February 2015 Solar Project Finance Journal

19 Feb 2015

Below, we have included excerpts from Sol Systems’ February 2015 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 pr@solsystemscompany.com.


Characteristics of “Hot Projects”

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

  • Capacity: 100 kW – 17 MW
  • Average Capacity:  2.90 MW

Developer all-in (asking) prices*:

  • <500 kW:  $1.85 – 3.90/Watt
  • 500 kW–2 MW:  $1.75 – 4.24/Watt
  • >2 MW:  $1.50 – 3.06/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 – 12.0 cents/kWh with 2% escalator
  • DC:  5.0 – 7.5 cents/kWh with 2% escalator
  • HI: 18.0 – 27.0 cents/kWh with 0-2% escalator
  • MA:  5.9 – 12.5 cents/kWh with 2% escalator
  • MD: 6.5 – 11.0 cents/kWh with 2% escalator
  • MN: 9.0 – 11.0 cents/kWh with 2% escalator
  • NC: 6.5 – 7.2 cents/kWh with no escalator, 15-year term
  • NJ: 8.0 – 12.0 cents/kWh with 2% escalator
  • NY:  7.2 – 16.5 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: 14.0 cents/kWh with no escalator (LADWP)
  • GA: 8.0 – 9.0 cents/kWh with an escalator (Georgia Power)
  • GA: 13.0 cents/kWh with no escalator (Georgia Power)
  • IN: 20.0 cents/kWh for 15 years with no escalator (IP&L)
  • RI:  18.5 cents/kWh with no escalator (National Grid)


Georgia:  We’ve got Georgia on our minds now that legislation legalizing PPAs passed unanimously in the Georgia House of Representatives. The bill has since moved to the state senate, where it is expected to pass. Authorization of PPAs will encourage the development of Georgia’s underserved commercial solar sector in a market that has been historically dominated by utility-scale Georgia Power projects. Margins may be tight, but based on high insolation, medium to high electricity costs, and low build costs, projects could still pencil. As it stands, the bill would prohibit commercial customers from having a system larger than 125% of their maximum hourly demand, which depending on the sizing of the system, is unlikely to have a significant impact.

Illinois:  On your mark, get set… Will you be ready to go when the IL solar market pops?  Don’t wait until the Land of Lincoln opens its solar procurement program; developers should now be having discussions with potential hosts to figure out whether they are interested in cash deals or PPAs and begin negotiations accordingly. Since final numbers have yet to be released, we recommend that developers move deals toward LOI stage, and set loose guidelines for the PPA range they can expect when the program is live this summer. When released, we expect for the Illinois Procurement to look much like the Connecticut ZREC program, and we are happy to help developers bid into the market. For more information on Illinois, shoot us an email.

Massachusetts:  What are you doing to work around the limited allocations in SREC II’s Managed Growth? Projects over 650kW are rare, and smaller deals are increasingly common. Investors will finance these one-off smaller commercial deals, but developers who are interested in building a growing, sustainable business can make one-off smaller deals more attractive if they demonstrate follow-on pipeline to the investor. Meanwhile, investors are becoming comfortable with unhedged SRECs for a portion of a project; talk to us if you want to finance your project without hedging all of your MA SRECs.


  • Module prices are ticking back down after the tariff bump. Developer concerns over price seem to be waning, and we have seen some deals procuring tier 1 modules for under $0.70/W.
  • The solicitation for Connecticut’s small ZREC program (<100kW) opened last week, and the small and medium ZREC solicitation will open in the spring. Need advice on pricing out ZREC deals and bids? Contact our team to learn about what will work best for you.
  • President Barack Obama included a permanent extension of the solar investment tax credit (ITC) in his 2016 budget. We’ll be watching closely to see if this will come to fruition, and if it will help in the push for commence construction language. Then again, it could end up being a bargaining chip to be traded away during the budget-making process.
  • Dominion Virginia Power announced plans to develop 400MW of solar within its home state. Seeing is believing, but who knows? Maybe Virginia will be the next Georgia.
  • While SMA has had some troubling headlines regarding their corporate financial health, we still hold the tier 1 inverter manufacturer in high regard. We remain optimistic in their strength and ability to overcome challenges, and to retain their stature in the global PV market.
  • Go West! New incentives in California for west-facing systems are indicative of how much capacity has been built through their CSI program and lofty RPS goals. California is prudent in incentivizing ways for more capacity to be built while simultaneously addressing saturation. They accomplish this by encouraging production in the late afternoon when the electricity is needed more than in the mid-day, when traditional south-facing panels produce the most.
  • How does your garden grow? Projects developed in the Minnesota community solar gardens program are more attractive when subscribers either pre-pay up-front or “pay as you go” under a fixed rate contract, rather than opting to tie the rate to Xcel’s tariff.

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 www.solsystemscompany.com.

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Sara Rafalson

Sara Rafalson