Partners Group-backed Dimension Energy believes it has a secret weapon in its arsenal as it looks to scale up its portfolio of community solar projects.

The firm expects to grow the portfolio to 1GW nationwide over the next five years at an estimated cost of USD 3bn, the company’s co-founders told Infralogic.

By leaning on in-house regulatory and policy expertise, the developer and operator aims to seize a first mover advantage by establishing a presence in new markets while the regulatory frameworks are still being developed by lawmakers and state agencies.

“From day one Dimension’s view towards new markets is to be an enabler and opener, rather than someone who is waiting for a market to be fully baked from a policy standpoint before they enter,” Dimension’s chief development officer and co-founder Sam Younes told Infralogic.

Younes cites Dimension’s entry into Virginia’s nascent community solar sector as exemplary of the company’s strategy of getting involved in new markets while legislative and regulatory frameworks are still being developed.

“We started acquiring and entitling sites in that market probably about three and a half, four years before tariff implementation. That allows us obviously to lock up the best sites from an interconnection standpoint and also shape the policy in a way that allows us to transact quickly, once we’ve worked through the various state regulations and commissions,” Younes says.

Younes estimates that Dimension’s portfolio of more than half a dozen community solar projects in Virginia makes it the largest owner-operator for such projects in the state, which enacted legislation to expand the sector earlier this year.

Currently Dimension operates 34 MW of community solar (or shared solar as its referred to under Virginia’s program) in the state, with another 32 MW under construction.

That strategy of early entry and engagement in the policy process significantly increases the return potential of Dimension’s projects, Younes said.

“There’s probably about a 300 basis point spread between being an early entrant versus someone who’s acquiring other people’s fully developed assets,” he said.

In addition to Virginia, Dimension is active in California, New Jersey, New York, Maine, and multiple states in the Midwest.

Dimension’s focus on bringing projects forward from the origination stage to operation also distinguishes it from many other independent power producers (IPP) in the community solar space. These firms tend to rely heavily on M&A deals to grow their portfolio, Dimension co-founder and CEO Rafael Dobrzynski said.

Younes and Dobrzynski first launched Dimension as a pure-play developer, bringing projects online and selling them to IPPs. But in 2021, with the help of a USD 400m investment from Partners Group, Dimension expanded its ambitions to encompass the entire lifecycle of its projects, a strategy Dobrzynski says frees its operations from development fee costs and boosts margins.

“The whole thesis was about transitioning the business from a development fleet to develop, own and operate assets,” he said.

After scaling up its operational capacity through integration of a project finance team, asset management platform and construction team, among other resources, Dimension began building its current 250 MW operational portfolio in 2023. The company expects to bring online capacity equivalent to the current portfolio every year, he said.

Additionally, Dimension operates a development arm that will maintain a roughly 2 GW pipeline of origination projects, Dobrzynski said.

Around two-thirds of Dimension’s projects are originated internally, Dobrzynski said. For the remaining projects, the company looks to deal with local developers that can benefit from Dimension’s access to resources for financing, entitling, or interconnection with the grid, Younes said.

“Some of our agreements come maybe two years before the project has shovels in the ground. During that time we have to get the projects into that shovel ready form, working on entitlement issues, providing financial support for interconnection, lending a hand on the development side,” Younes said. “It’s a partnership model, with both subject matter support as well as financial support.”

The expansion effort is backed by investment from Partners Group, which upped its commitment to Dimension to USD 550m last year from an initial investment of USD 400m.

Additional financing for Dimension’s USD 3bn expansion, a five-year strategy first launched in 2021, will come from tax equity, tax credit transfers, and term debt, Dobrzynski said.

“All of the equity for these projects will be injected by Dimension Energy itself. Except for minor sell downs to structure tax equity transfers, Dimension does not typically do any ownership joint ventures. It’s all our own equity,” he said.