, obviously, just placing these grid assets closer to load on the distribution grid has efficiency and resiliency benefits for the overall system. One other big benefit that we like to point to about DG is just how quickly this can be deployed. We’re clearly facing an energy crunch here in the near term and looking at the options to help meet this growing energy demand, gas turbines are backordered. Everything we can see, you really can't build these until 2030 unless these orders are already in production. Nuclear SMRs are seem to be coming, but they seem to be a bit out from a commercial standpoint. And even utility scale renewables are much slower to deploy. waiting multiple years at a time in RTO ISO cues. So, DG assets can be brought on oftentimes in less than 12 months, and we just believe that's a really beneficial element of adding these assets as part of the broader supply of energy to the grid.
James Wright: Thanks, Bret. Your community's solar point was resonating with me. I live in a hundred year old house and I think if I try to put panels on the roof here, the roof would come in. So anyway, that kind of struck a chord with me.
Bret Labadie: Exactly. Hey, we should talk after the show.
James Wright: Yeah, yeah, yeah. You might have a new customer here. Yeah. Ines, over to you.
Ines Serrao: That was great. Thank you, Bret. From the energy consumer perspective, then, let's say a residential home like James or a small commercial or industrial customer, what are the benefits and disadvantages, if any, of sourcing their energy from a distributed generation provider like Pivot?
Bret Labadie: As I mentioned earlier, residential rooftop net metering is the largest kind of bucket within DG. But, you know, Pivot, as we pointed out, is not doing that. We're focused mostly on offsite facilities where customers will receive a fixed, you know, percent discount to their retail rate. Another product we could offer is to go to a corporate client and offer to lease their rooftop to build a project on the rooftop and inject that power directly into the grid. Ultimately, there's actually a lot of different flavors of what we can do, and those are only going to grow here as we look ahead, as energy storage starts to become more and more part of the solution set. But at the end of the day, our goal is to work with various clients, whether they're corporate or individuals, and really provide material benefits to them. Those can be financial savings on their electric bill, more certainty over future bills, control over the source of energy to meet various renewable goals. And then, as storage becomes more and more part of the solution set, really adding resiliency. So we just believe that we offer a very dynamic set of solutions that can really meet a lot of needs in this time for energy buyers.
James Wright: Yeah, that's great. you know, maybe no pun intended, but sort of pivoting the point of view a bit Bret, I mean, if you were sort of pitching a grid operator now or one of the RTOs, what are the overall cost benefits for those guys from what you do with deploying stuff on a distributed basis? Like, how does that help the grid from a, you know, whether it's an operational perspective, resiliency, etc. Like, how should they think about that?
Bret Labadie: Yeah, I think we think of this in two kind of big buckets. The first one is just diversity. I'll come back to this point a bit later when we talk about the financing, but diversity is a huge part of what makes DG really valuable. And we believe having a diversified portfolio allows the overall grid to be better suited, either from a resiliency standpoint, you're less reliant on large, single, large scale. facilities or transmission lines that can really take things down and have really large impacts. So spreading that out with a more portfolio approach, I think we believe has significant benefits. Secondly, just thinking through the cost benefit framework, a lot of times it's focused very much on just the generation source of what is the cost of this versus that. We believe a better way to think about this is the all-in cost of generating and then ultimately delivering that energy to customers. We've seen recent data showing transmission costs can come in as high as 30 cents a watt, which is a significant addition to the total cost of power when you couple a utility scale or a larger scale project with that transmission. When we take these delivery-related costs into account. We believe it really shifts the calculus on which resources are most cost effective and or most valuable to the grid. I do want to be clear, Pivot believes we need lots of utility scale resources as part of the solution. And we're not saying that that's not a big need. We just want to make sure that when we're considering the broader picture, having an accurate sense of that cost benefit analysis and not always thinking that bigger is always better, there's real value that distributed portfolios of smaller assets on the distribution grid that can add to that broader portfolio of energy supply.
James Wright: Yeah, that makes a ton of sense.
Ines Serrao: For sure. In building on this great history lesson and primer on community solar/DG. Bret, what would you say are the most important market forces impacting the community solar industry today and how is Pivot and how is Pivot navigating them?
Bret Labadie: Yeah, I mean, we're at a critical point for the energy system in this country. I think we can all see that it's palpable in what we do. You know, Demand for power driven largely by AI and the data center build out is growing at its most rapid clip since the post-war industrial boom of last century. We have an aging grid that requires significant investment plus the planned retirements of large thermal power plants is really leaving a shortage of dispatchable capacity. We're seeing very significant price spikes in wholesale markets, you know, recently in PJM and MISO capacity markets, along with ERCOT energy markets. As an industry, we need to meet the needs of the moment. We can help the country meet these near term needs for capacity. We can address reliability and we can help address energy affordability. In some places, this may continue to look like traditional community solar that we've touched on. In other places, it very much could mean having our projects provide power to the grid and not specific customers. And in other instances, it could mean leaning into energy storage and new ways to meet the grid needs and serve more customers. At Pivot, we're leaning into this challenge. We helped establish a new dispatchable distributed generation, DDG, so add a D to the front of that. In Colorado, our home state, which will bring solar plus storage assets online and constrained high value areas of the grid. We're moving aggressively into energy storage as we believe this is just a critical technology to really transform the value of the assets that we are bringing to the grid.
James Wright: That's awesome. Thanks, Bret. That makes a lot of sense as well. So I guess, taking a more macro view then with all you just said about the journey, the technology and the business case has been on and just kind of where we are right now within the broader energy landscape. Like, how do you feel about the opportunities now going forward, right? I mean, do you see more states coming online for DG and be more supportive of those types of policies? Do you still see, you know, benefits on the upside in terms of cost of generation? Like how do you think about the opportunity going forward?
Bret Labadie: Yeah, I think looking ahead, you know, the backdrop of just this massive opportunity to be a part of a dynamic portfolio of supply to meet growing demand is going to be the tailwinds of everything here. I think, you know, DG has come of age and matured so that we're not expecting traditional legislated community solar programs from, you know, that used to come on. you know, seven, eight, nine years ago, we believe the solutions are going to be much more dynamic. They're going to be driven by customers, by corporate clients, by the needs of the grid. They're going to be super dynamic. They're going to include solar. They're going to include storage. They're going to be cited in ways that is really just maximizing the value of those assets. Obviously, look, there are challenges in front of us. It's easy to say that and lose sight of some of the challenges. But these challenges are things that we've been dealing with the entire time we've been doing this. This is development, interconnection cues, permitting, acquiring customers, shifting policy and market forces. None of these are new. We're very confident that given how important we believe these assets are to the broader supply of energy, that we can navigate these just as we always have and really deliver on the huge opportunity in front of us.
James Wright: So Bret, that one point you just mentioned there actually resonated with me, particularly on the corporate side. So when we think about some of the historic drive of corporate activity from more of a pure ESG basis, that's obviously slightly less the case at the moment, but there are other really good reasons why corporates are encouraging these types of investments on the ground at the moment, as you're seeing. Do want to maybe touch on that a bit?
Bret Labadie: Yeah, absolutely. We're really excited by this. We believe this is a huge force in driving new dynamic solutions within the broader DG area. And it's really being driven by corporates that want to engage with clean energy and energy supply in ways that they haven't in the past. This can take on a lot of different forms from projects that are on site, projects that are off site. or even engaging in projects through purchasing recs and various things. I think one of the key drivers that DG can offer is really driving local impact. Doing a portfolio of 30, 40 assets, that is 30 to 40 local communities that each have their own stakeholders within those communities and corporates by engaging in a portfolio of DG assets can truly drive impact in those 30 to 40 communities versus just a single large scale project. And that is really a new force that we're seeing from a lot of our corporate clients, especially some of our larger corporate clients. And it's really exciting and it's opening up all kinds of new opportunities that we had not seen to date in DG.
James Wright: That's super interesting. And as you said pretty unique about your asset class.
Ines Serrao: Thanks, Bret. And shifting gears a little bit, do you anticipate industry consolidation? And if so, how might that impact the distributed generation players?
Bret Labadie: Yeah, I absolutely expect consolidation. I expect we see it across the entire renewable spectrum, within DG as well. There's certainly a level of disruption that this will cause that can be a bit chaotic and is never fun to see on some levels. But longer term, this is absolutely a healthy development for the industry as we continue to be a more critical piece of energy supply. I think it's a forcing function to shift the mentality for a lot of DG players from growth mode because the opportunity set is so large to driving towards long-term financial sustainability, which is actually in the end a much more durable, healthy, long-term outcome for the industry. So, you know, like looking back to this summer, I mean, obviously it was very challenging dealing with the policy changes and all the uncertainty, but deep down, I'm an optimist. I truly believe there's a really exciting future ahead for the industry and for DG specifically. We're already starting to see this just this week, Madison Energy announced the acquisition of Nextair's DG platform and business. And that's a very significant set of assets and it just accelerates Madison as the DG player up the curve of maturity and drives towards that financial stability. So, I think this is really positive development for the industry, DG specifically.
Ines Serrao: That's great. Thank you for sharing. And now pivoting to a topic that's near and dear to my heart specifically, as Bret, you and I have spent long hours trying to solve this. And I think it's interesting, not just for DG, but also for any type of portfolio financing with a large number of assets. Can you share some of the lessons learned about financing large portfolios and what efficiencies you have implemented and where you would like to see the banks continue to evolve as they support Pivot and others.
Bret Labadie: Yeah, absolutely. And just for those keeping track, you've now said pivot or pivoted twice, which we always like to keep track of.
Ines Serrao: You haven't, have you? So James are -
James Wright: I did. I did. Yeah.
Bret Labadie: Yeah, yeah, that's very good. Oftentimes it's followed by no pun intended or pun intended. But, yeah, look, to talk about this, I mean, first, it's just helpful to zoom out for a second just to reflect on the maturation that we've seen in this space over the last 10 years. I mean, I remember back in 2015 trying to raise money for community solar sponsors and it was incredibly challenging. And even raising project financing at the time, you know, is really just taking utility scale financing structures and repurposing them for community solar assets, which in a lot of ways is fine, but there's some very interesting quirks of these assets, in particular around just the fact that the offtake in utility scale, is all about, you have signed offtake and let's build a financing around that, and in this, truly the offtake comes after the fact, it's variable. so it's fundamentally just a different set of assets or asset to finance. That being said, just in the last four to five years, I think we've really proven the benefits of financing DG portfolios at scale. Given we're now in the process of eclipsing over $2 billion raised to date at Pivot, just in the last four years, we're feeling really confident about what we've built and what we've been able to solve. And yeah, as Inez pointed out, it's fun to reflect on. Pivot's first financing was with SVB when Inez was there. And Inez and I spent an incredible amount of time back in 2021 trying to figure this out. And it's actually really cool to look at what we have today and how much of that foundation is still what we worked through four or five years ago. So thank you, Inez, for helping us, starting us on this path. stepping back, just to kind of think about what financing these portfolios at scale means from each perspective of each party in the broader system. First, thinking about it for the sponsor, for us to be able to get financing locked in for 30, 40 assets at a time, just to put numbers around this, you're talking 150, 200 megawatts of assets at a time, this just provides an unbelievable amount of clarity, stability for us to then operate the business underneath that. So much of early DG was in two, three, four projects at a time. And it just creates this perpetual machine that you're constantly having to fight to raise for the next couple of projects as you're rolling through. So really pulling all these together into a single financing umbrella has really changed the game for us at Pivot and how we can manage our business, which is exciting. To be fair, like we are in a capital intensive business industry and we are always raising capital. trying to say we're just sitting back and watching it happen. But it's very different when you establish those robust foundations, you establish these financing partnerships, and then you kind of work that forward. And we're really seeing the benefit of that this year, in just in everything we've built over the last four years. So that, from a sponsor standpoint, is really hard to overstate how valuable that is. When we think about the investors, the tax credit buyers, given the size of these portfolios, we can now attract a level of corporate buyer that we just couldn't even imagine several years ago. so we are now commanding some of the largest corporates in the world. And these corporates, as I mentioned before, are very interested in engaging in projects in all different kind of ways. And this is one of those ways. And our ability to attract those longer the larger relationships that provide stability and reliability over time, again, just intensifies that clarity that allows us to run our business effectively. From the lender perspective, thinking through from the banks, one of the biggest unlocks for us was last year we established a revolving warehouse. This has been transformative for us. It's much less focused on singular assets. It's really focused on the portfolio. And as I've touched on previously, when you start to think about the portfolio and you have 30 to 40 assets, it's diversity that really shines through. And that's something that we've been hammering on my entire career here in DG. And it will continue to be the key thread that drives this industry forward. When I say diversity, it is truly in every direction. Diversity of geography, diversity of technology, of policy risk, of offtake type, of revenue type. of off-taker credit quality. In every direction you can look, DEG assets offer diversity. And as we all know, diversity ultimately reduces risk on a portfolio. And so this is a benefit, obviously, for Pivot as equity owners, but for lenders, for everybody involved in this. And we believe that that is just a critical piece of these larger portfolios. It just adds to that diversity. So as we continue to drive along this maturity curve as an industry, I want to have our financing partners continue to evolve alongside us as we continue to prove out this asset class and their operating history and just build that maturation together. I personally will be sure to be pushing on this the rest of my career because ultimately the why is too important.
James Wright: Well, thanks, Bret. That was a really great conversation. Some good educational points about the asset class itself and what companies like Pivot are bringing to the energy mix with all the good stuff you guys are doing. So thank you for that. So look, as we draw it to a wrap, we'll keep on theme with the podcast. We like to ask all our guests to chat about something that's shifted their week. And why not hand it to Ines, you start us off this week.
Ines Serrao: Thanks, James. So it's early September as we're recording this, and this was the week that kids, my kids, went back to school. And so that really has been what shifted my week. So on Tuesday, they had their pretty new backpacks. They were all excited, I'm proud to say. We took our pictures and off they went. And so far, no complaints. So everybody's back at school. The routines are on. And I'm very happy to be back at a world where I can focus on week and they are focusing on their work during the week.
James Wright: That's amazing. No calls from the school nurse yet. Everyone's good. Excellent. Good stuff. Bret, what about you?
Ines Serrao: Everyone’s good.
James Wright: Excellent. Good stuff. Bret, what about you?
Bret Labadie: Yeah, so I mean, as I reflect back over the last couple of months, it's been a really challenging summer for the industry. I think most people would agree with that. You know, really from May all the way up to early September, we've lived through a tremendous amount of uncertainty. So as I look at that and say, what is the opposite of all this uncertainty? It's the certainty of having fun at one of our dad band concerts that we play around Denver.
James Wright: Ha ha.
Bret Labadie: So this week we added two more dates at local breweries and bars to what we're referring to as our air quotes fall tour, which runs now through November. We have an awesome time. We're just middle-aged folks playing covers of Pink Floyd, Led Zeppelin, Pearl Jam, Nathaniel Rateliff. It's awesome.
James Wright: Amazing
Bret Labadie: I actually, I played bass in high school almost 20 years ago and sure enough, the opportunity presented itself last year. literally the opportunity was I was watching these guys on stage in a backyard neighborhood party and they didn't have a bass player. And by the end of the night, I had convinced them that I should be their bass player. And so I'm in a band again. I'm about to turn 43 and I'm really excited to say I'm playing in a band.
James Wright: Well, that's awesome. I'm going be in Denver in two weeks time, so you may find your next gig being sponsored by CIBC.
Bret Labadie: Very nice.
James Wright: All right, so I'll draw it to a wrap. guess a couple of things for me this week quickly. Look, it's 50 degrees when I left the house this morning to grab a coffee. It feels like fall is here, which is one of my favorite times of year. Pumpkin spice stocks are definitely having a pop at the moment. That's my first thing I've mentioned. I'd also just say maybe on a businessy point, I was up in Toronto this week with some of our leadership team discussing our growth in US market. And it really reaffirmed to me how much of our economic activity here in the US right now is being driven by energy with a big E in its kind of broader sense, right? So whether it's midstream investments, LNG exports, renewables, the CCGT renaissance, transmission build out that's kind of shifting those electrons, the huge demand side pull from our data center clients, like it's all around the big energy theme. So that thematic was really clear to me this week. And the ecosystem around all those sectors is a really exciting place to be an investor and a developer at the moment. Plus it's also seeded a few ideas for some more guests on the podcast, Ines so be warned, James's random idea generator is in full swing at the moment. So that's it from me. So with that, we'll call it a wrap on this episode. Big thank you again to Bret. Great to have you with us today and to hear about all the things that's happening at Pivot and the DG space. And Ines, have a wonderful weekend.
Ines Serrao: Thank you.
Bret Labadie: Yeah, thanks so much for having me. It's great talking to you guys.
Outro: Please join us next time on The Energy Shift as we continue to tackle some of the hottest topics in the US energy transition landscape, providing fresh insights and viewpoints to help you shift your perspective.
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