July 2014 Project Finance Journal

16 Jul 2014

This month's Solar Project Finance Journal includes info on the most competitive PPA rates, market developments in IL, RI, and SC, solar tariffs, and more.

This month’s Solar Project Finance Journal includes info on the most competitive PPA rates, market developments in IL, RI, and SC, solar tariffs, and more.

Below, we have included excerpts from Sol Systems’ July 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 pr@solsystemscompany.com 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: 200 kW – 28 MW

Average Capacity: 5.0 MW

Developer all-in (asking) prices*

• <500 kW: $3.20 – 3.60/Watt

• 500 kW–2 MW: $1.80 – 3.10/Watt

• >2 MW: $1.65-3.45/Watt

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

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

• CA: 6 – 19 cents/kWh with escalators between 1.5-3%

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

• HI: 20 – 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: 9.5 – 12 cents/kWh with 2% escalator

• NY: 6 – 13 cents/kWh with 2% escalator

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

• VT: 17 – 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)
    • 18.9 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)


Illinois: Legislation requiring the Illinois Power Agency (IPA) to purchase $30 million in solar electricity was passed on June 28. The IPA will procure solar electricity through the purchase of RECs from existing and new solar installations. We anticipate that 40 MW of new solar will emerge in the Prairie State as a result of the new legislation. Sol Systems is working with a number of Midwestern solar developers on their first third-party financed solar deals.

Rhode Island: National Grid will commence its second 2014 Rhode Island DG Standard Contract Open Enrollment Period for feed-in tariff contracts on July 21; the deadline for applications is August 1. The size limit for individual projects is 1.25 MW; however, Sol Systems has successfully aggregated and financed larger project portfolios in Rhode Island earlier this year. Fifteen MW of nameplate capacity are available for the remainder of the 2014 program year, and a third enrollment is scheduled for the fall.

South Carolina: After two years of negotiations, the South Carolina House of Representatives voted unanimously on new legislation to promote solar in the Palmetto State. Under the new law, investor owned utilities such as SCE&G and Duke Power must obtain 2% of their average 5-year peak power demand from solar energy sources. The bill also lifts the size cap on solar projects from 100 kW to 1 MW and permits the state to utilize third-party financing. We expect Georgia and North Carolina developers to help build South Carolina’s solar market from 7 MW to 300 MW or more.


  • The U.S. China trade war has opened the floodgates for previously unbankable panel manufacturers, but developers will need to have a report from an independent engineer before an investor will consider financing a deal using lesser known modules.
  • Since Georgia Power announced its feed-in tariff contract winners, projects have been changing hands rapidly as developers sell off projects.
  • Developers are starting to show us more interesting project opportunities in Mexico.
  • Template legal documents seem to finally be gaining momentum. Developers and investors alike are increasingly contacting Sol Systems to gain access to our template legal documents. This is a big step to standardizing the industry and bringing down soft costs.
  • Speaking about the ITC’s expiration after 2016, Tony Clifford, CEO of Standard Solar, said “I fear that in spite of our years-long, across-the-board efforts to reduce hard and soft costs, the solar industry may wake up on January 1 of 2017 with a huge hangover and a not-quite-competitive cost model.”
  • The share of third-party-owned (TPO) solar photovoltaic (PV) systems will peak in the U.S. residential market at 68% in 2014 and fall in the following years, according to a new report by GTM Research.
  • Acquisitions continue to be a major theme this month. Most notably, SolarCity announced it will acquire Silevo, an “advanced silicon solar-cell startup” and “high efficiency solar manufacturer”. The acquisition positions SolarCity as a fully integrated solar company, like SunPower and SunEdison. Other acquisition announcements included First Solar’s announced intent to purchase Skytron Energy, SunEdison’s acquisition of a 50% ownership stake in Silver Ridge Power, LLC (“SRP”) a subsidiary of The AES Corporation, as well as a number of utility-scale projects changing hands.
  • Yieldco activity is picking up. NextEra has raised nearly $450 million in an IPO for a portfolio that contains (10) solar and wind power plants. According to a Climate Policy Initiative’s paper, widespread use of Yieldcos should allow for wind and solar costs to drop by more than 20% compared to current project finance models. Time will tell if there are enough good-quality deals to fill up the Yieldco commitments that have been made.
  • Projects that we reviewed for investment earlier in the year are now resurfacing as some of those deals have fallen apart. Developers are finding out now that some investor bids were too good to be true, and they are now facing quick deadlines to hit COD by the end of the year. Developers should always vet investors as thoroughly as investors vet developers.
  • According to Bloomberg New Energy Finance, $5.1 trillion will be spent on renewable power plants by 2030; the Americas will account for $816 billion of that total.
  • Host credit is a large, investor-specific barrier in solar project development. If host credit is unworkable for your targeted investor at a given turnkey price or PPA rate, it may be best to abandon ship altogether, or find a new investor, before spending too much time on a deal that won’t come to fruition.
  • A movement is building to include more women in the solar industry. Groups such as Women in Solar, a 501c3 nonprofit membership organization, and Grid Alternatives have received press surrounding their efforts to increase professional opportunities for women in the solar workforce. Earlier this month, Renewable Energy World wrote that utilities would increase their profits if they put more women in leadership roles.
  • Smaller, sub 1 MW deals with non-investment grade credit are coming across our desk more and more. This isn’t surprising, since Sol Systems is unique in our ability to regularly and reliably finance these deals. We are also in early stage discussions to create a fund for even smaller solar projects and are actively seeking to loop some of these smaller projects into portfolios.

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 www.solsystemscompany.com.

View this blog on Renewable Energy World.

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Natacha Kiler

Natacha Kiler