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The Heart and Sol Inside and Outside of the Workplace: Sol Team Members Take Action to Solarize D.C. Through Philanthropy

Sol Systems' Anna Noucas participates in a volunteer rooftop PV build

Sol Systems’ Anna Noucas participates in a volunteer rooftop PV build in Northeast Washington, DC.

As a solar energy company, Sol Systems truly walks the talk in advancing our clean energy future. Historically, the firm has provided both financial and human capital to support sustainability initiatives. We call this our Heart and Sol.

To do our part to ensure a more sustainable future, we launched our Giving That Matters philanthropic initiative rooted in the pillars of sustainability:

  • Environmental Protection: The world’s health is our health.
  • Social Equity: Society’s well-being is our well-being.
  • Economic Prosperity: Thriving businesses support thriving communities.

Since inception, we’ve delivered over 500MW of clean power in more than 25 states across the nation. To date, our projects have offset 421,666 metric tons of carbon emissions which is equivalent to over a million road trips from coast to coast.

Sol’s sustainability initiatives, beyond financing and developing onsite and offsite solar, include: donating compost, procuring eco-friendly breakroom and office supplies, and purchasing 3213kWh of wind RECs at the headquarters office. Additionally, we’ve organized 5K fundraisers nationwide to both draw awareness to the benefits of solar energy and fundraise on behalf of industry nonprofits including: Solar Energy Industry Association (SEIA), the Solar Foundation, and the Clean Energy Leadership Institute.

Sol’s philosophy focuses on the holistic concept of sustainability, which transcends in our team’s personal giving and volunteer outreach endeavors. Various team members donate money and time outside of work to fulfilling the economic, social, and environmental issues that face the communities we live and work in.

Most recently, Leslie Barkemeyer, associate general counsel at Sol Systems, used her bridal party shower as a way to the give back to the D.C. community and the solar industry. Rather than a traditional bridal brunch, the future Mrs. Hodge called on her family, friends, and colleagues to help her fundraise to sponsor a rooftop PV solar installation for a low-income family in Washington, DC. Through a program with GRID Alternatives, Leslie, her four bridesmaids, and four women from Sol traded in their heels for hard hats to install the racking system, inverter, and module for a 3.6kW system with 12 panels at a private residence in northeast DC.

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Leslie’s team for the 3.6kW PV installation with GRID Alternatives.

With over 20 million low-income, owner-occupied, single-family homes in the United States, the GRID Alternatives staff is dedicated to making solar affordable for families with the most financial need, and exemplified their commit to the cause by allowing our group to move forward with the build despite the inclement weather policy.

“We are so fortunate. We don’t need any houseware. So why not pay it forward.” said Leslie. “It was fascinating working on the construction side. We did a small residential project, so the type of work is not entirely analogous to the work that goes into the commercial and utility scale solar projects we focus on at Sol Systems. Still, it was very cool to learn how to ground, install inverters and drill modules into racking. The build was complex and certainly required a team.”

To date, Leslie and her bridal shower guests have reach 66% of their fundraising goal. If you’re interested in supporting their efforts to provide solar for all residents in Washington, D.C. donate here.

ABOUT SOL SYSTEMS

Sol Systems, a national solar finance and development firm, delivers sophisticated, customized services for institutional, corporate, and municipal customers. Sol is employee-owned, and has been profitable since inception in 2008. Sol is backed by Sempra Energy, a $25+ billion energy company.

Over the last eight years, Sol Systems has delivered more than 500MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.

Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit www.solsystems.com.

Celebrating Maryland Solar with Baltimore Mayor-Elect Catherine Pugh

Celebrating Solar Blog

Baltimore Mayor-elect Catherine Pugh speaks at Christ Church Harbor Apartments.

Earlier this month, Sol Systems hosted an event to celebrate solar energy at the Christ Church Harbor Apartments, home to a 196kW rooftop system financed by Sol Systems with our partners RER Energy Group and WGL. Christ Church is a low-to-moderate income senior living facility located on the Baltimore Harbor. Baltimore Mayor-Elect Catherine Pugh, a longtime solar champion, was the keynote speaker. Mayor-Elect Pugh spoke on the benefits of solar energy for the community, the state, and thanked the residents for their support throughout the installation process.

“[Christ Church’s] 196kW solar array has produced enough solar to offset carbon dioxide emissions from over 12,000 gallons of gas or 120,000 pounds of coal,” said George Ashton, President of Sol Systems and Chair of the Maryland Clean Energy Center, who spoke at the event. “These numbers are telling, but they don’t tell the other story; the story of an energy independent Baltimore creating its own clean, green, solar energy from its own rooftops.”

It has been a challenging year for the Maryland solar industry. Solar renewable energy credit (SREC) pricing – an important driver for solar growth and economic development in the state –  dove as the market experienced oversupply. In May, Governor Hogan vetoed legislation that would have expanded the state’s foundational solar energy policy, the renewable portfolio standard. This could impact the viability of the state’s pilot program for community solar.

“Community solar is a way that renters, people with shaded roofs, and low income Maryland residents can take advantage of the benefits of solar without installing it on their roofs,” said Ashton, “which is critical to a place like Baltimore.”

Many are hopeful that a veto override will take place in early 2017. Mayor-Elect Pugh spoke on this during her keynote address, ensuring the group that the override would move forward.

Sol Systems is grateful for the residents and team at Christ Church for their leadership on sustainability in the city of Baltimore, and for hosting us last week at their facility.

ABOUT SOL SYSTEMS

Sol Systems, a national solar finance and development firm, delivers sophisticated, customized services for institutional, corporate, and municipal customers. Sol is employee-owned, and has been profitable since inception in 2008. Sol is backed by Sempra Energy, a $25+ billion energy company.

Over the last eight years, Sol Systems has delivered more than 500 MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.

Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit www.solsystems.com.

It’s Official: D.C.’s 50% RPS Becomes Law

You may have heard talk over the past couple of months about a renewable portfolio standard (RPS) expansion happening in the District of Columbia.  Well, it’s no longer just talk. Back in July, Mayor Bowser signed the initial bill, and it then went to Congress for review. Now, effective as of October 8, B21-0650, the Renewable Portfolio Standard Expansion Amendment Act of 2016, is officially law.

What are D.C.’s New Renewable Targets?

While the SACP has increased substantially under this law, the devil is in the details.

Graph 1

Figure 1: SACP schedules under new and old legislation

Under the act, D.C. must procure 50% of its electricity from renewable energy by 2032, and the solar requirement is now 5%. At these new levels, D.C. is now on par with other state clean energy leaders like California, New York, and Oregon in regards to RPS goals. Not only does the law increase the renewable requirements, but it also extends the alternative compliance payments for utilities that don’t meet these standards; this acts as a price ceiling in the marketplace. Under Section 6(c)(3), the current $500 penalty for every megawatt hour (MWh) of solar not met is extended to 2023 (reference Figure 1), and for the proceeding 9 years, until 2032, the alternative compliance payments for utilities stay in the couples of hundreds for utilities that don’t meet their requirements.

SREC Pricing: The Devil is in the Details

With an ACP that high, one may expect SREC values to hover around $500 for the foreseeable future.  Think again; the devil is in the details. As the legislations stands, existing load contracts from five years or less before this new law will still be subject to the old solar ACP schedule (reference Figure 1), which decreases to an ACP of $350 starting next year.  What this load amount will be is still uncertain; it could be large, or it could be small. The point here is that some of the market will be under different compliance obligations than others, and a $500 SREC price is not a safe assumption for SREC pricing in the short term. It might be a future outcome, but those who expected pricing to remain at current levels may be disappointed.

Conclusion

While D.C.’s new standards may not result in continued $500 SRECs, at least right away, the new law will help grow solar and other renewables in the District through 2032 and beyond, and the clean energy job market with them. In a statement by Mayor Bowser, her office estimated that the new bill will create 100 new green jobs within just the first year, and that number will increase year over year.

On top of that, the new law will have larger societal and environmental benefits. It will help the District meet its Sustainable DC Plan which aims to reduce carbon emissions by 50%. In addition, the new law creates a “Solar for All Program,” to be run by the District Department of Energy and Environment (DOEE).  This program hopes to reduce the energy burden for 100,000 low-income households by 2032, and will bring access to renewables to communities that may not have otherwise had the opportunity.

Overall, the Renewable Portfolio Standard Expansion Amendment Act is paving D.C.’s renewable future for everyone in the district, and establishing the District as a national leader in forward-thinking energy policy.

ABOUT SOL SYSTEMS

Sol Systems, a national solar finance and development firm, delivers sophisticated, customized services for institutional, corporate, and municipal customers. Sol is employee-owned, and has been profitable since inception in 2008. Sol is backed by Sempra Energy, a $25+ billion energy company.

Over the last eight years, Sol Systems has delivered more than 500 MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.

Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit www.solsystems.com.

SOURCE: The Sol Project Finance Journal, October 2016

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SOURCE is a monthly solar project finance journal that our team distributes to our network of clients and solar stakeholders. Our newsletter contains solar statistics from current real-life solar projects, trends, and observations gained through monthly interviews with our solar project finance team, and it incorporates news from a variety of industry resources.

Below, we have included excerpts from the Octoberr 2016 edition. To receive future Journals, please subscribe or email pr@solsystems.com.

PROJECT FINANCE STATISTICS

The following statistics represent some high-quality solar projects and portfolios that we are actively reviewing for investment.

Have a solar project in need of financing? Our team can provide a pricing quote for you here.

PPA RATE OCT


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STATE MARKETS

Massachusetts – The commercial solar market is at a standstill for all but a small number of projects that will be eligible for a May 2017 SREC II extension. Potential host customers continue to issue requests for proposals (RFPs), but without firm program guidelines in place for a successor program, submitting accurate, honest pricing for these RFPs remains impossible. While the industry awaits the new program – which is set to go into effect in summer 2017 – new commercial development has come to a halt, and will stay that way if no extension to SREC II is granted. Meanwhile, the Massachusetts Department of Energy Resources (DOER) has convened weekly stakeholder meetings to work through many remaining questions about their straw proposals. Expect for the new program to be very rooftop heavy; strict land restrictions have been proposed that will limit most greenfield development.

We’ve always considered the Northeast market to be fundamentally different. It is deregulated, electricity is expensive, the utilities are not nearly as powerful as they are in the Midwest or South, and land is relatively more challenging to secure and purchase (because of restrictions and costs). As a result, we expect the Northeast to increasingly move toward commercial and residential distributed generation and away from utility-scale projects.

Virginia – After installing only 10MW in 2015, Virginia is on its way to install over 1GW of solar capacity over the next five years. In fact, SEIA estimates that the installed solar capacity in Virginia has grown by 72% over the last year. Solar legislation has had limited success at the state house year after year. So, what gives? The reasons for this dramatic uptick are multi-fold: Dominion has pledged 400MW of solar by 2020, for one, and corporates continue to enter into creative financing arrangements in the Commonwealth. With renewable pledges from the McAuliffe administration and pending changes to Dominion Power’s Renewable Generation Tariff, expect this growth to continue. However, given PPA legality issues – except for a very limited pilot program – most solar development in Virginia will remain utility-scale. The state’s market profile is in stark contrast to Massachusetts for all of the reasons mentioned above. In other news, MDV-SEIA and the Solar Research Institute published the results from its community solar listening sessions and request for information (RFI) earlier this month. Will we see community solar legislation in Virginia in 2017?

Texas – The Lone Star state’s unique regulatory environment – as well as its ample transmission infrastructure – offer options for traditional PPA projects, utility offtake, and hedged corporate offtake contracts. Land and labor costs are affordable, solar irradiation is high, and permitting is favorable. However, given high penetration and the possibility of congestion at certain hubs, a project’s suitability for solar is no longer enough. A truly optimal project must be certain of the long-term transmission and distribution outlook, the local tax regime, and interconnection costs to be compete. Still, expect to see a lot of capacity with slim margins coming out of the Lone Star state. According to SEIA, Texas is expected to install more than 4.6GW of solar electric capacity over the next five years, second only to California during that time span.

SOLAR CHATTER

  • 2016 saw two major shifts in the tax equity market: the ITC extension, and the IRS ruling regarding 50(d) income. The ITC extension means more projects are fighting for scarcer tax appetite, which is also exacerbated by the extension of bonus depreciation. The 50(d) ruling provided much-needed clarity for investors and developers utilizing the lease pass-through structure, though the verdict does limit the amount of depreciation an investor can absorb compared to previous tax interpretation. Developers may also find terms tightening up in the coming months as a result of these changes. As the market continue to mature, we expect (and hope) to see a more apples-to-apples understanding of tax equity pricing across the market in 2017.
  • Pricing is quickly heading under $1/Watt for utility-scale projects. Despite strong economics for onsite behind the meter projects, a number of commercial customers are increasingly expressing their preference to scale with offsite solar. Much of this can be attributed to aggressive corporate and institution goals targets to procure a certain percentage of renewables by a certain date.
  • Our team is starting to see more sub-investment grade credit opportunities. We predict for more of these projects to emerge as many lower hanging fruit, investment grade counterparties have been picked over.
  • Applications for the latest enrollment of Rhode Island’s RE Growth program are due on October 21. Rhode Island – and its very pro-solar Governor Raimondo – proved its commitment to solar energy after passing a package of renewable energy bills earlier this summer.
  • Legislation to “pull forward” New Jersey’s solar carve-out to 4.1% by 2021 passed committee earlier this month. If it passes through the General Assembly, will Governor Christie sign it? More importantly, is this bill enough to mitigate future oversupply? On a related note, May, 31 2017 is the deadline for Grid Tied Subsection Q projects to be delivered.
  • The buzz around storage is starting to reach host customers, who are more frequently asking RFP respondents to include both a solar only option, and an option with a storage adder. While the buzz exists, when will storage be a viable solution across all markets? Storage is being discussed more in New York, and given the Massachusetts Department of Energy Resources’ recent straw proposal, MA is piquing the interest of storage developers. In places like California and Hawaii, storage is becoming a critical component to customer facing solutions and even utility-scale projects.
  • It’s that time again. As the industry rushes to meet Q4 closing deadlines, developers and financiers are also starting to line up early stage 2017 pipeline. We see a far expanded solar market in 2017, both in terms of size and geographic diversity. We expect big news out of the South in the coming years.
  • Maryland projects are harder and harder to pencil as SREC prices continue to fall, and no other incentive regime exists for non-residential projects. The industry has its eyes on a veto override in January, which could provide short-term price support. Unfortunately, the expected boost may still not get solar projects to the level of economic viability that developers and customers require.
  • Time of use (TOU) rates are very much top of mind in California, where rate cases are pending for the investor owned utilities (IOUs) that would push peak periods later in the day. San Diego Gas & Electric – also the first IOU to hit its net energy metering (NEM) 1.0 cap –is the farthest along. Meanwhile, California is already beginning to discuss NEM 3.0, and advocates are getting up to speed on solar + storage analytics, which will be important to future NEM frameworks in the state.

ABOUT SOL SYSTEMS

Sol Systems, a national solar finance and development firm, delivers sophisticated, customized services for institutional, corporate, and municipal customers. Sol is employee-owned, and has been profitable since inception in 2008. Sol is backed by Sempra Energy, a $25+ billion energy company.

Over the last eight years, Sol Systems has delivered more than 500 MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.

Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit www.solsystems.com.

What Comes After North Carolina?

North Carolina is a solar giant. As development slows, which state will step up to take its place?

North Carolina is a solar giant. As development slows, which state will step up to take its place?

It is no secret that North Carolina has experienced a solar boom in recent years, skyrocketing to the #3 spot nationally in terms of installed capacity. This boom was jumpstarted by a 35% state tax credit and an attractive qualifying facility (QF) rate and contract term. As a result, the Solar Foundation counted nearly 6,000 workers in the Tar Heel state at the end of 2015.

Since the expiration of the state tax credit, the market is not drying up, but it has certainly slowed down. Add long approval timelines for interconnection and Duke’s new “circuit stiffness reviews,” (trademark that one, guys) and this runaway market is certainly slowing. Where will developers in the region run to next?

We have written before about South Carolina, which has experienced rapid solar growth – both on the utility-scale and residential side – in 2016. If the market could only fix its property tax challenges, it could rival its northern counterpart. Georgia, on the other hand, has now matured, with promises of more solar on the way. As these states increase in penetration – and competition – developers are starting to race to markets further down South – such as Louisiana, Mississippi, and Alabama – in search of low cost land and labor, and the possibility of long-term bilateral contracts with utilities and cooperatives.

To be clear, the North Carolina market won’t be coming to a halt any time soon – or so long as the fundamentals of PURPA are upheld, a critical issue for our industry and one worth fighting for. As the state faces continued penetration, which state will become the next North Carolina? The race is on.

This is an excerpt from the October 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, please subscribe or e-mail pr@solsystems.com.

ABOUT SOL SYSTEMS

Sol Systems, a national solar finance and development firm, delivers sophisticated, customized services for institutional, corporate, and municipal customers. Sol is employee-owned, and has been profitable since inception in 2008. Sol is backed by Sempra Energy, a $25+ billion energy company.

Over the last eight years, Sol Systems has delivered more than 500 MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.

Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit www.solsystems.com.

Ohio’s Renewable Portfolio Standard: It’s Time for a Thaw

Back in 2014, with the infamous, SB 310, Ohio became the first state to freeze its renewable portfolio standard (RPS) and halted requirements for renewable energy at 2014 levels. This means that until the end of 2016, rather than gradually increasing its renewable energy goals, the RPS has been stuck, requiring only 2.5% of energy to come from renewable sources, with a carve out of 0.12% for solar. Without legislative action, the freeze would lift on January 1. Some Ohio legislators are not so keen on a thaw, however, and are in search of another RPS ice age.

Burr, it’s Cold in Here…

SB 320, introduced in April, was one attempt at another RPS ice age. Introduced by Ohio state Senator Bill Seitz (R-Cincinnati), SB 320 would have gutted net metering, extended the freeze (again) and diluted the standard by extending eligibility to non-renewable sources. When SB 320 failed to gain much traction, Senator Seitz’s drafted a substitute bill – but it’s not any better. In fact, the new bill would remove the “teeth” from the RPS – known as an Alternative Compliance Payment (ACP). The Ohio RPS would not only be frozen again, but it would be completely voluntary, and the SREC program would cease to exist. This also means that customers who made good faith investments in solar energy before the legislature’s tampering with existing law would have to pay for this politicking – literally.

Other anti-RPS bills have also been circulated, such as Senator Kris Jordan’s SB 325, which would get rid of benchmarks all together, or Representative Ron Amstutz’s HB 554 proposal to extend the freeze until at least 2027.

Ohio, is Another Freeze Really Necessary?

OhioBlogGraph1With these bills on the table, you can’t help but ask if another freeze is really necessary. In comparison to other states with an RPS in place, Ohio’s goal of 12.5% by 2027 is already very modest.  For example, Ohio’s neighbor, Pennsylvania, has a goal of 18%. Meanwhile, states across the country continue to increase their renewable energy targets, as they see the job creation that solar energy brings (208,859 jobs and counting nationwide, 139,399 more than coal!), and increasing interest from corporate buyers to do business in renewables-friendly states. Any more changes to Ohio’s RPS would only cause Ohio to lag further behind.

On the campaign trail and since, Governor Kasich pledged to veto any freeze to the standards, but followed up by implying that the current standards were unachievable: “You can mandate anything you want,” he said, “but that doesn’t mean you can achieve it.” Are Ohio’s standards really so unrealistic? When the RPS was frozen in 2014, Ohio was already well on its way to meeting its goals.  In fact, the 2014 compliance report from the Public Utilities Commission of Ohio showed that both the renewable energy and solar compliance goals were exceeded.  The market will continue in oversupply – especially because bordering states may sell their SRECs into Ohio – even with a thaw.

A Thaw is the “Common Sense Plan”

Ohio Blog Graph2With SB 310, the Ohio solar economy took a hit. Before the freeze, Ohio ranked #8 in terms of solar jobs, but has since fallen. The fall in job ranks was accompanied by a plummet in solar renewable energy credit (SREC) prices from the $65-$70 range to the low teens, affecting homeowners and businesses who had already made good faith investments in solar and were hoping to reap the SREC benefits to pay off their solar arrays. With falling SREC prices also came falling build rates, peaking at 48.3MW in 2012, and falling to only 10MW last year.

Any legislation seeking to further a freeze or continue to weaken the RPS, would only further hurt the 89,000 Ohioans  employed across the clean energy sector involved with manufacturing, installing, developing, constructing, and financing. The job creation from the Ohio RPS is proof that it’s good bang for the buck; compliance is likely a mere 0.5% of other measures recently approved to support the state’s failing nuclear and coal plants.

Corporate buyers are also increasingly interested in large scale renewables. According to the American Council on Renewable Energy (ACORE), in 2015 alone, corporations signed renewable Power Purchase Agreements (PPA) for 1GW of renewable power from Texas, 326MW from Oklahoma, and 391MW from North Carolina. Nationwide, the Business Renewables Center estimated that corporates conducted 3.24GW of renewable energy deals, and 80% of S&P 500 Companies are now publishing sustainability reports. Worldwide, over 80 of the largest companies have committed to up to 100% renewable energy usage, with U.S. names like Nike, Microsoft, and Walmart amongst them.

Conclusion

Unfreezing the RPS and allowing the targets to resume would send a signal to the market that Ohio is open to renewable energy business. When Ohio’s legislature goes back into lame duck session in November, the House will have 5 days to review any bills attempting to extend the RPS winter. Make sure to reach out to your representatives and let them know that no action is the best action.  Allowing the freeze to be lifted is the best option for Ohio’s economic and renewable future.

ABOUT SOL SYSTEMS

Sol Systems, a national solar finance and development firm, delivers sophisticated, customized services for institutional, corporate, and municipal customers. Sol is employee-owned, and has been profitable since inception in 2008. Sol is backed by Sempra Energy, a $25+ billion energy company.

Over the last eight years, Sol Systems has delivered more than 500 MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.

Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit www.solsystems.com.

New Jersey RPS “Pull Forward” Bill Pushes Forward

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Solar installations in NJ are increasing dramatically, which threatens to push supply and demand into disequilibrium once again.

On Thursday, October 6th, the New Jersey Assembly Telecommunications and Utilities Committee passed and merged bills S-2276 and A-3918 in a 5-2 vote that will “pull forward” the solar carve-out from 3.47 percent to 4.1 percent by 2021.

For several years, New Jersey was the poster child for SREC market volatility. In 2012, SRECs tanked from a high of ~$700 per SREC in 2009 to just $70 per SREC. The market finally reached stability when Governor Christie signed legislation – the S1925/A2966 bill – into law in 2012. The bill accelerated the Renewable Portfolio Standard (RPS) by four years, bringing supply and demand back into equilibrium.

Since the bill’s passage in 2012, SREC pricing has recovered to recent highs of $260. However, last year’s solar investment tax credit (ITC) extension – among other factors – are causing the rate of solar installations to increase dramatically, which threatens to push supply and demand into disequilibrium once again. The pull forward bill was designed to better align solar installation rates with the years that the solar industry has to take advantage of the ITC, and to prevent investment from going to other states as SREC prices continue to fall.

Next up, the bill will be listed for a vote in the General Assembly. Will it move forward? Stay tuned to our blog for more information.

Interested in solar in New Jersey? Contact our team at finance@solsystems.com to discuss financing, SRECs, or on-site and off-site solar energy solutions or fill out our project intake form.

ABOUT SOL SYSTEMS

Sol Systems, a national solar finance and development firm, delivers sophisticated, customized services for institutional, corporate, and municipal customers. Sol is employee-owned, and has been profitable since inception in 2008. Sol is backed by Sempra Energy, a $25+ billion energy company.

Over the last eight years, Sol Systems has delivered more than 500 MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.

Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit www.solsystems.com.

Employee Spotlight: Senayt Rahwa

Senayt Rahwa

Associate Counsel Senayt Rahwa

The unique and dedicated team of people who work at Sol Systems have been a key part of our success over the past eight years. With a growing staff of over 60 full-time employees, in offices at Washington, D.C., Philadelphia, and San Francisco, the driven, talented group of industry professionals have created resourceful financing mechanisms for the solar industry and thousands of individual projects. Every month, we give you an inside look at some of the incredible work our team members have been doing. This time, we are featuring Associate Counsel Senayt Rahwa, to hear about her experiences and opportunities at Sol Systems.

1. Why did you choose to pursue a career centered around solar energy?

During law school I took several climate change and environmental law classes which were just more interesting to me than the other courses I was taking at the time. My particular focus was environmental law from a social justice perspective – the intersection between community development and renewables became an area I really enjoyed and I felt compelled to pursue after graduation.

2. What work were you doing before coming to Sol Systems?

After law school, I worked at a law firm here in D.C. in the tax credit finance and syndication group for several years. My practice there was really a hybrid of real estate, debt financing and tax equity work with both New Markets Tax Credit and Solar Investment Tax Credit projects. I was able to work on a variety of projects including representing institutional investors financing large commercial solar projects to construction of new charter schools in low income communities.

3. What made you want to start a career at Sol Systems?

I met Yuri and Leslie at an Energy Bar Association event and was really drawn both to the company’s mission as well as Sol Systems dynamic and unique company culture. Hearing of the history of the company and what it has grown to become was motivating and made me want to get involved with this team.

4. Since starting at Sol Systems, how have you found in-house counsel differs from your earlier work experience at a larger firm?

At a large firm, you are working with multiple clients all of whom have differing business models and objectives, so getting to know those clients really well is more challenging. Working in-house has been different because my only client is Sol Systems and I’m deeply embedded in the company’s mission, purpose, goals, and work. The nature of the work is also such that I am charged with providing legal guidance with commercial insights rather than only identifying risks and deferring to the client’s tolerance for such risks.

5. Since joining Sol Systems, what has been your favorite part about working here?

Sol Systems is very dynamic – each day here is different and poses new, interesting challenges and watching how our team comes together to face those is cool. I appreciate how decisions are made intentionally, people are very collaborative, and there are is comradery amongst the team that encourages everyone to support one another.

6. What are the key facets of renewable and solar deals are you providing legal aid and counsel for?

There are a ton of projects out there, but we help evaluate if those projects are actually financeable for the investors who are putting money into a deal. We work to bring the investor perspective to bear on the development side that is focusing on the on-the-ground realities of the project.

7. Outside of Sol Systems, what do you do with your free time?

I like hiking and kayaking – and just being outdoors in general. I love spending time with family and friends both here in the DMV and back in Colorado. And at the moment, I am enjoying getting ready for a new addition to our family due in December!

Want to be a part of the Sol Systems team too? To learn more about available solar energy careers with Sol Systems, please visit our careers page.

ABOUT SOL SYSTEMS

Sol Systems, a national solar finance and development firm, delivers sophisticated, customized services for institutional, corporate, and municipal customers. Sol is employee-owned, and has been profitable since inception in 2008. Sol is backed by Sempra Energy, a $25+ billion energy company.

Over the last eight years, Sol Systems has delivered more than 500 MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.

Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit www.solsystems.com.

Overheard at Solar Power International: Musings on Solar Technology Trends

SPI, held this year in Las Vegas, is one of the industry's largest solar conferences.

What was the latest gossip coming out of Solar Power International this year? We’ve got you covered. Photo Credit: The Solar Foundation

Last week marked yet another Solar Power International. We sat down with Joe Song, Senior Director at Sol Systems, to discuss some of the Sol engineering team’s biggest takeaways from this year’s show.

Module price declines continue, and they are here to stay. This year at SPI, rumblings of further declines were heard throughout the conference. As we have written about in past issues of SOURCE, this is due to a number of issues, such as the solar investment tax credit (ITC) extension and decreased demand from international markets.

In 2016, we’ve experienced an approximately 20 percent price decline since the beginning of the year for conventional polycrystalline technology, which may force high efficiency module manufacturers to react accordingly to stay competitive. We would not be surprised to see some modules prices dip below the $0.40/Watt range by the end of 2017, and we anticipate that these price declines will be permanent.

The U.S. Department of Energy’s $1/Watt by 2020 goal is becoming very real, and has a real chance to exceed those goals in some markets.

The inverter space is changing rapidly. The introduction of extremely price efficient Chinese inverters ($0.04/W – $0.08/W), combined with new competition in the utility-scale space is giving incumbent inverter companies a run for their money. 1500V certifications should enable 2017 utility projects to more widely deploy higher voltage installations, with the goal to shave a few pennies from Balance of System (BOS) costs.

The small utility-scale space is of increasing interest to EPCs and equipment manufacturers alike. This sector is perceived as the next “it” market sector, and Sol Systems built out a utility-scale origination team in Q12016 to focus more on this sector (generally speaking, <25MW, though this team is currently reviewing projects 7MW – 40MW in size). These projects are efficient with shorter development timelines than large utility-scale, can be more targeted to grid-specific “need” areas, avoid transmission interconnection, and may still achieve price economies similar to large utility-scale projects. Many community solar program size limits fall within this range.

Creative, brilliant, and necessary technologies were on display in the exhibit hall this year. We observed some broad leaps in the tracker space, a continuation of the module/racking integrated product approach, light-weight carport products, bi-facial and laminate crystalline silicon modules, and high voltage inverters. We continue to see opportunity to optimize core components, reduce balance of system costs, and find ways to enable disruption. The exhibit hall was littered with great ideas that are being supported by industry partners such as Powerhouse and DOE SunShot. We’re excited about the opportunity to witness continued innovation

Carports and single axis trackers are growth areas in the Balance of System and racking space, where we see these types of projects increasing in market share. Trackers are especially increasing in popularity as the pricing and design have improved to enable smaller projects, with higher tolerances for interesting site conditions. Carports continue to be one of the main levers in the C&I space and should experience efficiencies as products find ways to reduce steel and incorporate installer-friendly design. Competition within the racking space will continue to be fierce, as arguably more gains may be achieved with racking when compared to other core components.

Have questions on technology trends? Shoot us a note at finance@solsystems.com, and we’re happy to connect you with our engineering team.

This is an excerpt from the September 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 pr@solsystems.com.

ABOUT SOL SYSTEMS

Sol Systems, a national solar finance and development firm, delivers sophisticated, customized services for institutional, corporate, and municipal customers. Sol is employee-owned, and has been profitable since inception in 2008. Sol is backed by Sempra Energy, a $25+ billion energy company.

Over the last eight years, Sol Systems has delivered more than 500 MW of solar projects for Fortune 100 companies, municipalities, universities, churches, and small businesses. Sol now manages over $650 million in solar energy assets for utilities, banks, and Fortune 500 companies.

Inc. 5000 recognized Sol Systems in its annual list of the nation’s fastest-growing private companies for four consecutive years. For more information, please visit www.solsystems.com.

SOURCE: The Sol Project Finance Journal, August 2016

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SOURCE is a monthly solar project finance journal that our team distributes to our network of clients and solar stakeholders. Our newsletter contains solar statistics from current real-life solar projects, trends, and observations gained through monthly interviews with our solar project finance team, and it incorporates news from a variety of industry resources.

Below, we have included excerpts from the August 2016 edition. To receive future Journals, please email pr@solsystems.com.

PROJECT FINANCE STATISTICS

The following statistics represent some high-quality solar projects and portfolios that we are actively reviewing for investment.

Have a solar project in need of financing? Our team can provide a pricing quote for you here.

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STATE MARKETS

Georgia – Look out world, 1,600 additional MW of renewable energy are coming to the Peach State. At the end of July, regulators approved Georgia Power’s plan to add 1,600MW of solar, wind, and biomass by 2021. Among the 1,600MW will be approximately 1,050MW of utility-scale, under which wind will be capped at 300MW. This provides tremendous potential opportunity for solar, though this very much depends on rates which have made Georgia developers and EPCs among the most unyielding in the nation.

The plans also include 100MW of distributed generation (DG) projects up to 3MW in size, 50MW of customer-sited DG, 200MW of Georgia Power “self-build” projects, and a new 200MW Commercial and Industrial Program, details of which are still to be determined. The 1,600MW boost may increase Georgia Power’s renewable representation from 5 to 12% of the utility’s overall capacity.

Also approved in the same filing were early site studies and permitting for several hundred megawatts of new nuclear capacity (atop the troubled Vogtle 3 & 4 reactors already underway). Indeed, Georgia’s overall carbon dioxide intensity could be significantly lower in the next 4 – 10 years.

Massachusetts – Uncertainty is rampant in Massachusetts as the Commonwealth transitions away from its reigning solar incentive and net metering programs.

SREC II —> ???

The industry is at the edge of its seat awaiting an initial proposal from the Massachusetts Department of Energy Resources (DOER) on the successor program for SREC II. In the meantime, the ever-tolerant DOER has made changes to its Emergency Regulation to provide a four-month construction deadline extension to May 8, 2017 for solar projects demonstrating that 50% of construction costs have been expended by January 8, 2017. These projects will still qualify for SREC II, but receive a lower SREC factor – which creates a tricky balancing act as DOER must try to minimize moral hazard and spur urgency in development while sparing many projects the guillotine. DOER announced draft guidelines on the 15th, and is accepting comments until the 22nd.

Net Metering —> Market Net Metering

Last month, the Department of Public Utilities released its final framework for the transition to market net metering credits – approximately 60% of retail credit. Systems will qualify under the old regime with full retail credit if:

  • They submit an Application for a Cap Allocation (ACA) before the notification date of September 26 at 2pm
  • ACAs submitted before the notification date are deemed complete by the Administrator of the System of Assurance
  • Cap allocation is obtained by January 8, 2017

And of course, residential systems are untouched.

It is critical to remember that the strongly reduced credit will apply only to net export against monthly meter reads. The window may be closing on the heavy net exporting Virtual Net Metering Credit-reselling systems, but onsite systems serving their own load will be more or less unscathed.

Uncertainty Affects the Market

As SREC II and the current net metering regime come to a close, developers are racing toward these respective deadlines. As a result of this rush, there is a shortage of electricians available for AC work as demand exceeds supply. Subsequently, the price of hiring labor for electrical work has become much more expensive. Other challenges include uncertainty over SREC factors and the new solar incentive program, which makes accurate pricing of projects currently under development – or new opportunities –  nearly impossible.

Finally, be sure to pay attention to the results of the August 23 technical session on minimum monthly reliability charges (MMRCs), which may also affect project economics.

New York – On August 1, the New York State Public Service Commission approved the Clean Energy Standard (CES), which will require 50% of the Empire State’s electricity needs to come from clean energy by 2030. Under the CES, NYSERDA will incentivize Large Scale Renewables (LSR) through centralized renewable energy credit (REC) procurements, very much like they have under the current RPS. The major difference will be the size; the annual obligations for REC purchases under the CES will be approximately twice the size of the annual RPS solicitations that occurred between 2011 and 2015. In Million Metric Tons Carbon Equivalent (MMTCE) converted against the baseline generation mix in NYISO and adjusted for inflation, that’s “a lot.”

However, under the REC procurements, solar will compete with wind, biomass, fuel cells, landfill gas, and other eligible Tier 1 sources for 20-year REC contracts. For reference, 116MW were awarded at a weighted average price of $24.57/REC in the 2015 Procurement. 2017 Procurement dates will be announced on December 1.

SOLAR CHATTER

  • Net energy metering (NEM) 2.0 is upon us in California. In June, San Diego Gas & Electric became the first to hit its NEM 1.0 cap, and Pacific Gas & Electric is expected to follow as early as October. Despite the slight hit to project economics, the new regime will also increase the size of projects eligible for net metering; previously, projects were limited to 1MW.  PG&E made interconnection applications for systems greater than 1MW available earlier this week.
  • Property taxes remain a barrier to solar project development, and also create quite the headache in diligence. Each time an investor enters a new territory, new property tax rules must be understood. The remedy? Developers may show their sophistication and transactional experience by thoroughly understanding the local tax regime, knowing their local assessor, and documenting the expected expense for their partners to underwrite.
  • Know anyone in Florida? Voters will be able to cast their vote in support of Amendment 4, a measure which will encourage solar in the Sunshine State, during the August 30th primary. Take a moment and tell five friends. Then, in November, watch out for the confusing, utility-backed “solar” amendment, Amendment 1, during the general election.
  • Our utility-scale origination team is seeing more activity in southern markets such as Florida, Alabama, Mississippi, Texas, and South Carolina. Developers are looking to these states because of their above average irradiance and relatively low cost to procure land.
  • Despite the Supreme Court “stay” on the Clean Power Plan (CPP) earlier this year, California submitted a draft of its CPP compliance plan at the beginning of August. As Mary Nichols, Chair of the California Air Resources Board tweeted: “We’re down with #CPP (yeah, you know me!)”
  • 2016 is looking to be a banner year for utility-scale solar in Virginia. Dominion is making progress toward its goal to reach 400MW of solar by 2020, much of which has been comprised of large “self build” solar farms for corporate offtakers. GTM Research estimates that Virginia will reach achieve 166MW in 2016.

ABOUT SOL SYSTEMS

Sol Systems is a leading solar energy investment and development firm with an established reputation for integrity and reliability. The company has financed approximately 450MW of solar projects, and manages over $500 million in assets on behalf of insurance companies, utilities, banks, and Fortune 500 companies.

Sol Systems works with its corporate and institutional clients to develop customized energy procurement solutions, and to architect and deploy structured investments in the solar asset class with a dedicated team of investment professionals, lawyers, accountants, engineers, and project finance analysts.

50(d): What Does It Mean for the Tax Credit Market?

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Recent guidance from the IRS will provide certainty to the tax credit market.

Last month, we wrote in SOURCE that after years of anticipation, a 50(d) income ruling would soon be released. Sure enough, the Internal Revenue Service (IRS) issued temporary regulations in the Federal Register on July 22. In its issuance, the IRS clarifies its recognition of the income associated with the tax credit for lease pass-through transactions and whether that income should be included in a partner’s outside basis calculations. It has broad implications for many market participants.

To take a step back, let’s look at the lease pass-through structure and understand how it has different capital accounting treatment for the investment tax credit (ITC) compared to the partnership flip.

Under the partnership flip structure, the regulations direct tax equity investors to deduct half of the value of the 30 percent investment tax credit (ITC) when calculating their outside basis in year 1. Solar tax equity investors utilize outside basis for the purposes of realizing the depreciation associated with the investment, and calculating a gain or loss upon exit from the partnership that owns the project after the recapture period. Reducing an investor’s outside basis therefore means reducing the investor’s ability to absorb losses and/or take a capital loss upon exit – both of which are benefits for tax equity investors.

In a lease pass-through structure, the ITC is instead passed through to the Master Tenant where it is then allocated to the partners. Section 50(d) requires the partner to include one-half the ITC ratably into income across the depreciable life of the asset (in this case, five years). The inclusion of one-half the ITC value into income results in greater taxable income for the partner.

But here’s the key. Under normal accounting treatment, any taxable income received increases the capital account. An increase to the capital account, you guessed it, allows a partner to absorb greater losses, offset taxable income, and enjoy a larger loss on exit (depending on the particular deal). In other words, for a tax-laden investor, 50(d) income is a good thing. The industry broadly followed this interpretation, making the lease pass-through structure quite popular despite its particular complexities.

Then, almost two years ago, the IRS sensed peace in the kingdom and announced it would issue clarity on this subject. In December, news broke that guidance was pending, creating uncertainty in the tax credit market, mainly in the form of price bifurcation as investors and syndicators priced these transactions differently depending on views on how IRS would ultimately interpret the rule, variations on who would wear the risk, and bets on when the guidance would in fact be released.

In its ruling, the IRS states that:

  • Investors are not entitled to an increase in their capital accounts under 50(d)
  • 50(d) income is a partner item not a partnership item, and each partner in the lessee partnership is the taxpayer
  • 50(d) income does increase a partner’s outside basis

Now that the industry has more clarity on IRS intent, it is our expectation that the tax credit market will find a new equilibrium for transactions moving forward. Moreover, additional certainty may attract new investors to the solar ITC space, as historic and other tax credit markets also adapt to these changes.

If this all sounds wonky, it is. Don’t worry; we are here to help. To learn more, contact from our tax structured team at finance@solsystems.com with the subject line “Tax Equity”. We have placed tax equity into over 200MW of solar assets across the country, and can explain what the temporary regulations mean for investors.

This is an excerpt from the 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 pr@solsystems.com.

ABOUT SOL SYSTEMS

Sol Systems is a leading solar energy investment and development firm with an established reputation for integrity and reliability. The company has financed approximately 450MW of solar projects, and manages over $500 million in assets on behalf of insurance companies, utilities, banks, and Fortune 500 companies.

Sol Systems works with its corporate and institutional clients to develop customized energy procurement solutions, and to architect and deploy structured investments in the solar asset class with a dedicated team of investment professionals, lawyers, accountants, engineers, and project finance analysts.

The Storage Story: What’s in Store?

Energy storage can be used for a variety of applications, including utility infrastructiure, grid stabilization, peak load shifting and peak demand offsetting. Photo credit: NREL

Energy storage can be used for a variety of applications, including utility infrastructiure, grid stabilization, peak load shifting and peak demand offsetting. Photo credit: NREL

Storage has been no stranger to the energy conversation over the last several years. According to the White House, the United States doubled the installed capacity of energy storage to 500MW in 2015 alone. As the U.S. solar market continues to grow, the industry is beginning to envision a future where solar projects are built with storage units to help offset peak demand (just ask Elon Musk). Where do we stand currently? Is storage growing in the U.S., or is it just a buzz word?

The Current State: Looking at the State Level

Energy storage incentive programs have emerged in some of the top solar markets. California’s Pacific Gas & Electric (PG&E) has had the Self-Generation Incentive Program (SGIP) in place since 2001. Recently, the California Public Utilities Commission approved reforms that will require 75 percent of the program’s $83 million annual budget be used for energy storage. Previously, much of the budget had been consumed by fuel cells.

On the East Coast, New Jersey, whose program we have previously addressed, incentivizes $300/kWh of electricity produced by qualifying projects which caps at $300,000 or 30 percent of the total cost (whichever is lower).

In addition to these incentives, some states have introduced mandates to encourage storage development. California, true to its history of ambitious renewable energy goals, led the way with a 1.3GW procurement mandate by 2020 for its three largest utilities. Oregon followed suit shortly after with a storage mandate of its own. Looking back East, comprehensive energy legislation passed in Massachusetts at the end of July orders the Department of Energy Resources (DOER) to develop a 2020 energy storage mandate.

On the Horizon: National Incentives

Storage’s momentum has continued at the federal level. Early last month, Senator Martin Heinrich of New Mexico introduced an investment tax credit (ITC) for energy storage modeled off the solar ITC. While a good idea in theory, the solar industry is already facing an undersupply of tax equity, and the number of investors willing and able to monetize the solar investment tax credit is already limited, which drives up return requirements for these investors.

In addition to federal legislation, the White House recently took actions that they estimate will accelerate storage procurement or deployment to at least 1.3GW in the next five years.

Outlook for Developers

Energy storage can be used for a variety of applications, including utility infrastructure, grid stabilization, peak load shifting and peak demand offsetting.

As the storage market grows, we have seen increased demand for storage + solar solutions in requests for proposals (RFPs), and we are participating in these RFPs with partners as we look to meet consumers’ demand for this “hot” technology.

While mass adoption of solar + storage is at the very least one year away, growing interest in the topic makes it critical for solar developers to expand their knowledge on this topic. It is important to know when to add storage to a project, but it may be just as vital to know when to disqualify it. For now, energy storage feasibility is still highly incentive-driven (and thus, location-driven). Even in states with energy storage incentives, however, adding energy storage to a solar project sometimes fails to increase customer savings. Part of the challenge is that energy storage and solar offset different parts of customers’ energy bills. Because of this, optimal tariffs for solar and energy storage savings are rarely the same.  Nevertheless, if customers in states with incentives have large, “spiky” loads and high demand charges, or are on tariffs with time of day based rates, it is worth evaluating the addition of an energy storage system to a solar project.

Stay tuned. As more energy storage incentives become available and the cost of energy storage systems continues to decline, it will become increasingly important for solar experts to be energy storage experts.

This is an excerpt from the 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 pr@solsystems.com.

ABOUT SOL SYSTEMS

Sol Systems is a leading solar energy investment and development firm with an established reputation for integrity and reliability. The company has financed approximately 450MW of solar projects, and manages over $500 million in assets on behalf of insurance companies, utilities, banks, and Fortune 500 companies.

Sol Systems works with its corporate and institutional clients to develop customized energy procurement solutions, and to architect and deploy structured investments in the solar asset class with a dedicated team of investment professionals, lawyers, accountants, engineers, and project finance analysts.

Investing in Community: Schools (Nonprofits) and Solar Energy

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Sol Systems has closed on 48MW of capacity with tax-exempt offtakers, including KIPP DC: Connect Academy in Washington, DC.

Just like any residential or commercial customer, nonprofits must consider many factors before financing a solar project. Unlike homeowners and businesspeople, however, 501(c)3 organizations are tax-exempt and thus cannot directly benefit from the Investment Tax Credit (ITC) like their for-profit counterparts can. The ITC incentivizes taxpayers such that 30 percent of the dollar amount invested into eligible solar projects can be claimed as a tax credit. Nonprofits, without this same opportunity, remain relatively underrepresented in the renewable energy space as a result.

Even so, schools, places of worship, and other nonprofits can still source and benefit from on-site solar arrays. Through panels on the roofs of elementary schools or carports at community centers’ parking lots, solar installations can reduce and stabilize long-term electricity prices, and provide educational value–children are exposed to the science and environmental sustainability benefits of solar starting at a young age. However, are the projects viable from an economic and practical perspective? Unable to afford the high upfront costs, how can a school finance the desired project? Parents and school administrators will ask these, among other, practical questions. For schools and nonprofits in general, Sol Systems offers the option of third-party ownership in the form of a power-purchase agreement (PPA).

At the point of signing a PPA, many issues must be addressed: understanding the school’s pre-solar energy usage and related costs, providing power purchase rates that are lower than the grid’s cost of electricity, and determining any necessary changes (e.g. roof reinforcement, temporarily cleared parking lot) before installation can begin. These steps are needed to guarantee minimum production, accurate metering, and the selection of a competitive and reliable vendor from a request for proposal (RFP) process.

Once chosen, Sol Systems can work to deliver the school a reliable project that will provide the nonprofit with clean energy for the next 20 to 25 years. The school has two options at the end of the PPA term: 1) uninstall the project or 2) purchase the project from the owner. If the school has the necessary capital, the latter option may be attractive if the realized energy savings justify the purchase.

Sol Systems has successfully closed numerous projects using this model for academic institutions ranging from elementary schools to universities. In total, Sol Systems has closed on nearly 48MW of projects with tax-exempt offtakers. This includes not only schools and academies, but also churches and government entities. While ITC and other tax benefits (e.g. MACRS) seem to exclude nonprofits considering solar projects, Sol Systems’ track record with tax-exempt entities strongly proves otherwise.

Once their school engages in a solar PPA, students (eager for recess) won’t be the only ones excited by sunny days–the overall school community will also be looking forward to the continued environmental and economic benefits of its solar installations.

ABOUT SOL SYSTEMS

Sol Systems is a leading solar energy investment and development firm with an established reputation for integrity and reliability. The company has financed approximately 450MW of solar projects, and manages over $500 million in assets on behalf of insurance companies, utilities, banks, and Fortune 500 companies.

Sol Systems works with its corporate and institutional clients to develop customized energy procurement solutions, and to architect and deploy structured investments in the solar asset class with a dedicated team of investment professionals, lawyers, accountants, engineers, and project finance analysts.

FERC Ruling Opens Solar Market Potential to Co-ops and Munis

FERC obligated DMEA to "purchase from QFs offering available energy and capacity"

FERC obligated DMEA to “purchase from QFs offering available energy and capacity”

Access to solar energy has significantly increased as the cost of solar installation has dropped 70 percent within the past decade (2006-2016). Cost declines, when paired with supportive energy policies, have enabled the growth of solar in new markets. One such policy, the Public Utility Regulatory Policies Act of 1978 (PURPA), has been critical for driving solar development by requiring utilities to purchase electricity from qualifying facilities (QF), which include solar and other renewable generating facilities.

A 2015 Federal Energy Regulatory Commission (FERC) ruling—citing PURPA as the ultimate authority that overrides contractual obligations between two electric cooperatives—gives more purchasing control to rural electric co-ops and municipal utilities nationwide. Further upholding its ruling, FERC rejected a June 2016 declaratory order request made by the appellant co-op. Both decisions contribute to the increasing solar capacity owned and purchased by co-ops, which plan to add over 375MW  between 2016 and 2018.

The favorable change for renewable energy stakeholders stems from petitioner Delta-Montrose Electric Authority (DMEA), a member-owned and not-for-profit rural electric co-op distributing electricity to approximately 28,000 members in Southwest Colorado. Having entered a forty-year wholesale electric service contract in 2001, DMEA was required to purchase at least 95 percent of its energy needs from a Colorado-based generation and transmission (G&T) co-op known as Tri-State. However, DMEA was eventually offered the opportunity to interconnect with and purchase power from a local hydroelectric project. Taking this offer would exceed the contractual five percent cap, so DMEA petitioned for relief from its power purchasing constraints with Tri-State.

FERC obligated DMEA to “purchase from QFs offering available energy and capacity,” a ruling that ultimately upheld PURPA to supersede any conflicting contractual obligations. Namely, this 2015 order allows DMEA to purchase local hydropower as desired and continue to support similar-scale renewable energy generating projects. Tri-State, wanting to recover lost revenues from member co-ops that have since diversified their energy purchases, then filed its own petition a year later. Nevertheless, in June 2016, FERC rejected the declaratory order request that “would effectively undo Delta-Montrose’s statutory obligation to purchase from QFs and correspondingly limit QFs from selling power to Delta-Montrose at negotiated rates.”

The FERC orders open parallel opportunities to the 835 other rural electric distribution co-ops as well as municipal utilities across the United States. Like DMEA, many such co-ops and utilities face similar contractual constraints on their percentage of self-generated power. This fact helps explains why, for example, two rural electric co-ops in New Mexico recently issued a request for proposal (RFP) for a large-scale solar PPA much larger than their original five-percent limits would allow.

U.S. co-ops currently own and purchase about 16.7GW of renewable capacity (including contracts for federal hydropower), and this number will continue to rise in part by solar photovoltaic projects’ expanded presence. As many distribution co-ops and municipal utilities exercise their independence to purchase more renewable energy, Sol Systems continues to provide financing for local solar developers.

The mass integration of solar into existing energy systems is not achieved overnight; financing, development, increased grid flexibility, and additional means to ensure the energy source’s reliability will be necessary. Still, the future of solar among rural electric co-ops and municipal utilities is certainly brighter.

ABOUT SOL SYSTEMS

Sol Systems is a leading solar energy investment and development firm with an established reputation for integrity and reliability. The company has financed approximately 450MW of solar projects, and manages over $500 million in assets on behalf of insurance companies, utilities, banks, and Fortune 500 companies.

Sol Systems works with its corporate and institutional clients to develop customized energy procurement solutions, and to architect and deploy structured investments in the solar asset class with a dedicated team of investment professionals, lawyers, accountants, engineers, and project finance analysts.

Grounded, Growing: Sol Systems Over the Years

The Sol Systems Team has seen plenty of growth over its 8 year history.

The Sol Systems Team has seen plenty of growth over its 8 year history.

Then & Now

Sol Systems is deeply rooted in effective teamwork. Co-founders George Ashton (President) and Yuri Horwitz (CEO) started as track teammates in 2001 at their alma mater, William and Mary. After school, their career paths parted ways—George becoming a finance professional and Yuri a clean energy lawyer. Ultimately, George and Yuri re-joined forces in 2008 to form Sol Systems, consisting of 58 full-time employees and 8 interns across three (Washington DC, Philadelphia, San Francisco) office locations as of July 2016.

Each year for the past four years, Sol Systems has been recognized by Inc. Magazine as one of the fastest-growing companies in America and even more so in DC. The company’s significant growth parallels that of the overall industry. But what is it that specifically accounts for Sol Systems’ success? Despite many fitting answers, the essence is captured by two key concepts: forward-thinking and upholding a triple bottom line.

Forward-Thinking

To facilitate the financing of over 450MW of solar energy to date, Sol Systems has looked beyond the horizon (both literally and figuratively). The company has evaded the complacency of any one business model and has instead consistently pivoted to build off the company’s strengths and keep on the cutting edge of the solar industry. For example, Sol Systems’ initial business line focused on aggregating solar renewable energy credits (SRECs), and the company has since added two additional business lines: structured finance and project acquisition (with another line set to launch in autumn 2016).

Andrew Gilligan, now heading investor acquisitions, began as an undergraduate intern on Sol Systems’ SREC Customer Service team before graduating and working full-time in 2011. A veteran team member, Andrew reflected on the company’s growth. “We’re taking on challenges,’ said Gilligan, “but only the ones we’re equipped to handle.” Such an anticipatory spirit is inherent to the company, and Andrew’s statement resonates with the thoughts of colleague Bridget Callahan. Like Andrew, Bridget joined Sol Systems when SRECs were its main source of revenue generation, and she currently manages the four-member SREC Customer Service team.

“SRECs are a unique state incentive structure that has been critical to adding solar in markets such as MA, NJ, MD, and DC. Sol Systems recognized the importance of SRECs early on,” said Callahan, “and we continue to help system owners and developers maximize SREC revenue today.”

The company is, of course, only as dynamic as the people constituting it. Noting trends among new hires, Bridget and Andrew similarly commented that everyone is very open, positive, and team-oriented–all factors contributing to the company’s agility as a small private firm. Andrew added that the team recruits those who are not only smart and adept at problem-solving but also passionate about deploying solar energy. In doing so, Sol Systems is an industry leader that continues to realize and raise the threshold of its potential.

Triple Bottom Line

Even with perpetual movement forward, the company remains focused on delivering its triple bottom line (i.e. People, Planet, Profit). Beyond profit, Andrew and Bridget emphasized how the company creates value for people and the environment. They also cited less obvious ways Sol Systems benefits its stakeholders besides helping build the clean energy sector. Bridget remarked that “Sol Systems has definitely shown that it wants to invest in the people. A key example is having an HR department focused on professional development for employees.” The adage that meaningful change starts from within is no exception to Sol Systems’ workplace—the company encourages a strong internal community that, in turn, extends to developers, investors, and other partners.

Describing the company’s commitment to environmental sustainability, Andrew shared that, “[Sol Systems team members] obviously finance solar projects, but we try to get people excited about it. We also do volunteer projects that help preserve the outdoors as best we can.” The company’s physical office space is an additional reflection of Sol System’s care for the environment; here, one can find composting and single-stream recycling as well as wind RECs purchased to help offset the office’s load.

In sum, Sol Systems’ promotion of social and environmental welfare is simultaneous to its economic success.

Future Direction

The company continues to welcome new hires, celebrate long-time employees, and foster community. So, what’s next for Sol Systems? The company’s scope of work is ever-broadening, but Sol Systems is certain to uphold its core values. After all, the organization is not only a business, but also a supportive team–not so different from the one that brought Yuri and George together before they founded Sol Systems.

ABOUT SOL SYSTEMS

Sol Systems is a leading solar energy investment and development firm with an established reputation for integrity and reliability. The company has financed approximately 450MW of solar projects, and manages over $500 million in assets on behalf of insurance companies, utilities, banks, and Fortune 500 companies.

Sol Systems works with its corporate and institutional clients to develop customized energy procurement solutions, and to architect and deploy structured investments in the solar asset class with a dedicated team of investment professionals, lawyers, accountants, engineers, and project finance analysts.

Module Shortage? That’s So 2015.

After a year of module shortage whispers, the market now faces an oversupply.

After a year of module shortage whispers, the market now faces an oversupply.

Oh, how quickly things can change in one year on the solar coaster. After reporting extensively on module shortage rumors throughout 2015, a funny thing has happened: we are now facing a module oversupply. Why?

  1. Decreased demand from major rest-of-world markets is creating a glut in supply. GTM Research expects a reduction of 3% – 4.5% in global demand from China alone. Europe’s solar market continues to lack growth, and the Euro is not where it once was.
  2. Our industry’s gift from the holiday season, the solar investment tax credit extension, has nullified the urgency to complete projects in 2016. With December 31, 2016 no longer the deadline for ITC eligibility, many projects originally slated to be placed in service by the end of this year have been pushed into 2017 and 2018.
  3. A certain company (you can guess) that manufactured modules – and bought modules for their own solar projects – is no longer manufacturing modules or developing projects. As a result, there remains an excess of preexisting inventory that needs to be placed into third party projects.
  4. High efficiency module monocrystalline manufacturers have turned their focus to the North American solar market, offering pricing that is highly competitive when compared to conventional polycrystalline product. This has created downward price pressure on the polycrystalline manufacturers as they are forced to reduce their prices to remain competitive.

Sol Systems has seen module prices in the low-to-mid 50 cent range for Q3 and Q4 installations, much cheaper than anticipated for 2016. Based on our analysis in the market, we expect that low prices are here to stay. Bring on the cost declines, which will enable further market opportunity and bring us closer to grid parity. For projects that we co-develop with partners, Sol Systems can often secure lower-cost modules. Give us a call.

This is an excerpt from the July 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 pr@solsystems.com.

ABOUT SOL SYSTEMS

Sol Systems is a leading solar energy investment and development firm with an established reputation for integrity and reliability. The company has financed approximately 450MW of solar projects, and manages over $500 million in assets on behalf of insurance companies, utilities, banks, and Fortune 500 companies.

Sol Systems works with its corporate and institutional clients to develop customized energy procurement solutions, and to architect and deploy structured investments in the solar asset class with a dedicated team of investment professionals, lawyers, accountants, engineers, and project finance analysts.

Procurement DE-claration, 2016: SRECDelaware Announces 2016 Procurement Results

The Delaware solar renewable energy credit (SREC) program, SRECDelaware, recently announced the results of its 2016 Procurement. This year, procurement was marked by a higher than anticipated volume of SRECs produced by new systems between 25kW and 2MW in capacity. In response, Delaware’s state utility, Delmarva, decided to buy the resulting 2446 excess SRECs. The overall outcome of Delaware’s procurement oversubscription was a slight price drop from last year for SRECs in the oversubscribed tiers.

What is the Procurement Program?

Delaware has a unique structure of SREC procurement that allows customers to bid competitively on SREC purchase contracts with the Delmarva. These contracts were meant to address price volatility in the DE SREC market. Accordingly, solar energy systems in DE are categorized into one of five tiers based on system size and installation date. Customers in each tier bid on contracts with Delmarva to sell their SRECs at a fixed price. The customer with the lowest priced bid in each tier wins the contract. Additionally, Delmarva can buy up to 6,000 more SRECs from customers after all the tiers have been sold.

See below for a chart detailing the tiers for DE SREC Procurement:

DelawareBlogGraph1

*N-1, E-1, and E-2 compete for the same pool of 4,400 SRECs

How is this year’s procurement different from years past? At the most basic level Delmarva buys more SRECs and tier cutoffs have evolved. Delmarva can now purchase up to 6,000 additional SRECs after establishing its 20-year contracts with bid winners. In the past, Delmarva was limited to a purchase of 3,000 additional SRECs. Furthermore, the DE SREC program has changed the nameplate capacity cutoff for systems in E-1 to 25kW, rather than 30kW. Additionally, this year’s contracts last for 20 years. Customers sell their SRECs to Delmarva at the bid price for the first 10 years and then for $35 per SREC for the last 10 years of the contract.

As discussed earlier, Delmarva was allowed to purchase up to 6,000 additional SRECs after establishing contracts. However, Delmarva actually purchased nearly 2,500 SRECs more than that limit by purchasing all SRECs priced below $95 from the oversubscribed tiers of N-2 and N-3. SRECDelaware cites that the undersubscribed tiers N-1, E-1, and E-2 were filled with low-priced excess N-3 bids, since tiers N-3 and N-2 had more SRECs than Delmarva originally intended to purchase. In years past, none of the tiers have been undersubscribed.

Bid Pricing Results

SRECDelaware’s 2016 Procurement resulted in a bid price increase for tiers N-1, E-1, and E-2, but a decrease for the oversubscribed tiers, N-2 and N-3. Below are the results of this year’s procurement, as well as the changes in average bid price over time.

DelawareBlogGraph2

DelawareBlogGraph3

ABOUT SOL SYSTEMS

Sol Systems is a leading solar energy investment and development firm with an established reputation for integrity and reliability. The company has financed approximately 450MW of solar projects, and manages over $500 million in assets on behalf of insurance companies, utilities, banks, and Fortune 500 companies.

Sol Systems works with its corporate and institutional clients to develop customized energy procurement solutions, and to architect and deploy structured investments in the solar asset class with a dedicated team of investment professionals, lawyers, accountants, engineers, and project finance analysts.

Meet the New Faces of the SREC Customer Service Team

Avery Sellers and Lauren Miller help manage over 7,000 customer accounts

Avery Sellers and Lauren Miller help manage over 7,000 customer accounts

Sol Systems is pleased to introduce two new members of the Solar Renewable Energy Credit (SREC) Customer Service Team: Lauren Miller and Avery Sellers.

Along with Bridget Callahan, Kate Brandus, and Jessica Cowan, Lauren and Avery are responsible for managing over 7,000 customer accounts, with tasks ranging from registration with regulatory entities to assisting with the distributing of SREC payments.

As a SREC Customer Operations Associate, Lauren works directly with customers by registering their solar energy systems and monitoring generation reports for SREC minting with the generation tracking entities PJM-GATS and NEPOOL. Avery, an SREC Operations Associate, verifies meter readings and assists the IT team in improving the customer dashboard.

Lauren and Avery both started at Sol Systems as interns in the SREC Operations and Marketing teams, respectively. Previously, Lauren worked at the White House Council on Environmental Quality in the Office of Federal Sustainability. Avery has worked at Smart Electric Power Alliance, formerly the Solar Electric Power Association.

Lauren graduated from Georgetown University with a B.S. in Science, Technology, and International Affairs, specializing in energy policy. Her passion for clean energy grew out of a commitment to sustainability that started at a young age. Lauren grew up loving hiking, and her family always emphasized the importance of environmental conservation.

Avery holds a B.A. in Political Science from George Washington University. Renewable energy has always been close to his heart, especially since his father also worked in the renewable energy sector. Avery wants do work that is globally impactful and finds the energy sector as the perfect place to make a positive change.

When they’re not at the office, Lauren and Avery both enjoy music. Lauren enjoys nature by hiking and kayaking, but is also an avid dancer, specializing in jazz and hip hop. Avery almost went to film school and now focuses on photography over filmmaking. He also enjoys spending time outdoors, whether it be kayaking, snowboarding, or cycling.

Please help us in welcoming Lauren and Avery to the team.

Working at Sol Systems

Interested in becoming a member of the Sol Systems team? We are currently seeking new employees at all three of our offices, in Washington, D.C., Philadelphia, and San Francisco. To learn more about available solar energy careers with Sol Systems, please visit our careers page.

ABOUT SOL SYSTEMS

Sol Systems is a leading solar energy investment and development firm with an established reputation for integrity and reliability. The company has financed approximately 450MW of solar projects, and manages over $500 million in assets on behalf of insurance companies, utilities, banks, and Fortune 500 companies.

Sol Systems works with its corporate and institutional clients to develop customized energy procurement solutions, and to architect and deploy structured investments in the solar asset class with a dedicated team of investment professionals, lawyers, accountants, engineers, and project finance analysts.

So, You Want to Go Merchant…

Cost declines are driving the growth of merchant solar. Where are the best opportunities?

Cost declines are driving the growth of merchant solar. Where are the best opportunities?

In some markets, solar is now at a price point where installation costs are competitive with locational marginal pricing (LMP). As solar costs continue to fall, the potential for merchant solar is on the rise. With overall system pricing decreasing by 5-10% in Q1 2016 alone (depending on geography), the merchant solar market is ripe with opportunity. 

Who? The solar industry’s rapid cost declines are catching the eyes of sophisticated corporate buyers, educational institutions, and other entities who are increasingly looking to off-site renewables to hedge against volatile electricity pricing and provide cost savings. The wind industry has been structuring these transactions for years, but paired with cost declines, solar has added appeal because projects can be sized in accordance with an electricity buyer’s load at much smaller scale, and more rapidly deployed.

Why? Developing merchant solar projects can be far more straightforward from a developer’s perspective than a typical PPA deal. One of the appeals of merchant solar is that it can be far more streamlined than selling a PPA to a host customer. After leasing land from a landowner, a developer can move through the various stages of development and then exit by selling the development rights before one would have otherwise entered PPA negotiations. For Sol Systems, merchant projects are most attractive when site control is in place, interconnection is underway, and geotechnical concerns have been addressed.

Where? The opportunity for merchant solar is most prevalent in open energy markets, such as PJM and ERCOT. In the PJM region, Maryland and New Jersey are especially ripe with opportunity given the added boost from solar renewable energy credits (SRECs). California is also an attractive market for similarly structured transactions because of Direct Access (DA), which allows customers to purchase electricity from competitive suppliers. However, DA is unavailable to new customers.

So, you want to go merchant? Now is the time. Contact ben.margolis@solsystems.com for tips on breaking into this new market, or if you have projects in need of off-take.

This is an excerpt from the June 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 pr@solsystems.com.

ABOUT SOL SYSTEMS

Sol Systems is a leading solar energy investment and development firm with an established reputation for integrity and reliability. The company has financed approximately 450MW of solar projects, and manages over $500 million in assets on behalf of insurance companies, utilities, banks, and Fortune 500 companies.

Sol Systems works with its corporate and institutional clients to develop customized energy procurement solutions, and to architect and deploy structured investments in the solar asset class with a dedicated team of investment professionals, lawyers, accountants, engineers, and project finance analysts.

Employee Spotlight: James Machulak

"Having the opportunity to lead a new department at Sol Systems and build it from scratch has allowed me to accomplish an important life goal."

“Having the opportunity to lead a new department at Sol Systems and build it from scratch has allowed me to accomplish an important life goal.”

At Sol Systems, our team is the foundation of our continued success. With nearly sixty full-time staff and counting, our talented team of industry professionals have brought creative financing solutions to the solar industry for the past eight years. Giving our clients, partners, and growing staff a chance to get acquainted with the Sol family, our Employee Spotlight blog series features interviews with new hires. This month, we sat down with James Machulak, the Director of the Asset Management Team.

1. What first made you interested in the solar energy industry?

I have always been interested in the environment. As an undergraduate and graduate student, I studied economics, so having the chance to combine two of my favorite things, finance and the environment, was an opportunity I was very excited to pursue.

2. Why were you attracted to accept a position at Sol Systems?

I joined the team in October 2015, and when looking at Sol Systems at the time, I thought that it would be very interesting to join the company at such a strong and clear inflection point. With the solar industry and Sol Systems itself growing so quickly, I knew that there was going to be a lot of new and engaging work happening. The opportunity to build-out the Asset Management department was something I really looked forward  to when accepting this role. There is still a significant amount of progress going on at Sol Systems and my role continues to develop.

3. Since joining the team, what has been your favorite part about Sol Systems?

Definitely the people. The people make all the difference and here at Sol Systems they are the core of what we have been doing. Everyone here is really passionate and smart, and the organization allows them to bring new innovative ideas and perspectives to their work here. Also, the people are so dedicated to the mission of Sol Systems and the work that we are doing here.

4. What are you currently working on the Asset Management Team?

Our role continues to develop and be defined since we are still a smaller team and continue to bring on more people. Currently, Asset Management means that we manage the investments of tax equity assets for investors. For companies investing who are not in the solar industry, we make sure that we maximize the returns that they get on their investment. Additionally, since the solar industry is a little more technical than others companies may be investing in, we also manage technical performance and make sure that the stakeholders understand how their finances are being invested and any issues that may come up and impact their returns.

5. In what ways do you see the solar energy industry, and the role of asset management in the field, changing?

Since solar is still relatively new and growing rapidly, the available pool of assets is also increasing. As the industry progresses, asset management is definitely going to see a lot of growth. With this increase, asset management in solar will likely get more mature and see considerable standardization, such as more polished electronic reporting and data. Also, with more tax equity and credit options available, there will be extensions of opportunities for new tax investors who may need guidance and advice in the process of investing in solar energy.

6. Outside of Sol Systems, what do you like to do with your free time?

I actually really enjoy playing bridge a lot. I also like playing videogames when I get a chance. Walking and hiking around parts of D.C. is something I really like to do too.

Interested in becoming a member of the Sol Systems team? We are currently seeking new employees at all three of our offices, in Washington, D.C., Philadelphia, and San Francisco. To learn more about available solar energy careers with Sol Systems, please visit our careers page.

ABOUT SOL SYSTEMS

Sol Systems is a leading solar energy investment and development firm with an established reputation for integrity and reliability. The company has financed approximately 450MW of solar projects, and manages over $500 million in assets on behalf of insurance companies, utilities, banks, and Fortune 500 companies.

Sol Systems works with its corporate and institutional clients to develop customized energy procurement solutions, and to architect and deploy structured investments in the solar asset class with a dedicated team of investment professionals, lawyers, accountants, engineers, and project finance analysts.