December 2014 Solar Project Finance Journal

16 Dec 2014

This month's Solar Project Finance Journal includes news on top solar markets such as New Jersey, California, and Illinois; chatter on emerging markets; the latest PPA and feed-in tariff contract rates.

This month’s Solar Project Finance Journal includes news on top solar markets such as New Jersey, California, and Illinois; chatter on emerging markets; the latest PPA and feed-in tariff contract rates.

Below, we have included excerpts from Sol Systems’ December 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. To receive future Journals, please email


Characteristics of “Hot Projects”

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

  •  Capacity: 150 kW – 35 MW
  • Average Capacity:  5.29 MW

Developer all-in (asking) prices*:

  • <500 kW:  $1.85 – 3.50/Watt
  • 500 kW–2 MW:  $1.80 – 3.25/Watt
  • >2 MW:  $1.70 – 3.15/Watt

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

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

  • CA:  9.0 – 17.0 cents/kWh with escalators between 1.5-3%
  • CT:  8.0 – 12.5 cents/kWh with 2% escalator
  • DC:  6.0 – 8.0 cents/kWh with 2% escalator
  • MA:  8.0 – 13.0 cents/kWh with 2% escalator
  • MD: 7.0 – 10.0 cents/kWh with 2% escalator
  • MN: 9.0 – 11.0 cents/kWh with 2% escalator
  • NC: 6.5 – 8.5 cents/kWh with no escalator, 15-year term
  • NJ: 7.0 – 15.0 cents/kWh with 2% escalator
  • NM: 8.0 – 14.0 cents/kWh with 2% escalator
  • NY:  6.0 – 13.0 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: 14.0 cents/kWh with no escalator (LADWP)
  • GA: 8.0 – 9.0 cents/kWh with an escalator (Georgia Power)
  • GA: 13 cents/kWh with no escalator (Georgia Power)
  • IN: 20 cents/kWh for 15 years with no escalator (IP&L)
  • RI:  18.5 cents/kWh with no escalator (National Grid)


California – The Los Angeles Department of Water and Power (LADWP) is still accepting applications for the fourth round of feed-in tariff contracts in their FIT100 program. Allocations for small projects (30kW – 150kW) are available on a first-come, first-serve basis, and are especially attractive if they can be grouped into portfolios. Applications for projects 150kW – 3MW will be placed on a waitlist, though we estimate that many projects that have already been accepted will not come to fruition.

One of the biggest challenges with the LADWP FIT100 program is how long it takes for LADWP to transfer the FIT contracts to developers and complete interconnection; this is largely due to a staffing shortage on LADWP’s part for the program. To expedite this – and to increase the likelihood that your solar project makes it to the finish line – we recommend creating a project holding company for all of your project and ensuring that all documentation is in the name of the project LLC.

Illinois –Although the Illinois solar procurement program does not open until June 2015, now is the time developers should be meeting with hosts and getting as far along in the project development process as possible.  Only 191 days until summer… and procurement. If you are a small developer, starting now is especially important. The larger developers already have big accounts that they have worked with previously who are solar ready in Illinois (i.e. WalMart and others). To get your piece of the $30M pie, get your projects in order as soon as possible. Remember: the procurement is split into two buckets: <25kW and 25kW – 2MW. The early bird catches the worm. 

New Jersey Breaking news: New Jersey SRECs are trading on the open market for $205/mWh, a 190% rally after a market low of $70/mWh in 2012. What’s the reason for the rebound?  Since the market crash of 2012, solar developers flocked to other northeastern markets such as Massachusetts and New York in search of more fruitful opportunities. As a result, build rates slowed from 36MW per month in 2012 to 19MW per month in 2014, according to PJM data. Supply and demand did its work with the lower supply of projects correcting the market.

In the Garden State, what’s old is now new again, and we are actively reviewing New Jersey projects for investment that have even better returns with Sol Systems’ fixed price SREC contracts for up to 15 years. This certainty makes the New Jersey very attractive to solar investors, especially compared to Massachusetts where interconnection, net metering credits, and the SREC factor determination (Managed Growth, anyone?) are rarely a sure thing.


  • One of solar’s most attractive markets just got even hotter. Washington, D.C. will soon close loopholes that have kept its renewable portfolio standards (RPS) artificially low. This will have a positive impact on SREC prices, which are already at $475/mWh. The biggest challenges in D.C. are the shortage of land and the abundance of old roofs, so check out MapDwell to vet potential host sites. Unfortunately, MapDwell cannot help you with D.C.’s onerous permitting process.
  • SolarMax has filed for bankruptcy. Developers who planned to use SolarMax inverters on their current projects should have no problem switching to another manufacturer; ask our team for a list of bankable options.
  • Solar project development is not just about successfully negotiating a PPA, securing a host with good credit, and establishing a clear path to interconnection. Honesty is also a key ingredient in the recipe for a successful C&I solar project. Misleading your solar investor is like misleading your doctor: even if your project is lacking in some key areas, putting any potential issues on the table early will increase the likelihood that the project will make it to the finish line, appendages intact.
  • Behind the meter projects in Massachusetts continue to be in short supply, as developers are getting used to the new rules of the SREC II program – and having to develop smaller projects. Our advice? Go get ‘em! The SREC factor makes economics strong, and this sector is highly underrated. Check out behind the meter projects in California, too. They can pencil without incentives and with a moderate PPA.
  • Tipping point?  More than 50% of the residential PV that came online last quarter did so without a state incentive, according to the Solar Market Insight Report.
  • Minnesota Xcel’s community solar gardens program is open for business.
  • NextEra Energy is in the process of acquiring Hawaiian Electric Industries (HEI) in a $4.3 billion deal. Will HEI look like the anti-solar Florida Power & Light or NextEra Energy Resources, NextEra’s progressive arm?
  • North Carolina is entering its last year of its state tax credit, and 2015 will be a rush to complete projects by year-end. Even deals that did not contemplate monetizing the credit were benefiting from its valuation in an FMV appraisal when using a lease pass-through structure. A state government hostile to renewables means the Tar Heel state likely won’t be seeing a new solar incentive regime anytime soon.
  • After the election shake-up, some solar advocates are concerned about a hostile governor in Maryland, and excited about a solar-friendly governor in Pennsylvania. However, each faces a very strong opposing party majority in the legislature, and at the end of the day, we expect fracking, not solar, to be the bigger energy issue in these states. Meanwhile, Pennsylvania SRECs have rebounded to $50/mWh, and Maryland remains one of the most underrated solar markets for project development.
  • Developers are increasingly asking us what it takes to be a tax equity sponsor, and whether it is more beneficial than developing and selling projects. Owning projects instead of selling creates a regular source of revenue and increases a company’s valuation. We see this is a natural progression for successful developers if they choose the right financing partner – though it is not for everyone.

About Sol Systems

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 171MW distributed generation solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. It has over $550 million in assets under management as of December 2014.  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

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Sara Rafalson

Sara Rafalson