Over the last two months, the state of Connecticut has made a number of headways in its state solar program. First, two Connecticut utilities released the second solicitation of its Medium and Large ZREC Program. Second, the state’s Governor signed into law a bill that would exempt commercial and industrial solar energy systems from property tax. In conjunction, these two updates will help to spur Connecticut’s solar industry through the end of 2013 and beyond.
Connecticut Medium and Large ZREC Program Updates
The Connecticut Utilities, Connecticut Light & Power (CL&P) and United Illuminating (UI), announced on July 18, 2013 that winning bidders had been notified that they were awarded contracts for the Connecticut Medium and Large ZREC solicitation.
The Connecticut Medium and Large ZREC solicitation provides 15-year, fixed price ZREC contracts for winning projects based on a competitive solicitation process. To qualify for a ZREC contract, projects had to fit within either the Medium (100 – 250 kW) or Large (251 – 1,000 kW) tier and meet additional qualifications including, but not limited to, being located behind the customer’s revenue meter, installing a separate meter dedicated solely to the measurement of the project’s energy output, and gain approval to interconnect through the standard interconnection process. Applicants had to submit bids for their projects by June 13, 2013 to be considered.
After reviewing and ranking each application by bid price and completeness, CL&P and UI then awarded contracts according to their annual allocated budgets of $4,260,000 and $1,066,666, respectively. With a limited budget over the course of the fifteen year term, both programs experienced an oversupply of applications, as expected, and their actual awards remained fairly limited. For the LREC and ZREC program combined, United Illuminating received 69 total bids, and Connecticut Light & Power received 231 total bids. The below chart shows the annual budget allocated, the value of a 15 year contract, and the number of applications awarded contracts for each tier.
The range of pricing and weighted average pricing for awarded projects for each tier has not been released. Current winners will now have 15 business days to return a partially executed version of the ZREC contract, and then subsequently they will have five business days from the effective date of the standard ZREC contract to provide the necessary performance assurance to ensure their contracts remain secure. Last year, many winning bidders experienced great difficulty with this step of the process, as, many did not have the financing secured to meet the performance assurance requirement.
Connecticut Property Tax Exemption
In addition to the announcement of ZREC contract awards, the state of Connecticut’s solar market also experienced an additional breakthrough earlier this summer. On June 3, Governor Malloy signed into law a bill that would provide tax exempt status toany Class I renewable energy (i.e. solar or wind), Class II hydropower, and solar thermal facilities installed for the generation of electricity to commercial and industrial use. Previous law provided tax exempt status to only residential systems and facilities located on farms. To receive this tax exemption, renewable energy sources must be installed on or after January 1, 2014, and the nameplate capacity must not exceed its location’s load (i.e. do not produce more energy than the location will need).
Secure Financing for your Connecticut Solar Projects
Sol Systems encourages any developers with winning bids in the Connecticut Medium and Large ZREC Program to contact our project finance team at email@example.com to discuss their projects and potential financing solutions. Sol Systems will also continue to track the progress of this year’s solicitation and will provide any updates on our blog.
About Sol Systems
Sol Systems is a boutique financial services firm that offers investor clients direct access to the renewable energy asset class and provides developers with sophisticated project financing solutions. Founded in 2008, Sol Systems focuses on meeting the most critical needs of the industry, including SREC monetization, capital placement, tax equity, and New Market Tax Credits. To date, the company has arranged financing for thousands of projects and facilitated hundreds of millions in investment on behalf of Fortune 100 companies, private equity, family offices and individuals.
For more information, please visit www.solsystemscompany.com.