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Massachusetts: To Tip Your Cap or Remove it Altogether?

536px-Coolidge_after_signing_indian_treaty

It’s time to remove our (net metering) caps and get back to work.

Etiquette dictates that a man tips his cap by raising it slightly above his head to signify recognition, greetings or a simple salutation. However, once a man enters a building to settle down for work, he removes his cap. The greetings and formalities in the solar industry are finished, and it’s time to remove our caps and get back to work.

In the solar industry, net metering caps are limits placed on how much solar capacity is eligible for Net Energy Metering, or the ability to sell excess generation back to the grid. Caps are usually set per utility service area and are a percentage of that area’s peak historical maximum load. Unfortunately, once these caps are filled, solar facilities may not be able to sell excess generation at a fair rate. After hitting its net metering cap earlier this year and putting much of its solar development on hold as a result, Massachusetts is considering options to raise its caps and allow its solar market to flourish once again.

In July, the Massachusetts State Senator Downing introduced legislation to lift the state’s net metering caps. In response to the Senate bill, Governor Baker has introduced his own legislation. While the Senate bill changes the cap from a percentage of demand to a capacity cap of 1600MW, which is the state’s goal for solar,  Baker’s version sticks with a demand percentage, only expanding the current caps by only 2%, or about 445MW. Under both versions, Class I systems, or systems under 10kW on a single-phase circuit and 25kW on a three-phase circuit, are exempt from the net metering caps.

On the one hand, it is promising that Governor Baker is showing support for at least a version of raising the caps, because he had previously opposed an increase in the caps – and a general opposition to solar “subsidies.” Unfortunately for the solar industry, however, the bill hopes to replace net metering with an avoided cost rate after the 1600MW goal is met; this could be a potential game changer for the Commonwealth’s solar industry, and not in a good way. A comparison of Governor Baker’s bill and the original legislation from State Senator Downing can be found below.

Baker’s Bill

  • Net metering caps are raised 2% for private and public utilities.
  • When 1600MW DC state-wide goal is met, net metering is replaced by avoided cost (ISO rate).
  • Projects approved before 1600MW goal will be given 20 years of net-metering credit.
  • MA DOER is tasked with establishing new incentive program after 1600MW goal. This may be different from the current SREC program, but will be defined by the DOER.

Downing’s Bill

  • Eliminates net metering caps except for cap of 10MW for municipal or government entities.
  • Net Metering credit would be the full credit for excess kWh, not just ISO rate.
  • Also calls for DOER to create a new incentive program after reaching 1600MW to accommodate the changing solar market.

The differences between Downing and Bakers’ bills reflect the mixed opinions presented by the Massachusetts Net Metering and Solar Task Force, which was released a report in April. National Grid opposed Baker’s small increase to the caps, claiming that it would still cost non-participating ratepayers significantly. Mary-Leah Assad, a National Grid spokeswoman also added that a 2% raise would likely by filled by October. Thus, if Baker’s version of the bill passes, the solar industry may race ahead to yet another abrupt standstill. Without a long-term solution in place, the future of the country’s number #4 solar market remains uncertain.

Still need help navigating the Commonwealth’s complicated regulatory landscape? Call our finance line (888) 235-1538 x2 or drop us a note at finance@solsystems.com. We look forward to hearing from you.

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 262MW solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments and project acquisition, to debt financing and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.

Why Asset Management is Critical to the Solar Industry: Part One

Standard Partnership_iStock_000010800164Small

What value does asset management add to a company?

As a solar company grows, it often seems like a no-brainer to build out the business development and origination teams. With more team members working on deals, there is more opportunity for new business; the value of new revenue is well understood, and the return on investment is seen as a clear win-win.  Asset management, on the other hand, has a tendency to be a cost center rather than a profit center. Given that companies spend resources on asset management without related revenue, it begs the questions, what value does asset management add to a company?  Over the course of a few blogs, we will explore this question.

The answer, though, is straightforward in one sense and as complicated as a tax equity structure in another.  As companies keep investing in new solar projects and closing deals, the end results are increasingly large portfolios of projects that must be monitored. When a deal closes – whether in solar, other renewable energy, or the traditional energy space – the project continues as a living, breathing entity.  In many cases, that means there are annual operating budgets to review, monthly and quarterly metrics to track, risks to monitor, and amendments or waivers to effectuate.  Those tasks, and the associated portfolio risk analysis or any changes from closing, are not the responsibility of the origination team, but that of the asset management team.

In this sense, the revenue ascribed to origination teams depends, in large part, on a robust asset management team.

Why Data Management Matters

Given the responsibilities outlined above, the building block of any successful asset management team is, necessarily, rigorous data management. To this end, project and site level data is collected in several ways: covenant deliverables such as production reports and financial statements, on-site monitoring systems, and interaction with the project developers and operators.  A list of some technical and financial metrics used on solar projects is below. Note: this is a small sample of the data collected for solar projects that we have closed.

Production Cash Flow Lease Service Were cash traps triggered? Distribution Amounts
Solar Resource Revenue Internal Rate of Return Was a prepayment triggered? Payment of fees
Inverter Availability Operating Expenses Return on Investment Milestone Dates Tax Rates
Performance Ratio Operating Income/Deficits Debt Service Coverage Ratio Liquidated Damages Warranty
Production Availability Debt Service Lease Service Coverage Ratio Contribution Amounts Tax Credits

In asset management, we rely on this quantitative data to monitor and analyze trends, deviations, or gaps—be they technical or financial.  The primary data from the project is analyzed to determine how the project or portfolio is performing against the benchmarks agreed upon at closing and against the budgeted figures for that period.  Therefore, it is imperative to have a high level of data integrity.  Data validation processes, quality control and utilizing a data management system and/or a workflow management system contribute to clean and useful data as the project changes throughout its useful life.  Asset management software should be able to store and report out on financial, technical and profile data of a project as well as compliance deliverables.

This quantitative analysis, though, can only tell one part of the story.  The asset manager’s responsibility is to blend quantitative reporting with qualitative information to best understand the projects, determine patterns (good or bad), and identify any risks to which the project and investment are exposed.

Once this analysis is done, the asset manager’s role is to leverage the information and work to mitigate those risks to protect the investment.  All of these functions described above are completed for each project within a portfolio multiple times a year. The Sol Systems asset management group works hard to see the success of our investors’ solar portfolios; your investment in the solar asset class is safe with us.

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 262MW solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments and project acquisition, to debt financing and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.

Approaching the Tax Credit Horizon: Where Will Commercial Solar Succeed in 2017?

Last year, solar installations in the U.S. commercial sector fell by 6 percent. The market is expected to bounce back in 2015, but there are still many challenges in financing and aggregating commercial-scale projects.

This post was co-authored by Sol Systems Portfolio Analyst Eric Scheier and originally published by Greentech Media. 

Last year, solar installations in the U.S. commercial sector fell by 6 percent. The market is expected to bounce back in 2015, but there are still many challenges in financing and aggregating commercial-scale projects.

Sol Systems has focused heavily on financing commercial-scale solar, with the same kinds of success and bruises as others. This focus mirrors a broader philosophy of ours: solving complex problems to deliver value to both investors and developers in the United States.

As such, we’re quite focused on understanding how the planned federal Investment Tax Credit (ITC) step-down from 30 percent to 10 percent will impact this market segment. It is a topic we’ve explored in the past in our two-part series “Peering Over the Horizon,” in which we discussed the continued decline in the cost of capital and the impact of the step-down in the ITC.

This article builds on that work, as well as recent reports from Morgan Stanley and a recent LCOE analysis from Lazard. We believe all of these articles are critical reading, as they provide a framework to analyze the industry. Our research reaches different conclusions because it is designed to serve our investor and developer partners, and because we disagree with previous assumptions about SREC prices, build costs and the cost of capital.

Investor returns will tighten

Not surprisingly, the reduction in the ITC means an overall smaller “economic pie” that can be split between solar developers, the EPC, the financier and the host customer. Assuming turnkey costs do not change, the ITC step-down correlates to a 3 percent to 5 percent unlevered post-tax return for the investor that is purchasing a project. This means that an investor that used to be securing a 9 percent return on their investment in a commercial project would receive a 4 percent to 6 percent IRR, if turnkey prices did not change.

Structured transactions like a flip or lease-pass-through will either scale in size (portfolio sizes will need to increase to support the same investment) or disappear. Further, structured transactions will have a reduced impact on overall implicit IRR (these structures can effectively reduce IRR by 1 to 300 basis points in certain markets currently). Given this combination, we believe that there will be more tax-advantaged capital (like utility affiliate funds) buying solar projects.

This analysis can be illustrated through a “heat graph” comparing costs of capital, PPA rates and build costs. We originally provided this graph in 2014 and have updated it below. The reader can use his or her own assumptions to arrive at a conclusion. (Click to enlarge.)

cocppaTable

The industry has matured to a point where investors are bidding on commercial projects within a 150-basis-point differential, generally between 8 percent and 9.5 percent. If build costs are not reduced from an all-in price of $2.09 per watt, as SolarCity recently accounted, investors will need to be comfortable with a 5 percent to 6 percent return for many commercial projects. That will not happen in the next 18 months. Instead, our industry needs to focus its energies on increasing build and development efficiency.

Build costs will come down

Sol Systems’ research team has run what we term our “Sol Map Analysis” to look at required build costs on a state-by-state basis, and to provide a national snapshot that summarizes the planned 2017 step-down.

This analysis runs a specific project through each state model simultaneously, calculating differences in taxes, average commercial retail electricity, SREC monetization, production tax credits, etc., to determine the break-even build costs for that state. In each iteration, we assume that the PPA is 90 percent of the expected retail electricity rate, a savings of 10 percent for the customer. Our model utilizes proprietary forward SREC curves based on those we see in the market.

We contemplate a tax-efficient buyer acquiring these projects. Structured transactions are slightly more efficient, generally lowering the overall effective cost of capital 100 to 300 basis points for projects depending on state incentives and electricity prices.

We ran four different scenarios in our model, with the worst-case scenario representing an 8 percent cost of capital, and the best case 6 percent. We do not make assumptions about build costs, but instead offer a state-by-state break-even build cost based on a stated investor hurdle rate and the average commercial retail electricity rate for the state.

We use EIA retail electricity rates, which, critically, do not include a consideration of demand / energy split in any given state. We have excluded Alaska, Hawaii and the District of Columbia from these charts, but those regions are on the extremes, one would expect, in all scenarios.

Similarly, we have excluded states where power-purchase agreements (PPAs) are either illegal or unproven, according to DSIRE. Finally, we measure addressable market by load, and not by available space or other technical limitations. These market sizes are most helpful for comparison purposes.

Mapping the future: 2015 commercial market

Build costs: $2.10

Cost of capital: 8 percent

ITC: 30 percent

Approximate addressable market: 258 gigawatts

Utilizing relatively conservative cost of capital estimates of 8 percent, the United States looks like a relatively attractive place for commercial solar. Developers can build solar at a realistic price and commercial customers can save.

It is a challenging market, but one in which a properly aligned developer can succeed. We utilize best-in-class build costs of $2.10, which is aggressive but realistic for larger commercial systems. We believe that an 8 percent hurdle rate is realistic for larger systems. With these assumptions, the addressable commercial market in the United States is 258 gigawatts in our state-by-state analysis.

8_percent_cost_of_capital

2017 Aggressive scenario: 30% ITC with declining costs of capital and build costs

Build costs: $1.80

Cost of capital: 6 percent

ITC: 30 percent

Approximate addressable market: 437 gigawatts

In the best-case scenario, we assume that the commercial segment will secure acquisition capital at a 6 percent IRR for the investor, and that the 30 percent ITC will not change. We also assume that build costs are reduced dramatically in the next 18 months to $1.80, from $2.10.

This could happen as the industry expands and investors become increasingly comfortable with the asset class, but this is a full 200 basis points below where investors are buying large commercial projects today. Structured portfolios would be most likely to achieve this hurdle for investors.

If the industry can adjust this quickly, reducing both the build costs and also the cost of capital for commercial projects — and the ITC does not step down — the addressable market explodes in 2017 to 437 gigawatts, or almost a doubling of market size. Texas, Arizona and New Mexico, all relatively modest markets at the moment, become critical new commercial solar markets.

6_percent_cost_of_capital_solar

2017 positive case: 10% ITC, aggressive drop in cost of capital and declining build costs

Build Costs: $1.90

Cost of Capital: 6 percent

ITC: 10 percent

Approximate Addressable Market: 239 gigawatts

A potential (but optimistic) scenario, would include the step-down to 10 percent in the ITC, and a less aggressive reduction in cost of capital and build costs. In that scenario, we see the commercial addressable market shrink from 258 gigawatts to 239 gigawatts, a small decrease of 7 percent.

We would note that this is an aggressive drop in the cost of capital of 200 basis points, but a fairly realistic build cost as developers scale and equipment costs come down. In this scenario, markets remain fairly stable, with a reduction in penetration.

6_percent_capital_cost

2017 base case: 10% ITC, declining cost of capital and declining build costs

Build costs: $1.90

Cost of capital: 7 percent

ITC: 10 percent

Approximate addressable market: 138 gigawatts

Unless there is a policy bridge to extend the ITC, we think this is the realistic scenario for commercial solar. In this scenario, the cost of capital naturally declines as project economics become less reliant on tax benefits. There is also slight decline of capital, and together they lead to a weighted average cost of capital for these systems of 7 percent. There is also a continued drop in solar build costs based on scale and technology.

As a result, we see a decline in the addressable market from 258 gigawatts to 138 gigawatts, a 47 percent reduction in the market. The commercial segment retreats to core markets, including California, the Northeast, and the Mid-Atlantic.

7_percent_solar_cost_of_capital

2017 worst case: 10% ITC, no decline in cost of capital and slight build-cost drop

Build Costs: $1.90

Cost of Capital: 7.5 percent

ITC: 10 percent

Approximate Addressable Market: 138 gigawatts

Finally, the worst case scenario is a market in which the ITC steps down to 10 percent and investment hurdles do not change. In that case, the commercial segment survives in a much smaller pool of states, primarily driven by high electricity prices and SRECs.

75_cost_of_capital_solar

We should extend the 30% ITC

As we approach the expiration of the ITC, we are able to more accurately predict the impact that it will have on the solar industry, and where the industry needs to improve in order to survive. When asked, many solar executives maintain that they are not worried about the expiration of the ITC, and even go so far as to say that it would be good for the industry. We disagree.

The “good for the industry” hypothesis is premised upon the assumptions that 1) there will be more cash to lever, and 2) there will be lower transaction costs. We won’t argue either of those points.

However, a drop in the blended cost of capital for a project from 8 percent with a 30 percent ITC to even 5 percent with a 10 percent ITC does not yield a higher, or equal, takeout price for the developer, regardless of transaction costs. Nor does it produce a better structured return for a tax equity investor or sponsor. We encourage those of you who think otherwise to model an actual project with whatever aggressive debt terms you can imagine.

We point out that the original reasoning behind the 30 percent ITC also still holds true — it offers solar operators a rough approximation of the tremendous tax benefit offered to fossil operators, who simply write off their fuel as an expense.

Fewer markets, but large markets

The good news is that while only a limited number of states will be attractive for developers looking to do commercial solar, those states represent a disproportionate part of the addressable market. Based on current state electricity rates, and current estimated build costs, we estimate the current addressable U.S. market for commercial solar to be 200-300 gigawatts.

With the ITC step-down, and with decreasing build costs, that market is likely to shrink to between 150 and 250 gigawatts (which, it is worth noting, may not be a shrinkage at all). The heat chart below provides some useful parameters for that analysis.

addressableMarketPivotTable

While there may be a reduction in the current market, we estimate that reduction to be around 20 percent to 35 percent, not a wholesale destruction. We make a number of conservative assumptions about state incentives and the viability of PPAs that will probably be revised in favor of solar over time.

Additionally, as overall construction and development costs come down because of scale and technological development, and as storage technologies enable solar to viably attack demand as opposed to merely energy charges, dormant state markets will re-emerge.  Finally, the addressable market will expand even further as industry participants like ourselves become better at evaluating “off-credit” hosts.

It is clear from this analysis and others that all market participants hold the future of the industry in their hands: smart investors will become more comfortable with the asset class, sophisticated financiers will lower transaction costs, developers and EPCs will streamline their processes, and suppliers will continue to drive down input costs.

We say “will” because the commercial market has such enormous untapped potential: the industry has installed fewer than 10 gigawatts of the hundreds that the market may be able to support. We fully anticipate that the commercial market will be a large part of the solar future.

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 262MW of distributed generation solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments and project acquisition, to debt financing and SREC portfolio management. For more information, please visit www.solsystems.com.

PJM Capacity Performance: Hochi Juhotchi, or Kagamoosha?

This post was co-written by Senior Director, Project Finance Colin Murchie.

From New Jersey to Northeastern North Carolina, a growing number of generators in the PJM region are connecting to the wholesale side of the grid instead of behind the meter. For a sufficiently savvy solar developer, this can offer significant streamlining benefits compared to typical customer-sited development. By effectively decoupling site from load, more sites can be developed more quickly. However, wholesale generators also face a far more complex and dynamic revenue picture than a simple fixed-rate per MWh contract with a customer on-site. In particular, PJM’s multibillion-dollar capacity market has recently transitioned to a scheme with strong parallels to a mid-1990’s Chris Farley sketch. (Watch it, despite its cultural insensitivity, or the rest of this entry will make even less sense than it otherwise would.)

Capacity market basics

Through the “Reliability Pricing Model” or RPM, PJM region generators receive payment not only for energy produced (MWh), but also for having capacity (MW) available during peak or emergency events – during the hot summer afternoons when demand is highest, for example, or during the polar vortex.

In the past, some utility-scale solar has participated by bidding into the auctions at zero, and being credited with about 38% effective capacity (that is, a 1MW AC generator was treated as a 380kW generator). Actual performance would be measured during the five highest demand hours systemwide, almost invariably summer afternoons, and generators that hit their mark (i.e. a 1MW solar energy system that was producing at least 380kW during those hours) received payments.  Averaged across a year, these might add up to around $10/MWh – a meaningful amount – though one that many solar investors don’t take into account. In the less likely event of underproduction, penalties were minor; generators would just forfeit a portion of future payments. It all seemed like a lark set up by the hotel concierge.

The new plan: Capacity Performance

Then came the polar vortex. While nuclear and renewable generators reliably provided capacity to the market at typical historical levels, many fossil generators failed their obligations. The result was major instability in the power markets, and a push to reform facilitated by financially struggling nuclear generators who argued that they were not being compensated fairly for their reliability.

Accordingly, in early June, FERC approved an expensive new plan, the Capacity Performance Proposal. The decision was described as a “dream come true” for electricity generators. Although FERC Chairman Bay dissented with the approval, implementation is underway. PJM manual revisions, currently available in draft form here, should be finalized on July 23 despite continued stakeholder confusion and contention. PJM’s own analysis suggests that an extra $1.4-4 billion in capacity payments will flow to generators per year under the new structure with higher, but not commensurate, penalties for nonperformance. While market participants are scrambling in order to take part, most of the solar world is unaware of the significance.

The initial proposal to overhaul the capacity market was frankly grim for intermittent generation, to the point of essentially removing all compensation from renewable generators; their historically decent capacity performance (CP) would have been socialized among load-serving entities for free. Some intervenors (hat tip: Community Energy) got after PJM and pushed to make what was ultimately approved by FERC a much better solution.

Specifically, rather than simply being handed a 38% capacity factor and being measured against that yardstick, individual solar generators will pick their own exposure. Should they perform at that level, they’ll be paid the auction clearing price. Should they exceed it, they’ll be paid a share of any penalties from those who fall short.

“Nana ju, hiaku, hochi juhotchi.” – is the new RPM found money?

At first blush, it is possible for solar generators to obtain significant payments from the auction even without having a clear idea of how to do so. This is firstly because overall capacity market prices are anticipated to rise. Secondly, even across newly-expanded performance hours that include an explicit winter component alongside the typically-summer 5 CP, historic performance of solar as a capacity resource should be in the same neighborhood as it was previously. Preliminary analysis carried out by PJM at the behest of Community Energy indicates that solar, in fact, could do better under the new regime than the old. Solar generators can aggregate and even pair with other resources (e.g. wind) to strengthen their capacity, though the details of these coupled bids are still fuzzy and will likely be difficult for many solar facilities to arrange.

“Kagamoosha!” – Confusing and severe consequences for nonperformance

However, penalties for nonperformance will theoretically be stiffer for solar and could prove difficult to predict in advance. PJM’s view is that potential bidders need to be looking at a significant downside to make accurate decisions. Penalties are calculated at a rate equal to the annual net cost of new entry (Net CONE) divided by 30, with an annual stop-loss at 150% of Net CONE. (Further Net CONE explanation available here.) By contrast, the potential upside that flows to generators who underpromise and overdeliver could be low. By shifting to a pro-rata share of any penalties paid, in a market structure that makes paying penalties very undesirable, the system pushes for generators to develop their most accurate possible bid.

Kwakisurpineku?  Or Kwakisurpipiku?  Subtle differences lead to shocking outcomes

Overall, the market has become undoubtedly more complex – and it wasn’t simple in the first place. A simple error in a difficult-to-understand market structure could convert a big win into a serious shock. Potential wholesale bidders in the PJM market will have to develop a significantly more subtle capacity bidding strategy than many have today – or face the loss of what could be 20% or more of their revenue. The first real test will come in early August’s capacity auction for 2018/19 delivery, in which PJM intends to procure 80% of necessary capacity with the Capacity Performance obligations. By 2020/21, the transition is expected to be complete. Sol Systems anticipates that some owners of utility-scale solar assets may watch from the sidelines while the market shifts. However, developers and asset owners who are proactive enough to participate intelligently may end up winning big.

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for over 200MW of distributed generation solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments and project acquisition, to debt financing and SREC portfolio management. For more information, please visit www.solsystems.com.

Sink or Swim in Rhode Island: Another Year of Renewable Procurement in the Ocean State

Starting on June 15th, 2015, National Grid will once again be accepting applications for the latest version of the RE Growth Program in Rhode Island. National Grid initially launched the RE Growth program in June 2011, with a goal of reaching 40MW of renewable energy procurement in Rhode Island by the end of 2014. The 2015 program plans to allow customers to sell generation under long-term tariffs at fixed prices. The program is open to solar, wind, hydro, and anaerobic digesters.

Previous Voyages

Starting off slow, the first two procurements of 2014 only totaled 4.5MW of renewable energy. The third procurement, however, totaled about 11MW, bringing the total amount of renewable energy to 15.5MW, split among 18 contracts.

2014 Procurements 1 2 3
Contracts Awarded 3 3 12
Total Capacity 1.9MW 2.6MW 11MW

The more successful third procurement pushed the total for the 2011-2014 procurements to 38.6MW, just shy of the 40MW goal. While both wind and medium solar (26-250kW) exceeded their target allocations of 1.5MW each, small (<25kW) and large (1-5MW) solar did not meet their targets of 500kW and 8.5MW, respectively. Small hydroelectric and anaerobic digestion were also very under-represented. There were no hydroelectric systems and only one anaerobic digestion facility awarded a contract in 2014.

One change to note is that during the 2014 procurements, the amount of contracts awarded in the third round was 12, compared to the first two rounds with 3 contracts each. The weighted average price awarded for solar also rose from 16.7 cents/kWh during the first procurement to 20.076 cents/kWh during the third. Because the program was not filled, those who did enter received higher pricing.

What’s Keeping People Out?

Why hasn’t Rhode Island’s latest incentive program been overwhelmed with applications? Non-participation could be due to a number of factors such as program structure, difficulty in finding sites, or lack of knowledge of the program. Developers may have also migrated to more cash rich Northeastern states such as Massachusetts, where they could build a larger or more lucrative pipeline of projects. Still, with development stalled in Massachusetts, don’t cross this state off from your list; it has the potential to be a great market to fit in a couple, although smaller, bonus projects each year.

Setting Sail for 2015

Announcing the RE Growth program structure for 2015, National Grid set new annual targets starting with 25MW for 2015, increasing to 40MW each year for 2016-2018, eventually reaching a total of 160MW by 2019. Pursuant to recommendations from developers and stakeholders, National Grid has changed the contract terms from 15 to 20 years, hopefully making the program more appealing and projects more financeable. The new program will also be implemented through a tariff rather than contracts. In an innovative move reflecting recent German practices as they transform into a scheme with more customer participation, and reminiscent of recent Massachusetts legislative proposals, qualifying facilities can be directly paid the tariff or integrate these tariff payments with net metering for the kWh value of their usage.

Selection Process

National Grid will be accepting small-scale solar applications on June 15th, and then will accept applications for the remaining classes between August 3 and August 14. For the 2015 enrollment period, the Distribution Generation Board set ceiling prices and capacity targets. (see table.) Small-scale and medium solar projects will receive a Standard PBI and will be selected on a first come, first served basis. Large and commercial-scale projects must submit a competitive bid at or below the ceiling price. These projects will be selected by lowest-price first. If any projects bid the same price and would exceed the specified target capacity, National Grid will select the project(s) that appear to be farthest along and that are most likely to be deployed.

Classes and Targets Applicable to the 2015 Enrollment

 Renewable Energy Class

(Nameplate kW)

Annual

Enrollment Target (Nameplate MW)

Ceiling Price/Standard PBI

(cents/kWh)

 

[20-yr Tariff Terms except *]

Small-Scale Solar – Host Owned

(1-10kW DC)

3.0

41.35

(*15-yr Tariff)

Small-Scale Solar – Host Owned

(1-10kW DC)

37.75

(*20-yr Tariff)

Small-Scale Solar – 3rd Party Owner

(1-10kW DC)

32.95

Small-Scale Solar

(11-25kW DC)

29.80

 

 

Renewable Energy Class (Nameplate kW)

Enrollment

Target (Nameplate kW)

Standard PBI

applicable to Medium Solar only (cents/kWh)

Ceiling Price w/ITC (cents/kWh)

Ceiling Price w/ PTC (cents/kWh)

Ceiling Price w/o ITC/PTC (cents/kWh)

Term

of Service (years)

Medium-Scale

Solar

(26-250 kW DC)

4,000 24.40 24.40

N/A

N/A

20

Commercial-

Scale Solar

(251-999 kW DC)

5,500

N/A

20.95

N/A

N/A

20

Large-Scale

Solar

(1,000-5,000 kW DC)

6,000

N/A

16.70

N/A

N/A

20

 

Fair Winds and Following Seas?

While the Rhode Island market has been understated in the past, highly creditworthy utility off-take and above-market rates will continue to appeal to investors, providing sufficient capacity can be won or aggregated in either the current program or future RE Growth Tariff program. We expect for this market to remain especially attractive to developers looking for opportunities as the Massachusetts market has stalled, and New York has fallen short of expectations.

Interested developers should contact our project finance team at finance@solsystems.com or (888) 235-1538 ext. 2 to see how Sol Systems can help secure financing for Rhode Island solar projects. Sol Systems has previously facilitated financing for solar projects in Rhode Island with feed-in tariff contracts.

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for nearly 200MW of distributed generation solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments and project acquisition, to debt financing and SREC portfolio management. For more information, please visit www.solsystems.com. 

What Game Theory Can Tell Us about Middle Market, C&I Solar

The decisions made along the path of solar project finance and development have major implications for the growth –or stagnation—of the commercial and industrial solar market.  How does a developer choose the right financier for their project, or an investor decide to interact during contract negotiations? Together, what impacts do these decisions have on the value chain?

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A Sixth YieldCo Goes Public as the Asset Class Has its First Anniversary

Today TerraForm Power Inc. (TERP), a spinoff from SunEdison (SUNE), had its IPO making it the sixth yield corporation or “yieldco” to go public since NRG Yield (NYLD) became the first yieldco one year ago.  High dividend yields and rising stock prices have encouraged a wealth of investment in these new companies. However, investors should be aware of the differences that exist between yieldcos and longer term risks associated with the application of this new corporate structure to the power generation industry.

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Palo Alto Feed-in Tariff Stalled by Lucrative Rebate Program

The City of Palo Alto Utilities (CPAU) has established various programs in the last few years to encourage solar development in the city. Despite space constraints that limit most projects to roof mounts and carports, the administration promotes two distinct initiatives designed to meet the statewide Renewable Portfolio Standard of 33% by 2015:

Photo Credits: Richard Masoner

Solar Panels at the City of Palo Alto Municipal Service Center

-       Palo Alto CLEAN, a feed-in tariff program

-       PV Partners Program, a rebate program that supports net energy metered (NEM) systems

On March 2012, CPAU launched the Clean Local Energy Accessible Now (CLEAN) program, in hopes to expand the production of cost-effective, clean local energy. This was an important step towards greater energy self-reliance, and for the city’s goal of supplying 33% of its electricity with renewable energy by 2015. The feed-in tariff pilot program was initially capped at 4 megawatts and it was targeted to medium-sized commercial rooftops with a minimum size of 100 kWs per installation. After opening the program for applications in April 2012, no applications were received at the initial rate of $0.14/kWh.

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Maryland General Assembly Passes Solar RPS Acceleration Bill

In an effort to take a firmer commitment towards a clean energy future, the Maryland Senate passed legislation (37-9) that will accelerate the requirement of 2% solar energy generation in Maryland by two years. As mentioned in a previous blog by Sol systems, SB791/HB1187 were drafted to address potential SREC market volatility caused by the design of the former Renewable Portfolio Standard. Termed by supporters as the Solar Jobs Bill, Maryland can expect over $3 billion in investments to the state, as well as the creation of over 10,000 jobs- volumes significantly higher than those of the previous RPS.

Sol Systems currently offers three types of SREC agreements for Maryland solar systems (both photovoltaic and solar thermal): Sol Brokerage, Sol Upfront, and Sol Annuity. Please email info@solsystemscompany.com or contact your solar installer for more specific pricing.

About Sol Systems
Sol Systems is a solar energy finance and development firm that was built on the principle that solar energy should be an economically viable energy solution. With thousands of customers and hundreds of partners throughout the United States, Sol Systems is the largest and oldest SREC aggregator. We provide homeowners, businesses, solar installers, and developers with sophisticated financing solutions that help make solar energy more affordable. Sol Systems also helps energy suppliers and utilities manage and meet their solar RPS requirements efficiently by providing them with access to diverse portfolios of SRECs. For more information, please visit http://www.solsystemscompany.com.

Maryland General Assembly on Track to Pass Legislation to Accelerate the State’s Solar RPS Requirement

Due to sun-setting Federal incentive programs for solar energy and the current structure of Maryland’s Renewable Portfolio Standard (RPS), Del. Sally Jameson (D-28) and Sen. Rob Garagiola (D-15) proposed legislation that attempts to address this concern. House Bill 1187 will accelerate the solar carve-out expecting utilities in Maryland to achieve the 2% solar energy generation requirement by 2020, instead of the current requirement of 2% by 2022.  The belief is that the current standard will create a glut, or oversupply, of SRECs due to a higher annual increase in solar energy after 2016. This could distort supply and demand of SRECs, thus making the market volatile and less predictable.  HB 1187 aims to provide stability to a potentially volatile market by “smoothing” out the growth of solar in Maryland.

HB 1187 does not increase the overall solar requirement for Maryland; rather it accelerates the achievement of 2% solar by two years (see chart below for comparison). Moreover, although from 2013-2020 there will be yearly increases in demand, as compared to the current requirements, the end goal and requirements for solar will not be affected.

Energy Year Current Requirements Proposed Requirements
2012 0.10% 0.10%
2013 0.20% 0.25%
2014 0.30% 0.35%
2015 0.40% 0.50%
2016 0.50% 0.70%
2017 0.55% 0.95%
2018 0.90% 1.40%
2019 1.20% 1.75%
2020 1.50% 2.00%
2021 1.85% 2.00%
2022 2.00% 2.00%

The estimated benefits of this acceleration could not only create a more stable market with a steadier roadmap of SREC prices, but will also extend into the Maryland economy as a whole. Based upon industry information, HB 1187 could create over 10,000 jobs across the Maryland economy by 2018. Industry predictions state that the legislation could incentivize over $3 billion in investment and $144 million in revenue for the State as a result of job creation.

What does this mean for the ratepayer? The legislation was designed with a 1% price impact on the customer. HB 1187 anticipates a residential compliance cost of $0.19 per month and an average commercial electrical bill increase of 0.11%.  However, the proposed RPS will actually create savings for the ratepayer when compared to the costs incurred from the current RPS schedule.

HB 1187 passed the House with unanimous support on March 21, 2012 and is currently proceeding through the Senate. After having initially failed the Senate Finance committee, SB 791 managed to pass through the committee 8-2 upon reconsideration during a vote late March 29, 2012. After a final lobbying effort by stakeholders and advocacy groups, SB 791 passed upon second reading in the Senate on April 2nd and will undergo its third reading tonight, April 4th, when it is likely to become law. Sol Systems will post an update as soon as more information is released on the status of the bill.

Sol Systems currently offers three types of SREC agreements for Maryland solar systems (both photovoltaic and solar thermal): Sol Brokerage, Sol Upfront, and Sol Annuity. Please email info@solsystemscompany.com or contact your solar installer for more specific pricing.

About Sol Systems
Sol Systems is a solar energy finance and development firm that was built on the principle that solar energy should be an economically viable energy solution. With thousands of customers and hundreds of partners throughout the United States, Sol Systems is the largest and oldest SREC aggregator. We provide homeowners, businesses, solar installers, and developers with sophisticated financing solutions that help make solar energy more affordable. Sol Systems also helps energy suppliers and utilities manage and meet their solar RPS requirements efficiently by providing them with access to diverse portfolios of SRECs. For more information, please visit http://www.solsystemscompany.com.

Life After the 1603 Grant: the Road Ahead

The following is a mutli-part series on the Cash Grant and the Road Ahead. It is part of Sol Systems‘ continuing efforts to provide the industry with the information and ideas (where we can) that we believe it needs to continue to succeed. For additional resources on project development, we recommend you join the SolMarket community, which provides a number of informational resources and the SolSmart suite of legal documents.

In February of 2009, the federal government passed ARRA, and the 1603 Investment Tax Credit (ITC) Cash Grant program with it. The Program effectively transformed what was traditionally an investment tax credit into a cash grant, awarded by the treasury, within 60 days of commercial operation. It was perhaps the single most important piece of legislation for solar in recent history, spurring huge growth in the sector, recently estimated to be 69% year over year. In January of 2012 the 1603 ITC Cash Grant will expire, and with it the ability for developers and investors to secure the cash grant in lieu of a tax credit.

So what’s next?  Well, let’s take a look.

Part I: Looking Back

Under the Emergency Economic Stabilization Act of 2008, a 30% tax investment credit for qualifying renewable energy projects was extended through 2016, allowing owners of solar projects to offset 30% of a solar system’s cost through tax credits.  So long as a system owner had enough tax liability over the course of 5 years, he or she would be able to deduct 30% of the system’s gross cost from their federal taxes.

Because most solar project companies or developers working on commercial and utility-size PV projects do not generate enough taxable profit on their balance sheets to utilize the 30% tax investment credit (ITC), they had to seek a financial intermediary with the necessary tax liability to buy a stake in the project company and monetize these tax credits, what is commonly referred to as “tax equity investors”.  Tax equity investors are effectively companies with large balance sheets, traditionally banks and more recently larger corporations, which purchase tax credits to shelter otherwise taxable income, while also providing an essential financing tool for large renewable projects.

In 2007, the Solar Energy Industries Association (SEIA) estimated there were up to 28 tax equity investors, primarily financial institutions led Morgan Stanley, JP Morgan and others.  However, the collapse of Lehman Brothers and the financial crisis of 2008 effectively ended most of these companies participation in the tax equity market for renewables.   Several companies, such as AIG and Prudential, departed the tax equity market entirely because of bankruptcy or uncertainty about whether they would have sufficient taxable income.

II. The 1603 Program

In response, President Obama approved the Section 1603 Cash Grant Program (as part of the American Recovery and Reinvestment Act of 2009), to effectively stabilize renewable energy market by providing $1.9 billion of cash grants in lieu of tax credits.  Under the 1603 Program, owners of a renewable energy system could simply apply for a cash grant to cover 30% of the system’s cost, regardless of their tax liability.

The 1603 Program catalyzed the solar market, with approximately 80% of solar projects opting for the cash grant, driving growth of 104% between 2009 and 2010 in the United States. As of mid-August 2011, 87% (2,095) of the 2,410 cash grants awarded under the 1603 program were provided to solar energy projects (although only 27% of the nominal value if these grants). Since October of 2010, the federal government has invested over a billion dollars in solar projects through the 1603 Grant Program.

Unfortunately for the solar industry, the Section 1603 Program is set to expire at the end of this year, and it appears highly unlikely that it will be renewed again.   With the expiration, interested parties without the necessary tax liability will again have to rely on tax equity investors to fully monetize the ITC.   The problem is twofold: (i) the tax equity market has not yet fully recovered and there are only an estimated 10 to 15 investors looking for tax equity deals and (ii) integrating tax equity into deal structures will significantly increase transaction costs, raise the costs of development, and potentially limit smaller deal sizes.

The result will be a bottleneck in 2012-13, where a substantial number of solar developers and other interested parties look to construct or own commercial-sized solar system, but only a select few can secure the requisite tax equity financing. This will mean a number of projects will not be developed, and those projects that do secure tax equity will see increased yields. Some projects are likely to seek safe harbor under the 1603 Program by securing 5% of the total costs of the system, but this strategy brings with it its own challenges.

So now, as we look towards the horizon, what’s next? What will happen to this 80% of the industry opting for the cash grant? Companies like Sungevity, Sanyo and Vivent are quickly lining up tax equity for the upcoming year, and some believe market growth will slow by up to 50% in the second half of 2012. Might these challenges be mitigated by solar modules priced below $1.10/watt? What creative solutions will our industry implement to meet these financing challenges?

Please join us(and others) next week for Part II of this Series: “Life After the 1603 Grant: Looking Ahead”

After Solyndra: Renewable Energy Financing 3.0

Sol Systems CEO Yuri Horwitz and Associate Andrew Gilligan were featured in yet another article on AOL Energy!

Innovations in renewable energy finance have begun to address an additional obstacle to project development — linking project developers to potential investors.

Solar finance firm Sol Systems launched an online platform, SolMarket, on 31 August. SolMarket is designed to add a level of transparency to the solar financing market by easing communication between project developers and potential investors.

“The communication channels, the financing channels, the due diligence channels were all disrupted and fragmented,” Sol Systems CEO Yuri Horowitz told AOL Energy.

Participation in the platform appears to be growing. In the first two weeks of operations, SolMarket’s partnership funds — those that have agreed to use the platform for due diligence purposes — rose to $400 million from $350 million.

Much like a social networking site, each company and project has a searchable profile that it can make available to potential investors. This allows both sides to more efficiently identify partners or projects of interest.

“They’re not picking up the phone to call 50 developers or 50 investors,” Horowitz said. “That in and of itself is going to save the industry huge amounts of money.”

Resources for solar firms include standardized documents which, when developed by independent firms, can be costly and may not include the information that investors consider vital, as well as standardized analysis tools to evaluate a project’s performance under different financing scenarios or off-take prices.

The site also offers member discounts on solar modules, which may prove particularly valuable to “mid-tier” developers of projects in the 50kW-1MW size range.

“Group purchases are really focused on those small systems, providing them with pricing that they otherwise could not get,” Horowitz said. And they seek to offer the advantage of volume to SolMarket‘s partners on the manufacturing side.

“There’s a lot of room there to grow, but what’s really holding that market back are the transaction costs,” he said.

Read more about SolMarket and renewable energy financing.

Solar Decathlon Provides Opportunity for Students Hoping to Enter the Green Economy

This week marks the kick-off of the U.S. Department of Energy’s fifth Solar Decathlon challenge. The competition, meant to inspire college students to participate in the emerging clean energy economy, will bring twenty collegiate teams to Washington DC to display their innovative solar designs after two years of planning and design. The goal is for these solar-powered homes to be energy efficient, aesthetically appealing, and affordable.

Students from Middlebury College install solar panels from SunPower for the 2011 Solar Decathlon.

Students from Middlebury College install solar panels from SunPower for the 2011 Solar Decathlon.

Collegiate teams will travel from across the world to compete in this year’s challenge, with teams ranging from China to Florida, Belgium to Massachusetts. Though the decathlon teaches engineering, architectural, and design skills, students come from interdisciplinary academic backgrounds. Team Middlebury from Vermont is comprised of over 85 students from more than 25 different academic disciplines. The Middlebury team, or “Self-Reliance,” built their New England farmhouse from local materials with low life-cycle costs such as sustainably forested timber and Vermont slate. Solar design features include passive heating and cooling and a solar array consisting of two hot water collectors and 30 solar panels that will produce 7930 Kwh of energy annually.

Teams will be judged on affordability, architecture, market appeal, engineering, communications, comfort, and more. Team Massachusetts hopes that their 28-panel photovoltaic array of monocrystalline silicon cells will lead them to victory, while Hawaii’s wave-shaped design is sure to earn them creativity points with the judges.

These innovative solar designs will be displayed in West Potomac Park in Washington DC from September 23rd to October 2nd.  The event is open to the public free of charge. Visitors are encouraged to tour the houses to learn more about how they can incorporate these innovative solar ideas and energy efficiency practices to save money on their utility bills.

Sol Systems would like to wish all the collegiate teams the best of luck in the competition. With the global solar market projected to increase by 130% by 2020, we look forward to seeing your new skills put to use in the emerging clean energy economy.

Sol Systems featured on AOL Energy!

Sol Systems’ Andrew Gilligan was featured in AOL Energy! Check out the article below.

Hope Shines Through Bankruptcy Clouds for US Solar Sector

A spate of bankruptcies in US solar manufacturers is not a sign of imminent industry collapse, but the inevitable result of competition in a new and evolving market, according to industry representatives.
Solar manufacturer Solyndra announced its intention to file for bankruptcy on the final day of August, following bankruptcy filings by Evergreen Solar on August 15 and SpectraWatt on August 19. The three firms’ failures prompted a flurry of commentary about the challenges facing US solar manufacturing, and prospects for the sector’s survival.
But solar industry representatives suggest that this is just part of the inevitable weeding out of firms that are unable to compete as the market landscape changes. Solyndra’s bankruptcy was “an anomaly…That’s one of the gazillion technologies out there for solar. Some are going to make it, and some aren’t,” founder of American Council on Renewable Energy (ACORE) Mark Riedy told AOL Energy at the Georgetown University Energy and Cleantech conference on September 2, 2011.

All Eyes East

Competition has intensified for solar panel manufacturers as cheaper Chinese modules have become more widely available. Manufacturing costs are lower in China, due in large part to relatively cheap labor and low-cost loans from China’s state-dominated banking system.

“It’s not like they’re making huge profits either, but they can probably take on more”, said Andrew Gilligan, an associate with solar finance firm Sol Systems.

Another factor that has driven down costs is a reduction of feed-in tariffs in some European countries, according to Gilligan.

“The demand they thought was going to be there in Europe for solar has drastically been reduced in 2011,” he said.

Solar manufacturer and project developer SunPower‘s investments in Italy were hit when the government reduced feed-in tariffs in response to debt crisis, according to project development analyst Brian Bailey.

“SunPower basically lost a major market, and we’ve been moving modules to other markets and trying to fill the gap,” Bailey said at the conference.  Sol Systems' Andrew Gilligan was featured in AOL Energy! Check out the article below.

The Problem With Policy

SunPower’s experience in Italy also highlights the importance of policy risk in the solar industry, as firms are still working towards lower costs that would allow them to compete without government incentives.

Intensified cost competition has not driven every player out of the market. Integrated firms like SunPower and Q-Cells control solar power developments from manufacturing to project implementation, and are less sensitive to manufacturing margins.
The Money Still Flows

And SunPower and Q-Cells have both managed to attract capital, despite uncertain economic conditions.
 

Q-Cells is employing innovative means of raising project funds, such as going through a traditional project finance route but “wrapping” it in an insurance policy, according to director of new market development Nick Chaset. A wrap provides a guarantee against potential losses.

“We’ll provide a parental guarantee as a publicly traded company or we’ll go through a third party like [insurance company] Zurich,” Chaset said.

SunPower is continuing to fund projects using power purchase agreements, as well as lease financing, according to Bailey. The company’s creditworthiness benefits from French oil major Total‘s decision, announced in April, to buy 60% of the solar firm’s shares and provide $1 billion in credit support over five years.

“We have one of the strongest balance sheets in the world behind us”, Bailey said.

And the companies’ solid track records give them a leg up over less established firms.

“Big investment banks, financial institutions aren’t interested in taking risks on a new developer,” said Gilligan.

Two Certainties: Natural Gas And Taxes

But the US solar industry may face additional challenges in the coming years. One of the primary drivers behind a recent boom in solar projects is the option for solar developers to receive a 30% investment tax credit in the form of a cash grant, according to Gilligan. He does not expect the cash grant option to be renewed next year, which would force solar project developers to seek tax equity financing, which may not be as readily available.

And if the price of US natural gas fails to rise, it could act as a barrier to development of all renewable fuel generation sources.

“As long as this natural gas price stays around $4…it’s so cheap that it’s not going to be a good financial decision to build big wind and solar farms,” Gilligan said.

But Riedy argues that there are US solar manufacturers with the potential to survive the culling process by advancing solar technologies and achieving the necessary cost reductions.
“There’s a lot of guys that have really good stories to tell in the solar space and they’re up, they’ve got their projects going, they’re manufacturing panels, the panels are starting to compete with the Chinese,” Riedy said.
Ultimately, any firm that can keep its costs down and provide a reliable product may outlast its competitors.
“Cost is always the key driver,” said Booz Allen Hamilton energy associate David Brown.

Sol Systems Issues Call for Solar Projects – New Project Finance Platform Now Has $400 Million in Available Funding

Sol Systems Issues Call for Solar Projects – New Project Finance Platform Now Has $400 Million in Available Funding

Washington, DC: September 14, 2011 – Less than two weeks after launch, Sol Systems is proud to announce that its new solar finance platform, SolMarket, has increased from $350 million in available investment dollars to $400 million.  In addition, reception by solar installers and developers across the country has been overwhelmingly positive.  SolMarket’s network now includes over 180 companies and 300 users.

SolMarket is a financing platform that will catalyze investment in solar energy projects nationwide by transforming how solar projects are financed.  SolMarket provides investors and developers with the tools they need to efficiently originate, evaluate, finance, and construct renewable energy projects.  It provides a standardized origination platform, a document library, modeling software, and a standardized document suite.  SolMarket will also offer developers group purchase discounts for solar modules and other equipment.  There are no costs for developers to participate in SolMarket.

“We talk to hundreds of solar developers about prospective commercial and utility-scale projects, and unfortunately, many of these solar projects are never built due to an inability to efficiently locate financing,” said Yuri Horwitz, CEO of Sol Systems.  “We have created SolMarket to help drive efficiencies into the solar market and connect investors and developers effectively.  SolMarket will reduce the cost of financing transactions and enhance the tempo of solar project development.”

SolMarket is currently seeking projects ranging from 50 kW to multi-megawatts in size.  Solar developers are encouraged to submit their projects prior to September 30th, when investors will get their first look at projects.  Projects entered prior to this date increase their visibility and the likelihood of getting included in the investors’ 2011 portfolios.

Sol Systems invites interested solar developers to attend a SolMarket webinar, hosted every Tuesday, Wednesday, and Thursday during the month of September at 2 pm EST.  For more information, please email info@solmarket.com or visit www.solmarket.com.

About Sol Systems

SolMarket is a wholly owned subsidiary of Sol SystemsSol Systems is a Washington D.C. based solar finance firm, and the largest solar renewable energy credit (SREC) aggregator in the nation, with over 2,300 customers and over 20 MW of solar capacity under management.  Through its SREC offerings, it has promoted the development of the solar market by providing long-term financing options for SRECs, facilitating over $100 million in solar development.

Contact:

Ms. Sudha Gollapudi, Director of Strategic Partnerships

info@solmarket.com

888-765-1115 x1

Sol Systems Issues Call for Solar Projects – Launches Project Finance Platform with $350 Million in Available Funding

Washington, DC: August 31, 2011 - Sol Systems today announced the launch of SolMarket, a new financing platform that will catalyze investment in solar energy projects nationwide by transforming how solar projects are financed.  SolMarket launches with over $350 million of committed partner funds, actively seeking solar projects in need of financing.

SolMarket provides investors and developers with the tools they need to efficiently originate, evaluate, finance, and construct renewable energy projects.  It provides a standardized origination platform, a document library, modeling software, and a standardized document suite.  SolMarket will also offer developers group purchase discounts for solar modules and other equipment.  There are no costs for developers to participate in SolMarket.

“We talk to hundreds of solar developers about prospective commercial and utility-scale projects, and unfortunately, many of these solar projects are never built due to an inability to efficiently locate financing,” said Yuri Horwitz, CEO of Sol Systems.  “We have created SolMarket to help drive efficiencies into the solar market and connect investors and developers effectively.  SolMarket will reduce the cost of financing transactions and enhance the tempo of solar project development.”

SolMarket has already attracted funding from a number of investors and is seeking projects ranging from 50 kW to multi-megawatts in size.  Solar developers are encouraged to submit their projects prior to September 30th because investors are quickly building out their portfolios for 2011.

Sol Systems invites interested solar developers to attend a SolMarket webinar on Thursday, September 1st, Friday, September 2nd, or Tuesday, September 6th at 11 am EST.  For more information, please email info@solmarket.com or visit www.solmarket.com.

About Sol Systems

SolMarket is a wholly owned subsidiary of Sol Systems.  Sol Systems is a Washington D.C. based solar finance firm, and the largest solar renewable energy credit (SREC) aggregator in the nation, with over 2,300 customers and over 20 MW of solar capacity under management.  Through its SREC offerings, it has promoted the development of the solar market by providing long-term financing options for SRECs, facilitating over $100 million in solar development.

Contact:

Ms. Sudha Gollapudi, Director of Strategic Partnerships

info@solmarket.com

888-765-1115 x1

Magic and Sunrays in the Air

In a neighborhood where painting your door a different color requires approval from a presidentially appointed commission, Georgetown Energy is aiming to permanently change the view of dozens of houses – from the sky.

Georgetown Energy, a student consultancy devoted to helping residents convert to solar electricity, is heading a monumental solar project that involves turning 43 quintessential student townhouse residences to solar electricity in the midst of Washington DC’s historic Georgetown district. Although it is a long-term project to be enjoyed by the generations after many of the current members of the group have graduated, Georgetown Energy students believe that the rewards of such an innovative project are well worth the effort.

What magic surrounding solar coaxed students to become involved so profoundly?  First, there is a substantial payback for the investment. In a solar lease contract signed between Georgetown University, which owns the student townhouses, and Solar City, a leading national solar installation company, adding 96.6 kW of solar capacity to 43 townhouses will require an initial investment of about $164,000, much less than if the University were to purchase the solar panels. Although Georgetown Energy has partnered with SolarCity for this project and used its solar lease scheme as a model, the project will be offered to various installers at its final stages. In the innovative solar lease scheme, the University will “lease” the roof of each townhouse to the installer, which will design, own, and operate a solar photovoltaic system on each townhouse.  The installer will then sell the electricity produced from each solar project to the residents of the townhouse at a lower price than the traditional competing utility. Savings increase every year and over the 20 years duration of the solar lease contract, students would save a total of $458,856 in their electricity cost. After the contract is over, the student body can decide whether to buy the panels at a low price.

Indeed, another charming aspect of the proposal is that everything is student-owned. Originating from the need to allocate a 3.4 million dollar defunct student endowment, the solar investment will take up only a portion of the available fund and coexist with other student proposals as well as generate profit. Ideally, Georgetown Energy sees the proceeds creating a fund for related projects to further environmental awareness and energy studies on campus.

Is there anything else in it for the university, the students, and the DC area? Sol Systems, a strong force in the fight for better solar incentives in DC, believes so. Not only is being involved in such a movement ideal preparation for a career in renewable energy (two recent graduates and former members of Georgetown Energy actually work at Sol Systems), but there is much potential for the greater DC area too. Of course, cleaner air for the district tops the list. It may even attract more students interested in environmental and energy issues and demonstrate the feasibility of clean energy investments, creating a virtuous cycle of environmental awareness and action in the university community. Perhaps the project may even set an example of a successful clean energy investment that some students may follow individually in the future. Lastly, it is a modern display of service to the community, the crux of the founding Jesuit ideals of Georgetown University.

What stage is the project at right now? In April 2011, a student commission voted in support of the proposal. Now Georgetown Energy students are working with University officials on the details. These include contractual issues, billing mechanisms, pricing, and structural and electrical issues with the houses. The Georgetown Energy students are learning some concrete skills needed for evaluating any type of construction investment. The work done from June-August 2011 will culminate in a final recommendation to be handed to the University on September 1st after which Georgetown Energy students will have to persuade the rest of the student body off their feet for a concluding student referendum and choose from final proposals from competing vendors and permitting.  If all goes well, the battle will be won one year from today. The panels will be constructed in Fall 2012 and convert ordinary sunrays to a unique opportunity for revenue and intellectual growth – truly magic!

Sol Systems is hiring a Marketing Associate

Sol Systems is hiring a Marketing Associate!

The ideal candidate will be: resourceful, detail-oriented, and passionate about the development of renewable energy, and will possess the following skills and attributes:

  1. Creative
  2. Outgoing
  3. Excellent writing skills
  4. Willingness to do whatever it takes to “get the job done”
  5. Intermediate to advanced use of Microsoft Office products
  6. The ability to understand a complex and evolving market
  7. Enthusiastic, with a demonstrated interest in solar energy, renewable energy, energy finance, marketing, sales, entrepreneurship, and renewable energy legislation

A successful Marketing Associate will become an integral part of a dynamic company that is a leader in the nascent SREC industry. The Marketing Associate will also be critical to the launch of a new product in the solar financing space. This Marketing Associate will participate in the following initiatives:

  • Blogging
  • Collateral creation and updates
  • Customer Service
  • Industry Association involvement
  • Events & Presentation Planning
  • Product Launch
  • Website content management
  • And much more

Through this position, the Marketing Associate will gain familiarity with solar legislation, solar finance mechanisms, industry news, and industry language, as well as new product development in a fast paced, start-up environment.

Location: The Marketing Associate will be expected to work out of our centrally located office in Chinatown, Washington DC

Commitment & Compensation: The position is a full-time paid position that will entail a 90 day review period. Compensation will be commensurate with experience.  Successful candidates will be eligible for a full time position.

To Apply: Please submit a resume and cover letter (no more than one page each) to jobs@solsystemscompany.com.  Qualified candidates will be subsequently asked for a writing sample and three references.

Arlington, Virginia Commercial Scale Solar Development RFP

Notice to developers in the Washington DC metropolitan area: we want to share with you an RFP for commercial scale solar developments.

Arlington County has issued a Request for Proposals to pre-qualify multiple firms for installation of solar thermal and solar photovoltaic systems on County government buildings over the next 3 years. Pre-qualified firms will receive the Invitation(s) to Bid for solar installations. We anticipate these will range from 5 kW to 50+ kW in size.

As always, Sol Systems wants to remind our partners that we have SREC financing solutions to help you reduce the cost of your solar installations and win bids like these.

Maryland Clean Energy Summit 2010

Maryland’s Clean Energy Summit – October 4th, 2010 – Hilton Inner Harbor

George Ashton, Vice President and CFO of Sol Systems, the largest SREC aggregator and a leader in solar finance, will be speaking at this year’s Clean Energy Summit in Baltimore, MD. The summit will bring federal and state policy leaders together in a public forum to discuss the future of renewable energy in Maryland and the effects local policies will have on the proliferation of residential and commercial renewable energy systems.

Mr. Ashton will speak as a member of a panel discussing the future of renewable generation. One of the most critical components to solar energy projects are the monetization and sale of solar renewable energy credits (SRECs). In fact, the income secured by solar system owners from the sale of SRECs is usually greater than the actual electricity savings. Mr. Ashton will discuss the future of regional SREC markets and their ability to support growth within the state of Maryland and in the region as a whole.

Other panels include: “Discovery Drives Change”, “Forecasting the Climate for Finance”, “Transportation”, “Renewable Generation”, “Alternative Fuels & Biomass”, and “Energy Management & Built Environment”.

Invited Guests include: Congressmen John Sarbanes, Governor Martin O’Malley, and Cathy Zoi, US Department of Energy Asst. Secretary for Energy Efficiency & Renewable Energy

For more information on the conference, please go to: http://www.mdcleanenergysummit.org/