As YieldCos and solar stocks crumble, who will weather the storm?

Semper Paratus ad Expensis

It has been a stormy few weeks in the solar industry; stock market volatility has not been kind to some of the major sources of project finance. The beginnings of some uncertainty started at the end of October, and right now, we are hearing from individual developers that some of their once seemingly-certain sources of finance are becoming more equivocal or going silent or nearly so. As the waves mount up, we hear that some developers are having trouble raising their contacts on the radio.

Stability in the Storm

We’re pleased to report that Sol Systems’ primary sources of commercial and small utility-scale project financing have not been much in the news lately. We carry out the vast majority of our distributed generation financing with a small number of large, stable, publicly held companies who have weathered the last few weeks without a perceptible change in project pricing. We are ready and able to assist any projects who need a safe harbor, quickly.

Have a Plan and Stick to It

We suggest that you hold your financiers to specific timelines, and we would ask you to do the same to us. It is reasonable and necessary for a financier to require exclusivity over a given deal if they are to complete a transaction. It is similarly reasonable for such periods to be extended if additional specific work is required or obstacles are encountered.

However, it is critical that a developer keep an eye on the progress of the transaction within that period, and carefully consider whether they believe a timely close is likely.

If not, it may be best to explicitly wrap up exclusivity, bring the project back out to the market, and carefully consider execution risk just as you would pricing or any other aspect of the transaction. From our end, we find that responsiveness and specificity of communication is the best single indicator of a deal’s chances of success, and a project’s initial source is unlikely to prove its best intermediary.

Call for Help Early

Mariners in distress commonly use a “pan-pan” call to indicate when they have a serious problem with the functioning of their vessel but are not yet in the life-threatening distress that a “mayday” would indicate. It can be a very useful means of obtaining valuable advice or alerting necessary resources. Even if you are only beginning to lose confidence in your finance, and if you are free to speak to other finance, please do send us a note – finance@solsystemscompany.com – we’re always ready.

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for over 375MW 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.