When investing in solar assets, utilities and infrastructure owners typically rely on a select list of preferred Engineering, Procurement, and Construction (EPC) partners to deliver the project to their standards and avoid major issues. We understand why. Working with only a select few preferred EPC providers minimizes exposure, and reduces time spent reviewing and approving new providers. Plus, it provides a greater degree of comfort knowing the job will be done well when partners have an established working relationship and track record together.
Yet, in the fragmented commercial and small utility-scale market, many of the entities originating project opportunities often intend to serve as EPC provider to capture more value and margin in their solar projects. Enter the conundrum for solar investors: how can an investor expand their commercial solar portfolio if they’ll only work with a select number of EPC providers?
Of course, opportunities still remain for investors to purchase a project for a development fee and work with their EPC partner of choice. However, EPC monogamy can be limiting. As such, solar investors seeking to break into the commercial market and scale their portfolios would be well-advised to establish a structure and process that allows for new EPC providers to be considered. Getting this structure and process correct is key to minimizing exposure to critical risk factors during construction, and to achieving consistent quality assurance across projects.
With Sol Systems, investors can have their cake and eat it too. We can act as an EPC wrap for investors, meaning that we serve as the primary counterparty for our investor and take on the EPC provider’s obligations. Through this added layer of protection and standardization, Sol Systems is responsible for diligence on the contractor and relevant site or project information. It is also in our best interests to deliver the project to the contracted scope within budget by the target completion date. This wrap allows an investor to mitigate the risk of working with multiple partners by relying on one single partner they can trust, allowing them to scale within the commercial market.
This is an excerpt from our August edition of SOURCE: the Sol 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 firstname.lastname@example.org.
ABOUT SOL SYSTEMS
Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 262MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. 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. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.