George and I met in 1997 on the track at William and Mary. George was as warm-hearted then as he is now, and took me under his wing when I joined the team. We became fast friends, and we worked well as a balance of intensity and levity, anxiety and faith, a dreamer and one who liked to ensure that dreams were put into practice.
After college, we pursued our individual paths. George was a finance and economics guy, and he basically succeeded professionally wherever he wanted, and right out of the gates. Within years he found himself working on giant securitizations in New York and DC. It took me a bit longer to get my feet under me. I was focused on the environmental space, and sought opportunities within non-profits and the government, and then after law school, within the law firm world. I eventually landed at Alston & Bird firm doing large-scale wind and solar development. I loved it.
George and I started the company in 2008 in a conversation around my dining room table (which now sits in our office). Having worked on larger wind and solar deals, I was increasingly drawn to the prospect of distributed generation. It was apparent that transaction costs were weighing down, and often holding back, these smaller deals. At the same time, George was looking to leverage his financial background into a more impactful career, and was similarly interested in micro-credit and lending. We were both at a crossroads. It was 2008, Lehman Brothers and AIG were going bankrupt, and the economy was entering the Great Recession. We trusted and believed in one another, we believed in solar, and we were convinced that we could build something special. Why not start a company?
Our first line of business was aggregating and financing solar renewable energy credits (SRECs), a relatively new environmental commodity that was absolutely critical to the economics of solar projects on the East Coast. We understood that for the SREC market to function, energy suppliers and utilities needed volume – otherwise transaction costs would drown the value of the commodity itself. We picked up the phone and started calling energy companies and utilities that needed to procure SRECs, worked with multiple state public service commissions to help them set up SREC markets, and worked doggedly to create long-term channel partnerships with developers and construction companies to aggregate customers. We grew our customer base from a few dozen residential customers in 2008-2009, to over 7,000 commercial and residential customers today.
We focused on SRECs initially because we wanted to focus on a discrete business that delivered value to the solar industry by solving a complex problem. If we delivered value, we could capture value, and build a profitable business that we could leverage into other ventures in the future. Others in the industry would comment, “wow, that’s super complex and boring, glad you’re doing it.” That was tremendously reassuring to us. We wanted to be doing work, and doing it well, that nobody else was drawn to.
In 2011, we took the next step in our journey. At the time many of the SREC markets were the primary markets for commercial customers investing in solar. However, the market was bogged down because of high transaction costs, the challenge of aggregating volume, and the complexity of customer credit. In short, the market was complex and was struggling with many of the same problems we had been working on for years in our SREC business. We saw an opportunity, but a challenging one.
We began our commercial and small utility finance and development business with two $20 million allocations from strategic partners in 2012, one was an insurance company and the other an energy company. We worked closely with the energy companies we had partnered with to expand our sources of financing. Our team leveraged and expanded our network of solar developer partners within the industry to provide financing solutions for solar projects.
We expanded from acquiring and financing projects, to providing tax structured investments on behalf of corporations, insurance companies and banking partners. Sol Systems developed and/or financed over 140MW of solar projects (valued at more than $250 million) in 2016. Sol continues to expand its network of investor clients, and is currently building relationships with insurance companies and corporations interested in investing in the solar asset class.
Throughout the evolution of our business, we have consistently focused on the commercial and small utility segment. In the last couple of years our company has increasingly worked with corporate customers to develop sophisticated and tailored financial and technological solar solutions for them. By way of example, in 2016, Sol Systems developed one of the most historically complex municipal portfolios on top of over 30 schools, police stations and others buildings for the District of Columbia (our home town) while it also developed a 17MW portfolio for a Fortune 100 client. The company is also actively working with universities and commercial partners to provide offsite solar energy from early stage development assets. We see this as an integral part of the future.
In 2016, we welcomed a new business partner, Sempra Energy. Sempra is a $25 billion energy company with a long record of developing large-scale wind and solar projects in the United States. They also have a large footprint of utilities in Central and South America. We clicked with Sempra because we respected and liked the people there, and because a shared vision of serving commercial customers and developing distributed generation assets. We look forward to building this company with them in the future.
Sol has grown from two friends around a dining room table to a team of over 65 people in offices in Washington DC, San Francisco, and Philadelphia. Throughout our company’s journey, George and I are most proud of our people. There is nothing more fulfilling than building something with people you respect, people you can learn from, and people that you care about. We both feel enormously indebted to the smart, cohesive, creative, and dedicated team that has built this company with us. They will increasingly run this company with time.
Yuri and George