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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 grades for each state
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 “agriculture 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.

Why Are There So Few Bankable Inverter Manufacturers?

July 30, 2013- 67 kW (STC rating) photovoltaic array with a PVI 82 kW inverter at the Mesa Verde Visitor and Research Center in Montezuma County, Colorado. The array consists of 286 Schott Poly 235 watt solar modules (13.8% efficiency) wired in 22 series

And another one gone, another one gone…We called it.

This post was co-authored by Senior Director, Investment Analysis Joe Song.

And another one gone, another one gone…We called it. It’s a new ball game for the inverter business. Advanced Energy (AE), the #3 inverter manufacturer in the U.S., recently announced its intention to “wind down” its inverter business. With Satcon’s bankruptcy and SMA announcing its own struggles earlier this year, it is evident that inverter manufacturers are experiencing the pricing compression that module manufacturers have batted against for the past decade.

When considering equipment preferences for our own investments, we count nearly two dozen Tier-1 module manufacturers, as opposed to five or so inverter companies (and we find this to be market with other financiers). Why is it that there are far fewer bankable inverter manufacturers than bankable modules?

For one, engineering and manufacturing modules is a much simpler and more standardized process that is nearly commoditized, with a lower hurdle rate and learning curve as opposed to tech-heavy inverters. All inverters are not created equally; these are highly complicated, highly sophisticated machines that are arguably more important than the modules to which they connect.

As opposed to modules, inverters do have moving parts, and they are exposed to a harsher degree of operating conditions, with parts that are more prone to failure but also depended on to perform at a high degree of availability. In addition, inverter manufacturers often have much more intensive service programs, being called upon much more frequently than any other core technology provider, presenting resource demands that are challenging to fulfill sustainably. In comparison to module manufacturers, where only a few have unique technologies, the majority compete mostly on marketing and pricing, with little differentiation in the actual product itself.

Module manufacturers were the first to feel the extreme downward pricing pressure from foreign competition. Then, as most low hanging cost reductions were exhausted, inverters became the next target of price compression for the last few years. Foreign companies like Chint and Sungrow are contributing to the same trends in the inverter market, causing a tremendous downward effect on pricing and creating highly competitive conditions in the U.S. While it is a positive news for the industry that all-in project costs have become more competitive, we may continue to see high quality manufacturers no longer able to sustain profitable business lines.

In the near term, we do not expect consolidation of the inverter business to have a dramatic impact on project development, inverter pricing, or delivery schedules. We project that for the most part, the remaining manufacturers have the ability to scale. This may, however, give investors pause as they reconsider bankable inverters and how to evaluate this properly in light of these change-ups. It is highly likely that recent newcomers will ultimately prove worthy of participating in non-recourse financed projects; the amount of time it takes for the market to gain this comfort in these newcomers will be a key consideration.

The biggest question that remains in light of AE’s news is about servicing the operating inverters still under warrantee, and to what degree the warranties will be honored. Since AE is not closing up shop – just “winding down” its manufacturing – we remain optimistic that AE will service the parts or certify a third party to handle for them.

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

ABOUT SOL SYSTEMS

Sol Systems is a 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.

Is DC’s Sustainable Energy Utility Sustainable?

Groups such as GRID Alternatives have been critical to pushing forward low-income solar in the District.

Groups such as GRID Alternatives have been critical to pushing forward low-income solar in the District.

The District of Columbia City Council is a tried and true champion of renewable energy development. Over the past decade, it has extended and expanded the District’s Renewable Portfolio Standard and solar carve-out, cultivating the strongest SREC market in the country. In 2008, the Council created the DC Sustainable Energy Utility (DCSEU) and the Sustainable Energy Trust Fund (SETF). The Council charges the DCSEU with increasing the District’s renewable energy generating capacity, especially among low-income households. But the DCSEU may face an uncertain future, due in large part to actions that may strip the utility of its main source of reliable funding.

Through the end of 2014, the DCSEU had installed 28 percent of the District’s renewable energy generation capacity. To accomplish this, it installed solar arrays on 105 low-income homes at no cost to the homeowner, relying heavily on the funding it received from the Sustainable Energy Trust Fund. But in passing the “Fiscal Year 2016 Budget Support Act of 2015” on for Mayoral approval last month, funds will be diverted from the SETF to the DC General Fund for the fifth time in seven years. The result will be the removal of over $5 million of ratepayer fees from solar development, potentially stifling local installers and costing low-income residents valuable income.

Where does the DCSEU get its funding?

Natural gas and electric utilities provide most of the SETF’s funding, but the law implies that utilities should recoup their contributions by imposing a small surcharge on ratepayers’ utility bills. That has been working since the law’s passage in 2008. But if this revenue is shifted from the SETF and instead to the District’s General Fund, ratepayers effectively pay extra taxes on their electricity and gas – taxes that are unlikely to be put toward renewable energy development.

What’s the good news?

DC’s Fiscal Year 2015 Budget re-upped the newer Renewable Energy Development Fund (REDF), which enables the DCSEU to continue pursuing its solar development goals in the District. The law mandates that Alternative Compliance Payments, a fee levied against utility companies that fail to meet the District’s renewable portfolio standard, provide the capital for the REDF.

Making solar affordable for everybody

Low-income households often spend a higher proportion of their income on electricity, making access to cost-saving solar photovoltaics especially important for low-income families. One product of the Renewable Energy Development Fund is the Solar Advantage Plus program. Here’s how it works: the DCSEU contracts six developers to install solar energy systems on low-income households, offering energy savings for customers and expanded opportunities for installers. Then, to help provide additional funding for the installations, the contractors can sell the Solar Renewable Energy Certificates (SRECs) that the system generates. Solar Advantage Plus and other programs like it will also help to expand the geographic diversity of residential solar installations, an outcome worth pursuing given the high concentration of solar installations in the District’s wealthier Northwestern quadrant.

Looking to the future

The siphoning of utility-imposed surcharges warrants concern from ratepayers and utilities alike. Under the current funding structure, both contribute more than their fair share to the District’s solar energy development efforts. By continuing to supply the DC General Fund with diverted SETF funds while also requiring Alternative Compliance Payments be sent to the REDF, the DC Council double-charges its utilities for investments that are not earmarked for renewable energy development. For now, the Council has at least secured short-term alternative funding for solar energy installations. However, with Alternative Compliance Payments and SREC prices set to decline in 2017, the future of low income solar in the District remains to be seen.

ABOUT SOL SYSTEMS

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

Sol Systems’ Summer Intern Spotlight

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Left to right: Olivia Chen, Will Patterson, Andrew Dewey, Jeffrey Popkin, Joseph Kraut and Louis Winkler. Not pictured: Jacob Sandry

Here at Sol Systems, we make investments of all kinds. Our number one investment? Young people inspired to embark on a career in the renewable energy industry. This summer, we welcome our interns Olivia Chen, Andrew Dewey, Joseph Kraut, Will Patterson, Jeffrey Popkin, Jacob Sandry, and Louis “Cuffie” Winkler.

Olivia Chen joins Sol Systems this summer as an SREC Portfolio Intern. In that role, she assists the SREC Trading team with modeling of state SREC markets. Prior to joining the Sol Systems team, Ms. Chen worked at Apple Inc. in Silicon Valley doing Quality Assurance for both Siri and Apple Maps. Ms. Chen holds a Bachelor’s of Arts in Economics and Communication from the University of California at Davis, and is currently pursuing a Master’s degree in Statistics with a concentration in Quantitative Analysis at American University in Washington, D.C.

When Andrew Dewey came to Sol Systems as an SREC Operations Intern in January, he assisted with customer service and processing residential systems for SREC sales. In his new position as Project Finance Intern, Mr. Dewey assists in outreach to developers, as well as analysis and modeling of potential new projects. Prior to joining Sol Systems, he worked as an intern at the Solar Electric Power Association (SEPA). Mr. Dewey is pursuing a Bachelor’s degree in International Business with a minor in Sustainability at George Washington University in Washington, D.C.

Joseph Kraut comes to Sol Systems as an intern in the Tax Equity group. This summer he will help transition tax equity projects to asset management as well as document processes used in financial analysis of tax equity deals. Before interning at Sol Systems, Mr. Kraut served in the U.S. Navy as a Submarine Officer for seven years. Last summer, he interned at a solar energy start-up where he modeled commercial scale tax equity investments. Mr. Kraut holds a B.S.E. in Mechanical Engineering from the University of Michigan and is currently pursuing a dual Master’s degree from the University of Michigan’s Erb Institute. He will graduate with an M.S./M.B.A. focused on energy and finance.

Since joining the Sol Systems team in January as a Marketing and Communications Intern, Will Patterson has assisted with website maintenance, social media metrics and planning, and company marketing. Before coming to Sol Systems, Mr. Patterson worked as a Communications Intern at the American Academy of Actuaries. Mr. Patterson is pursuing a Bachelor’s of Arts in Communications with a concentration in Public Relations at the University of Maryland at College Park.

Jeffrey Popkin joins the Sol Systems team as a Solar Analyst Intern. He will conduct policy research, assist the SREC Operations team, and develop strategy for long-term installer partnerships. Previously, Mr. Popkin interned at the U.S. Department of Justice in the Environment and Natural Resources Division, where he conducted policy and legal research on the EPA’s Clean Power Plan and assisted in congressional relations. He recently graduated from the University of North Carolina at Chapel Hill with a Bachelor’s of Arts in Economics and Public Policy.

Jacob Sandry is a Project Finance Intern at Sol Systems exploring emerging solar markets with new development models and assisting the team with project modeling. Mr. Sandry has previously served as a Fellow at Solar Mosaic where he conducted research and helped to develop a platform through which communities could develop solar projects. He is pursuing a Bachelor’s of Arts in American Studies at Yale University and is an Energy Studies Scholar. Through the Yale Entrepreneurial Institute Summer Fellowship, he founded an organic sports drink company called SÖL Hydration.

Louis “Cuffie” Winkler joins the Sol Systems team as an Asset Management Intern. He performs financial analyses of future solar photovoltaic and solar thermal projects and also assists in the management of closed projects. Before coming to Sol Systems, Mr. Winkler worked as a Project Management Consultant for Eastern Research Group where he did consulting work for the U.S. Environmental Protection Agency. Mr. Winkler holds a Bachelor’s of Arts in History from Hamilton College in New York and is currently pursuing a joint Master’s degree in Environmental Management and Business Administration from Duke University’s Nicholas School of the Environment and the University of North Carolina at Chapel Hill’s Kenan-Flagler Business School.

The Sol Systems team extends a warm welcome to our summer interns and wishes them well as they continue to develop careers in renewable energy.  For more information on internship and career opportunities, please visit http://www.solsystems.com/our-company/careers.

ABOUT SOL SYSTEMS

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

Can We Handle the Truth? What Can an A/B Split Tell Us about North Carolina’s House Bill 332?

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North Carolina has reached a pivotal moment in the trajectory of its solar economy. Will they take the road to solar prosperity?

CAUTIONIf you adhere to the adage, “Don’t ask a question you don’t know the answer to,” read on at your own risk.

Our state and local governments are challenged every day with the demands of delivering public services efficiently while making public investments necessary for long-term, lucrative economic development.

In an ideal world, objective experts provide our policymakers with data-based cost benefit analyses they use to determine if and how incentives and subsidies deliver widespread, positive outcomes for individuals and businesses. In the real world, bias and emotions interject as different alliances petition for the same scarce public resources.

Whatever your personal view of solar tax incentives, would you like to know their true, real-life impacts on your state and local jobs, tax revenues, economic well-being, electricity rates, and of course, the climate?

North Carolina may have your answer. Let’s start with a snapshot of the state’s solar market today (Sources: U.S. Solar Market Insight, The Solar Foundation, and EPA U.S. Greenhouse Gas Equivalencies Calculator):

  • 2nd highest state for solar PV installation capacity with 397MW installed in 2014(2nd only to California)
  • 11th highest number of solar jobs per capita, up from #25 in 20132
  • +2,500 solar jobs in 2014 to total over 5,600
  • 177 solar companies at work throughout the value chain
  • 1,011MW of solar energy currently installed, ranking the state 4th in installed solar capacity
  • $652 million invested in solar installations in 2014
  • Enough solar energy installed in the state to power 110,000 homes or offset carbon emissions from 749 million pounds of coal burned

This solar prosperity evolved after the state’s policy initiatives including a Renewable Portfolio Standard (RPS) target of 12.50% by 2021, a 35% tax credit through 2015, and standard-offer PPA contract from the utilities at a fixed rate of approximately equaling about $0.068/kWh for up to 15 years for projects up to 5MW (AC).

So, here’s the question:  What happens to North Carolina’s solar industry and the state’s economic well-being without these policy tools?

The General Assembly is thinking about this question right now. In fact, the House has already passed House Bill 332 that would: 1) halt North Carolina’s RPS at six percent, scaling its original commitment back by more than half; and 2) reduce the current threshold for Qualifying Facilities eligible for the standard-offer PPA program from 5MW down to 100kW. Now, the Senate is doing their analysis.

Does it make sense to pull the plug half way through a policy initiative that has slingshot North Carolina into national leadership for solar capacity and jobs?  What if North Carolina’s policymakers did what many businesses do to uncover economic outcomes of two possible courses of action? An A/B split, or randomized experiment, is a common, proven method to test two hypotheses over a specific period of time. A population is randomly divided into two groups where one is the control group, maintaining the existing offer, and the other group receives a test offer.

CAVEAT:    The A/B test idea is a hypothetical, folks. It’s meant to elicit ideas about how to test how the true, real-life upside potential and downside risks shake out in the public interest.

North Carolina is ripe for an A/B test. The state could be randomly divided into two groups of counties, where, for one year, one group of counties – Group A – keeps all incentives as they are, and the other group of counties – Group B – operates without the 35% tax credit, and under the scaled back to proposed House Bill 332 levels.

At the end of the year, counties could report the annual changes in solar jobs, solar investments in dollars and megawatts, solar-related tax revenues, electricity rates, and other key indicators to determine if and how the incentives benefit the people and businesses of North Carolina. If the A/B split were to happen, which group would you rather be in?

SIDE NOTE:  We ran a 100kW project in North Carolina through our proven financial model to see if it could pencil should House Bill 332 pass and cap Qualifying Facilities at that size. We plugged in several scenarios of build costs, PPA rates, and other transaction inputs. Each time, it broke the model – meaning there was no cost of capital that can make this size transaction work. The implications of this finding are significant: our investors would have no choice but to seek investments in other states.

ABOUT SOL SYSTEMS

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

Sol Systems to Sponsor Intersolar Women In Solar Energy Breakfast

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WISE is the solar industry’s only 501(c)3 non-profit membership association dedicated to the advancement of women in the solar energy industry.

Sol Systems will sponsor the Women in Solar Energy (WISE) Intersolar Breakfast, which will take place on Tuesday, July 14 at the Intercontinental Hotel in San Francisco.  WISE is the solar industry’s only 501(c)3 non-profit membership association dedicated to the advancement of women in the solar energy industry.

During the breakfast, which is included in the official Intersolar program schedule, successful women in the solar industry will share their stories and discuss ways that solar companies can work toward a more diverse workforce.

Sara Rafalson, Senior Associate at Sol Systems, serves in a volunteer capacity as President of WISE and will deliver opening remarks at the breakfast. Sol Systems’ Stephanie Smith (COO), Rebecca Tilbrook (Project Engineer), and Jessica Cowan (Office Manager & Special Projects) will also be in attendance.

Diversity is at the heart of Sol Systems, where 36 percent of the team is comprised of women, as compared to 21.6% of the solar workforce at large. In addition to their support of Women in Solar Energy, the women of Sol host monthly brown bag lunches focusing on professional development; the men of Sol are also included.

Interested in meeting up with Sol Systems at the WISE Intersolar breakfast? RSVP today; seats are limited.

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 200MW 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.

SOURCE: The Sol Project Finance Journal, June 2015

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

Below, we have included excerpts from the June 2015 edition.  To receive future Journals, please email pr@solsystems.com.

PROJECT FINANCE STATISTICS

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

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*Our all-in price statistics exclude projects from Ontario, Hawaii, the U.S. Virgin Islands, and Puerto Rico where all-in prices remain over $3.50/W.

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STATE MARKETS

California: Because you know it’s all about that rate, ‘bout that rate… The gold rush is here. Already, 184MW out of the eligible 400MW have been filled for Southern California Edison’s (SCE) Option R rate. Remember, Option R allows developers to better pitch ROI to hosts by focusing on Time of Use (TOU) rate charges instead of demand charges. Get it while you can; we expect the remaining 200MW+ to fill up quickly. Meanwhile, Pacific Gas and Electric’s (PG&E) Option R became available on June 1; look for that to open the market for commercial solar projects in PG&E territory. Unlike Option R in SCE territory, PG&E’s has no cap on the number of customers or megawatts.

New Jersey:  We are consistently surprised by the lack of commercial-scale pipeline coming out of New Jersey. Perhaps many hosts are opting for cash purchases instead of third-party financed deals. Or perhaps developers look at the $225 SREC prices of today and long for the $600/mWh pricing from yesteryear. Maybe more third-party financed deals going to leases? We’re stumped; you tell us. Meanwhile, the Garden State seems particularly primed for merchant opportunities.

Rhode Island: Unfazed after falling slightly short of its goal to procure 40MW of renewable energy by 2014, the Ocean State upped the ante with an even more ambitious goal: 25MW of renewable energy for 2015, increasing to 40MW each year for 2016-2018. Applications for small-scale solar (<25kW) opened up on June 15, while applications for projects 26kW – 5MW will be accepted between August 3 and 14. Take note, highly creditworthy utility off-take and above-market rates in this state will continue to appeal to investors. We strongly suggest this market for Northeastern developers, especially as Massachusetts remains stalled, and New York has fallen short of expectations. There’s much to consider for this state that runs only 48 miles long and 37 miles wide.

SOLAR CHATTER

  • Ready, set, go! Bids for 15-year Connecticut ZREC contracts are due on June 18th at 1pm. We expect for LREC and ZREC pricing to ultimately get closer to the price of Class I RECs.
  • Residual value is a hot topic among financiers who realize that they must take into account the value of the asset once the PPA expires in order to maintain their competitive edge over the other sources of capital flooding the space. How does Emilio Estevez feel about this?
  • This is your monthly reminder that Maryland is the best market where nobody else is doing business. Hint, hint.
  • Watch for the Illinois solar market to pop now that its first SREC procurement deadline has passed. Subsequent rounds will take place in November 2015 and March 2016. Meanwhile, pending legislation pushes for a longer term, more robust solar market in the Land of Lincoln.
  • Vermont has been gaining traction among developers for its high electricity prices, SPEED program, and Green Mountain Power’s solar adder for projects under 500kW AC. The challenge with the Green Mountain Power program, however, is that its floating rate PPA structure spells out risk to many investors. To increase the likelihood that these deals are financed, put a floor in the PPA to make the investor more comfortable with underwriting the deal.
  • The latest Solar Market Insight report showed that residential and utility-scale solar each added more capacity than the natural gas industry brought online in Q1 2015.
  • The verdict is still out on Massachusetts net metering, though many in the industry are cautiously optimistic that a solution will be put in place to keep the industry going until the end of 2016. Support is strong in the state senate, while the support from state house of representatives is questionable. In the meantime, developers should look into NSTAR territory.
  • According to the International Monetary Fund (IMF), 6.5% of 2015 global GDP – or approximately $5.3 trillion – will subsidize fossil fuel use. Hopefully that will put the solar-haters to rest.
  • Got a project in PJM territory that wouldn’t mind a little cash flow boost? Sol Systems is offering compelling SREC contract to projects in PJM territory; some North Carolina, Illinois, Indiana, and even Virginia projects are eligible. Contact srecs@solsystems.com for more information.

ABOUT SOL SYSTEMS

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 200MW 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.