October 2014 Project Finance Journal

17 Oct 2014

This month’s Project Finance Journal includes developments in the CT, MN and NY markets, advice about partnerships and more.

This month’s Project Finance Journal includes developments in the CT, MN and NY markets, advice about partnerships and more.

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


Characteristics of “Hot Projects”

The statistics below represent some high-quality solar projects and portfolios that we are actively reviewing on behalf of our investor clients.

Capacity: 110kW – 30MW

Average Capacity: 3.70MW

Developer all-in (asking) prices*:

  • <500kW: $1.90 – 3.30/Watt
  • 500kW–2MW: $1.65 – 3.20/Watt
  • >2MW: $1.50 – 3.10/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 – 18 cents/kWh with escalators between 1.5-3%
  • CT: 7 – 12.5 cents/kWh with 2% escalator
  • DC: 7 – 8 cents/kWh with 2% escalator
  • HI: 18 – 22 cents/kWh with 2% escalator
  • IN: 9 – 11 cents/kWh with 2% escalator
  • MA: 7 – 10.5 cents/kWh with 2% escalator
  • MD: 7.5 – 13 cents/kWh with 2% escalator
  • NC: 6.5 – 8.5 cents/kWh with no escalator, 15-year term
  • NJ: 9 – 12 cents/kWh with 2% escalator
  • NY: 6.5 – 12 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:
    • 12.6 cents/kWh with no escalator (PG&E)
    • 14 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 many of these programs have since closed.


Connecticut: The United Illuminating Company (UI) is re-opening its medium ZREC solicitation for projects in the 150kW – 200kW range. The cause for the re-opening may be a result of developers bidding in for ZREC prices that were too low to make their projects attractive to third party investors. This has happened with ZREC projects in the past, but has not led to a re-opening, as program administrators were previously able to select a new awardee from its extensive waiting list. A shorter waiting list this year may be due to UI’s limited utility territory. The date has yet to be set for the solicitation’s reopening, though it will likely be at the end of this month “or as soon is as practical,” according to an announcement from Northeast Utilities.

Minnesota: Will the Land of 10,000 Lakes soon be renamed the Land of 10,000 Community Solar Gardens? We certainly see it as a possibility, especially given that Minnesota’s community solar program has no cap (unlike Colorado’s, capped at 6MW for 2013). The only cap is on individual project sizes, which can be up to 1MW. Largely similar to the program in Colorado, the Minnesota Community Solar model differs from that of Massachusetts in that each project only requires a minimum of 5 subscribers. This is important to note, as programs that mandate a high volume of subscribers, such as Massachusetts, lead to high customers acquisition costs that make these deals much more challenging to put together. Sol Systems is also interested in 400kW+ portfolios of <40kW projects that have been awarded Made in Minnesota grants. We’ll also be keeping an eye on the Value of Solar Tariff, which we expect to be active in 2015.

New York Program Opportunity Notice (“PON”) 2956 awards for projects >200kW have been announced, and we are actively reviewing projects for investment. Meanwhile, the next iteration of New York’s solar program, the Megawatt Block, is shaping up to be one of the industry’s most robust incentive regimes. As proposed, the Megawatt Block incorporates a number of incentive design best practices that should poise the Empire State for strong, steady solar growth. Though the overall program is lucrative, the proposed first “step” of the block is overly low; we hope for this to change after the comment period. Market incentives are divided into residential PV (up to 25kW), small PV (non-residential up to 200kW), and large non-residential PV (over 200kW). The final framework for projects over 200kW should be in place by mid-November, and the program is expected to open in late Q1 in 2015 on a first-come, first-served basis. Read more>>


  • While the most recent high-profile securitizations have been focused on residential, rumor has it that at least one successful effort to securitize a pool of commercial and industrial (C&I) solar assets will be announced very soon. In fact, when attending Asset-Backed Security conference in Miami, we heard from many banks who are more interested in C&I than residential. For securitization to scale in the C&I space, however, involved parties will need to consider non-investment grade hosts, which are abundant in the middle market.
  • The Minneapolis airport is installing a 3MW solar canopy at $8.47/W. Carports are generally pricey, but still, talk about a Throwback Thursday (#TBT).*
  • Real Goods Solar will exit its large commercial solar business, instead focusing on residential.
  • Just months after Ohio signed legislation to freeze its renewable portfolio standard (RPS) citing cost concerns and a dislike for subsidies, American Electric Power (AEP) filed a proposal with the Public Utilities Commission of Ohio (PUCO) to increase customers’ charges by $2 per month to protect the profitability of its coal plants – a price dramatically higher than RPS cost impacts. Without this charge, AEP Says that these coal plants will no longer be able to compete and may be shut down.
  • The Internal Revenue Service will investigate whether value of solar tariffs (VOSTs), like those launched in Minnesota and Austin, Texas, generate taxable income. Net metering advocates hope that this investigation will discourage further implementation of VOSTs.
  • The $860M Rockefeller Foundation announced that they will divest from fossil fuels and instead focus on cleaner alternatives. It is unclear if or how they will invest in actual portfolios of solar projects – though if they are listening, we certainly encourage them to do so.
  • Mississippi may become the 44th state to allow net metering. A report prepared for the Public Service Commission of Mississippi stated that “solar net metered projects have the potential to provide a net benefit to Mississippi in nearly every scenario and sensitivity analyzed.

*Disclaimer: Though the project price tag was $25M and the solar was only 3MW, the project costs also included 80% LED lighting, HVAC retro-fit and energy efficiency performance contract, and high efficiency equipment.

About Sol Systems

Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 165MW and over $600 million of distributed generation solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. It has over $300 million in assets under management as of September 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