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The Storage Story: What’s in Store?

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

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

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

The Current State: Looking at the State Level

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

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

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

On the Horizon: National Incentives

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

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

Outlook for Developers

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

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

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

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

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

ABOUT SOL SYSTEMS

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

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

Investing in Community: Schools (Nonprofits) and Solar Energy

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

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

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

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

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

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

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

ABOUT SOL SYSTEMS

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

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

So, You’re Developing a Sub-500kW Solar Project…

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We have experience executing on sub-500kW projects, but not all projects that come across our desks in this size range make the cut

Sol Systems reviews all types of solar projects for investment, from small non-profits up to large utility- scale solar farms, and everything in between. Sample projects include a 197kW apartment building in Baltimore, a 658kW church in San Jose, and even multi-megawatt solar farms in North Carolina.

While we have experience executing on sub-500kW projects, not all projects that come across our desks in this size range make the cut. Here are a few factors to keep in mind to increase the likelihood your small commercial solar project attracts investment.

So, your project has some issues…

With these types of projects, interconnection problems, transaction costs, and other issues can have a disproportionally large impact on the price or value of a <500kW project as opposed to something that’s 1MW or more. Longer document negotiations, or issues with interconnection may be more easily absorbed by a larger commercial project, while the same costs, because they are generally fixed no matter the size, would make a small project un-financeable. Even a project with strong economics can struggle if lots of legal, engineering, and diligence resources are required to complete the project.  Small projects may see also more drastic variation in price than a large project as incentive levels change. In other words, get the project done quickly and efficiently to avoid these costly deal killers. Time kills all deals.

One of the best ways to reduce the impact of these costs is to include the small project in a portfolio of similar or near-identical projects. If there is only one form of a PPA to review, for five projects with the same design, the fixed closing costs for the deal get amortized across more watts, creating a larger effective project.

So, you’ve got questions about credit…

A sub-500kW project with an investment grade off-taker like a Fortune 500 company that is publicly rated, or an off-taker with a strong balance sheet such as a municipal water utility, will be more likely to move along than an off-credit project like a standalone church or an independent apartment building. Investors will demand higher returns for lesser credit to account for the additional risk the credit brings to a project. The already tight economics of a small project can fail to pencil at a higher return target necessitated by an off-credit off-taker.

Underwriting to a parent company or umbrella organization can also be a successful route. If a portfolio of churches, for example, can be backed by their entire diocese’s credit, it may fare better than with just the church’s individual financials. If an off-taker doesn’t have a publicly available credit rating, Sol Systems will generally review 3 years of audited or CPA reviewed financials. Strong financials will often qualify off-takers like non-profits or private schools that are unlikely to have investment grade ratings from any rating agencies.

So, you need a solution…

Essentially, everything is tighter with smaller projects. Small variances, even those out of a developer’s direct control, can render the project un-financeable. These variances may include unexpected construction costs, site control negotiations, or incentive uncertainty. Bringing a complete portfolio of projects with solid, unwavering economics and credit-worthy off-takers is the best route to success.

Sol Systems has a proven track record of bringing small and sometimes difficult projects across the finish line. The smallest we’ve financed to date is 159kW, though generally, projects at least 300kW in size will be given higher consideration, especially if a developer can establish follow-on pipeline. And for projects in SREC states, we can provide an SREC contract no matter the size.

By financing with Sol Systems, you tap into our knowledge base and experience in portfolio aggregation and standardization that help sub-500kW deals get done quickly and efficiently.  We work with partners to identify issues upfront, and we collaborate with our partners to implement expedient and direct solutions.

For more information, contact finance@solsystems.com or 888-235-1538.

ABOUT SOL SYSTEMS

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

Virginia’s Solar Legislation: Will It Live to See Another Day?

2015_Virginia_State_House_-_Richmond,_Virginia_02

Virginia ranks 32nd in the country with only 18MW of solar energy installed

For a brief period at the beginning of 2016, Virginia’s legislature looked like it might have been gearing up to strap down and improve the solar market in the state. Such legislation is necessary, as Virginia ranks 32nd in the country with only 18MW of solar energy installed according to the Solar Energy Industries Association (SEIA).

Furthermore, as we have previously discussed, Virginia came in with a “C” in the solar net metering class of 2015. Its neighbor, Maryland, on the other hand, came in with an “A” and is 12th in the nation with 321MW of solar energy, 4,300 people employed in the sector, and a 95% increase in solar investment over 2014. Virginia has less than half of the solar jobs in Maryland, coming in with under 2,000 solar workers.

It is about time that Virginia stepped up, and legislation this session offered a glint of hope that it just might. However, despite a valiant effort by MDV-SEIA, a collection of pro-solar legislation was tabled in Richmond last week after a heavy showing from opposition.

So, which bills are amongst the dearly departed? Here are a few highlights.

This Session’s Obituaries: Will They Live to See another Day?

HB 1050 and SB142 – this team of bills sought to establish a 30 percent state tax credit for solar thermal systems (though not their solar PV companion).

HB 1285 – would have authorized community energy programs, which allow multiple customers to subscribe to clean energy from an offsite location. It is an idea that is catching on across the country to provide more equitable access to clean energy, and this bill was solar advocates’ push to have community solar programs enter the Virginia market.

HB 1286 – like 1285, was a darling child of solar advocates across the state. It was an all-encompassing piece of legislation providing for the allowance of third party financing through power purchase agreements, lifting the one percent cap on net metering, and authorizing community and “agricultural” net metering programs. Over half of U.S. states and the District of Columbia allow for third party financing, but not Virginia, which has made solar’s cost prohibitive for its citizens.

HB 480 – sought to establish a tax credit equal to 35 percent of installed renewable energy and define the aggregate amount of credit allowed to each person for placing into service renewable energy during the taxable year.

Virginia’s neighbor to the South, North Carolina, had a 35 percent tax credit until recently, which according to data from the N.C. Department of Revenue generated the state $717 million in spending and capital investment in 2014, with only $126 million claimed. North Carolina also ranks 4th in the country for solar capacity with 6,000 solar jobs. You snooze, you lose, Virginia.

SB 761 – looked to establish a mandatory Renewable Portfolio Standard (RPS) in Virginia, which would have required 25 percent of generated power to come from renewable energy by 2025. The current RPS in Virginia is voluntary, and as such, symbolic in nature. Hence one of the many reasons for little solar growth in the state.

SB 779 – was a bill that survived past the others. It was poised to be a weaker version of HB 1286, which still would have been major progress for the state. However, this bill was also tabled…for now.

The Last Bill Standing

HB 1305- is the only solar bill still standing in Virginia’s legislature. It provides a tax exemption worth 100 percent of the solar energy systems value for projects 5MW and under, and for projects from 6MW-20MW that file for interconnection before December 31, 2018. It also drops the tax exemption to 80 percent for projects above 20MW starting January 1, 2017.

The Living Dead: Summing it Up

Clearly, some of these bills were stronger than others in regards to promoting clean energy, but all of the above were kept from moving forward in this legislative session. So, the question is

Will There be a Resurrection?

Fingers crossed, yes. As the discussions stand these bills have been “carried over,” and will be discussed again at special subcommittee this upcoming summer.

So, if you are a Virginia customer do not lose hope, but do not just sit tight. Reach out, speak out, and ask for solar because maybe the umpteenth time Virginia discusses solar energy might just be the charm! As for the solar industry, with such a large laundry list of requests, it is time to rally around the priority bill that has the biggest likelihood of passing and allowing the local renewable energy economy to flourish.

ABOUT SOL SYSTEMS

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

State Solar Jobs Census: Takeaways from Major Markets

The US solar industry grew 20% as a whole in 2015, now employing over 200,000 employees

The US solar industry grew 20% as a whole in 2015, now employing over 200,000 employees

Earlier this month, The Solar Foundation (TSF) released its annual State Solar Jobs Census, a state-by-state breakdown of its national report on the solar industry. The 177-page Solar Jobs Compendium summarizes data through Q3 2015 for each state, including growth projections for 2016. We’ll look at the major takeaways by region.

New England

  1. The Bay State is Still Booming…For Now – Massachusetts enters 2016 as the nation’s 2nd ranked solar market for jobs. Combined with having the 6th largest amount of solar capacity, these are impressive numbers for the nation’s 6th smallest state by area. For years, Massachusetts has been a leader in the solar industry, and its job market is projected to grow another 9 percent in 2016. As SREC II comes to a close and net metering leaves the state in a standstill, will solar employment continue?
  2. Connecticut’s Solid Showing – Connecticut is a very distant 2nd place to Massachusetts in New England, but boasts more installed solar capacity than the remaining four states in its division combined. The latter is due in part to the relatively small solar markets of Maine, New Hampshire and Rhode Island, but is also a testament to the state’s successful residential market. According to the report, over 60 percent of new capacity installed in Connecticut last year was in residential, creating a solid job market for installers. As for the commercial and industrial (C&I) market, we love us some ZRECs.
  3. Legislative Barriers – The report notes that Maine, New Hampshire and Rhode Island all have an installed solar capacity of under 20MW. TSF partly attributes this to regulations involving the states’ net metering policies (look away, Nevada). 

Mid and South Atlantic

  1. Success in the Carolinas – With successful Q4 projections for both states, the Carolinas finished strong in their respective situations. North Carolina, a powerful solar state that we know well, doubled its capacity in 2015 to claim hold to 2nd place in installed capacity behind California. With 90% of its capacity in utility-scale projects and less room for residential installations, its job market ranks 9th. South Carolina, an emerging solar market, looked to double its total installed capacity in Q4 alone. With a projected job growth of 20 percent in 2016, South Carolina will be a small market to keep an eye on.
  2. Maryland Makes Strides – Maryland added an impressive 1,200 jobs to its solar market in 2015, ranking 12th overall in US job markets. Through Q3, the state added almost 60 percent of its new capacity through residential installations, and plans to add up to 143MW of capacity on schools in 2016. With the April passage of a community solar bill, 2016 could be an interesting year for the state, but TSF projects more tempered growth in 2016 compared to its predecessor. Meanwhile, keep an eye on the SREC market, which is starting to decline given large utility-scale projects that will stunt the state’s supply/demand balance.
  3. Installation Without Representation! – Here in the District, the 1,000 solar jobs through Q3 2015 rank 6th in the nation per capita. A solid SREC market and high energy prices have driven D.C.’s steady residential market that awaits the outcome of the proposed merger of utilities Pepco and Exelon.

The West

  1. California Reigns Supreme – No surprise here. California is the nation’s leading solar market, and it’s not even close. The size of the state brings it in at 5th in jobs per capita, but it leads virtually everywhere else. The state added over 2,000 megawatts in the first 3 quarters and over 21,000 jobs (don’t worry, we won’t take all the credit). In 2016, TSF projects 14,000 new jobs in the Golden State, a 20 percent increase. Don’t expect a new solar champion next year.
  2. Nevada’s Cliff Dive – The Census report on Nevada’s solar industry is more of a glimpse into the past. Nevada ranked as the 3rd overall jobs market for solar through Q3 2015, but that was before the December net metering ruling by the Nevada PUC. After the PUC’s bait and switch, the state has seen multiple companies move out and hundreds of jobs slashed in the industry, sure to hurt the Census numbers for this year. What was once a state projected for 20 percent growth and 1,600 new jobs in 2016 is now scrambling to pick up the pieces of a once thriving market.

With the extension of the solar Investment Tax Credit (ITC), much of the 2016 growth projections could end up much different than they were at the end of Q3 2015 when the census data was gathered. Interested in joining the growing industry? Sol Systems is hiring! To learn more about solar energy careers with Sol Systems, please visit our careers page.

ABOUT SOL SYSTEMS

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

How Does the ITC Extension Affect SREC Pricing?

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February SREC prices

On December 18, 2015, the solar industry scored a landmark victory by winning a multi-year extension of the solar investment tax credit (ITC). The three-year 30% ITC extension – plus the subsequent 2-year ramp down – will provide the solar industry with a strong, stable investment climate for years to come. Analysts estimate that solar capacity may increase by 30-50% over the next five to seven years as a result of the ITC extension.

The strong, stable investment climate created by the ITC extension serves as a bridge to the Clean Power Plan, provides job security to the industry’s 200,000+ employees (and counting), allows for solar to prosper in new markets, and will improve the health of our planet. A sustained solar boom is a boon for our economy and our environment; but what does the expected growth in installations mean for the nation’s top solar renewable energy credit (SREC) markets?

Let’s Back up. What Creates an SREC Market?

SREC markets are driven by three factors:

  • Supply of solar, which means the amount of solar installations in a given state
  • Demand for solar, which is driven by each state’s renewable portfolio standard (RPS) and solar carve-out
  • The alternative compliance payment (ACP), or the penalty an electricity supplier must pay if they do not procure enough SRECs or build enough solar to comply with the RPS. In many ways, this acts as a price ceiling in the market.

Will Market Conditions Change in All SREC States?

The ITC extension is affecting some SREC markets more than others. With or without a 30% ITC, each market still has its own unique issues. In DC, solar will still be challenging to build given land constraints. Pennsylvania and Ohio, due to the ability to apply SRECs from adjacent states towards state compliance, have long been oversupplied. This has especially been felt in Ohio after Governor Kasich froze the RPS, triggering price declines in all bordering states, and even Virginia.

In the Northeast, analysts have long expected that Massachusetts, the nation’s #6 solar market (#3 in Q3 2015), would hit its cap for SREC II this year, with or without an ITC extension. As we reported earlier, that could happen as soon as this week. Last, New Jersey. After serving as the poster child for SREC market volatility, New Jersey has been facing its own comeback, which we suspect to sustain itself for the next several years.

But what about Maryland?

The Biggest Question Mark: Maryland

With the increase in supply made possible by the ITC extension, Maryland is the market that may experience the most downward pressure. Recently, prices have dipped from $160/SREC to $120/SREC, with further declines expected as costs continue to come down and utility-scale projects become easier to build, such as Great Bay, the 75MW project expected to hit the market in the next 12 months. On top of that, the solar requirement within the Renewable Portfolio Standard (RPS) is stagnant at 2% beginning in 2020 as the SREC market effectively begins to merge with the Tier 1 REC market. Depending on what percentage of PJM pipeline you view as likely to go online, and what the effect on residential uptake will be as REC prices decline, this combination could result in ample supply until 2020 and oversupply thereafter.

How to Mitigate SREC Risk

To protect yourself from SREC risk, Sol Systems offers long-term SREC contracts for as long as 15 years. Contact Kate Brandus at info@solsystems.com for information on pricing.

For the most updated SREC pricing in your state, see our latest clear prices for our Sol Brokerage clients.

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for over 400MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services include tax structured investments, project acquisition, and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 5000 list of the nation’s fastest-growing private companies for a third consecutive year. For more information, please visit www.solsystems.com.

Net Metering: The Class of 2015

IREC and Vote Solar provided grades for each state Photo Source: IREC and Vote Solar

IREC and Vote Solar provided net metering grades for each state as part of their Freeing the Grid.
Photo Source: IREC and Vote Solar

The solar energy industry ended 2015 on a high note with the approval of the Clean Power Plan, the successful international climate agreement at COP 21, and the extension of the solar investment tax credit (ITC). However, alongside federal policy, state policies can make or break solar energy. In particular, net metering is a policy that several states saw changes to in 2015.

Net metering allows solar customers to be credited for the electricity they add to the grid and only pay for their net electricity consumption. Specific rates vary state-by-state based on laws and various regulatory decisions; however, across the board, net metering encourages consumers to go solar with the promise of future savings on electric bills.

A new “report card” by the Interstate Renewable Energy Council (IREC) and Vote Solar gave each of the 50 states a grade based on their net metering policies. These grades were based on a number of factors, including the number of net metering-eligible technologies, how many sectors and utilities net metering was applicable to, the limits on systems and aggregate capacity, who owned renewable energy credits, whether meter aggregation was allowed, and, finally, the credit to customers for net excess generation.

So, based on these criteria, which states were still going strong with net metering in 2015 and which states were looking for a break? Good news for our Sol Systems customers and partners most of the states we operate in, and others with solar carve outs, were A-OK. Massachusetts, Maryland, Ohio, Pennsylvania, Delaware, D.C, California, Arizona, and New Jersey were all top of the class, and they were not alone. Overall, 18 states met the IREC’s criteria and got A’s, and Indiana, Rhode Island, and New Mexico were alongside 12 other states who finished with a B due to IREC’s perceived room for improvement in a couple of the criteria areas.

However, not every state we work in finished top of the class. Virginia finished 2015 with a C average due to high customer-stand-by charges for systems with a capacity greater than 10kW and a need for better safe harbor provisions. Virginia was not alone in the C range; it was joined by North Carolina and 3 other states. However, while Virginia may not have done well in 2015, they may be looking to improve things in 2016. Current Virginia House Bill 1286, if passed, would lift the current net metering cap, authorize community net metering, allow for power purchase agreements, and expand agricultural net metering, allowing energy generation to be applied to multiple meters.

Overall, more than 2/3 of states had A’s or B’s in 2015, and six states improved their net metering policies, showing an overall positive trend for 2015. But, there were also some problem children in the class. There were 13 below average states, 3 D states, and 10 F states, meaning there were no net metering policies in place at all. Hawaii and Nevada, once all-stars in the net metering game, dropped to F’s in 2015.

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for over 400MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services include tax structured investments, project acquisition, and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 5000 list of the nation’s fastest-growing private companies for a third consecutive year. For more information, please visit www.solsystems.com.

How Real is the MA SREC II Crunch?

You’ve all heard about the rush for allocations in the Massachusetts SREC-II market.  The outstanding question is just how real the project queue is. We feel there are two categories of projects likely to churn out of the program, creating an initial source of massive churn in the next few weeks and an ongoing source of more limited churn for what could be as much as a year.  Projects that are, in fact, holding on to a quality interconnection agreement and ready for near-term construction start have more than a glimmer of hope for successful SREC-II qualification.

Churn #1 – The Unbaked

As we discussed in our previous blog entry on this subject, there’s been a massive rush of applications over the last 4 weeks:

1.    On Tuesday, January 5th, the Massachusetts Department of Energy Resources (DOER) announced that 120MW would be set aside in the SREC-II program for projects under 25kW. This left a little over 250MW for those greater than 25kW.

2.    On Monday, January 25th, that 250 became 100.

3.    On Monday, February 1st, that 100 became 22.

4.    On Monday, February 8th, that 22 will become 0. And so begins the wait list.

So: about 450MW of applications in a month. These all could be legitimate and headed for ultimate approval! But that would be unusual.

Take a look at this graph below. On the far left, applications “under review”, with no qualification date. Next to them, “pending” applications of greater and greater age. (Unlike the slug of January applications currently piled up at DOER, pending applications have passed at least initial review, have an interconnection agreement, and have received an Assurance of Qualification. They haven’t, however, gone online. You can see the approved portion of the rush of applications here in the 0 – 30 and 30 – 60 bins.)

GraphFinal1

The graph is sorted by 30 day bins of age.

Now, let’s look how quickly real, complete, projects go online in a typical Massachusetts month – backwards looking, over the last year, for systems bigger than 25kW. It looks like a typical month of C&I buildout in Massachusetts is in the neighborhood of 15 – 20MW.

GraphFinal2

Short version, in the most recent 60 days? Almost 450MW of applications hit the program when you’d expect to see about 40MW of ones that turn into real projects.

It seems unlikely that the number of fully-baked, ready-to-roll, shovel-ready, choose-your-metaphor-indicating-completeness projects has increased by a factor of 10 in the past few weeks.

You should probably assume a significant proportion of the unapproved applications are eliminated in just the next few weeks – a conservative guess would amount to wiping out today’s “negative” cap, but not taking many new applications off of the waiting list. For applicants as of perhaps right now, this “Churn #1” likely takes the program from “oversubscribed” to “fully subscribed.”

Churn #2 – The Unfinished.

Now, keep in mind that there are two ends of the approval process where a project can fail. Projects that do have a compliant and complete application are in the light blue bins above, aging away. Qualification starts a 9 month clock to completion, and we all know that not every solar project makes it. Though DOER has historically proven reasonable in offering extensions to projects that are very close to completion, you should anticipate that as projects march down this “conveyor belt” to the right, some will fall off for not being even close. Currently there’s 340MW on this part of the conveyor, and of them, 40MW are more than 270 days beyond their SQA date. We don’t know how many are subject to some modest extension, but not all of them will get these extensions, and this bin grows all the time as projects “move to the right” without “disappearing” due to completion.

In fact, you have to wonder how many projects in the 200MW that jammed in the SREC door in the last 60 days were hoping to not obtain their SQAs until later in the development process. These projects could have other critical pieces missing or delayed (e.g. PILOTs, permits, financing, or just as critical and limited net metering approvals), and had been hoping not to start that 9 month clock until their hand was forced. They’re probably more risky than the typical applicant.

All we can say is the 0 – 30 and 30 – 60 bins are each 100MW when again a typical number would be 20. That’s another 180MW of projects above the average we’d expect. Of course there will be some “pull through” that increases throughput above the average, and  no matter what we’ll only get to see these “freed up” as many as nine months from now.

The Takeaway

GraphFinal3

Massachusetts just saw a giant surge of SREC applications  - enough to cap out the program and start a 10 month waiting list beyond that .  However, interconnection agreement execution and other bottlenecks mean we don’t think that this correlates well to a giant surge of projects – and while applications take up room for a while, only real projects ultimately cap out the program.

Over the next 2 to 6 weeks, historical numbers would suggest that the industrious dairymaids at DOER churn the program down from the 190MW+ backlog to zero, and in fact better than zero – up to perhaps a few months of typical headroom (Up to 6 months if they’re all utterly noncompliant, but we have concerns that some may be “Hail Mary” applications with interconnection and key permits but not much else going for them). I’ve marked this as “Churn 1″.  Anticipate it to cut down in a big way – and soon – but not cashing in all the “excess” projects.

As that is being put to use, another few weeks of typical installation should be expected to free up in the next month or so as a subset of the oldest unbuilt approvals lose their status. Here, I’ve marked these “Churn 2”, with a total reprieve now expected through perhaps June.

Unfortunately, another ~6 months of program room will be occupied by the “Churn 3” projects, which will continue to take up room whether they are likely or not until perhaps October – and their owners will have little incentive to give up their spots.  Further, some “Churn 1” projects won’t be immediately released, but will stall here, again until the summer.

The real question will be how this intersects with Massachusetts’ legislative timeframes for a more permanent fix.  It could also be too optimistic if there’s major “pull-forward” and the state’s typically 15 – 20MW monthly C&I market surges forward.

*Note: This blog was initially published February 5 at 3pm. It was updated after a late Friday afternoon announcement from the Massachusetts DOER.

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for over 400MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services include tax structured investments, project acquisition, and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 5000 list of the nation’s fastest-growing private companies for a third consecutive year. For more information, please visit www.solsystems.com.

Massachusetts SREC Program is Hitting its Cap…Again

Mad Rush

Bring on the mad rush to qualify for SREC II. Hurry up before it’s too late!

In case you haven’t heard, the Massachusetts SREC-II program is a mere 22MW away from reaching its cap.

You may be asking yourselves what happened. So were we… until we did some digging. Here’s how it happened:

  1. On Tuesday, January 5th, the Massachusetts Department of Energy Resources (DOER) announced that 120MW would be set aside in the SREC-II program for projects under 25kW. This left a little over 250MW for all other projects over 25kW before reaching former Governor Patrick’s goal (and the overall SREC program’s cap) of 1,600MW.
  2. On Monday, January 25th, the DOER released an updated Solar Carve-Out II Qualified Units list. Only a little over 100MW were left of the 250MW from two weeks earlier.
  3. On Monday, February 1st, the DOER again released its weekly Solar Carve-Out II Qualified list, sharing that only 22MW were left for projects over 25kW. Only slightly over 94MW of the 120MW remains for projects under 25kW in the small solar set aside.

Wow. That’s some drastic growth. The caps are filling up quickly, but how do we separate the “real” from the “aspirational” projects?

Qualifying Units List: Explained

In the DOER’s qualified units list, systems are separated out into three categories:

1)    Solar energy systems with a MA RPS ID# currently generating SRECs;

2)    Systems with a pending application status, meaning they have been awarded an Assurance of Qualification (AOQ) but have not received a State of Qualification (SOQ) because they are not yet operating and generating SRECs;

3)    Systems with an application under review, meaning an application has been submitted but the DOER has not completed its review.

Systems that are under review are waiting to be notified by the DOER of the application’s completeness. This generally happens within a few weeks of the application being submitted. If an application is incomplete, then the entity who filed the application will have two weeks to cure any deficiencies. If a deficiency is not cured within that period, then the application will be rejected. Keep in mind a complete application includes an executed interconnection agreement!

Any systems in the pending stage most likely have been granted a nine (9) month window to reach commercial operation (COD). If these projects are unable to be completed in that time, they may apply for an extension.

Will All Qualifying Units Make the Cut?

On the DOER’s most recent list from February 1st, 140MW of system applications were Under Review (63MW of which are in National Grid) and another 340MW of systems (of which 195MW are in National Grid) are categorized as having a Pending status.

In other words, not all of the projects currently in the Qualified Units list are necessarily qualified for the Massachusetts SREC II program.  Instead, developers operating in Massachusetts – a top 3 solar state in Q3 2015 and #6 in the country overall – noticed the limited capacity left in the SREC-II program and acted accordingly. They shuffled through their own “active projects” lists and submitted applications for any projects with a recently executed interconnection agreement  – or any projects with the hope of having an executed interconnection agreement within the next few weeks. A mad rush appears to be underway, similar to what the state saw as the SREC-I program – and net metering allocations – quickly reached their respective caps.

A small glimmer of hope may still exist for projects without SREC allocations. Given this information, we could see systems fall out of the list due to incomplete applications or due to their inability to reach their COD deadlines in time (think National Grid projects that have not secured a NEM cap allocation and are less likely to get an SREC allocation extension).

Still Reading? Stop Now, and Submit Your Application!

The magnitude of such circumstances is unclear, but what is obvious is the value in submitting an application now for any mature projects with the hopes that these projects will eventually move forward from the wait list that is expected to show up on future DOER weekly Solar Carve-Out II Qualified lists.

If you have a project that has received an AOQ or a project under review and don’t have financing, please reach out to our Project Finance team at finance@solsystems.com.

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for over 400MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services include tax structured investments, project acquisition, and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 5000 list of the nation’s fastest-growing private companies for a third consecutive year. For more information, please visit www.solsystems.com.

3 Immediate Effects of the ITC Extension on the U.S. Solar Landscape

3Changes2

What does the ITC extension mean for the investment climate in the U.S.?

On December 18th, the U.S. House and Senate passed the Consolidated Appropriations Act of 2016, which included a multi-year extension of the solar investment tax credit (ITC). Now that we have another 5 years of ITC, here are three basics effects the extension will have on the U.S. solar landscape.

1)      More [expensive] tax equity needed

Depending on who you ask (check out forecasts from UBS, GTM, and BNEF), solar capacity may increase by 30-50% over the next five to seven years, creating a strong, stable investment climate for solar assets. The added supply of solar (as well as the reinstatement of both MACRS and wind’s production tax credit) projects will put tax equity investors in higher demand than ever, as we estimate that somewhere around $10 billion in solar tax equity will be needed annually, on average, over the next five to seven years. To put that in perspective, the solar tax equity market in 2015 was sized at approximately $6 billion. This increased demand for tax equity will have a positive effect on yields for these investors. For investors contemplating developing or expanding a tax equity platform, the time is now.

2)      “New” markets

Before the extension of the ITC, we wrote about new markets that have emerged thanks to falling costs, PPA authorization, and other factors. The extension of the ITC will make it possible for solar to flourish in these new markets, as well as markets that have made a comeback, such as Pennsylvania – assuming each works out its respective localized challenges (e.g. net metering battles, property taxes in the Southeast, and PURPA challenges across the West).

3)      SREC price decline in some markets

With the increase in supply made possible by the ITC extension, some SREC markets may experience downward pressure. Most notably, Maryland will see these effects as costs continue to come down and utility-scale projects become easier to build. On top of that, the solar requirement within the Renewable Portfolio Standard (RPS) is stagnant at 2% beginning in 2020.  The combination will result in ample supply until 2020 and oversupply thereafter.

To protect yourself from SREC risk, Sol Systems offers long-term SREC contracts for as long as 15 years. Contact Kate Brandus at info@solsystems.com for information on pricing.

Full Report Available
Are you an investor interested in a more in-depth analysis of the tax equity market under an extended ITC? Contact finance@solsystems.com to set-up a call with our team.

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

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 410MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments and project acquisition, to debt financing and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com

2016: Rush Hour is Over, But…

RushHour2

Since the ITC extension passed, developers and host customers alike have stopped to ponder: “Why the rush?”

Q4 is always the most intense part of the year for the solar industry, as developers and EPCs rush to complete year-end deadlines. This Q4 was no different. In fact, it was even more so. Financiers all rushed to close 2015 deals. Developers rushed to lock in 2016 pipeline. MUSH hosts were rushing to issue RFPs for projects that could be built by the December 31, 2016 ITC placed in service deadline. Rush, rush, rush.

But then, everything changed.

Since the ITC extension passed, developers and host customers alike have stopped to ponder: “Why the rush?” End users that issued RFPs are asking: “Maybe I should put this project on hold and see if costs come down over the next couple years.” More often than not, we’re seeing these potential solar customers as the ones putting the brakes on a deal to retool it, or even re-shop it.

As for developers, some are noticing that in the mad rush to lock in 2016 pipeline by year-end, key diligence items were overlooked.  If you have a contract for a 2016 project and missed a key item in diligence (“Shoot, how am I interconnecting this thing again?”), by all means, use this short reprieve to take a step back and get your ducks in a row before shopping your project to a financier. But, don’t wait too long. Contracts expire, SREC values decline, and pricing may change as a result. With much delay, lenders may reallocate funds.

Similarly, if the end user is asking for more time to see where the market goes, tell them there is no time like the present. Since 2010, the cost of a solar electric system has gone down by 70% according to Sunshot. Moving forward, the most potential for dramatic costs declines will come from soft cost reductions (permitting, financing, O&M, customer acquisition, etc.) that are challenging to predict.  Moreover, who ​knows if the cost of capital will continue to drop or begin to climb as interest rates rise and YieldCos pause many of their actions in the market.

Solar has some great momentum right now, but remember: there are many unknowns. As the saying goes, a bird in the hand is better than two in the bush. Rush hour is over, but don’t get left behind.

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

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 410MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments and project acquisition, to debt financing and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.

What does the American Energy Innovation Act mean for the Solar Investment Tax Credit?

energy

The American Energy Innovation Act would extend the critical solar investment tax credit (ITC), but also give the option for facilities to choose between the ITC and a Production Tax Credit (PTC).

If you’re wondering what might happen to America’s solar industry if the solar Investment Tax Credit (ITC) is allowed to expire at the end of next year, you’re not alone. With pressure coming from an industry of 174,000 (more than Facebook, Apple, and Google combined) and both ends of the political spectrum, Congress should be paying attention too.

Last month, a group of prominent Democrats in the U.S. Senate released a draft version of what they are calling the American Energy Innovation Act. The draft legislation, which faces long odds in a Congress whose majority refuses to accept the economic benefits of clean energy, provides a framework for developing a clean energy economy and achieving significant reductions in carbon emissions. In the bill, the Senators outline a proactive and diverse approach to investment, research, and development, signaling the common-sense policies a clean energy-friendly Congress would take to secure a sustainable energy future.

Solar in the Spotlight

Solar gets a huge shout-out in the American Energy Innovation Act. First and foremost, the bill would extend the critical solar investment tax credit (ITC), but also give the option for facilities to choose between the ITC and a Production Tax Credit (PTC).

This bill represents some of several ongoing legislative efforts to extend the ITC, but many have said that this particular bill is more of a public display of support for smart clean energy policies.

Looking further down the road though, the American Energy Innovation Act offers consumers, workers, and companies in the U.S. a tremendous array (pun intended) of opportunities to boost solar energy development. From expanding access to community solar to funding job training programs, the bill would fundamentally change solar energy production and distribution in America. Take a look at some of the specifics:

  • Each year for the next 15 years, $200 million would be invested in solar installation job training programs.
  • The Federal Trade Commission would be required to seek out and end interconnection practices that impede distributed generation.
  • Through amendments to PURPA, community solar plants up to 2MW in size would become legal nationwide.

These initiatives would help provide the solar industry with the market stability it craves while also comprehensively addressing the needs of a quickly evolving energy industry that faces tough environmental challenges. And though the draft American Energy Innovation Act is a promising glimpse into potential U.S. energy policy, unfortunately for the clean energy industry, it’s still just a bill.

To learn more about the solar ITC and how you or your company can help keep solar competitive, visit www.Raceto2017.com.

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 333MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments and project acquisition, to debt financing and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.

Word to the Wise: Choose Your RFPs Carefully

RFP

Don’t be like this guy. Choose your RFPs carefully.

Increasingly, we are seeing more RFPs for MUSH projects. As developers out there certainly know, RFPs can be tough and highly competitive. On the one hand, a developer may bid too high and lose. On the other hand, RFPs are often a race to the bottom. A developer may bid in low, win, but never actually build the project because their bids are too low for the project to pencil with a financier (we estimate that there are dozens of megawatts held-up in New York at this time for this very reason). The key to winning on price is knowing where that middle ground is. (That is why we encourage developers to check-in with us on pricing before submitting an RFP.  We will also bid in and offer our reputation, financial security, experience and other tools as necessary for trusted partners.)

But, even then, submitting materials into an RFP is a time consuming effort, and a dangerous one if they are a developer’s primary means of securing business. For one, time from RFP issuance to award to COD runs so long that often the market looks completely different when it’s all said and done, and then the developer can get caught footing the bill.

RFPs can be especially challenging for local and regional developers. Chances are that if you Google “solar RFPs” and find one, another company – perhaps one with a lower cost of capital and cheaper build costs – has already found it as well. In these cases, a local or regional developer should read the RFP carefully to understand what the host values most; some may prefer the race to the bottom pricing, while others may value “buying local” and may prefer to work with a local player over a national giant.  In these race to the bottom RFPs, having a differentiator – whatever that may be for your company – is key. For example, national players often opt-out of bidding into projects with unconventional credit profiles, or where volume is achieved from a larger number of smaller sites. Another advantage local players have is if a project is dependent on renewable energy credits (RECs).

Lastly, we are seeing some hosts issue RFPs to check industry viability without a clear commitment to execute in the near term. If you carefully examine the introductory text, you may sometimes find key phrases that sound like, “Sure, this whole solar thing seems cool. Let’s issue an RFP and see how much it would cost.” We are glad that, more and more, potential hosts are testing the solar waters. But, before you put too much time into a given proposal, read carefully. Recently, we saw an RFP with copied and pasted language from another public opportunity, except that the host neglected to update the document with its own name on some pages, and also described the project as in the PJM interconnection – but it was located in the Deep South! If issuers are not detail-oriented enough to proofread their own work, we recommend being mindful of your company’s time before pursuing such opportunities.

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

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 333MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments and project acquisition, to debt financing and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.

Baker Testifies on Massachusetts Net Metering Caps as Industry Awaits Action

800px-Joseph_Hooker_outside_MA_Statehouse

Last year, Massachusetts installed 308MW of solar electric capacity.

At the end of September, Massachusetts Governor Charlie Baker testified in front of a Statehouse in support of two pieces of proposed energy legislation, S 1965, authorizing long-term hydro contracts, and H 3724, legislation which would slightly increase net metering caps. Baker’s support of both bills further emphasizes his known preference for an all-encompassing piece of energy legislation, tackling the hydro and solar issues at the same time. However, because of the consistent and strong pressure from the solar industry, Baker also acknowledged the immediate need to raise the net metering caps to alleviate the pressure that currently exists.

The net metering caps have created a concerning situation in Massachusetts, the nation’s #4 solar market, with 9,400 solar workers. When a given territory hits its cap, development stalls, forcing developers to look elsewhere for opportunity – or to get creative. Last year, the Commonwealth installed 308MW of solar electric capacity.

The State Senate passed a bill in July from State Senator Downing, calling for a raise in net metering caps across all territories, setting the cap at the state’s goal of 1600MW of solar. Baker later submitted his bill which increases the caps by about 2% keeping with the model of utility territory caps, and leaving the state’s public cap at 6% and private at 7%. Unlike Baker’s legislation, Downing’s bill does not separate the cap by utility territory, so National Grid (NGrid) would be able to take some of the undersubscribed capacity currently allocated to Nstar.

It is yet to be seen which bill, if either, will be successful, but Governor Baker’s acknowledgment of the pressure felt from the solar industry in Massachusetts shows promise, especially as he continues to emphasize his desire for Massachusetts to be a national leader in clean energy.  In an effort to continue this positive momentum, Senator Downing also stated that he is open to compromise, lending some probability to the chance of net metering legislation being enacted and the caps being lifted.

NGrid territory currently has a 46MW waiting list for private systems, and 33MW for public. There is about 105MW of private capacity and 118MW of public capacity remaining under NStar and the other territories, but as the countdown to the ITC expiration continues, development is expected to further accelerate.

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 333MW solar of 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.

Round Two is No Déjà Vu. What You Need to Know About the IL Supplemental Procurement.

Looking up from the base of the Sears Tower.

After the successful June 2015 procurement , the Illinois solar industry is racing toward the second round of the three-part SREC Procurement

Now is the time to act for the second of three procurements in Illinois.

After the successful June 2015 procurement , the Illinois solar industry is racing toward the second round of the three-part SREC Procurement. Driving growth of new, distributed solar generation remains the goal, but there are several key differences from the June procurement. In short, these include:

  1. an increase in the amount of money available from $5 million to $10 million;
  2. an increase in the maximum system size to 2 MW; and
  3. no maximum bid size per bidder.

Like June, the procurement will be broken into several size categories to achieve the goal of procuring 50% of the SRECs from systems smaller than 25kW. Systems must have been energized after January 21st, 2015 and be located behind a customer’s utility meter.

SRECs continue to be a vital piece of solar financing in IL, especially as the previously available state grant shows no signs of returning in the foreseeable future.  Nearly all of the $5 million available in June was spent, and we expect the November procurement to see heavy demand as well.  This procurement and the third round scheduled for March of 2016 will be key events to watch as uncertainty around the state’s policy framework adds to precariousness around the impact of the ITC step down.

Sol Systems will participate again as an Aggregator in the November procurement. Already, we are working with individual customers, installers, and developers to place bids in all size categories.  Additionally, we are working with installers to place speculative bids in the small size category.

For this procurement, the IPA’s published schedule actually places the first major deadlines in late October. In line with that schedule Sol Systems will be accepting new customer registrations until October 20th.

Bid into the Illinois SREC Procurement

The Illinois solar renewable energy credit (SREC) market is preparing for take-off. The Illinois Power Agency (IPA) will procure $30 million in SRECs from Illinois-sited systems this June and November, and in March 2016, and Sol Systems is here to help.

In June, our team will submit bids on behalf of customers in all three categories: <25kW,  25kW up to500kW and 500kW up to 2MW . To qualify for the Procurement, systems must be energized after January 21, 2015..

Learn more below, and contact info@solsystems.com if you have any questions. Installers interested in placing Speculative Bids should contact eric.stam@solsystems.com

About the Illinois SREC Procurement

  1. What is the Illinois SREC Procurement?
  2. What kind of SREC contract can I secure?
  3. Does my solar energy project have to be a certain size to participate?
  4. How do I sign up for the Illinois SREC Procurement?
  5. What deadlines should I be aware of?

Eligibility

  1. Who can participate in the Illinois SREC Procurement?
  2. I live outside of Illinois, but I have an Illinois certification number. Can I still participate?
  3. What size solar energy systems are eligible to bid into the Procurement?
  4. What kind of meter is my system required to have?
  5. Is my system required to have remote monitoring?

Bidding

  1. What is the difference between a speculative bid and an identified bid?
  2. What are some important bid rules?
  3. Will you bid my system at exactly the price I send you?
  4. How much will I be paid per SREC?
    What should I bid?
  5. What is Sol Systems fee?
  6. How do I calculate how many SRECs to bid?
  7. Do I have to post credit?
  8. Will I get my deposit back?

Next Steps after Bid Submission

  1. What happens if I have a winning bid?
  2. What important dates should I be aware of?
  3. What are the registration requirements?
  4. How will monthly meter readings be reported? Will I have to do it?
  5. When will I get paid?
  6. What happens if I bid and lose?

General

1. What is the Illinois SREC Procurement?

The Illinois Power Agency is hold a $30 million procurement for solar renewable energy credits (SRECs) from photovoltaic solar systems. The procurement will take place over 3 events starting in June 2015 ($5m spent), followed by November 2015 ($10m), and March ’16 ($15m). The focus of the procurement is on new systems and small systems with a target of 50% of procured SRECs generated by systems smaller than 25kW.

2. What kind of SREC contract can I secure?

Through the procurement, the IPA will award five year contracts with fixed payments, for up to a maximum quantity of SRECs. “Up to Maximum Quantity” means there is no penalty for under producing and no ability to sell more than the Maximum Quantity to the IPA. A customer can sell their SRECs until the maximum quantity or the five year term is reached, whichever comes first.

3. Does my solar energy project have to be a certain size to participate?

No, the small size category only specifies that systems are below 25kW in nameplate capacity (DC). There is a maximum size, 500kW for the June event and 2MW for November and March.

4. How do I sign up for the Illinois SREC Procurement?

Customers can sign up by registering through Sol Systems’ website. Once the online registration is complete, Customers will receive a contract which they can sign and retrun to Sol Systems by email, fax or mail. Addresses and our fax number are:

Sol Systems is working with many installers and developers in IL, and you may be able to sign up with Sol Systems directly through them. Please ask your installer to find out more or contact Sol Systems at info@solsystems.com

5. What deadlines should I be aware of?

Bid submissions are due to Sol Systems by October 20th by 6 pm EST.

You can find the full calendar of dates and deadlines for the procurement see the IPA’s Supplemental PV calendar here: http://ipa-energyrfp.com/calendar/

Eligibility

1. Who can participate?

Eligible solar energy systems must be new, which means they must be energized on or after January 21, 2015 to bid into the Procurement. Systems must also be distributed which means they must be located behind the customers utility meter and be smaller than 2MW. Systems must also be installed by a “qualified person,” which is defined in the law authorizing the Supplemental Procurement, the Illinois Power Agency Act Section 1-56 (20 ILCS 3855/1-56(i)), and is a slightly more stringent standard than is currently in place.

2. I live outside of Illinois, but I have an Illinois certification number. Can I still participate?

Unfortunately not. All solar energy systems must be located in Illinois and must be interconnected with an electric utility, alternative retail electric supplier, municipal utility, or a rural electric cooperative; Sol Systems will aggregate systems located in either MISO or PJM interconnection territory; roughly speaking, Ameren Illinois customers are in MISO territory and ComEd customers are in PJM territory.

3. What size solar energy systems are eligible to bid into the Procurement?

In June, solar energy systems must be in one of two size categories:

a. Smaller than 25kW (50% of SRECs procured); or

b. Between 25kW and 500kW (50% of SRECs procured)

In November, solar energy system systems will be broken into the following size categories:

  1. Smaller than 25kW (50%)
  2. Between 25kW and 500kW (15%)
  3. Between 500kW and 2MW (35%)

In March 2016, solar energy system systems will be broken into the following size categories:

a. Smaller than 25kW (50%) ; or

b. Between 25kW and 2MW (50%)

4. What kind of meter is my system required to have?

Systems must have a revenue quality meter with accuracy as defined by IPA. Click here for the IPA’s requirements for revenue quality meters. Note that there requirements do depend on system size and systems below 10kW which will be registering with the GATS registry may use inverter readings from an inverter that meets the IPA’s accuracy standards. No systems registering with the M-RETS registry may use inverter readings. 5. Is my system required to have Remote Monitoring?

If your system is larger than 20kW, it must have remote monitoring.

Bidding

1. What is the difference between a speculative bid and an identified bid?

Speculative bids are only possible for systems smaller than 25kW. A speculative bid is a bid which only specifies a quantity of RECs and a price per REC. It does not identify the system from which the RECs will come.

2. What are some important bid rules?

  1. The minimum size for bid blocks is 500 RECs, which is approximately 80kW.
  2. In the small size category, all RECS in a single block must be bid at a uniform price.
  3. In the large size category, systems are bid with a specific price per system.
  4. An Identified bid is a bid which identifies the system which will generate the RECs, the quantity of RECs and the price per RECs. The system is identified with information such as physical address, interconnecting utility, planned nameplate capacity. The system does not yet have to be installed or energized to be bid as an Identified System.

3. Will you bid my system at exactly the price I send you?

If your system is above 25kW we will enter your bid with the exact bid price you have. provided to us.

If your system is below 25kW, your system will be grouped with others to reach the minimum bid size of 500 RECs (which is approximately 80kW). Groupings will be determined by the bid prices submitted as well as the overall range of bid sizes and prices. Our goal is to form the most competitive groups possible. However, we will treat the bid price you have provided to us as a minimum bid price and will not put you in a grouping with a lower price.

4. What should I bid?

You should bid the price that makes your project financially feasible. If your project is already built you should bid a price that would result in a meaningful (to you) reduction in the time required to recoup your investment.

When determining your bid price, make sure to account for Sol Systems’ fees, listed below.

5. What is Sol Systems’ fee?

For winning bids, Sol Systems will charge a fee per SREC based on the winning bid price. For Systems smaller than 25kW the fee will be 11% or $10, whichever is greater on a per SREC basis. For systems larger than 25kW the fee will be 9% or $10, whichever is greater on a per SREC basis. Customers who do not have winning bids, will not be charged an additional fee.

6. How do I calculate how many SRECs to bid?

All systems will use the same formula to calculate the quantity of RECs they bid, based on their nameplate capacity. That bid quantity will be calculated as: (Planned Installed Capacity / 1000) x .1438 (the Assumed Capacity Factor) x 8760 kilowatt hours hours x 5 years. When customers register online, this calculation will be done automatically for them.

7. Do I have to post credit?

Any Sol Systems’ customer bidding identified systems will not have to make any credit deposit to place a bid. If you have a winning bid, you will be asked to deposit $4/SREC as the required post-bid credit.

The procurement does have several credit posting requirements: $16/REC for speculative bids and $8/REC for identified bids. Half of the required credit is due at the time of bid submittal.

Installers or Developers placing Speculative bids will post credit as a part of submitting a bid to Sol Systems.

8. Will I get my deposit back?

Yes, if you have a winning bid and are required to post credit, the credit will be refunded along with your first payment for SRECs. If you’ve place a speculative bid, and your bid does not win, your credit deposit will be refunded once IPA has returned the deposit to Sol Systems.

Next Steps after Bid Submission

1. What happens if I have a winning bid?

Once your system is turned on, you will need to submit your approved interconnection agreement to Sol Systems. If your system does not have remote monitoring installed you will report meter readings once a month via your Customer Dashboard on Sol Systems’ online platform.

2. What important dates should I be aware of?

Installers and developers placing speculative bids have six months to identify the systems which will generate RECs to fulfill the speculative bid. Once identified, systems must be energized and registered with GATS/M-RETS within 12 months

Solar energy systems with winning identified bids must be energized and registered with GATS or M-RETS within 12 months of the bid date. Sol Systems will handle these registrations.

3. What are the registration requirements?

Once Sol Systems has received all the necessary information from the customer or installer, we will handle all state and regulatory registration requirements on behalf of any customers with winning bids. There is no additional fee for this process.

4. How will monthly meter readings be reported? Will I have to do it?

Sol Systems will handle submission of meter readings to PJM-GATS or M-RETS on a monthly basis. Meter readings are the way by which SRECs will be measured so that IPA knows how any SRECs you should be awarded and paid for.

Depending on the requirements of the tracking registry and whether your systems has remote monitoring installed, winners may be required to report information to Sol Systems on a monthly basis via Sol Systems’ online Customer Dashboard.

5. When will I get paid?

Payments will be issued on a quarterly basis. Sol Systems processes payments at the end of each month in February, May, August, and November. Payments are also received from the IPA on a quarterly schedule, and Sol Systems will pay customers in the payment month immediately after it has received payment from the IPA. For example, if IPA issues payment to Sol Systems in December, the customer will receive payment in the February cycle.

6. What happens if I bid and lose?

If you first bid does not win in June, Sol Systems will bid your SRECs again in the November event. Before we place another bid for you, you will have the opportunity to confirm or change your bid price.

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 333MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments and project acquisition, to debt financing and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.

Massachusetts: A Solar Champion

The Massachusetts Clearinghouse Auction has helped propel the Commonwealth to one of the top nation's solar markets in the nation.

The Massachusetts Clearinghouse Auction has helped propel the Commonwealth to one of the nation’s top solar markets

Lately, Massachusetts has gotten used to winning, and the Massachusetts solar market is no exception. With over 300 MW of installed solar capacity and nearly 10,000 solar jobs, Massachusetts comes in at the 4th strongest solar market in the country. And thanks to last year’s unveiling of the state’s SREC-II program, growth has continued.

The Commonwealth’s Solar Carve-Out was initially intended to support the development of 400MW of solar, but in an effort to incentivize further growth, the Carve-Out has since been expanded (with goal of 1600MW in mind). Over the past several years, the Massachusetts Department of Energy Resources’ (DOER) Solar Renewable Energy Credit Clearinghouse Auction has played an essential role in stabilizing the Massachusetts SREC market. This summer’s iteration was, for the most part, no exception. At the end of July, DOER held the third Clearinghouse Auction for its SREC-I program since the state established its Solar Carve-Out in 2010. Sol Systems sold SRECs in the auction on behalf of customers, and it was also one of 55 bidders to participate.

Here’s how it went down:

The SREC-I auction proved to be successful, proportionally distributing SRECs to bidders at the fixed price of $300/MWh ($300 minus fees are distributed to customers). But unlike last year’s auction, the Clearinghouse was heavily over-subscribed from the start, causing it to clear easily in the first round. In fact, buyers placed nearly 10 times as many bids for SRECs as there were SRECs available for purchase (124,831). This was in large part due to a projected market shortage that has sent 2016 SREC prices soaring to $450/MWh. Because Massachusetts allows buyers to bank SRECs purchased in the auction for later use, many entities with future compliance obligations have rushed to take advantage of the SRECs’ extended life (an additional two years upon entering the auction). Anticipating this spike in demand and to ensure that utilities are able to meet their compliance obligations, DOER earmarked half of the available SRECs for purchase exclusively by utility companies.

DOER did not hold an auction for the newly created SREC-II market this year since all qualifying systems were able to sell their SRECs on the open market.

The Massachusetts Solar Magnet

High SREC prices are a major driver of the Massachusetts gold rush, causing developers from across the country to flock to the Commonwealth in search of opportunity. By offering a fixed Clearinghouse Auction price of $300/MWh and maintaining some of the highest Alternative Compliance Payments in the country, the state sends utilities a clear signal that they must continue to invest heavily in solar development. In fact, just last winter, customers in Massachusetts experienced a significant rate increase, one that solidified the state’s position as one of the most expensive electricity markets in the country.

The Massachusetts solar magnet has caused many areas in the Commonwealth to hit their net metering caps, providing cause for concern over the future stability of the commercial market (the cap doesn’t apply to residential systems).The good news? Solar development continues to be a priority in Massachusetts, and Sol Systems is committed to continuing to drive down project transaction costs to ensure that more deals are financed in the Commonwealth. For more information on Sol Systems’ SREC services for installers in Massachusetts and around the country – or general financing for commercial solar projects in the Commonwealth – please contact finance@solsystems.com.

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 333MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments and project acquisition, to debt financing and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.

Solar Shines Through The Rain At Solar Power International

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All registration fees for the 5k went towards supporting GRID Alternatives and the Solar Foundation

Pouring rain could not stop most from waking up extra early to take on the streets of Anaheim with the impressive determination, good humor, and speed that are hallmarks of the solar energy industry. Thank you to everyone who had a part in making the #RunWithSOLar5K a fun and healthy way to start off SPI 2015!

The event was sold out, and 100% of the registration fees, which will be posted by SEIA and SEPA in the coming weeks, will be donated to the Solar Foundation and GRID Alternatives. The two organizations continue to do vital work to bring solar energy and jobs to all communities.

Congratulations to the winners! Everyone’s results may be found here.

1 - Race Winners

Run with SOLar 5k winners John Beard and Emma Kosciak

Overall

1st           John Beard

2nd          Emma Kosciak

3rd          Cameron Crowe

Men

1st           John Beard

2nd          Cameron Crowe

3rd           Alex Ward

Women

1st           Emma Kosciak

2nd          Trisha Elizando

3rd           Anna Noucas

Teams

1st           Sol Systems

2nd          EnterSolar

3rd           Kyocera Solar

IMPORTANT NOTE REGARDING YOUR “PACE” TIME:  Thanks to a misplaced cone, we all got a little “bonus” distance to make this a 5KPlus race. So, your pace time is based on 3.5 miles.

To recognize the race winners, Sol Systems is buying and retiring an SREC in the PJM region for each individual winner, and one for each winning team in order to offset carbon emissions. Individual winners will also receive a gift card to purchase running gear from a national sports store.

Thank you again, and all the best to you all for a successful and healthy wrap up to 2015!

Sol Systems

Solar Power International

SEIA

SEPA

The Solar Foundation

GRID Alternatives

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 333MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments and project acquisition, to debt financing and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.

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

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

Split Decision: Massachusetts Net Metering Task Force Draws Lines in the Sand

An amendment to a climate change action bill (S 1973), sponsored by State Senator Ben Downing, has passed in the Massachusetts Senate in favor of raising the state’s net metering caps.

An amendment to a climate change action bill (S 1973), sponsored by State Senator Ben Downing, has passed in the Massachusetts Senate in favor of raising the state’s net metering caps.

An amendment to a climate change action bill (S 1973), sponsored by State Senator Ben Downing, has passed in the Massachusetts Senate in favor of raising the state’s net metering caps. Lifting the net metering caps is critical for the Massachusetts solar industry, which now employs over 9,400 solar workers, second only to California in solar jobs. In 2014 alone, Massachusetts installed 308MW of solar electric capacity. However, solar development in Massachusetts has slowed since National Grid hit its private and public net metering caps earlier this year. Now, the House and governor must decide if the caps will actually be raised, bringing the Commonwealth closer to its goal of 1,600MW of solar by 2020.

The caps, along with other solar regulatory issues, were analyzed by the Massachusetts Net Metering and Solar Task Force, tasked by the legislature to report on the issues surrounding solar incentives and regulation.

On April 30, 2015, one month after their original deadline, the Task Force released their Final Report to the Legislature. While the report intended to include the needs of utilities, customers, solar industry representatives, legislators and non-Task Force stakeholders alike, the original document was disjointed, drawing a firm line in the sand over the divisive issues without a strong solution.

For many issues, the Task Force actually released two separate opinions with Task Force members associating their names with a specific opinion, distancing them from the alternative. Regarding the incentive delivery mechanism – or program design – for large scale solar projects, one group supported a Declining Block Incentive (like we see in New York’s Megawatt Block, for example), while the other supported a Competitive Procurement Model (similar to what one would see in Illinois, Delaware, and other comparable markets).

Program Design: What Will the Commonwealth’s Next Solar Program Look Like?

The pro-solar group supporting Declining Block Incentive (consisting of representatives from the solar industry, town administrators, legislative appointees, and others), sees this program design as optimal for clear, reliable, and sustainable solar development. With a Declining Block, the program is “always on,” meaning developers know the rate they can receive as they develop a project, and they don’t have to tie their development schedule to a procurement schedule. A bidding process would tie developers to a schedule, and prevent earlier stage projects from attaining a certain level of certainty that they can proceed.

Net Metering Caps: Raise Now, Later, or Not at All?

The Task Force was also split on net metering compensation, as well as immediate and long term changes to net metering Caps. Nine members supported raising the caps in the near-term, while three members opposed a short-term cap raise. Absent an interim solution for the net metering caps that have been met, or are close to being met, solar installations are already beginning to stall in Massachusetts. Rabinowitz asserted that the caps in National Grid territory do not need to be raised, since National Grid is still receiving applications. On the contrary, developers are most likely applying in hopes that other projects fall through and they can move their own projects forward. It is incorrect to assume that the program is unnecessary simply because applications are being received after the cap has been met. As noted in this July’s SOURCE: the Sol Project Finance Journal, some projects such as completely behind the meter and small projects in municipal territories can continue without any change to the caps.

Solar Geography: Getting Beyond National Grid

The Task Force took a united stance on some issues such as Geographic Distribution stating that “The Task Force Members agree that there should be an equal opportunity for solar development across the state.” This is likely to have minimal to no impact on the industry however, and was low-hanging fruit for consensus.

What Solar Needs in Massachusetts

What solar needs to be successful, in Massachusetts and elsewhere, is a clear regulatory framework to operate within. While the Task Force was a prime opportunity for developing a sustainable plan for solar in Massachusetts, they seem to have stuck to their own interests. Providing such disparate recommendations to the legislature is not only inefficient, but it fails to reduce uncertainty within the industry.

Sen. Downing’s amendment may face an uphill battle in the house, and with Governor Baker, who has come out against the caps being raised until more protections are put in place for non-participating rate payers. With the report from the Task Force, it is still unclear what those protections are, and if they’re warranted. What is clear is that at least in the short-term, the net metering caps must be raised for solar development to continue in the nation’s #4 solar market.

ABOUT SOL SYSTEMS

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

What Can Community Supported Agriculture Teach the Solar Industry?

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Like Community Supported Agriculture offers individuals a portion of a crop yield, shared solar models are sprouting up throughout the U.S., offering people opportunities to choose clean energy without owning their own solar energy system or leasing their rooftop.

In 1965, amidst destruction of arable land and the growing use of pesticides in food production, a group of Japanese women invented “tei kei,” a system where consumers supported local farmers on an annual basis in exchange for a share of their crop. In the 1980s and 90s, this idea spread to the United States, where consumers desiring to take control of their food choices enrolled in CSA (Community Supported Agriculture) programs, purchasing a share of a local farmer’s crop each season. Starting in cities in the Northeast where residents didn’t have access to their own gardens, thousands of CSAs have spread across the country. Like Community Supported Agriculture offers individuals a portion of a crop yield, shared solar models are sprouting up throughout the U.S., offering people opportunities to choose clean energy without owning their own solar energy system or leasing their rooftop.

Why Shared Solar Matters

The residential solar market has seen dramatic growth over the past few years due to rapidly declining module costs and innovative financing models like power purchase agreements (PPAs) and leases. Unfortunately, even these forces cannot seed solar development for millions of people who can’t install a system on their homes because they have shaded roofs, weak credit scores, or don’t own their homes. This leaves more than half of Americans without the ability to host a solar array. Businesses have also been taking advantage of the savings and predictable energy costs that come from owning or hosting a solar array, whether on-site or remote. Companies like Wal-Mart, Ikea, Apple, Amazon and Google have all been major players in cultivating the solar boom of the last five years. While it is actually relatively straightforward for them to do so in any deregulated electricity market, many businesses haven’t taken advantage of opportunities to go solar.

Enter shared solar – also known as community solar. Like a CSA for solar energy, people who may not be able to host a solar installation on their roof can buy shares of a solar installation that is installed in a field or on a rooftop in their community. Customers can either pay upfront, or sign a contract to pay for the energy for a fixed period of time. At the end of each billing cycle, people or businesses will see the fruits of their investment as they receive credits on their electricity bill for the amount of solar produced by their share of the installation. In Minnesota and Colorado, these installations are called “solar gardens.”

The Shared Solar Opportunity

While the concept of shared solar has been around for years, recent legislative wins have made it ripe for flowering. Colorado, Minnesota, Massachusetts and California have all passed legislation legalizing the shared solar model and other states are following suit.  Even places like New York, D.C., and Maryland have passed legislation improving the economics and streamlining the administration of these systems, in the absence of industry uptake in a non-legislated model. The National Renewable Energy Laboratory (NREL) estimates that the extra customers that solar gardens bring in could cultivate over 10GW of solar capacity over the next five years representing half of new solar development and billions of dollars in investment opportunity. By removing the barriers to owning or hosting a solar panel on one’s rooftop, these models also potentially open direct participation in clean energy to 100% of electricity customers.

Seeing these opportunities, a number of developers are sowing the seeds for large solar gardens. In Minnesota, the utility Xcel Energy has received bids for nearly 1GW of projects (the state currently only has 22MW of installed capacity). However, Minnesota offers an important case study regarding the regulatory challenges that shared solar faces across the country. Solar gardens in MN are capped at 1MW in size, but many proposed gardens are larger installations co-located on the same site. Xcel has announced it won’t allow co-located gardens and has stalled all Minnesota community solar projects until the Public Utilities Commission reaches a decision. While shared solar models offer the promise to bring solar to millions of new customers, many implementation hurdles still prevent these programs from reaching maturity.

Sowing the Seeds for Shared Solar

Despite the many weeds that still need to be rooted out, the opportunities for shared solar models to accelerate growth are vast. Over three-quarters of Americans believe in further developing our solar resources, and community solar enables people to have direct choice in creating the clean energy future they desire. In the foreseeable future, participating in community solar may be as ubiquitous as purchasing a share in a CSA or shopping at the farmer’s market.

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.