November 2014 Project Finance Journal

20 Nov 2014


This month the Project Finance Journal includes information on Minnesota, New York and Rhode Island’s solar market, C&I Credit, when to walk away from a solar deal and more.

Below, we have included excerpts from Sol Systems’ November 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.


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

Capacity: 50kW – 28MW

Average Capacity: 3.28MW

Developer all-in (asking) prices*

  • <500kW:  $1.90 – 3.50/Watt
  • 500kW–2MW:  $1.65 – 3.35/Watt
  • >2MW:  $1.60-2.90/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.

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

  • CA:  10 – 19 cents/kWh with escalators between 1.5-3%
  • CT: 8 – 12.5 cents/kWh with 2% escalator
  • DC:  7 – 8 cents/kWh with 2% escalator
  • HI:  20 – 22 cents/kWh with 2% escalator
  • MA:  8 – 12 cents/kWh with 2% escalator
  • MD: 7 – 12 cents/kWh with 2% escalator
  • NC: 6.5 – 8.5 cents/kWh with no escalator, 15-year term
  • NJ: 8 – 12 cents/kWh with 2% escalator
  • NY:  6 – 13 cents/kWh with 2% escalator
  • VT: 13 – 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:
    • 14 cents/kWh with no escalator (PG&E)
    • 15 cents/kWh with no escalator (LADWP)
  • CO: 16 cents/kWh with no escalator (Fort Collins)
  • 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)

*Please note that these statistics are representative of projects we are reviewing for investment. This is not an all-encompassing list of all feed-in tariffs in the market, and some of these programs have since closed.

Solar Markets

Minnesota: As other incentive programs have dried up, Minnesota has been one of the few markets opening up. As a result, it has received much attention. Still, it is not without its faults.

Despite the hype earlier this year surrounding the Value of Solar Tariff (VOST), we anticipate that it will be used infrequently as an alternative to plain ol’ net metering. The Community Solar Gardens (CSG) program, which is currently estimated to open in mid-December, will be much more fruitful – though it is not without its risks. Margins will be tight, and its implementation remains unclear, creating some development risk. The other risk lies in whether the utility is prepared – and fully staffed – to manage the flurry of CSG applications and interconnection requests that are sure to come. Other risks are political: the utility commission is appointed in staggered terms, and prone to political swings (though Mark Dayton (D) won his reelection campaign for Governor).

New York: The industry had plenty of nice things to say about the Megawatt Block program upon the release of its proposed framework. Now that the actual proposed numbers are out, however, it is clear that the incentive level on the first block is too low to make projects over 200kW pencil. At press time, the first block is proposed at 10.5 cents/kWh, and this will need to increase by another 1-2 cents for the NY solar market to be viable. Otherwise, Megawatt Block will be the solar party that nobody showed up to.

The problems with the Megawatt Block program are varied. Fundamentally, an unsophisticated financial model was utilized to devise the initial calculations. In its current structure, the behind-the-meter market is in danger of not happening.

With all its faults, perhaps the weakest link in the Megawatt Block stakeholder process has been the lack of participation from the solar industry. We encourage developers to check out the numbers in the Megawatt Block’s current framework, run them through your own models, and see if they will work. If not, e-mail with your feedback as soon as possible, as time is running out to shape the program.

Rhode Island: The Ocean State is throwing a FiT after their feed-in tariff (FiT) program fell shy of reaching its 40MW by the end of 2014. With so much promise in other New England solar markets, we understand why relatively less development activity occurred this year. Still, if you are a developer with host relationships in Rhode Island, don’t cross this state off from your list; it has the potential to be a great market to fit in a couple, although smaller, bonus projects each year. Per state law, National Grid must add 160MW of qualified distributed generation (DG) facilities over a 5-year period, and after the FiT’s shortfall, they are looking to a new program structure to incentivize solar DG. The new RE Growth Program Tariff is expected to open for enrollment in spring 2015.


  • As the cost of solar comes down, states with high irradiance (i.e. the Southwest) are increasingly attractive, even without incentives. This is because lower solar build costs mean that a project can achieve the same returns with a lower PPA rate. Similarly, East Coast SREC markets such as New Jersey and Maryland have become more attractive, as unsustainably high SREC prices are no longer a requisite for project development in light of a decrease in the cost of solar.
  • Can the solar industry part the Red Sea after midterm elections? One runoff to watch is the Louisiana Public Service Commission Chairman, where solar-friendly Forest Wright will take on the incumbent on December 6. Earlier this month, a well-known fundraiser for Wright was targeted in a fire bombing. In brighter news, Pennsylvania SREC prices increased from $35 to $50/SREC after the election, and the industry is optimistic about PA’s new Democratic governor.
  • A forthcoming ruling from the IRS on historic tax credits may also apply to the solar investment tax credit (ITC) and reduce the amount that solar developers see from tax equity investors. However, it still remains to be seen.
  • We have heard from solar developers that current lenders in Canada are slow to distribute loans to the abundance of projects that have received Ontario feed-in tariff contracts. As a result, developers are looking to lenders who can move quicker. Our advice to Ontario solar developers? The larger the portfolio, the greater your chances of receiving financing.
  • Continued competition among inverter manufacturers will likely result in material price reductions, especially as new manufacturers emerge from Europe and China. On the tail of the SolarBridge acquisition, we have also heard rumors that yet another large inverter company will be acquired as many major industry players move closer to vertical integration.
  • Despite the political disaster after Solyndra’s 2011 default, the Department of Energy reported that they are currently $30 million in the black as a result of their loan guarantee program, and project ultimate profits to come out over $5 billion. This is timely around the holiday season, as the Solyndra jokes from our non-solar friends and family have gotten old.
  • Q4 is the busiest time for solar installations, as projects race against the clock – and the weather – to meet end-of-year deadlines. To put that in perspective, Greentech Media reported that 44%of installs in 2013 occurred in Q4. Looking forward to next year, it is not too late to tee up 2015 projects, and our team is actively reviewing project pipeline.

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 October 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

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Sara Rafalson

Sara Rafalson