August 2014 Project Finance Journal

14 Aug 2014

Solar feed-in tariffs

This month’s Project Finance Journal includes market developments in IA, MA, and NC, info on the most competitive PPA rates, solar tariffs, and more.

Below, we have included excerpts from Sol Systems’ August 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 energy projects and portfolios that we are actively reviewing for investment.

Capacity: 120 kW – 60 MW

Average Capacity: 5.25 MW

Developer all-in (asking) prices*

• <500 kW: $2.40 – 3.60/Watt

• 500 kW–2 MW: $1.80 – 3.15/Watt

• >2 MW: $1.50-3.10/Watt

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

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

• CA: 6 – 15 cents/kWh with escalators between 1.5-3%

•CT: 7 – 15 cents/kWh with 2% escalator

•DC: 7 – 8 cents/kWh with 2% escalator

• HI: 15 – 22 cents/kWh with 2% escalator

• IN: 9 – 11 cents/kWh with 2% escalator

• MA: 6 – 12 cents/kWh with 2% escalator

• MD: 9 – 11 cents/kWh with 2% escalator

• NC: 6.5 – 8.5 cents/kWh with no escalator, 15-year term

• NJ: 9 – 13 cents/kWh with 2% escalator

• NY: 8.5 – 14 cents/kWh with 2% escalator

• OH: 7 – 7.5 cents/kWh with 2% escalator

• VT: 13 – 19 cents/kWh with escalators between 1-2%

**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:
    • 12.6 cents/kWh with no escalator (PG&E)
    • 17 cents/kWh with no escalator (LADWP)
  • GA:
    • 8-9 cents/kWh with no escalator (Georgia Power)
    • 13 cents/kWh with no 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: 18.5 cents/kWh with no escalator (National Grid)


Iowa:  The Hawkeye State joined the list of states with a legal precedent to allow third party power purchase agreements (PPA’s) after the state Supreme Court ruled in favor of Eagle Point Solar (EPS). The ruling affirmed that the Dubuque, IA based solar installer was not acting as a utility when it arranged a PPA with the city of Dubuque. This emerging market is ripe with opportunity, as inexpensive land, low EPC costs, a bounty of bankable hosts (ie: municipalities), and high insolation will boost project development. Commercial and industrial (C&I) entities are great prospects as well, though these hosts may be more cumbersome given that they are subject to demand charges that make modeling accurate returns more challenging. Developers interested in the Iowa solar market should give us a call for advice on EPC prices and PPA rates that could make projects pencil.

Massachusetts: On the last day of the year’s legislative session, lawmakers ditched the Great Solar Compromise bill that was proposed earlier this summer, instead voting to raise the Commonwealth’s net metering caps. The cap for private solar projects will increase from 3% to 4% of an electric distribution company’s peak load. The cap for public projects will increase from 3% to 5%, and the SREC market will remain. Unfortunately, Governor Patrick’s 1.6 GW goal will not be memorialized in the legislation, which opens the market up to political risk when the Governor steps down early next year. Overall, we see this as progress for the solar industry, though it is only a stopgap solution until Massachusetts is forced to revisit their solar policy when the caps are reached…again. In other news, the Massachusetts Clearinghouse auction cleared in the third and final round on Friday, August 1. Read our analysis on how this will affect the SREC II market.

North Carolina: Currently, utilities must pay a set rate for power generated from projects under 5 MW. However, a proposal now under review by regulators would reduce the maximum size of solar projects eligible for this standard pricing to 100 kW; everything larger than this threshold would be open to negotiation (read: increased legal costs). If approved, the proposal would drastically alter the state’s surging solar market, which is now mostly comprised of utility-scale projects. The proposal would also shrink the maximum length of PPA contracts from 15 to 10 years, posing challenges for financiers. In brighter news, Sol Systems will deploy tax equity into 40 MW of North Carolina solar by the end of the year.


  • Connecticut ZREC contracts have been awarded. So far, our team has reviewed several projects for investment that are very attractive due to high electricity prices.
  • As incentives dry up and tax credits diminish, we expect for developers to “get smart” by adding smart modules, DC optimizer products, and storage, among other technologies, to extract more value from a given solar asset. An increased focus on safety is another factor driving increased demand for smart technologies (ie: modules that shut off in case of a fire).
  • Hurry up and wait! After rushing to apply for the most recent PON awards, many New York developers, especially those with projects over 200 kW, are now in limbo until the Megawatt Block program is announced. We expect this to add much more certainty to the New York solar market.
  • Many of the developers that we work with, including those with a strong predilection for made-in-America products, are turning against SolarWorld in the aftermath of the trade case. Some have even declared a total boycott. Meanwhile, a recent report from Greentech Media states that prices of Chinese modules sold into the U.S. have increased by 9 percent.
  • As we mentioned last month, the South Carolina solar market is emerging. We have heard buzz that South Carolina Electric & Gas will be releasing the skeleton framework of its solar program sooner rather than later.
  • California developers, beware. Some projects that may initially seem eligible for aggregated virtual net metering may not be. We recommend for developers to take a deep dive into fully understanding their utility’s net metering and meter aggregation rules before going too far down the rabbit hole.
  • Though liquidity remains very high, the New Jersey SREC market continues to fall. Spot market pricing has declined from $180 to $150/SREC. We expect for this decline to continue.
  • The purchase of distressed operational assets could provide an interesting opportunity if investors refurbish 8-10 year-old solar assets with newer, better performing modules or inverters – or put in an optimizing product like Tigo or Solar Edge. Given the technological strides the industry has made since the projects first became operational, adding new technologies could significantly increase the value of the projects. Think of it like flipping a house.

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

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Sara Rafalson

Sara Rafalson