This month's Solar Project Finance Journal includes info on the most competitive PPA prices, developments in some of the hottest state markets, and information on yieldcos, storage, and more.

This month’s Solar Project Finance Journal includes info on the most competitive PPA prices, developments in some of the hottest state markets, and information on yieldcos, storage, and more.

Below, we have included excerpts from Sol Systems’ April 2014 Solar Project Finance Journal, which is a monthly email newsletter that our project finance team distributes to our network of clients and solar stakeholders. Our newsletter contains solar statistics from current real-life solar projects, trends and observations gained through monthly interviews with our solar project finance team, and it incorporates news from a variety of solar industry resources.

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

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

Capacity: 180 kW – 44 MW
Average Capacity:  5 MW

Developer all-in (asking) prices*: 

  • <500 kW:  $2.23-3.00/Watt
  • 500 kW–2 MW:  $2.05-2.85/Watt
  • >2 MW:  $1.60-3.00/Watt

*Our all-in price statistics exclude projects from Ontario, the U.S. Virgin Islands, and Puerto Rico where all-in prices remain over $3.00/W.

Average PPA rates & escalators (20-year terms unless noted)**:

  • AZ: 4.5 – 12 cents/kWh with 2% escalator
  • CA:  11 – 17.5 cents/kWh with escalators between 1.5-3%
  • CT:  7.5 – 14 cents/kWh with 1% escalator
  • MA:  9 – 12.5 cents**/kWh with 2% escalator
  • MD: 7.5 – 10.5 cents/kWh with 2% escalator
  • MN: 9 – 10 cents/kWh with no escalator
  • NC: 6.5 – 8.5 cents/kWh with no escalator, 15-year term
  • NJ:  7 – 12 cents/kWh with 2% escalator
  • NY:  6.5 – 10 cents/kWh with 2% escalator
  • OR: 6.5 – 7.5 cents/kWh with 2% escalator

**With the exception of California, projects rely upon additional state incentives, grants, or an SREC/ZREC contract.

Recent Feed-in Tariff Rates (20-year terms unless noted):

  •  CA: 17.6 cents/kWh with no escalator (LADWP)
  • GA: 9 – 10 cents/kWh with 1% escalator (Georgia Power)
  • IN: 20 cents/kWh for 15 years with no escalator (IP&L)
  • NY: 22 cents/kWh with no escalator (LIPA I)
  • RI: 28.8 cents/kWh for 15 years with no escalator (N-Grid)

Florida:  The outlook on solar in the Sunshine State is increasingly uncertain.  Gainesville Regional Utility suspended their feed-in tariff (FIT) program at the beginning of the year. Florida Power and Light (FP&L), the state’s largest electric utility, recently proposed a solar pilot program that would have ratepayers voluntarily pay an additional $9/month on their utility bills to fund up to 2.4 MW of new solar capacity.  If the program is approved by the Public Utilities Commission, Florida-based installers would build the commercial scale systems, and the resulting solar would be owned and controlled by FP&L.  In the meantime, Ritch Workman, the chairman of a powerful Florida House committee, is trying to stop a constitutional amendment that would extend the state’s residential property tax exemption for solar to certain commercial installations.  If the pro-solar initiative ever reaches a voter ballot, it is expected to pass.

Georgia:   There are three noteworthy solar updates on the Peach State, and more specifically within Georgia Power’s territory:

  • The Advanced Solar Initiative Small & Medium Scale Solar Program’s April 4th application deadline has passed, and contracts will begin to be executed this May. The program will fund up to 45 MW of capacity via systems that are less than 1 MW.
  • On April 7th, the Advanced Solar Initiative Utility Scale RFP Program released its RFP. The utility will attempt to procure 495 MW of solar through this process.
  • There is also new language in the PPA  contract which makes it friendlier to developers and system owners; claw-
    back provisions have been removed, and the opportunity to obtain a Certificate of Public Convenience and Necessity (CPCN) provides greater contract certainty.  Nevertheless, it is rumored that utility-scale projects will have to beat an incredibly low, perhaps impossibly low, avoided cost rate from the utility.

New York:  PSEG Long Island, which began managing LIPA’s electric grid on 1/1/14, announced results for the Clean Solar Initiative (CSI) FIT II on April 2nd. Projects with capacities totaling 100 MW will receive contracts for 16.88 cents/kWh for 20 years; this is significantly lower than LIPA’s CSI I program, which awarded 22 cents/kWh contracts, but should still provide financeable and meaningful cash flows for solar developers and investors. Meanwhile, NYSERDA announced its last round of winners for PON 2589 program a few weeks ago.  PON 2112 still has funding available at $1.00/W for the first 50 kW and $0.60/W for the remaining capacity up to 200 kW. This program continues to produce small but financeable projects. A new PON announcement is also expected soon for projects greater than 200 kW.

In general, there are bright prospects for the New York solar market, and we have heard from more and more residential and commercial solar developers who are opening offices and ramping up operations in New York.  However, as solar penetration increases, developers should anticipate interconnection studies and required upgrades that have the potential to increase project costs and impair development timelines, particularly in land-constrained areas like Long Island.

Vermont:  In a state with a tradition for self-reliance and independence, Vermonters have won even more energy independence thanks to an overwhelming bipartisan vote that expanded Vermont’s net metering cap from 4 to 15% of peak demand. All grid-connected solar energy systems under 500 kW will be compensated for excess solar electricity generation until the cumulative capacity of net metered systems represents more than 15% of Vermont’s peak load.

Solar Chatter:

  • More developers and investors are starting to price out energy storage and smart controllers. In markets like California and Hawaii that have relatively high solar penetration, these devices have the potential to reduce grid volatility, mitigate tolerance issues, and streamline the interconnection review process.
  • Panel prices have increased slightly. This is likely due to increased global demand (consider the massive growth in Japan and China), and perhaps the tariff trade “war” with China. These price increases have caused some challenges with deals at term sheet stage when the developer has modeled lower panel prices but neither the developer nor the investor is willing to assume the reality of increased costs. These issues can sometimes be mitigated if an investor is capable of bringing their own panels to the project.
  • Yieldcos continue to be a hot topic. Bloomberg estimates that at least a dozen developers are considering or have already formed yieldcos. Abengoa is considering one, and SunEdison is moving forward on $250 million yieldco with capital from Goldman Sachs. One reason that yieldcos may deliver value is that the residual life of PV systems could become more prominent as the systems generate benefits after the life of the initial PPA.
  • In a maturing industry, consolidation is inevitable. Solar M&A activity continues with recent announcements from Real Goods Solar, Sunrun, and NRG.
  • In reference to net metering battles with utilities in California, Arizona, Louisiana, Idaho, Washington, Utah, Louisiana, Kansas and Vermont, the President of the Alliance for Solar Choice & VP of Policy Sunrun, Bryan Miller, stated “Utilities have lost battles on rooftop solar 9-0 in the last year. They’ve lost every single one of them.”
  • It looks like Illinois is getting closer to fixing some of its solar policy issues. If the renewable portfolio standard (RPS) is addressed through SB103, Illinois could become a top 10 solar market in 2015.
  • Compared with NYSERDA’s previous round of PON 2589 funding, the latest round was awarded to a more diversified group of developers. Some have speculated that the usual suspects were passed over because they had dragged out timelines on other NYSERDA projects – or that NYSERDA is responding to complaints from smaller developers.

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