January 2015 Solar Project Finance Journal

23 Jan 2015

Below, we have included excerpts from Sol Systems’ January 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: 150 kW – 35 MW
  • Average Capacity:  5.04 MW

Developer all-in (asking) prices*:

  • <500 kW:  $1.85 – 3.50/Watt
  • 500 kW–2 MW:  $2.05 – 4.24/Watt
  • >2 MW:  $1.80 – 2.85/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 – 14.0 cents/kWh with 2% escalator
  • DC:  6.0 – 8.0 cents/kWh with 2% escalator
  • HI: 18.0 – 22.0 cents/kWh with 0-2% escalator
  • MA:  8.0 – 12.0 cents/kWh with 2% escalator
  • MD: 8.0 – 11.0 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 – 13.0 cents/kWh with 2% escalator
  • NY:  9.0 – 22.0 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)


Massachusetts – The solar property tax exemption in the Commonwealth is complicated because it grants authority to local tax assessors to determine whether a given solar project will be tax exempt or not. That tends to be a project-by-project discussion that requires a fair degree of local lobbying. Moreover, it is unclear if the tax exemptions apply to virtual net metering (VNM) projects, a huge part of the state’s exploding solar market. With respect to the second question, a recent ruling  from the Commonwealth of Massachusetts Appellate Tax Board may provide additional clarity. The ruling holds that a solar energy system will be exempt event if it supplies energy to an off-site location of the taxpayer, if the property owner also owns the off-site location. What remains unclear is whether the property will remain exempt if it is providing electricity to off-site land that is not owned by the same taxpayer.

New Jersey  Last month, we reported that New Jersey SRECs had rallied to $205/mWh. Now, that number has climbed to $225/mWh – a greater than 200% rally after a market low of $70/mWh in 2012. Meanwhile, long-term SREC contracts can be procured for over $200/mWh.  Our advice to solar developers? Strike while the iron is hot; now is the time to go after pipeline in the Garden State… and lock your SRECs into a fixed price contract for projects that are operational or already well underway. Feel free to reach out to our SREC team to discuss your projects.

New York – We grow increasingly concerned with the implementation of the Megawatt Block program.  The program as it stands has fallen short of expectations, and we foresee that margins in an already tight solar market will continue to shrink.  On top of that, a recent ruling from the New York Public Service Commission (NYPSC) may halt the development of remotely net metered systems, which will disproportionately affect larger projects Upstate. An alternate to net metering may be developed, but don’t get your hopes up. Despite our concerns, we continue to invest in  commercial solar projects in the Empire State,  but only the most clean cut, “corner case” projects work. Potential projects’ build costs must be at or around $2/Watt with 25-year PPAs or greater-than-2% escalators in most of upstate NY. Downstate, as always in NY politics, is considerably favored with the new regime, not that this Upstate-dominated office is bitter. Read more>>


  • 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.
  • The solicitation for Connecticut’s small ZREC program (<100kW) is coming soon. Because of the small system sizes, these projects are most attractive when they can be bundled into a portfolio: the larger the portfolio, the better.
  • Construction revolvers are a credit facility that make it easier for developers to procure modules with increased certainty and early in the project development process. These are especially important in tax equity deals where the developer is acting as the sponsor. A construction revolver ensures that the sponsor can purchase modules without touching their own cash. Once the modules are purchased, they will show up as an asset on the sponsor’s balance sheet.
  • The U.S. solar industry now employs 174,000 workers, up 22% from last year’s high of 143,000, according to the Solar Foundation’s Solar Jobs Census.
  • Last month, developers were rushing to complete projects by end-of-year deadlines. This month, we are back to project origination. Our team is hard at work originating solar projects for investment. Got a project in need of financing? Contact us at finance@solsystemscompany.com.
  • A bill legalizing third party ownership in Georgia may soon be fast-tracked in the state legislature. State Representative Mike Dudgeon (R) sponsored HB 57, which is currently making its way through the House.
  • While you were reading this Journal, 2-4 solar energy systems were installed in the U.S. According to a recent report by GTM Research, a solar energy system is now installed every 2.5 minutes. This is up from the every 4 minute stat that GTM reported on last year, which Obama then mentioned in his State of the Union.

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