June 2014 Solar Project Finance Journal

18 Jun 2014

This month's Solar Project Finance journal includes updates on the hottest solar markets, solar tariffs, 111(d), and the most competitive PPA rates.

This month’s Solar Project Finance journal includes updates on the hottest solar markets, solar tariffs, 111(d), and the most competitive PPA rates.

Below, we have included excerpts from Sol Systems’ June  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: 281 kW – 35 MW

Average Capacity:  6.8 MW

Developer all-in (asking) prices*

  • <500 kW:  $2.90-3.20/Watt
  • 500 kW–2 MW:  $1.95 – 3.10/Watt
  • 2 MW:  $1.75-3.00/Watt

*Our all-in price statistics exclude projects from Ontario, the U.S. Virgin Islands, and Puerto Rico where all-in prices exceed $3.00/W.

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

  • CA: 8 – 19 cents/kWh with escalators between 1.5-2%
  • FL: 13 – 14 cents/kWh with 2% escalator
  • GA: 8-10 cents/kWh with 2% escalator
  • HI: 20-22 cents/kWh with 2% escalator
  • MA: 7 – 10 cents/kWh with 2% escalator
  • MD: 6 – 10.5 cents/kWh with 2% escalator
  • NC: 6.5 – 8.5 cents/kWh with no escalator, 15-year term
  • NH: 11 – 13 cents/kWh with 2% escalator
  • NY: 6 – 8 cents/kWh with 2% escalator
  • VT: 16 – 19 cents/kWh with 2% escalator

**With the exception of California, projects rely upon additional state solar incentives, grants, or an SREC/ZREC contract.

Recent Feed-in Tariff Rates (20-year terms unless noted)

  • CA:
    • 8.7 cents/kWh with no escalator (Re-MAT)
    •  12.6 cents/kWh with no escalator (PG&E)
    • 18.4 cents/kWh with no escalator (LADWP)
  • GA:
    • 13 cents/kWh with 0-2% escalator (Georgia Power)
  • IN:
    • 20 cents/kWh for 15 years with no escalator (IP&L)
  • NY:
    • 22 cents/kWh with no escalator (LIPA I)
    • 16 – 18 cents/kWh with no escalator (LIPA II)


Connecticut: On June 5th, the Connecticut ZREC program closed its deadline for medium and large scale projects. Given that this is the ZREC program’s third solicitation, solar developers that we work with are comfortable with the program and expected pricing. The selection of the winning bidders will occur in mid-July.

In other news, the Constitution State’s Public Finance Authority successfully securitized $30 million in loans for its PACE program on May 19th. This securitization, which occurred through Connecticut’s Green Bank, the Clean Energy Finance and Investment Authority (CEFIA) and Clean Fund, a PACE finance provider, will allow the state’s Green Bank to replenish capital and make more PACE loans available.

Massachusetts:  The SREC II program continues to enable a solid number of viable projects, and some large rooftop opportunities that merit above-market pricing. However, despite the political support in the state, the net metering cap remains the market’s limiting factor. We have seen a number of strong projects stall as developers await net metering allocations, and would-be investors (including ourselves) move on to other projects. A legislative fix has been introduced, and SEIA held a meeting that resulted in a compromise: net metering will stay alive, but the SREC market will be replaced. Should the legislation pass, 1) the net metering cap will be removed, 2) a bill charge will be implemented for all ratepayers to cover transmission and distribution (T&D) infrastructure costs, and 3) the SREC program will be replaced with a tiered rebate system much like California’s CSI rebate and New York’s recently announced “Megawatt Block”.

New York: When developers ask us about the newest, hottest markets for commercial solar, New York comes to mind.  Here are some of the latest happenings:

  • The state recently proposed a “Shared Clean Energy” bill (i.e. community solar) which could create a market for virtual net metered projects. This is promising because Upstate New York has plentiful, cheap land that can accommodate larger energy systems which could fetch high electricity prices from New York City and Long Island.
  • NYSERDA restructured its next incentive program (PON 2956). This incentive is expected to allow commercial developers to monetize the upfront rebates with lower transaction costs and capture all PBI payments one year sooner. Read more.
  • The PON 2956 program for projects over 200 kW is accepting applications for its July 17th deadline. We continue to advise our developer clients on bid and PPA pricing for this program.
  • Because many New York counties are doing their first commercial scale solar projects, there is some uncertainty regarding permitting processes, timelines, and also property tax treatments. New York has a state-wide property tax exemption, but individual counties are given discretion to interpret tax treatments.
  • The state’s PACE program recently scored $75 million in financing from Bank of America Merrill Lynch.New York is also taking a leading role in transforming its energy landscape.

Ohio: On June 6th, Ohio made history and became the first state to roll back its Renewable Portfolio Standard (RPS). Seventy businesses and organizations, including Honda and Whirlpool, wrote a letter to Governor Kasich telling him how killing the RPS and energy efficiency standards would harm their businesses, yet fossil fuel interests and conservative political forces prevailed.  The new legislation reduces the amount of solar required by the state RPS, decreases the ceiling price on the Alternative Compliance Payment (ACP) for SRECs, and eliminates the distinction between in-state and out-of-state Ohio SRECs. Together, these measures have put downward pressure on prices and have removed liquidity from the Ohio SREC market.


  • Around this time of year, many solar projects with commercial operation dates in 2014 have locked down their sponsor equity; however, many developers are still evaluating their options for debt financing.
  • “Solar accounted for 74% of all new U.S. electric capacity installed in Q1 2014, further signaling the rapidly increasing role that solar is playing in the energy market,” said Shayle Kann, SVP at GTM Research.  GTM and SEIA’s Solar Market Insight Report 2014 Q1 also showed that:
    • Q1 2014 was the first quarter in which residential PV installations exceeded non-residential (commercial) installations nationally.
    • More than 1/3 of residential PV installations came on-line without any state incentive for the first time ever in Q1 2014.
    • The U.S. installed 1,330 megawatts of solar PV in Q1 2014, up 79% over Q1 2013. This makes it the second-largest quarter for solar installations in the history of the market.
  • Mergers and acquisitions continue in the IPP and utility realm. Last week, it was announced that PPL Corporation and Riverstone Holdings will merge to form Talen Energy Corp and become the third largest independent power producer in the U.S. This is not long after it was announced that Exelon would buy Pepco Holdings to become the largest utility in the U.S. – in terms of customers served.
  • After a terrible year for NJ SREC pricing in 2013, build rates slowed, and the lower supply growth led to a price boost. New Jersey SREC prices continue to soar, and fixed price contracts are especially strong for 3 and 5-year terms. Developers in need of SREC contracts in the New Jersey market should contact us for information.
  • “There is no death spiral” said Lyndon Rive in an interview. There might be a “change spiral,” and that “maybe change is death” to utilities. Rive also said that an oil derrick does not require a building permit, whereas a solar energy system does, and that it is “faster to get a permit for a fracking facility than it is for a solar system.”
  • The U.S. Energy Information Administration (EIA) recently estimated that national electricity transmission and distribution losses average about 6% of the electricity that is transmitted and distributed in the United States each year. As many in the PV industry know, distributed generation energy sources, like solar, are consumed closer to the point of generation making T&D losses virtually insignificant.
  • Suntech’s CEO recently predicted the cost of large scale solar in China will match the cost of coal fired generation by 2016. Suntech also recently invested in an inverter company and a batter storage company.
  • In 2013, owners of 6.3 GW of pre-existing solar assets invested in new monitoring technologies. Some of the system upgrades were for solar that had no previous monitoring capability; the other monitoring upgrades can be attributed to: changing legislation, a wish to standardize monitoring across solar fleets, and a desire for solar investors to have energy production measurement that is independent from the solar installer/developer.
  • For solar to become a “grid problem,” it needs to represent 20-25% of total power, according to the report entitled Advanced Grid Power Electronics for High Penetration PV Integration 2014. When cross compared to a Bloomberg New Energy Finance – EIA report which shows the top 10 utilities by net energy metering (NEM) penetration, it seems that solar penetration should not pose a grid problem anywhere in the United States.
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.
Print Page


Natacha Kiler

Natacha Kiler