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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.

Fueling the Tax Equity Machine

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Despite the scarcity of tax equity, the market-leading tax equity sponsors will continue to be successful in originating new pipeline and securing available tax equity capital.

The extension of the ITC and bonus depreciation continues to drive a strong solar market; however, it also exacerbates the tax equity “bottleneck” experienced by many developers and investors. Looking ahead to 2017, tax equity scarcity will likely grow. In January, we estimated that $10 billion in solar tax equity would be needed annually, on average, over the next five to seven years. Bonus depreciation limits the tax appetite of investors active in other infrastructure asset classes, and the prospect of corporate tax reform, depending on actions taken by Congress and the Trump administration, could create further shortfalls.

In the interim, as EPC prices continue to fall, tax equity investors will be asking themselves, “Where’s the upside?” Sponsors hoping for investors to accept lower returns in 2017 than 2016 will likely be disappointed. We expect pricing to be consistent or lower than 2016. As always, sponsors should be wary of offers that are too good to be true, asking tough questions about the source of the capital, the status of the commitment, and track record on execution with the proposed partner.

Nevertheless, despite this scarcity of tax equity, the market-leading tax equity sponsors will continue to be successful in originating new pipeline and securing the limited tax equity capital that is available. The secondary constraint on growth of sponsor portfolios may actually be their ability to adequately capitalize their daily functions while having enough to spare to seed the Sponsor portion of on-balance-sheet structured assets.

Sponsors must put in a limited amount of the capital stack, perhaps five to twenty percent, with exact numbers depending on the terms they receive from debt and equity versus the cost to build the project. Capital-constrained sponsors want to leave as little cash sitting in a project as possible, as the cash returns to the sponsor are usually minimal until the tax equity investor flips out of the structure, and perhaps not even then if the project is heavily leveraged. A sponsor without access to sufficient equity capital or financing may have to start selling a larger percentage of their pipeline to generate current-year revenue and keep the machine running.

Sponsors’ investments will certainly pay off in the long-term, but the fact remains that they must balance investing in their operational portfolios while also continuing to develop new assets. We will be watching closely to see how the industry’s most mature players evolve their business models to sustain this growth, and how others in the market will follow. In the meantime, Sol Systems is actively securing partners for 2017 tax structured transactions. Developers interested should send project details to finance@solsystems.com.

This is an excerpt from the November 2016 edition of The SOL SOURCE, a monthly electronic newsletter analyzing the latest trends in renewable energy 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.

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.

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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 York’s Clean Energy Standard: Cuomo’s Plan Put into Action

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Unlike an RPS, New York’s CES plan includes nuclear power

On August 1, New York regulators unanimously approved a Clean Energy Standard that requires 50% renewable energy use by 2030, affirming and laying groundwork for Governor Cuomo’s mandate. The New York State Public Service Commission estimates it will reduce greenhouse gas emissions by 80% by 2050. In order to achieve the ambitious goal, the standard’s implementation schedule has been made to be an aggressive one, with a 26.31% renewable requirement in 2017 increasing to 30.54% by 2021, and so forth.

A Clean Energy Standard, Not Quite an RPS

While the standard looks similar to a renewable portfolio standard (RPS), the word “clean” in place of “renewable” denotes the inclusion of nuclear power. Nuclear falls into the Tier 3 category and will be subsidized through Zero Emission Certificates (ZECs). The plan comes at a crucial moment for three nuclear facilities in particular which have experienced financial difficulty.

No Solar Carve Out

The standard builds on New York’s existing regime, including the NY-Sun initiative, which has helped installed renewable capacity grow by 300% between 2011 and 2014. However, despite the solar industry’s impressive growth in New York, the Clean Energy Standard does not include a solar carve-out or sub-tier, which have driven development in other top solar states such as New Jersey, Massachusetts, and Maryland. Solar will therefore compete with all other “Main Tier” or Tier 1 resources such as wind, hydro, anaerobic digesters, and fuel cells.

Interested in financing for solar projects in New York? Contact our finance team at finance@solsystems.com to learn more about development opportunities or fill out our project intake form.

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 493MW 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.

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.

Employee Spotlight: Rebecca Tilbrook

"Our responsibilities are to identify and quantify potential technical risks to projects that might exist and then, based on what we find, decide how best to mitigate them."

“Our responsibilities are to identify and quantify potential technical risks to projects that might exist and then, based on what we find, decide how best to mitigate them.”

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 nearly sixty 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 Rebecca Tilbrook of the Technical Advisory team, to hear about her experiences and opportunities at Sol Systems.

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

I have always been interested in the environment. Specifically for solar, I think I am relatively pragmatic and practical, and to me solar PV (photovoltaics) is the simplest way to produce electricity. With coal or oil, the process started millions of years ago when animals and plants would die and after centuries of high pressure and heat, they became the fossil fuels that we are now extracting for energy – a very long process. With solar energy, it is just the electrons and the photons at work. The sun provides energy straight to the panels that directly convert it into electricity. I think the simplicity of that process always interested me.

2. What aspects of Sol Systems made you want to join the team here?

The fact that Sol Systems is purely a solar company made it stand out for me. Working at other utility and renewable energy companies, it was difficult having to fight internally for the spotlight since solar was not the only focus of those companies. However, at Sol Systems, everyone is focused specifically on solar energy which unifies our vision and goals.

On top of that, I hadn’t heard about Sol Systems before I had seen the online job posting, but many of my colleagues and industry contacts both knew about Sol Systems’ reputation and have glowing reviews for the work they were doing. It gave me a great impression of the company and I became very engaged in the work they were doing.

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

I have only been here for a little over a year now, and I think that my favorite parts about Sol Systems have changed over this past year many times. I am always grateful to work with such an energetic and passionate team – they are also a group of people who always respects each other.

4. As with any technology, there are technical risks to investment associated with solar, what are some of the ways you can mitigate these risks?

Our responsibilities are to identify and quantify potential technical risks to projects that might exist and then, based on what we find, decide how best to mitigate them. The risk key areas we focus on are technology, design, energy production, counterparty, and execution. For the most part we evaluate risks by a variety of standards that are all widely adopted by most financial and risk rating companies. We usually work with Tier 1 manufacturers who provide robust warranties and guarantees.

The team is also increasingly focused on energy modeling and observing the risks around production. We predict the future energy production based on system type and location in order to give detailed projections of returns on the investment of the project. Overall, we end up working with a wide range of contractors, developers, and investors as we work to shape projects to fit investor preferences so that each project we bring will perform like other projects in their portfolio and meet their standards for quality, reliability, and investment returns.

5. What role do maintenance and upkeep of solar energy systems play into managing solar investments?

Solar doesn’t have many maintenance requirements after the initial installation compared to other generation types and it ends up being very low cost over the lifetime of the system.

6. How do investment risks associated with solar compare to those of other energy sources and technologies?

Compared to something like gas, the biggest difference is the fuel source. Once you have begun extracting fuel – like gas – for energy, you are pretty certain of what the short term prices may be, yet it can be difficult to project the prices and costs years out. The biggest difference is that solar doesn’t need the same type of fuel and instead uses the light from the sun. As a result, while you may not be able to forecast exactly when a cloud will block out the sunlight hour to hour, the year to year production and costs are fairly predictable for solar energy. When stacked against other renewables, solar tends to be more predictable than wind and doesn’t require as much maintenance as marine, hydro, wind, or geothermal systems. In the end, since solar energy doesn’t include any moving parts, won’t pollute while producing energy, and has long-term predictability it compares pretty well to other utilities.

7. Do you think that even in the face of these risks, solar is still a wise investment?

I definitely think investing in solar is worthwhile. In a more ethereal or visceral way, for thousands of years people have been worshipping the sun and it has always been seen as life giving because it provides us with considerable amounts of energy. Only in this last century have we found a way to efficiently capture that energy to create electricity. But in terms of why other people should care about investing in solar – I think that we have clearly come across a technology that not only creates energy without any pollution, but also does so silently, without any moving or kinetic parts, is made of one of the most abundant materials on Earth, requires little maintenance, lasts for nearly half a lifetime, and can be installed on nearly every exposed surface – investing in solar energy is a very logical and wise choice.

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

Outside of work, I enjoy playing and writing my own music.

Want to be a part of the Sol Systems team too? We are currently hiring 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.

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.

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.

SOURCE: The Sol Project Finance Journal, May 2016

2015-04-29-Sol-Cover-Banner2

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 May 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.

PPA-RATE-May

SizeAllinCombo

STATE MARKETS

Connecticut – Applications for the LREC (solar projects up to 2MW in size), Large ZREC (projects 250kW – 1000 kW), and Medium ZREC (projects greater than 100kW under 250kW) programs opened on April 28. Bid forms are due on June 16 at 1pm ET.

Our biggest piece of advice would be to keep your bid realistic. Competitive bid programs tend to be a race to the bottom, with developers bidding in at rates ultimately too low for projects to pencil. This leads to attrition of projects with these programs, which go through multiple iterations before all money is finally awarded to projects that can reach the finish line.

Want a second set of eyes before bid submission? Check in with our team by contacting finance@solsystems.com; we’d be happy to assist.

Ohio – Here we go again… At the end of April, Ohio state Senator Bill Seitz introduced SB 320, legislation that would extend the freeze on the state’s renewable portfolio standard. Since the original freeze bill, SB 310, passed in 2014, solar deployment plummeted from a high of 48.3MW in 2012 to only 10MW last year. To put that in perspective, Connecticut, a much smaller state, installed 91MW in 2015 alone. In addition to freezing the RPS and driving energy investments out-of-state, the bill waters down the RPS by allowing non-renewable resources to participate and introduces bold net metering provisions that would jeopardize the ability of future homeowners and businesses to choose solar. If the Seitz bill wasn’t bad enough, HB 554, introduced this month by Rep. Amstutz, would permanently freeze the state’s renewable energy and energy efficiency standards.

Bottom line? A freeze to the RPS is uncool. If you have customers in Ohio, they can take action by going to http://action.votesolar.org/page/speakout/ohio-rps.

Oregon – We’ve written before about Oregon’s new 50% by 2040 RPS, very modest, new $.005/kWh 5-year incentive for solar projects 2-10MW, and recent changes to reduce Qualifying Facilities (QFs) from 10MW to 3MW. The solar market is very nascent, but based on information gathered after attending Oregon SEIA’s conference last week, we’re starting to see more potential for solar to shine in cloudy Oregon. For example, the Public Utilities Commission is starting to define the community solar program, which could take a year; stakeholder meetings began this week. As of now, we know that PPA terms will be 20 years, and that projects can be anywhere in the state, including the sunnier southern region. The bill credit rate will be determined by the Resource Value of Solar study that the PUC is currently undergoing. In the short term, however, we expect for most of RPS compliance to be met with wind and hydro, both of which are rich in the state.

SOLAR CHATTER

  • Good news! New Hampshire Governor Maggie Hassan signed legislation into law doubling the net metering cap from 50MW to 100MW.
  • As we wrote about earlier this year, some investors with tax advantaged equity have shifted their focus back to larger scale projects since the extension of the investment tax credit. This means that developers may need to adjust their return expectations for commercial and industrial or even smaller utility-scale projects.
  • Wondering why Rest of State is already at block 4 within New York’s Megawatt Block program? Based on the pipeline we’ve seen, much of the volume is coming from monetary projects that were grandfathered into a higher credit rate almost a year ago and are now coming to fruition.
  • #MillionSolarStrong. The United States hit one million solar installations this month, or enough to power 5.5 million homes.
  • The race is on. There’s a mad dash right now to complete Massachusetts projects by the start of the next solar incentive regime in Massachusetts (for projects under 25kW), or January of next year (for projects over 25kW). We’re keeping close tabs on the market and the successor program to SREC II and will be in Boston attending the emergency regulation hearing next week. Will you?
  • Did you have a hard time submitting an application for California’s Self-Generation Incentive Program (SGIP) earlier this year? You’re not alone (and neither were we). Submissions for the “first-come, first-served” application process apparently awarded those who could best hack the system. Greentech Media explains why in an article on May 2. Expect for the program’s implementation to see some tweaks.

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.

Ohio Tries to Freeze Its RPS…Again. Not Cool.

Late last month, Ohio state Senator Bill Seitz (R – Cincinnati) introduced legislation to extend the freeze on the state’s renewable and energy efficiency standards for another three years.

Unfortunately, that’s not all. The bill – SB 320 – also expands the definition of renewable energy sources that may qualify for the Renewable Portfolio Standard, thereby diluting the demand for solar, wind, and other energy sources that would come to mind when one thinks Renewable Portfolio Standard. In addition to gutting the RPS, the bill introduces some bold net metering provisions that would jeopardize the ability of future homeowners and businesses to choose solar.

Put simply, SB 320 is bad news for the Ohio solar industry and the 235 companies that operate in the Buckeye State.

Déjà vu?

In June 2014, Ohio made history by becoming the first state to “freeze” its Renewable Portfolio Standard (RPS). Two years after the passage of SB 310, and the solar industry is still feeling its effects. Solar build rates have declined significantly from a high of 48.3MW in 2012, to a mere 10MW installed for 2015. Ohio has also missed out on economic growth as a result of the freeze, and its solar jobs ranking has dipped from #18 in solar jobs per capita across the country to a #22 ranking in solar jobs per capita for 2015.

WP1

Solar investment has fallen drastically since the passage of the first RPS freeze in 2014.

How Does the Freeze Affect SREC Pricing?

After the passage of SB 310, the price of solar renewable energy credits (SRECs) plummeted immediately by over half, from $70/SREC to $30/SREC. Today, SREC pricing is even lower and has traded down to $13/SREC on the spot market. This is troublesome for solar consumers who have already made good faith investments in their solar installations with certain pricing expectations. The value of these good faith investments were compromised with the passage of SB 310, and would again be diminished if the legislature successfully tampers with current law…again.

SB 310’s pricing impact has been felt not only in Ohio, but also adjacent markets that sell their SRECs into the state given an RPS provision that formerly allowed 50% of compliance needs to come from out-of-state sources. The law removed the 50% cap, and bordering states such as Indiana, West Virginia, Michigan, and Pennsylvania quickly flooded the spot market.

Renewable Portfolio Standards = Good

WP2Why else is preserving the RPS good for Ohio? Let us count the ways…

  • Ohio is home to 235 solar companies and employs 4,800 people across the state, ranking 11th nationally in solar employment. Nearly 3,000 of these workers are solar installers, and another 834 solar jobs are in manufacturing. These jobs are at risk if the freeze is maintained.
  • Four of the five top states in solar jobs per capita have a strong RPS: Massachusetts, Vermont, Hawaii, and California.
  • Combined, renewable energy and energy efficiency saved ratepayers 1.4% in electricity bills between 2008 and 2012.
  • If no legislation passes this year and the RPS is allowed to continue, economic activity could increase by $5.3 billion over the next 10 years.
  • If PUCO’s recent decision to subsidize Ohio’s coal and nuclear fleet is upheld, it could cost ratepayers $6 billion over the next 8 years. Meanwhile, the cost of complying with the RPS is about 0.5% of that figure.

Bottom Line? Don’t Freeze the RPS.

Freezing the RPS would not only be uncool, it would be harmful solar consumers, businesses, and residents in a state that imports $490M in coal from out-of-state each year, according to the Union of Concerned Scientists.

>> Act now! Protect the RPS by completing this action alert.

 

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for over 400MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments, project acquisition and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.

New Solar Interconnection Standards Adopted in New York and Next Steps

The New York Public Service Commission issued an official update to its Standard Interconnection Requirements

The New York Public Service Commission issued an official update to its Standard Interconnection Requirements

What?

This past March, the NY Public Service Commission (PSC) issued an official update to its Standard Interconnection Requirements (SIR) regarding New York grid connection for solar and other distributed resources. The updated guidelines allow for more standardized and expedient interconnection of projects to the New York state grid. By putting in place a simpler process for developers to acquire key initial circuit information and requiring fewer projects to obtain full studies, the new requirements ease the burden placed on state utilities to monitor applications submitted to the interconnection queue. The New York Solar Energy Industries Association (NYSEIA) has also committed to hosting a number of briefings and full training sessions on the updated SIR and how member companies should navigate it for optimal benefit going forward.

Who?

Crafted after months of cooperation between leading stakeholders in the solar industry including the NYSEIA, Joint Utilities, New York State Energy Research and Development Authority (NYSERDA), and NY Department of Public Service (DPS), the PSC produced this updated legislation in response to the state’s current Energy Plan goals and new Clean Energy Standard. In addition, the changes include a new NY Interconnection Technical Working Group (NYITWC) and ombudpersons established to resolve remaining issues that the updated guidelines fail to address.

Specifics?

The updated NY Solar Interconnection Standards include the following protocol:

  • Pre-application report whereby developers may request key information on circuits and specific substations of interest without needing to submit a full application to the interconnection queue
    • With a $750 fee and an average timeline of ten business days, this preliminary step can cover the actual interconnection application cost if filed within the required timeline, thereby increasing the efficiency of the interconnection application process as utilities move closer to the future development of hosting capacity maps.
  • State-wide technical screens–some mandatory, some optional–to expedite qualifying projects to execution with no upgrades and no study; elimination of blanket upgrade requirements for projects that don’t require a CESIR study (per the screening process described above)
  • Interconnection contract execution payment for projects with a completed CESIR study reduced from 100% of upgrade costs to just 25% of those costs, accompanied by a detailed per-item cost estimate by the utility
  • Projects up to 5MW now allowed to be processed through the SIR, but keeps the current 2MW net-metering limit in place (making it unlikely that this 5MW upper limit will be used initially)

Items not included but scheduled to be worked on by ITWG in the near future

  • Established best practice standards on technical issues such as substation level reverse power flow, remote monitoring requirements, control and protection issues like direct transfer trip (DTT) requirements and other anti-islanding protection schemes, and voltage flicker and regulation
  • Addition of enforcement incentives for utilities to meet interconnection process timelines and cost estimates
  • Increased queue transparency and formal queue management processes including exploration of site control requirement
  • Improvements to supplemental screen implementation and clearer minimum load screenings
  • Elimination of customer name requirement for interconnection applications and ability to update name/address on circuit section
  • Process for updating initial reviews as well as Coordinated Electric System Interconnection Reviews after minor system configuration changes and interconnection cost sharing options to mitigate higher cost upgrades that would benefit multiple projects

Be on the lookout for more information as the new Solar Interconnection Standards are put into effect in New York over the next few months!

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for over 400MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments, project acquisition and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.

A Tale of Two Carolinas

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North Carolina is the country’s #2 solar market, but the 35% state tax credit is no more.

It was the best of times, it was the worst of times. North Carolina is the country’s #2 solar market, but the 35% state tax credit is no more.

Without the state tax credit, the Tar Heel state starts to look a lot more like its neighbor to the South. And that’s not a bad thing. North Carolina and South Carolina are both in the same genre of solar market. Land lease and labor costs are low, and interconnection costs are low or reasonable for sites near transmission lines or substations. Both share the gift of relatively high production versus their counterparts north of Mason-Dixon line. They’re similar in terms of geography and the types of projects that can be built (ground mounts with low upfront and ongoing costs). Unlike high saturation states such as Hawaii and California, grid penetration is not an issue. The two states even share utility companies in common, and projects in the 5-10MW AC range benefit from long-term fixed contracts at similar rates. Larger projects require directly negotiated bilateral contracts for slightly lower rates, which are becoming more common in both states.

We’d also cite property taxes as a differentiator between the two. Unlike South Carolina, North Carolina benefits from an 80% property tax abatement for non-residential solar projects. This means that in South Carolina, developers must negotiate a payment in lieu of taxes (PILOT) agreement with each solar installation, or head to their local town council and explain that the solar energy system will not be attending public school or driving on the roads, and as such, should be exempt from the bulk of property taxes.

We’re mixing our Dickens here, but all we have to say about property taxes and the expense uncertainty they create, is “Bah! Humbug!”

This is an excerpt from our March 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 solar energy finance and investment firm. The company has facilitated financing for over 400MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments, project acquisition and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.

The Solar Development Landscape is Shifting. Are You Ready?

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Self-consumption, wholesale projects, and development outside of renewable portfolio standards are a few ways that solar development is changing.

In January, we wrote about how state-level battles over net metering and rate design will push the industry closer to self-consumption. Moreover, challenges to PURPA are encouraging some utility-scale solar developers to finance their deals through wholesale power contracts. Meanwhile, GTM Research estimates that more than half of all utility-scale solar – more than 6GW – will come on-line outside of state renewable portfolio standards (RPS).

In other words, the solar development landscape is shifting. Are you ready?

1. Self-consumption

The trend toward self-consumption can be illustrated by two of the nation’s solar leaders: New Jersey and California. New Jersey has rebooted its energy storage incentive. Though the deadline for open enrollment has passed, a competitive solicitation will take place later this year. In California, the Self-Generation Incentive Program (SGIP) will be increasingly important as the value of electrons exported to the grid is lowered slightly in light of changes to rate design.

Then of course, we saw Hawaii slash their net metering, making it financially feasible to go off-grid with help from storage. Con Edison in New York is also offering a storage incentive that is closely aligned with “resiliency” more than it is for ancillary grid services.

2. Wholesale projects

We are already seeing much activity with wholesale projects. Typically, these projects range from 5-10MW+ in size with relatively low wholesale agreements. Many of the projects that we’ve seen are in the PJM Region or the Northeast and can benefit from strong Tier I renewable energy credit (REC) long-term strip pricing, as well as relatively stable spot market electricity pricing.

Still, given higher land and build costs, projects in the Northeast can be tough to sell wholesale. Moreover, wholesale projects can still be challenging to finance, as without contracted revenue, you can’t put debt on these projects.

Two solutions we’ve discussed internally is bidding these projects into a local incentive program, and then selling the tail (after system size in these programs is maxed out) into the wholesale market. Additionally, these projects can be paired with a synthetic or remote PPA. In certain situations, these PPAs can be shorter in contract length than a traditional behind-the-meter project (10-20 years).

Expect us to write a lot more about this topic in the future.

3. Renewable portfolio standards (RPS)

While utility-scale solar growth may take place outside of renewable portfolio standards, proposals for more aggressive RPS standards are popping up around the country (see: Hawaii, Maryland, D.C., California, Vermont, Oregon, and New Jersey).

However, it’s important to remember than an RPS on its own cannot encourage solar growth. An RPS can force the hand of the utilities to create programs that will help it meet these standards, but without an accompanying program, an RPS can be more of a sentiment rather than the sole driver of market growth.

Maryland, D.C., New Jersey, and Massachusetts have had successful renewable portfolio standards because they are accompanied by a solar carve-out, which created the SREC markets. California is the nation’s #1 solar market year-over-year not just because of their 50% RPS, but because of high electricity prices, favorable rate design, a strong legacy incentive program that jumpstarted their local industry, among several other factors. States like Oregon, which recently passed a 50% RPS, will not immediately jump to North Carolina status with an incentive program at $.005/kWh. Moreover, the 50% RPS does not need to be met with solar.

Navigate the changing development landscape with a trusted financing partner. Contact us at finance@solsystems.com or 888-235-1538 x2 to discuss your financing needs with our team.

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for over 400MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments, project acquisition and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.

Will the Clean Energy Jobs Bill Stabilize the Maryland Solar Market?

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If market conditions stabilize in Maryland, solar employment will increase another 8.5% by the end of 2016

According to the latest Solar Jobs Census, Maryland ranks #12 in solar jobs nationally, with nearly 4,300 solar workers cross the state. 40,485 homes were powered by solar as of The Solar Foundation’s latest report.

The growth of the Maryland solar market is largely due to the state’s renewable portfolio standard (RPS), which has created a strong, stable market for solar renewable energy credits (SRECs). Unlike other SREC markets – such as Pennsylvania and New Jersey – which have been volatile, boom, and bust, Maryland has benefitted from consistent growth year-over-year and a stable market for SRECs. Moreover, high incentive levels in other “flashier” East Coast solar markets (e.g. Massachusetts, where we are offering $280/SREC for 5-year contracts in SREC I, $200 in SREC II) have historically led to relatively less representation by commercial and utility-scale solar developers in the state, again leading to a relatively stable supply-demand balance.

Maryland RPS = GOOD

The Maryland RPS has lived up to its promises. More than 1,000 solar jobs were added in Maryland last year alone. If market conditions stabilize (more on that below), solar employment will increase another 8.5% by the end of 2016, according to The Solar Foundation.

In addition to employment and solar deployment numbers that have come out of the Maryland RPS, it’s becoming increasingly easier and more affordable for utilities and energy suppliers to meet solar requirements set forth by the RPS. That’s because SREC prices, which utilities and energy suppliers must procure year-over-year to comply with the RPS, have steadily been declining.

The declining value of solar renewable energy credits makes it easier for utilities and energy suppliers to meet Maryland’s renewable energy goals.

The declining value of solar renewable energy credits makes it easier for utilities and energy suppliers to meet Maryland’s renewable energy goals.

The Maryland Solar Market is at Risk

Unfortunately, however, this stable growth is at risk. Since the start of 2016, SREC prices in Maryland have taken a nose dive from $160/SREC and are now approaching the sub-$100. Price declines will continue, as previously unattainable utility-scale projects – which had a December 31, 2016 deadline before the extension of the solar investment tax credit (ITC) – will now move forward, disrupting the SREC market’s supply and demand balance. Moreover, the cost of solar has plummeted dramatically since the original passage of the RPS in 2004, and costs have continued to decline since its subsequent amendments. In fact, since 2010, the cost of a solar electric system has gone down by 70% according to the Sunshot Initiative. As costs of solar have come down, these goals need to be reevaluated to better reflect the growing demand for solar in the state.

Introducing the Maryland Clean Energy Jobs Bill

Currently, legislative action is pending to increase the Maryland RPS. HB 1106, also known as the Maryland Clean Energy Jobs Bill, calls for a modest increase in the solar carve-out provision with the RPS, pushing it from 2% by 2020 to 2.5% by 2020, and pushing the overall renewables requirement to 25% of electricity by 2025. This will essentially require more than 500MWdc of solar. This is an attainable RPS goal that the solar industry is expected to meet with ease. This slight increase in near-term demand for solar is offset by reduced Solar Alternative Compliance Payments (SACPs), which essentially act as a price ceiling for the SREC market. Moreover, this increase is modest in comparison to other states such as Oregon and California which recently passed 50% RPS bills. Maryland’s neighbor, D.C., also proposed a 50% RPS last week.

Moreover, the Clean Energy Jobs Act of 2016 will support pre-apprenticeship, apprenticeship, and other workforce programs to establish career pathways within the renewable energy industry. (As a company that’s been hiring constantly over the last several years, we’d appreciate being able to find more local talent with ease.)

Will the Clean Energy Jobs Bill Affect SREC Prices?

While the Clean Energy Jobs bill will not have a dramatic upward push on SREC prices, the bill’s successful passage could possibly bring SREC prices back to where they were, closer to $120 for 2017, and to $85 for 2018. HB 1106 was heard in the Maryland House Economic Matters Committee on 3/3. Its corresponding bill in the Senate will be heard in committee today, Tuesday, March 8. Tell your state legislators that you want to see more solar in Maryland by doing by clicking on MDV-SEIA’s Action Alert, or by calling your state legislator.

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for over 400MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments, project acquisition and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.