May 2014 Solar Project Finance Journal

15 May 2014

Our monthly project finance journal contains solar finance statistics, trends, industry news, and SREC market information. Contact our team at or 888-235-1538 x2 for your solar project financing needs.

This month’s Solar Project Finance Journal includes info on the most competitive PPA prices, developments in Connecticut, Hawaii, Massachusetts, and New York, and information on the importance of inverter choice, an update on our construction and term debt offerings, EPA’s upcoming rulings on greenhouse gas emissions, and more.

Below, we have included excerpts from Sol Systems’ May 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 with a request to be added to our Project Finance Journal distribution list.

Project Finance Statistics

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

Capacity: 200 kW – 37 MW
Average Capacity:  5.2 MW

Developer all-in (asking) prices*: 

  • <500 kW:  $2.60-3.00/Watt
  • 500 kW–2 MW:  $1.85 – 3.20/Watt
  • >2 MW:  $1.60-3.00/Watt

*Our all-in price statistics exclude projects from Ontario and the U.S. Virgin Islands where all-in prices exceed $4.00/W.

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

  • AZ: 4.5 – 14 cents/kWh with 2% escalator
  • CA: 7.5 – 19 cents/kWh with escalators between 1.5-3%
  • CT: 7.5 – 14 cents/kWh with 1% escalator
  • FL: 13 – 14 cents/kWh with 2% escalator
  • HI: 18 – 20 cents/kWh with 2% escalator
  • MA: 9 – 11.5 cents/kWh with 2% escalator
  • MD: 6.0 – 10.5 cents/kWh with 2% escalator
  • NC: 5 – 8.5 cents/kWh with no escalator, 15-year term
  • NH: 11 – 13 cents/kWh with 2% escalator
  • NJ: 9 – 12 cents/kWh with 2% escalator
  • NY: 6.5 – 11.5 cents/kWh with 2% escalator
  • VT: 14 – 20 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:
    • 8.7 cents/kWh with no escalator (Re-MAT)
    • 12.6 cents/kWh with no escalator (PG&E)
    • 17.1 cents/kWh with no escalator (LADWP)
  • GA: 8 – 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)
  • RI: 28.8 cents/kWh for 15 years with no escalator (N-Grid)



Connecticut: After passing virtual net metering legislation last year, regulators in Connecticut have been unable to devise program specifications or an effective process for implementation. A bill for “shared solar” (another name for community solar) sought to address some of the virtual net metering concerns, but the bill failed to pass. Due to these issues, some developers who bid into the Connecticut ZREC program last year (with the assumption that they could use virtual net metering) will now have to downsize their projects. In brighter news, Connecticut Light and Power (CL&P) and the United Illuminating Company (UI) released their LREC/ZREC RFP on April 24. Bid forms are due on June 5. The Sol Systems team is happy to advise developers on bid prices.

Hawaii: Action by the Hawaii Public Utilities Commission (PUC) to fix the state’s grid “crisis” has sparked greater developer confidence that the interconnection bottleneck will open up. Among other directives, the PUC has directed Hawaii Electric Co. (HECO) to toss out its existing Integrated Resource Plan (IRP) and start from scratch with the goal of improving access to the grid for distributed renewables.  Net metered projects under 100 kW AC do not face the same degree of interconnection issues and are widely available for investment. However, these smaller projects continue to face credit, sizing, and portfolio aggregation concerns.

Massachusetts: The Massachusetts SREC II program was promulgated on April 25, and the Massachusetts Department of Energy Resources (DOER) started accepting applications for the new solar carve-out program on May 13. As a result, we are seeing more certainty surrounding the supply and demand dynamics of the SREC market as developers gain insight into which “managed growth projects” (ground-mounted over 650 KW) will move forward and go online in 2014, 2015, or beyond. In contrast, indecision and uncertainty related to the Massachusetts net metering cap continues to hinder project development. Legislators are currently working on a deal that would eliminate the cap; its current version would highly alter the state’s SREC market.

New York: It was another big month for New York solar. On April 24, Governor Andrew Cuomo announced an additional $1 billion in funding for the NY-Sun initiative, extending the program until 2023. The funding announcement includes an overhaul of New York State Energy Research and Development Authority’s (NYSERDA) current incentive program, including the addition of the “Megawatt Block” program. Incentives in Long Island will total $60 million in available grants, more than double the originally proposed allocation. The new program will take effect June 1st. Read our blog for more details on the NY-Sun program. In Long Island, LIPA II feed-in tariff contracts have been awarded, but the LIPA II program’s development deadlines are uncertain. This leaves developers without any incentive to move quickly to secure financing after finding an award. Other notable news in New York includes a plan to restructure the state’s utility model to better incorporate renewables, efficiency measures, and distributed generation. This could open up the market for energy storage in the Empire State. In all, we think the New York market has staying power, comparable to other strong East Coast markets like Massachusetts and New Jersey.

Solar Chatter:

  • The sun shines just about everywhere, but policy still determines whether a state measures its solar capacity in kilowatts or gigawatts. According to SEPA’s top 10 list of solar states, California is ranked #1. It has 29x more solar energy than Florida, “the Sunshine State,” which is ranked third in the country for solar energy potential, but #10 in terms of current installed capacity. For more on Florida’s policy woes, see our April Project Finance Journal.
  • Spring is an especially busy time of year for solar financing. The Sol Systems team is hard at work identifying project opportunities to fill our solar investment commitments, and we are actively seeking projects that can be built by Q3 and Q4 of 2014. If you are developing high-quality solar projects, please contact our project finance team to discuss options.  We are always happy to provide market-based advice on PPA pricing.
  • “Residential solar financing has become an attractive, mainstream asset class,” Jerry Smith, managing director at Credit Suisse.
  • Attacks on solar net metering and renewable portfolio standards (RPS) programs continue. Even mainstream media outlets such as MSNBC, Washington Post, LA Times, and New York Times have started to take note, sharing the narrative of the Koch brothers’ attack on solar. As the LA Times noted, “Solar, once almost universally regarded as a virtuous, if perhaps over-hyped, energy alternative, has now grown big enough to have enemies.”
  • Watch for the United States Environmental Protection Agency (EPA) to introduce new carbon dioxide regulations this summer. This could create a new wave of closures of older gas-fired and coal power plants that would necessitate solar stepping in to fill that void.
  • The solar industry is still small and people talk. In recent months, we have seen parties potentially tarnish their reputation by backing out of a deal over a few cents or engage in outside discussions during an exclusivity period. Before falling to temptation, one should weigh the benefits of a long-term financing partnership that can finance multiple deals versus the dollar profits on a single deal.  To borrow from a well-known cliché, “relationships matter”.
  • We are seeing some utility-scale players getting out of solar and selling their solar assets as utility-scale solar slows and distributed generation (DG) rises.
  • At the end of April, NRG Solar and partner MidAmerican Energy (now Berkshire Hathaway Energy) achieved substantial completion of “Agua Caliente”.  This 290 MW PV farm in Arizona (sold to PG&E under a 25-year PPA) is the world’s largest PV plant.
  • Industry stakeholders seem to be coalescing on processes to approve technology vendors that are not currently on investors’ lists. Moreover, inverter choice is becoming an increasingly important determining factor in whether or not a project is financeable.
  • Last month, we announced that Hannon Armstrong is our financing partner for our $100 million debt fund. Though we launched the fund targeting projects as small as 750 kW, so far, we have seen the most success with larger projects (we have reviewed 15+ portfolios over 5 MW, and of the 15 portfolios, 5 consist of portfolios larger than 10 MW). We have received feedback from developers that we are more competitive than other debt offerings because of our flexible tenors (up to 18 years), and the fact that we can execute quickly. Though we have had the most success with larger projects, we are still considering smaller projects, especially if the developer can demonstrate pipeline. 

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

Print Page


Natacha Kiler

Natacha Kiler