Interview with Steph & Sandhya of Solstice

Catherine: Hi, I’m Catherine McLean, Founder and CEO of Dylan Green and I’m really excited. Today I have with me Steph Speirs, co-founder and CEO, and Sandhya Murali, co-founder and COO at Solstice. Thank you for joining me today, ladies.

Steph & Sandhya: Thanks for having us.

Catherine: So I would like you all to introduce yourself and tell us a bit about your current roles. Sure.

Steph: I’m Steph Speirs, like you said, co-founder and CEO of Solstice. I focus on overall strategy, external partnerships, new business concepts, and general external engagement at Solstice.

Sandhya: Great. And I’m Sandhya, COO, and I mostly focus on internal day-to-day team management, but I also support our developer-facing work and our BD team.

Catherine: Great. Steph, you received your bachelor’s in history and international studies from Yale, and your master’s in public affairs and international development from Princeton.
You also received your MBA from MIT. You have worked for both Obama campaigns and the White House, as well as supported solar programs in Pakistan and India through Acumen. How did your political and renewable energy experience abroad lead to your current role at Solstice?

Steph: Well, thanks for the question. I started working in renewable energy because I was working on national security in the Middle East at the White House. And we would be traveling to Yemen, and we would be in these armored vehicles talking about the political future of the country. But then outside, people were lined up waiting for fuel because they couldn’t get enough fuel to power their daily lives with terrorists blowing up oil pipelines. So the geopolitics of the Middle East remained broken and seemed that way when I started working on renewable energy about 12 years ago. And so at first, I moved to India and Pakistan to work on it because there are hundreds of millions of people who lack access to electricity at all, and a large number of them live in South Asia. And it was working on solar microgrids and solar home systems and solar lantern work in far-flung off-grid places in India and Pakistan that made me realize that actually back home in America, so few people have access to clean energy. And as one of the countries that is emitting more carbon emissions in the world, we need to do more back home to make sure that clean energy works for all of us, not just some of us. So that’s what led me to work with Sandhya on Solstice.

Catherine: Sandhya, you received your bachelor’s in business at University of Michigan and your MBA from MIT as well. You spent six years at Barclays Capital before you went to Peru to work for a social enterprise focused on off-grid solar systems. What was your experience like and how did it influence your trajectory?

Sandhya: Yeah, the experience at the small-scale startup in Peru really energized me to want to work at a startup and really build something from the ground up, which was a far cry from my work in banking and the financial sector. And in terms of when I met Steph and learned about the idea of community solar, first getting exposed to it, I was really driven by the fact that we were addressing two missions. One, expand access, expand deployment of renewables, and two, expand access to clean energy savings. I spent some time at Barclays with the philanthropy team working on some volunteer projects in the international development space, mostly around financial inclusion. Kind of similar to Steph, that work felt really impactful, but it felt like you needed to really be in the country to actually have an impact.

And as I was wrapping up my MBA, I was really looking for an opportunity to do something impactful, build something from the ground up that was focused here at home. And so energy is clearly a system that needs some interventions, even here at home. And the fact that we could both tackle climate change and also tackle the inequities of the energy transition was very compelling and why I jumped aboard.

Catherine: I love that. So you touched on it a little bit, Sandhya, but how did you two meet exactly? And why did you ultimately decide to co-found the company?

Sandhya: Yeah, I often call our meeting a bit serendipitous because it was through a mutual friend, one of my classmates at MIT, who connected us. And Steph was looking for someone with financial experience, Excel experience in short, as the idea of Solstice was just getting started. And I raised my hand. I said, I can do Excel. And I also am really passionate about it.

Catherine: Did she make you do a modeling test?

Sandhya: No, she didn’t. She should have if she were smart, but she didn’t. She took my word for it. I don’t know. I think I built okay models. It was really, I think, fortuitous that we met and kind of decided, yeah, let’s start on this journey together. And I think we had really complementary skill sets that became more complementary as we’ve evolved over the last almost 10 years now to really grow and strengthen the company.

Steph: Yeah. As usual, Sandhya is far too humble. She has so many more skills other than just building financial models and is a true operator. And when you work with someone for 10 years, you truly, truly understand them as a human very well. And I’m very grateful to work with Sandhya all the time.

Catherine: One question I have for you, and I’m curious where you all were geographically, and the reason why I’m curious is because of this huge debate that’s going on at the moment with this remote versus hybrid versus, which I know Solstice embraces remote working, correct, if I’m not mistaken. So I’m just curious, where were you both based at that time? Were you in the same city?

Steph: When we first met, we’re not actually in the same city. I was working on Solstice at the same time that I was in India working a day job in off-grid solar. And then the time difference worked out that I could work on Solstice after my day job was over. And Sandhya was back in Boston. So we were not in the same place.

Catherine: And you made it work. There you go. You founded the company together.

Steph: Totally. Solstice has evolved a lot on this concept too as the world has changed. We used to be a five-days a week in the office company where we would all go into our office in Central Square in Boston. And we would work together all day. And now we’re a fully remote company. The way that we’ve built culture doing that is by having regular team offsites, roughly somewhere between two to four a year for various members of the team. And really using those moments to build connections, build norms, build communication structures that carry us through when we’re remote. So it’s kind of the best of both worlds. You get to have the flexibility of working from anywhere while also having the human connection of really loving your team.

Catherine: Yeah. So you said that 80% of Americans are unable to install solar for a variety of reasons. Can you elaborate on why this is as well as share how Solstice is overcoming this gap?

Sandhya: Yeah, sure. I can take that. So the majority of Americans can’t install solar on their rooftop. And there are a lot of really rational reasons why that’s so. Either their roof doesn’t face the right way, structurally not sound for solar panels, there’s too many trees, or probably more common, they don’t even own their roof. They live in an apartment or a condo and so don’t have complete authority over their roof. And then a big, big reason is also they don’t have the financial profile to either finance a system for their home or have the upfront capital to pay for solar panels. There is a big upfront cost barrier, and you need to have a pretty strong credit profile in order to take advantage of financing options or just have the capital to pay for it. So for that reason, only one in five households can actually do rooftop solar. And so the way Solstice is addressing it is through community solar, which is a somewhat new model for residential solar that lets you sign up for a portion of a shared solar garden that’s sited in your community.
And you don’t have to pay anything upfront, it’s a subscription model. And you can sign up and receive credits on your utility bill every month that helps you save roughly 10 to 20 percent off of your utility bill. So you get to support more clean energy for the grid and also save a little bit of money at the same time.

And that’s really the model of solar that Solstice is working to expand access to. And so we work with the solar developers and really handle all the whole customer experience for them. So there’s a five megawatt project going up in a community. We’ll go out, build partnerships, which we’ll talk about, and spread the word and get people signed up and then manage those customers for the life of their participation in our software platform.

Catherine: And is this on a state-by-state basis? Like if I’m in Virginia, a regulated state, is this an option for me as well as somebody in Texas, state residency?

Sandhya: It is very much state-by-state. The two states that you mentioned, yes, you can do it in Virginia, but not in Texas unless you’re in Austin.

Catherine: But not in Texas. I would have thought it would be the opposite.

Sandhya: Yeah, community solar programs are very much state-by-state. They’re passed legislatively and then the regulators will create a program. And so there’s a program in Virginia, there’s a program in Texas, in Austin, with Austin Energy, the local electric utility there, and then in a variety of other states. Our biggest states are New York and Illinois. We also have a presence in Massachusetts, New Jersey, Minnesota. New Mexico will be a big state for us as that program starts to take off. So it is very much state-by-state. And there’s a lot of variability in the types of programs.

Catherine: There was a partnership that you had recently with ONG, North America, and Microsoft to bring 60% electricity savings to low-income households and nonprofits in Illinois. I believe these projects are also outside of the traditional Illinois SHINES community solar program. Can you talk a little bit about that?

Steph: Yeah, partnerships are so important at Solstice because ultimately climate change is an all-hands-on-deck problem and we need people from all across the economic spectrum to participate. So to give you some context about how regular Illinois community solar programs work, generally people are seeing 20% off their electricity supply portion of their bill. But by doing this project outside of the program, we were able to kind of use our partners’ blended capital investment model that allows for even greater savings to be passed along to the customer. Microsoft’s participation in this project is really crucial. They’re a partner that can help the financeability of a project, which allows for the project to get built more easily and allows the profits and proceeds from a project to be split more with the communities. So rather than a 20% savings off people’s electricity bill, we’re seeing up to 60% off people’s electricity bills thanks to this coalition of partners. And Solstice’s role is that we are distributing the benefits of that project to disadvantaged communities. We’re going out and finding nonprofits to save money on their electricity bills by being a subscriber to the project, as well as low income households to save money on their bills by being subscribers to the project. So by tapping into the community partnerships we already have on the ground, as well as the commercial partnerships we have, since we don’t serve only residential customers, we serve commercial customers as well.
We’re able to bring all these parties together, make sure they get the savings and handle all the billing and administration of that through our software platform, and then make sure we’re maximizing the impact to communities on the ground.

Catherine: That’s really interesting. I’ve been hearing Microsoft’s name over and over again when it comes to these sorts of things. Why do you think they’re so interested in this space out of curiosity?

Steph: Yeah, we have the benefit of also having been one of their investee companies back before our company was acquired last year. And so Microsoft, we can authentically say, is truly, truly advancing climate equity, meaning they do care that their dollars go to actually benefit disadvantaged communities on the ground. It is pretty rare to see a really profitable tech company do that, and they decided they wanted to be leaders in it and even impose their own carbon tax on their own profits to generate funding to be able to do this work.
So I think that speaks to their intent to try to make sure the clean energy purchases benefit the community. So we were a natural partner for them on that, since we’ve been doing that for, at this point, over 10 years.

Catherine: That’s great. What are some examples of other effective partnerships Solstice has formed with local community leaders or organizations that have helped expand community solar and resulted in savings for communities?

Sandhya: Yeah, we really believe that the key to a good partnership is centered around trust. And so we work to build trust with community organizations, different types of community partners. And through that, we find it’s a much more effective way to reach the end users, whether it’s households, the community partners themselves, or businesses that are within their network. So there’s a few examples, and we have a variety of different types of partnerships that we pursue. But we’ve run about 200 of these partnerships in total, giving back about 800,000 to communities. And the flavor spans a few different varieties. We’ve worked with different housing authorities. We worked with the Housing Authority of Cook County in Illinois, and we subscribed hundreds of their customers. And the partnership contributions that we made back for every person that signed up ended up going to benefit the Friends of the Forest Preserve.
So they selected a local charity that they contributed the funds back to.
We’ve also worked with El Valor, which is a nonprofit in the Chicago area. They serve about 4,000 people, children and adults that have disabilities, and they directly signed up for a community solar subscription. And through that community solar subscription, they’re able to save about $14,000 a year, which is now going to help fund expanded services for this very deserving group of people. So it’s another example. And then we’ve done a lot of work with municipalities directly. We’ve run tens of municipality enrollment campaigns in New York and Illinois. We had one really interesting one in New Jersey, down in Toms River, where we had a project. There’s actually a lot of mistrust of solar in general in that area. And so our partnerships team worked really hard to basically go out and rebuild trust with that community. And they built a few pretty instrumental partnerships with the Brick Housing Authority. So that’s one of the local housing authorities there. We got validation through a third party organization called Sustainable New Jersey. And that kind of provided again, hey, Solstice is bringing community solar to this community. This is legitimate, you know, it’s validated. And that really helped solidify our ability to increase trust with that community and get folks to sign up for that project, which was literally in their backyard. So that gives you a sense of the types of partnerships we run. We’ve done everything from small local houses of worship, your small nonprofit to now increasingly larger partnerships with even large corporates to sign up their employees. And so it takes all forms. But the key, I think, is really starting with a strong foundation of trust that we can then build on.

Catherine: Yeah. I think that’s why it’s so important to be in these communities and be like on the ground face to face with them. And I think that you guys really do some great work. It sounds like in that arena, being in front of them and speaking to them. I wonder, just out of curiosity, how did COVID affect that? Like, it seems like a lot of your work is being in person and building trust with these communities. COVID must have impacted that, no?

Steph: Yeah, it did. It did. So we had to figure out how do you build trust in partnerships with the people who do have the trust on the ground, even if you can’t be on the ground? So it’s really that we can only move at the speed of trust. Trust is earned, not entitled. And we can build trust through working with the people who already have trust on the ground. So those housing authorities, nonprofits, and municipalities that Sandhya talked about. That’s how we build a more scalable community outreach system.

Catherine: Right. Solstice has been focused on AI solutions, which is a really interesting hot topic at the moment, such as energy score to address churn and collection rates. Can you share more about this and the impact of machine learning? How is machine learning having an impact on your day-to-day work as well as the customer experience within community solar more broadly?

Steph: Yeah, when you hear about AI talked about in energy, it’s more often on the supply side innovations, like projections of energy production or usage and grid reliability. And that has a very important role, but we are focused on AI innovations on the demand side of the market that change, like you said, the customer experience for the better. So it’s important to know one thing about community solar projects or really any solar assets. Developers who are building them are highly concerned about two metrics about their solar assets. One is kind of the collections rate, meaning the stream of revenue that’s coming from their solar project.
And in the case of community solar, the subscription rate, like how many people are maintained as a subscriber base for these projects. If you have a lot of customers move away or churn, as we call it in the industry, then that endangers the project because the finances of the project kind of break at that point. And so it’s really important to developers and long-term asset owners that they partner with an entity like Solstice that can really take care of their customer and ensure that collections and subscriptions rates stay high so that these projects can continue to have support in the community. Just so you have a frame of reference, Solstice’s collections rate is virtually 99% and our subscription rate is 98%. So how do we keep those numbers so high? A part of it is the machine learning model you talked about. We built a machine learning model that predicts the risk of a customer churning off a project, leaving a project.
And we designed the model to analyze customers who are already active on the solar farm and receiving credits. And then it gave our team a proactive tool by which they could identify the highest risk customers and then increase their interventions around education and outreach to those customers to ensure that either we could prevent them from leaving the project or if they did leave because they moved away organically, we had more time and more warning to proactively replace them with people on our wait list, which maintains that high subscription and high collections rate. So if you’re proactively reaching out to the customers that you can predict need that outreach or education or intervention more, that actually improves the customer experience. It makes the customer more likely to stay with the project. So this kind of thing is actually not just good for Solstice. By prioritizing customer loyalty and satisfaction, we’re actually hoping to contribute to the community solar industry in general. The more support we can garner from the community, the more support we can garner from customers. We’re facilitating the development of additional projects for community solar because there’s not that backlash that we’ve sometimes seen against badly managed programs.

Catherine: Right. That is really, really interesting to me. A wait list? Explain that further, please.

Steph: Sure. So each project, because it maybe takes a second to talk about how community solar works. So when someone signs up for community solar, we’re giving them a portion of the electricity that’s produced by the shared solar farm. Generally approximately equal to the amount of electricity they use. And they’re going to see credits associated with the production of that electricity from their portion of the solar farm every month. And that shows up as a credit on their utility bill in most states. Otherwise, it shows up as a credit on Solstice’s bill in other states that lack that utility consolidated billing regulation. So all that’s to say they will see the credits and they don’t have to do anything to their home. They don’t have to change anything with their utility. They’re going to get the savings on their utility bill without paying anything upfront. That’s why community solar is such a good and popular product. But if they move away, then that spot on that solar farm has to be replaced. And so we keep a wait list in order as a backstop for people who naturally will have to leave a solar project over the life of the 20 to 25-year project. We hold our responsibility for maintaining the project at high subscription rates and high collection rates. We hold that so sacred as a responsibility. And that’s why we maintain the wait list to make sure that we have a bunch of people ready to slot in if someone leaves their spot on the solar farm. The other reason the wait list exists is because there are more people who want community solar often than the number of projects. And so we can have people ready to go as soon as a new project gets constructed. We can slot them in from our wait list to a new project. So it behooves anyone listening to this to sign up on our website to join the wait list just in case we can have a future project available to them.

Catherine: I love that. There’s nothing that makes me more happy. My partner and I both drive EVs. And whenever we go to a fast charger EV because the slower charger EV stations are sadly empty a lot of the times. But whenever we go to a fast charger EV station and there’s no spots, we don’t mind waiting because we’re like, this is wonderful. We don’t want there to be any spots because we want more infrastructure. So I think that it’s really great that there are more people that want to do it than you have the capacity for now. So the final question I have for you is around the IRA. What are some of the opportunities and challenges you’ve seen with the IRA when it comes to expanding community solar access, particularly among low and moderate income communities?

Steph: Yeah. The IRA was a compromise from the bill formerly known as Build Back Better. So it wasn’t perfect, but it is such a transformational moment for our country to actually make the biggest investment in climate that we’ve seen in the history of this country. And also it’s really inspiring the rest of the countries in the world to say, we need to pass our own IRA because the U.S. can do it. So I think there’s so many opportunities that we’ve seen. So one of the challenges is that it took a little bit longer to get some of the money out than the law originally anticipated. For example, treasury guidance was supposed to come out earlier and it came out later last year. So that held up projects. A lot of developers and long-term asset owners didn’t want to electrify their projects to see if they might get the tax credits because it meaningfully changes the economic viability of projects.
Some projects that don’t pencil out without the tax credits do pencil out with the tax credit. So it’s actually weirdly led to some delays, but now that we’re seeing guidance come out and money being deployed 2024, I anticipate it will be a much bigger year. And some of the latest announcements we’ve seen are the investment tax credits specifically for low-income benefiting communities. So you have category four of the low-income tax credits that specifically gives 20% savings on people’s bills from projects. At least 50% of the project’s benefits have to go to individual households’ bill savings in the form of 20% savings off their bill. That’s huge.
And also we just saw the winners of some of the greenhouse gas reduction fund recently. We saw that three non-profit consortiums are going to act as green banks now to give financing to both community scale projects, but also individual households to access clean energy and electrification. That’s transformational. And in terms of some of the other challenges we’ve seen, the law is very strict on how it defines the beneficiaries as low-income households. Actually, the federal IRA law is even more onerous for low-income households than the state by state laws around low-income solar programs. For example, a lot of states in the country qualify low-income customer beneficiaries of statewide solar programs using geo-qualification maps or self-attestation, which is someone attesting their low income, and then they can qualify for a program.
Studies show that low-income households actually don’t defraud the government of public assistance. That’s a myth about low-income households. And so that’s why some states have implemented the most permissive, easiest to sign up for qualification standards of geo-qualification and self-attestation. In contrast, a lot of the federal IRA programs are requiring people to show documentation that they’re already on a public assistance program, or they have to show their tax records or income records to qualify for IRA benefits, which is pretty onerous. And it’s basically asking poor people to prove they’re poor, which some people don’t like the paperwork, even if they are. So I came from one of those households. And so we’re keenly aware that we need to make it easy for people to access clean energy. We need to make it as easy as possible so we can build more projects faster, because that’s the only way we’re going to solve climate change. So it’s not actually great for low-income inclusion if we’re making it really hard for people to sign up.

Catherine: It’s like voting. It reminds me of voting.

Steph: Totally. It’s very similar. Some states ask for IDs, and other states just take care of that administration on their end.

Catherine: Interesting. You mentioned, in passing, green banks. There’s been a lot of talk about green banks the past couple of days with the EPA. It’s the EPA, right?

Steph: The EPA awarded $20 billion yesterday, yeah.

Catherine: Yeah, exactly. Do you work with green banks a lot?

Steph: Yeah, I would love to turn to Sandhya to chat with some of our experience working with them. Go ahead, Sandhya.

Sandhya: Yeah. So some green banks, most notably the New York Green Bank, is often a financier on projects in New York. And so indirectly, we’ll be working with them. I think there are some opportunities we’re exploring with this new consortium of green banks that are receiving a lot of funding, and how we can continue to advance our mission of equity inclusion in the clean energy space by leveraging this massive boon to the industry and work more directly with those green banks.

Catherine: It was really nice speaking with you today, and thank you so much for taking the time and all the work you are doing on behalf of our industry.

Steph: Yeah thank you, Catherine for having us!!

Sandhya: Thank you so much! We appreciate being here.