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

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

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.

Module Shortage? That’s So 2015.

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

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

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

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

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

This is an excerpt from the July edition of SOURCE: the Sol Project Finance Journal, a monthly electronic newsletter analyzing the solar industry’s latest trends based on our unique position in the solar financing space. To view the full Journal or subscribe, please e-mail pr@solsystems.com.

ABOUT SOL SYSTEMS

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

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

A Comeback for Commercial Solar in the Golden State? We Think So.

California's commercial market: the next gold rush, without the bust.

California’s commercial market: the next gold rush, without the bust.

The commercial and small utility solar market in California reminds us of 1848, just a year before the gold rush: lucrative, and largely untapped. While the state boasts the largest commercial solar market in the union, it remains relatively small.

The latest Solar Energy Industries Association (SEIA) and Greentech Media Solar Market Insight report revealed that both 2014 and 2013 saw a smaller yearly increase in added commercial capacity than in 2012. Last year, 306.6MW came online in California’s commercial market – just a 4.75% yearly increase over 2013, and a .2% decrease compared to 2012.

This is where we see the opportunity. Over the next several years, we expect growth in a solar market galvanized by standardized financing solutions such as PACE, California Solar Incentive (CSI) and Option R in Southern California Edison (SCE) and San Diego Gas and Electric (SDG&E) utility territories, and the California Public Utility Commission’s (CPUC) approval of rate and time-of-use charges.

To capitalize on this momentum,  Sol Systems hit the Golden State last week in a week-long frenzy that included a major conference, dozens of meetings, an unforgettable road trip, and of course, a party.

The blitz began in San Diego at Infocast’s annual Solar Power Finance and Investment Summit. Kicking it off, Colin Murchie led the pre-summit workshop’s opening session. Highlights included guidance on long- term project finance strategy and tax equity structures.

The next series of pre-summit sessions were worth their weight in gold for some newer players in the game, and Yuri Horwitz carried Sol Systems’ torch in a series of educational sessions. The marathon covered everything from an overview of determining the economic viability of projects to a look at how underwriters examine transactions.

Expert analysis continued during a sprint covering the Northeast market, where Jason Cimpl shared intel on the hottest solar markets and insight into where the next best investment opportunities lie. One takeaway: if you can find an off-taker, Massachusetts continues to be an exciting place for solar developers.

In a not-so-sunny outlook of a post 30% investment tax credit (ITC) world, George Ashton joined other major firms, including Bank of America and CohnReznick, in a discussion on the impact that an ITC step-down will have on financing. Key points in this familiar debate were higher interest rates and the impact on PPA prices.

In addition to our expert speakers, Sol Systems’ tax equity, asset management, IMA, project finance, and SREC teams had jam-packed schedules at the Summit, which are already proving favorable to our ever-growing pipeline.

Sol Systems' project finance team enjoyed the scenic view and sunshine on the Pacific Coastal Highway

Sol Systems’ project finance team enjoyed the scenic view and sunshine on the Pacific Coastal Highway

Sol Systems’ project finance team continued the relay up the West Coast with a road trip along the Pacific Coastal Highway. In between scenic views of Big Sur and a quick spin on a Solar Coaster, the team managed to squeeze in several fruitful meetings with California-based developers.

The finish line was the official launch party of Sol Systems’ San Francisco office. We were honored that so many friends, new and old, joined us in a cheers to our California expansion. As a small gesture of our commitment to giving back to our community, the party also served as a springboard for the San Francisco chapter of our Giving That Matters program. A donation went to the Golden Gate National Parks Conservancy, and our Bay Area friends are invited to join us for a volunteer day on April 29. Email Jessica Cowan for details.

To join the growing ranks of our West Coast team, or to learn more about financing for your California solar projects, contact finance@solsystems.com.

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 180MW 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.

Massachusetts Updates 2016 Managed Growth Allocation, Developers Still on Edge

Massachusetts solar developers breathed a sigh of relief after last week’s announcement.

Some developers of 650kW+ solar projects may get their projects built after all.

Some developers of 650kW+ solar projects may get their projects built after all.

After the initial August 26th announcement that the 2016 Managed Growth Capacity Block would be 0MW, the Massachusetts Department of Energy Resources (DOER) opened a public comment period.  As expected, solar stakeholders expressed their concern over the 2016 allocation, citing that the DOER had projected overly ambitious growth in Market Sectors A-C. In response to these comments, DOER adjusted the 2016 Managed Growth Capacity Block allocation from 0MW to 20MW .

What is Managed Growth in Massachusetts?

The Massachusetts SREC-II Program, initiated in April, creates differentiated financial incentives for each market sector (“SREC Factor”) to level the playing field. This program makes smaller solar projects more competitive compared to larger ones by ideally giving financial preference to residential and rooftop projects (a higher SREC Factor close to 1.0) and providing less support for larger projects (ground mount, landfill or brownfield projects less than 650kW.) Previously, this program allocated 26MW and 81MW for the Managed Growth sector in 2014 and 2015 respectively.  As the legislation mandates, the reconsideration and final decision of the 2016 Managed Growth Capacity Block came from the following formula:

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July 2014 Project Finance Journal

This month's Solar Project Finance Journal includes info on the most competitive PPA rates, market developments in IL, RI, and SC, solar tariffs, and more.

This month’s Solar Project Finance Journal includes info on the most competitive PPA rates, market developments in IL, RI, and SC, solar tariffs, and more.

Below, we have included excerpts from Sol Systems’ July 2014 Solar Project Finance Journal, which is a monthly email newsletter that our project finance 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 solar industry resources.

If you would like to receive our Solar Project Finance Journal via email every month, please email pr@solsystemscompany.com with a request to be added to our Project Finance Journal distribution list.

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Rhode Island’s Second Solar Feed-in Tariff is Open for Enrollment. Here’s How to Apply

Rhode-Island-welcome2

The second 2014 open enrollment for the RI solar feed-in tariff will take place from July 21st to August 21st.

The second round of the 2014 enrollment in Rhode Island’s feed-in tariff program has been announced by National Grid, Rhode Island’s electric utility. The feed-in tariff is part of the state’s Distributed Generation Standard Contracts program, established in June 2011. The program awards long-term standard contracts to eligible distributed generation facilities for the purchase of energy, capacity, and RECS over a 15 year term. Upon establishment, the program called for 40MW of renewable energy procurement by the end of 2014. The program has reached 25 MW since it’s start, leaving 15MW of nameplate capacity available for the remainder of the 2014 program year, with a third enrollment scheduled for the fall in October or November.

The proposal period is scheduled to run from July 21st to August 1st. For each enrollment period, ceiling prices and capacity targets are set by the Distributed Generation Standard Contract Board, as can be seen in the table. All projects require a competitive bid price at or below the applicable ceiling price.  However, projects will also be evaluated using non-price criteria including site control and permitting, the ability to develop, finance, and construct in 18 months, technical and engineering aspects, energy resource plans, and project management experience. Price criteria vs. non-price criteria will be weighted 80:20, respectively. Categorized according to technology and size, renewable projects including wind, solar, and anaerobic digestion are all eligible for the program.

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June 2014 Solar Project Finance Journal

This month's Solar Project Finance journal includes updates on the hottest solar markets, solar tariffs, 111(d), and the most competitive PPA rates.

This month’s Solar Project Finance journal includes updates on the hottest solar markets, solar tariffs, 111(d), and the most competitive PPA rates.

Below, we have included excerpts from Sol Systems’ June  2014 Solar Project Finance Journal, which is a monthly email newsletter that our project finance 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 solar industry resources.

If you would like to receive our Solar Project Finance Journal via email every month, please email pr@solsystemscompany.com with a request to be added to our Project Finance Journal distribution list.

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May 2014 Solar Project Finance Journal

Our monthly project finance journal contains solar finance statistics, trends, industry news, and SREC market information. Contact our team at finance@solsystemscompany.com or 888-235-1538 x2 for your solar project financing needs.

This month’s Solar Project Finance Journal includes info on the most competitive PPA prices, developments in Connecticut, Hawaii, Massachusetts, and New York, and information on the importance of inverter choice, an update on our construction and term debt offerings, EPA’s upcoming rulings on greenhouse gas emissions, and more.

Below, we have included excerpts from Sol Systems’ May 2014 Solar Project Finance Journal, which is a monthly email newsletter that our project finance 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 solar industry resources.

If you would like to receive our Solar Project Finance Journal via email every month, please email pr@solsystemscompany.com with a request to be added to our Project Finance Journal distribution list.

Project Finance Statistics

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

Capacity: 200 kW – 37 MW
Average Capacity:  5.2 MW

Developer all-in (asking) prices*: 

  • <500 kW:  $2.60-3.00/Watt
  • 500 kW–2 MW:  $1.85 – 3.20/Watt
  • >2 MW:  $1.60-3.00/Watt

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Webinar Invitation – Everything You Need to Know about the Massachusetts SREC II Program

The Massachusetts solar renewable energy credit (SREC) program has been critical for driving the massive solar growth in the state. However, regulatory uncertainty has loomed since the Massachusetts Department of Energy Resources (DOER) announced last spring that the first iteration of the solar carve-out, now known as SREC I, had reached its cap. Since then, the industry has had their eyes on the development of SREC II, the Bay State’s next solar carve-out program. As SREC II nears promulgation, join Sol Systems, SEIA, and the Massachusetts DOER as we discuss:

  • SREC II’s regulatory framework and how it differs from SREC I, particularly in regards to the new SREC factor and Clearinghouse auction
  • The fate of Massachusetts SREC I subscribers, including those who have not yet been accepted into the program
  • Supply and demand dynamics in the MA SREC I & SREC II programs
  • Spot market prices and the availability of fixed price contracts, including advisable SREC strategies for both residential and commercial systems
  • How to finance commercial projects in Massachusetts, including advisable PPA rates and the availability of SREC strips

    Sol Systems will host a webinar on SREC II with the Massachusetts DOER and SEIA

    Join Sol Systems, Massachusetts DOER and SEIA for information on SREC II structure, pricing and market dynamics

Speakers include:
  • George Ashton, Vice President & CFO, Sol Systems LLC
  • Jason Cimpl, Renewables Trader, Sol Systems LLC
  • Michael Judge, Associate RPS Program Manager, Massachusetts Department of Energy Resources
  • Carrie Hitt, Senior Vice President of State Affairs, SEIA

The event will be taking place on April 23rd, 2014. Register today.

About Sol Systems
Sol Systems is a renewable energy finance firm that provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. Founded in 2008, Sol Systems focuses on meeting the industry’s most critical solar financing needs, including tax structured investments, capital placement, debt financing, and SREC portfolio management. To date, the company has facilitated financing for thousands of distributed generation solar projects and hundreds of millions in investment on behalf of Fortune 100 corporations, utilities, banks, family offices, and individuals. For more information, please visit

Rhode Island Solar Feed-in Tariff Now Accepting Applications for 2014

Contact us at finance@solsystemscompany.com for more information on the Rhode Island feed-in tariff.

National Grid, Rhode Island’s electric utility, recently announced a new round of enrollment in the state’s feed-in tariff program in the spring of 2014. The allocation is part of the Distributed Generation Standard Contracts program, which was created by legislation in June of 2011. The program originally called for a minimum of 40MW in new renewable energy procurement by December 30, 2014. The first open enrollment for the year targets 6 MW, 3.15MW of which is reserved for solar, with additional enrollments scheduled in July and October of this year.

The proposal period will run from April 21st until May 2nd. For solar systems above 250 kW, ceiling prices range from $0.2730/kWh to $0.2350/kWh, fixed, for 15 years, depending on system size and tax credits used for financing. Projects utilizing bonus depreciation and PTC/ITC will face lower ceiling rates across all sizes. Bonus depreciation is not currently available as an incentive. The Distributed Generation Standard Contract Board sets the ceiling prices and capacity targets for each enrollment period. Renewable energy projects including wind, solar, and anaerobic digestion are all eligible for the program, with certain distinctions based on technology and size. Following are the ceiling prices set by National Grid:

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Jump-starting the Solar Undead & Improving Returns…With Debt

Workmen-install-HomeSun-s-007

New debt options are improving IRRs for new and operational projects and they are also solving critical financing issues for a variety other projects in the U.S.

Debt can be one of the most challenging pieces to secure in the capital stack, and especially for solar projects under 1 MW. This is because renewable commercial banks see these deals as too small, regional banks have investment size and tenor limits that make financing difficult if not impossible, and local banks have limited experience with solar.  With these obstacles, it should come as no surprise that new solar debt options would be welcomed by the solar community. And, since we launched our $100 million debt fund, we have been rewarded with a wide variety of projects that are strong candidates for debt.

A number of new opportunities and operational projects are in the usual domestic markets, but some strong opportunities for debt have come from less expected places like Ontario and the Virgin Islands — and there are even several safe-harbored 1603 projects. Here are some reasons why the project opportunities are surfacing (or re-surfacing) and how the availability of construction and long-term debt contracts are injecting new vitality into both new and older solar projects.

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Sol Systems Closes 1.2 MW Transaction for Maryland Nonprofit, Leveraging Solar Financing & SREC Expertise

Financing for the construction of the 1.2 MW project was handled between Sol Systems and Building Energy.

Sol Systems recently financed a 1.2 MW solar project in Maryland.

Sol Systems has successfully financed a 1.2 MW solar project in partnership with its investor client, Washington Gas Energy Systems, a subsidiary of WGL Holdings (NYSE: WGL), which will own and operate the system. Located at Presbyterian Senior Living Services, a non-profit located in Glen Arm, Maryland, the system will provide electricity under a long-term Power Purchase agreement. Financing for the construction of the project was handled between Sol Systems and Building Energy. Washington Gas Energy Systems will own and operate the system.

To fast-track the financing for the commercial-scale project, Sol Systems engaged its network of institutional investors, structured the transaction, and secured a multi-year solar renewable energy credit (SREC) contract, critical to financing the deal.  Maryland SREC compliance buyers do not typically execute SREC contracts prior to a project’s operation date. However, Sol Systems was able to leverage its reputation as the oldest and largest SREC aggregator in the nation to secure a four-year fixed price contract.

“Early before entering into the U.S. market, we recognized the value of having a solid and reliable financing partner to help us navigate the complexities of U.S. solar market. An experienced partner like Sol Systems has provided us with the support we needed to finance our first deal in the United States,” said Andrea Braccialarghe, Managing Director America at Building Energy.

Since 2008, Sol Systems has facilitated financing for 69 MW of solar projects throughout the country, 8 MW of which are located in Maryland. In addition to commercial project financing and SREC aggregation, Sol Systems is tackling tax equity, one of the solar industry’s biggest financing limitations.

“Sol Systems is proud to have helped Building Energy succeed with their first U.S. solar project,” said George Ashton, CFO of Sol Systems. “This effort is an example of how our commercial financing solutions and SREC services can work in tandem to increase deal velocity, accelerate the tempo of project development, and bring solar to non-profits like Presbyterian Senior Living Services.”

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Sol Systems’ Financing Partnership with Washington Gas Featured in Washington Business Journal

Sol Systems’ partnership with Washington Gas was featured in the Washington Business Journal.

Sol Systems’ partnership with Washington Gas was featured in the Washington Business Journal.

The Washington Business Journal recently featured our financing partnership with Washington Gas Energy Systems, Inc. on three new solar projects in Hawaii, Maryland, and Sol Systems’ hometown, Washington, D.C.  Sol Systems served as an investment advisor to Washington Gas Energy Systems for these projects, assisting in project origination, due diligence, negotiation, and deal structuring before ultimately guiding these projects to financial close.

Washington Gas Energy Systems will build, own and operate three more new solar projects, at the KIPP School in the District, Presbyterian Senior Living Services in Glen Arm, Md. and the Turtle Bay Resort in Oahu, Hawaii.

The projects will come online under 20-year power purchase agreements. Sol Systems is Washington Gas Energy Systems’ investment advisor, lining up third party financing.

The cost of the projects was not disclosed.

KIPP School will get a 227-kilowatt roof array. Presbyterian Senior Living Services will have a 1,320- kilowatt ground-mounted system, and Turtle Bay Resort will have a 402-kilowatt roof mounted system.

Read the full article from the Washington Business Journal here.

About Sol Systems

Sol Systems is a boutique financial services firm that offers investor clients direct access to the renewable energy asset class and provides developers with sophisticated project financing solutions. Founded in 2008, Sol Systems focuses on meeting the most critical needs of the industry, including SREC monetization, capital placement, tax equity, and New Market Tax Credits. To date, the company has arranged financing for thousands of projects and facilitated hundreds of millions in investment on behalf of Fortune 100 companies, private equity, family offices and individuals.

For more information, please visit www.solsystemscompany.com.

Washington Gas Energy Systems to Build, Own and Operate Three New Solar Projects Across the Nation through Financing Partnership with Sol Systems

Solar Arrays Will Power Turtle Bay Resort in Hawaii, the KIPP School in Washington, D.C., and Presbyterian Senior Living Services in Maryland.

Washington Gas Solar Project Financed with Sol Systems

Sol Systems is proud to announce the successful financing of mid-sized commercial solar projects in Hawaii, Maryland, and D.C. These projects were financed through a partnership with our investor client, Washington Gas Energy Systems.

McLean, Va. – Washington Gas Energy Systems, Inc. has announced that it has contracted to build, own and operate three new solar arrays through a financing partnership with Sol Systems. The photovoltaic systems will power the Turtle Bay Resort in Oahu, Hawaii, the KIPP School in Washington, D.C., and Presbyterian Senior Living Services in Glen Arm, Md. Washington Gas Energy Systems will own and operate the solar systems under 20-year power purchase agreements. Sol Systems acted as an investment advisor to Washington Gas Energy Systems for these projects, which bring the organizations access to clean, solar electricity through third-party financing.

“We commend the KIPP School, Turtle Bay Resort and Presbyterian Senior Living Services for their environmental stewardship and we are pleased to be partnering with Sol Systems,” said Sanjiv Mahan, Vice President of Business Development at Washington Gas Energy Systems. “This strategic project portfolio strengthens our existing footprint in key regions throughout Maryland and Washington, D.C., while expanding our portfolio into strong solar states like Hawaii, giving us a true nationwide presence.”

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Sol Systems Expedites Financing for Commercial Solar, Successfully Closes 500 kW Deal

Blue Green Solar, LLC developed the 500 kW project in Clayton, NC with funding from one of Sol System’s investor partners.

Sol Systems continues its success in financing mid-market commercial solar projects, and recently secured an investor for a 500 kW North Carolina project in a matter of weeks. The system, located in Clayton, North Carolina was funded through a larger multi-megawatt portfolio.

Heath McLaughlin, the Founder of Blue Green Energy, LLC and the developer of the project commented: “We see Sol Systems as a valuable resource to developers hoping to receive qualified funding for solar projects. Sol Systems found us an investor at the right price point and helped to support the transaction on a tight deadline. It was a good experience to work with their team, and we very much appreciate their dedication and support.”

Single-site solar projects in the 250 kW – 1 MW size range typically face financing difficulties due to high transaction costs. Projects in North Carolina are especially challenging because the 35% tax credit is a critical piece of the financing, yet there is limited demand for North Carolina state tax credits.  Sol Systems’ unique approach of working hand-in-hand with a diverse group of investor clients provided significant advantages to ensuring a financing solution for Blue Green.

“Our focus on velocity and efficiency sets us apart,” said Andrew Gilligan, who helps lead Sol Systems’ Investor Advisory Services. “In this case, our ability to move rapidly was crucial to getting the project financed. We quickly identified an investor client that fit the needs of a project, and worked with our developer client to support an efficient project financing process. This is a great example of the value that we provide to both our developer and investor clients.”

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Connecticut Small ZREC Program Open and Accepting Applications

Sol Systems is currently aggregating several small ZREC projects, specifically projects that are 50 kW or larger, have or will be submitted into the CT Small ZREC Program, and are looking for third party financing.

Sol Systems is aggregating projects that are 50 kW or larger submitted into the CT Small ZREC Program and are looking for third party financing.

Connecticut Light & Power (“CL&P“) and United Illuminating (“UI“) officially opened the window for submitting applications into the Connecticut Small ZREC Program on January 8, 2013.  This program will be accepting applications through January 22, 2013.

The Small ZREC Program offers a unique opportunity for projects under 100 kW (AC) to receive financing through a fixed price ZREC contract for 15 years.  The pricing differs between CL&P and UI and is based on the weighted average price of the approved medium ZREC contracts, awarded to projects between 100 kW and 250 kW in later 2012 through a competitive RFP bidding process.  The pricing for each utility is as follows:

UI Rate: $148.89/ZREC
CL&P Rate: $164.22/ZREC

To participate in the Small ZREC Program, projects must meet the following criteria:

  • Located behind contracting utility revenue meter and have a dedicated REC meter
  • Must not have received funding or grants from the Clean Energy Investment Authority or its predecessor, the Connecticut Clean Energy Fund
  • Projects must be in service on or after July 1, 2011
  • No larger than 100 kW (AC)
  • Must have zero emissions – this may include solar, wind, and hydro
  • Developers must have site control

The total number of applications selected will be based on a set budget of committed funds, which is approximately $2.7 million between the two utilities.  In total, $2.36 million is attributed to CL&P and $552,310 is attributed to UI.  The selection process is a first come, first serve process based on date and time of application submission.  All projects submitted in the two week window does not exceed the allotted budget, then all applications will be accepted.  If the total number of projects submitted does exceed the allotted budget, random selection will occur.

Sol Systems is currently working on behalf of several investors who are interested in ZREC-eligible projects.  Our team is currently aggregating several small ZREC projects, specifically projects that are 50 kW or larger, have or will be submitted into the CT Small ZREC Program, and are looking for third party financing.  By aggregating a pool of smaller projects, Sol Systems is helping to bring capital to project sizes that traditionally lack capital, while also providing our investors with the opportunity to diligence and purchase multiple projects in one round of transactions.

If you have a project that has been awarded a ZREC contract and is looking for financing, please contact our team at info@solmarket.com or (888) 235-1538.  Our team would be happy to discuss your project with you and assess financing opportunities.

About Sol Systems

Sol Systems is a solar finance firm and a leader in financial innovation in the renewable energy industry.  Since its inception in 2008, Sol Systems has partnered with 350 solar installers and developers to bring over 3,000 solar projects from conception to completion by offering innovative financing solutions for residential, commercial, and utility-scale projects.

Sol Systems’ financing programs catalyze investments for a broad set of solar projects by simplifying their origination, diligence, and financing processes.  Developers seeking financing for solar projects can access over $2.5 billion in capital through the Sol Systems investor network.

In addition to providing financing, Sol Systems also offers project due diligence, deal structuring, and asset management services – all designed to reduce overhead and transaction costs and quicken project development timelines.

For more information, please visit www.solsystemscompany.com.

Small ZREC Program in Connecticut Set to Launch before the Holidays

Following the ‘Small ZREC Tariff Program: Applicants Informational Meeting’ held on November 27, 2012, United Illuminating Company (“UI“) and Connecticut Light & Power (“CL&P“) initially announced that the small ZREC program was set to open on December 21,

Connecticut small ZREC program set to open before the holidays.

Connecticut small ZREC program set to open before the holidays.

2012.  However, the December 21st date has now been officially changed to January 8, 2013, as UI and CL&P had requested that the Public Utilities Regulatory Authority (“PURA”) delay the program to avoid the opening of the solicitation in the midst of the holiday season and this delay was approved. There will be a two week window for when applications may be submitted into the program.

In conjunction, the utilities also announced the completion of the Medium and Large ZREC RFP.  UI’s large and medium contracts were approved by the PURA on October 11, 2012, and CL&P’s large and medium contracts were approved on November 21, 2012.  The pricing for the small ZREC program is fixed for a term of 15 years.  This pricing is based off of the weighted average of the medium ZREC price.  The pricing for each utility is as follows:

  • Proposed UI rate = $148.89/ZREC
  • Proposed CL&P rate = $164.22/ZREC

To participate in the small ZREC program, projects meet the following criteria:

  • Must be located behind contracting utility revenue meter and have a dedicated REC meter
  • Must not have received funding or grants from the Clean Energy Investment Authority or its predecessor, the CT Clean Energy Fund
  • Projects must be in service on or after July 1, 2011
  • No larger than 100 kW
  • Must have zero emissions – this may include solar, hydro, and wind
  • Developers must have site control

The total number of applications selected will be based off of a set budget of committed funds.  The total budget between the two utilities is approximately $2.7 million, with $2.36 million attributed to CL&P and $552,310 attributed to UI.  The selection process is a first come, first serve process based on date and time of application submission.  All projects submitted in the two week window will receive the same date and time stamp.  If the total number of projects submitted in the two week window does not exceed the allotted budget, then all applications will be accepted.  If the total number of projects submitted does exceed the allotted budget, then random selection will occur.

Sol Systems will continue to track this process on our blog and will provide any updates as these contracts progress.  Should you have a project that has been awarded a ZREC contract and are in need of financing, please contact info@solmarket.com.  Our team would be happy to discuss your project with you and assess financing opportunities.

About Sol Systems

Sol Systems is a solar finance firm and a leader in financial innovation in the renewable energy industry.  Since its inception in 2008, Sol Systems has partnered with 350 solar installers and developers to bring over 3,000 solar projects from conception to completion by offering innovative financing solutions for residential, commercial, and utility-scale projects.

Sol Systems’ financing programs catalyze investments for a broad set of solar projects by simplifying their origination, diligence, and financing processes.  Developers seeking financing for solar projects can access over $2.5 billion in capital through the Sol Systems investor network.

In addition to providing financing, Sol Systems also offers project due diligence, deal structuring, and asset management services – all designed to reduce overhead and transaction costs and quicken project development timelines.

For more information, please visit www.solsystemscommpany.com.

S-REITs – The Closest Option to Public Solar Financing?

Solar finance is not a new concept, but it’s predominately controlled through private and business to business transactions. The limited availability of capital, combined with the risks associated with a still maturing solar market, leave developers with a higher transaction costs in the search of  financing for solar projects. Platforms such as SolMarket attempt to mitigate the challenges of solar finance by matching projects with an appropriate network of pre-qualified investors.

In the search for new sources of capital, topics of “real property” and REITs (Real Estate Investment Trusts) have arisen within the solar community. A REIT, as defined by the Securities and Exchange Commission, “is a company that owns – and typically operates – income-producing real estate or real estate-related assets.” REITs act similar to exchange traded funds where public investors can participate in a diversified pool of real estate investments without owning or purchasing property. Investors would earn a share of the income produced through the commercial site through dividend payments. Currently, there are two tests for REITs. First, the income test requires that 95% of income must come from approved sources (usually rent). Second, the asset test requires that 75% of its assets must be real property.

If the property definition for solar PV systems is changed through tax code reform, investors could begin to explore the potential world of S-REITs (Solar Real Estate Investment Trusts). S-REIT’s would allow for a more transparent, secure, and competitive method of financing solar projects. The pool of investors would expand beyond private investment funds, to retail investors and even pension funds. One of the most attractive features of a REIT is its exemption from corporate taxation, as long as it distributes 90% of income to investors. In the case of solar, the main challenge arises with the income test. Unfortunately, the qualifications of a power purchase agreement as a form of rent are, at best, questionable.

Of course, even if solar fulfills the requirements of a REIT system through PPA installments, PV systems are still considered personal property. A change in the property tax code has to occur in order for S-REITs to exist. One important definition by the Internal Revenue Service regarding real property includes “land or improvements thereon, such as buildings or other inherently permanent structures thereon,” (Section 1.856-3(d) of the Income Tax Regulations) while personal property is essentially everything else that you own.

While solar energy systems can be physically moved, they are often fixed for periods up to, and beyond, 25 years. The main inhibitor to establishing solar as real property is the concept that solar panels operate in a system.  That is, if the inverter or mounting is removed from a solar installation, the array’s functionality is reduced or completely eliminated.

The National Renewable Energy Laboratory recently wrote a detailed report on S-REITs.

S-REITs are yet another innovation of the solar finance community. However, like other facets of the solar market, S-REITS face the challenges of complex state regulations and tax codes. While the concept may never come to fruition, the idea signals a greater demand for a more transparent, liquid, and stable solar market.

About Sol Systems

Sol Systems is a solar finance firm and a leader in financial innovation in the renewable energy industry. Since its inception in 2008, Sol Systems has partnered with 350 installers and developers to bring over 3,000 solar projects from conception to completion by offering innovative financing solutions for residential, commercial, and utility-scale projects.

Sol Systems’ financing programs catalyze investments for a broad set of solar projects by simplifying the origination, diligence, and financing processes. Developers seeking financing for projects can access over $2.5 billion in capital through the Sol Systems investor network.

In addition to providing financing, Sol Systems also offers project due diligence, deal structuring, and asset management services – all designed to reduce overhead and transaction costs and quicken project development timelines.

For more information, please visit www.solsystemscompany.com.

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