The biggest story around this time of year is the rush to meet end-of-year placed in service deadlines for 2014 pipeline. In 2013, Greentech Media and SEIA reported that 44% of installs occurred in Q4. We expect the numbers will show a similar trend for Q4 2014.
Placed in service deadlines are important for all investors, but especially publicly traded companies and tax equity investors. Publicly traded companies want to know when they can bank the investment and share it with their stakeholders. For tax equity investors, these timelines are important because they often carry forward tax liability from previous years. If tax equity investors are unable to use that tax liability, they will lose it, which why is that 12/31 deadline has little, if any, wiggle room for developers and EPCs.
As we saw last year at this time throughout the Northeast, heavy snowfall can and will impact construction timelines. Missing a placed in service deadline may result in liquidated damages for the EPC provider. Or, just as bad, an unanticipated snow storm may delay construction progress until the snow clears, meaning the developer will have to double down, burn more resources, and rush the job to meet project deadlines. Even after the weather clears, the EPC team is often faced with saturated or muddy grounds or other site conditions that make it difficult to maneuver materials.
Another impact on installation schedules is the likelihood that large storm events often lead to wide-spread power outages. In this case, utilities will then prioritize their base customers and deploy resources to repair down power lines and other equipment issues, leaving interconnection activities on a side burner and at risk of missing crucial project delivery deadlines.
Weather aside, planning for the worst is a smart move when it comes to solar project development. Often, the developers who meet these deadlines – even when faced with the prospect of the next Snowpocalypse – are the developers with the strongest work ethic who are encouraging their EPC contractors to get the deal done as quickly as possible. Work like you are behind schedule, and then you won’t be.
This is an excerpt from our Solar Project Finance Journal, a monthly electronic newsletter analyzing the solar industry’s latest trends based on our unique position in the solar financing space. To view the full Journal or subscribe, please e-mail email@example.com.
About Sol Systems
Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 171MW distributed generation solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. It has over $550 million in assets under management as of September 2014. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments and project acquisition, to debt financing and SREC portfolio management. For more information, please visit www.solsystemscompany.com.