September 2013 Project Finance Statistics

17 Sep 2013

Every month, Sol Systems distributes a newsletter, the Sol Systems Project Finance Journal, to our community of solar developers and investors. The journal features solar finance statistics, trends, industry news, and SREC market information. We gather this information from our relationships and experience aggregating SRECs and financing commercial and utility scale solar projects.

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.

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.

We have included excerpts from our September Project Finance Journal below. If you have any questions about this information, wish to receive our monthly newsletter via email, or have a solar project in need of financing, please contact our team at  We would love to hear from you.

Project Finance Statistics

Characteristics of “Hot Projects” **

Below you will find statistics on some of the high-quality solar projects and portfolios that are not yet contracted.

Capacity: 250 kW – 11.77 MW
Average Capacity: 1,555 kW

**Does not include projects in the Caribbean or Hawaii where asking prices currently range from $3.75-4.20/Watt. Also, does not include a California portfolio with carport projects, North Carolina projects, or 3 operational portfolios.

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

  • CA: 19.5 cents/kWh with a 3.5% escalatorMA: 11.3 cents/kWh with CPI as escalator
  • CT: 15 cents/kWh with a 1.5% escalator
  • MD: 9.3 cents/kWh with a 1.75%
  • NM: 9.3 cents/kWh with a 2.5% escalator (25 years)
  • TN: 10.6 cents/kWh with CPI as escalator
  • Puerto Rico: 21 cents/kWh with no escalator

Average Feed-in Tariff Rates:

  • CA: 13.3 cents/kWh with no escalator (CREST)
  • IN: 26 cents/kWh with 2% escalator (NIPSCO, 15 years)
  • NY: 22 cents/kWh with no escalator (LIPA)
  • RI: 31.6 cents/kWh with noescalator (NG, 15 years)

Please let us know if you have any projects which require third-party financing, or if you are looking to sell any operational solar assets. We would love to help you with your solar financing needs.

Trends and Observations

Making Money on the First Deal

There is a saying that “no one makes money on the first deal.”  Like a good proverb, there are numerous cases to support the statement – but like a bad stereotype, there are plenty of exceptions. We have seen that the first deal generally takes more time and resources, but if managed well, the first deal should be profitable for all parties. Here are a few key lessons we have learned.

1. The devil is in the details– so dig in fast. Experienced developers and investors know which details can pose risks and which can be quickly and successfully mitigated, so it is key to pick partners who are willing to be reasonable about which items need changing and how to work through them. It is also important to attack these issues quickly, usually through a term sheet or memorandum of understanding (MOU). Get all of the potential ugly issues with your project out in front of your deal, and build consensus around those issues through a term sheets. For example, permitting costs and timelines, host credit, and roofing upgrades can be time consuming, and it is important to work closely with your host customer to either address preexisting issues or develop a joint strategy of how to work with an investor to resolve them. You don’t want to be negotiating business terms the week before you are supposed to close because generally speaking, tight timelines work against you and not for you.

2. Finding good partners takes time. Time is money. To save time down the road, we recommend vetting your partners carefully to understand their needs, capabilities, and risk tolerances. Alas, vetting takes a lot of time. If an investor claims they have $50 million to invest, ask them where they have invested before and in which projects. Sol Systems vets all project developers and investors prior to conducting business with them, ultimately reducing costs associated with conducting thorough due diligence.

3. Documents can cause big delays. “Bankable” documents that work for one investor may not work for a different investor. If a developer’s documents do not work for their current investor, both parties can lose significant time and incur substantial legal fees renegotiating clauses and contracts, increasing the transaction costs and ultimately slowing project development.

Developers need to have projects with the right returns and profile, while investors need to have sufficient capital, ability to execute, and adequate project risk appetite.  It is very common for developers to run out of projects that fit their investor partners’ perfect investment profile, and it also common for solar investors to run out of tax equity or significantly adapt/change their investment strategy. For these reasons, it is critical to constantly expand your project pipeline and widen your network of new partners in an efficient manner. At Sol Systems, we identify and help solve project critical issues quickly and we bring together high-quality partners who have the types of projects that fit each other’s unique preferences. In doing so, we help create profitable opportunities for everyone – even the first time

Markets: What’s Hot

Our team works with highly qualified investors who are interested in deploying capital in the solar asset class in markets throughout the United States. Based on our interactions, here are some updates on a few attractive markets for solar investors:

  • California:  California continues its progress towards obtaining 1/3 of its energy from renewable sources by 2020.  Both the commercial and residential markets are sustaining impressive growth, and at least one residential developer is reporting 20% compounded annual growth. The prosperous industry is about to get a bit more support this October when it releases Re-MAT, a feed-in tariff program which applies to California utilities with more than 75,000 customers. The FiT program provides a starting base rate price of $89.23/MWh to projects under 3 MW, but pricing will be adjusted upward or downward every two months, based on demand within the program.
  • Connecticut: Since the mid-July solicitation for systems between 100-1,000 kW, the Connecticut utilities, CP&L and UI, have been working through their queue of applications.  Contracts had previously been awarded to developers with the most competitive ZREC pricing (i.e. bids with the lowest ZREC prices).  Predictably enough, some of the developers who put in the lowest bids were unable to provide the performance assurance in the form of cash or a letter of credit that was required to secure their ZREC contract. This has opened the way for a subset of developers who had bid in a­t prices slightly higher than the originally accepted ZREC prices. We have seen contracts awarded at prices between $77-$110/ZREC, and with relatively high PPA rates, these projects appear very attractive.
  • New York (LIPA): Solar development in the LIPA region was a bit underwater after Hurricane Sandy, but the market seems to be making a comeback as the utility works through its backlog of solar opportunities and interconnection requests. The residential market is flourishing, and Sol Systems is also seeing several projects in the 300-500 kW range.  On the other hand, building owners in the LIPA region are starting to command premium lease prices for their roof space, meaning developers are finding it harder to secure adequate roof space at economical prices.

Got December deadlines? Choose Your Investor Wisely.

As we march towards the end of 2013 and our developer partners become more focused on closing out financing for their 2013 projects, developers who are up against December deadlines may want to value investor experience and reputation even more highly than they would otherwise. Typically  “December deadlines,” means some construction and/or financing deadline that is critical to their projects’ financial returns (for example, this would include all Massachusetts SREC I projects, any projects that have year-end PPA deadlines, and projects that need to qualify for bonus depreciation). While it is often tempting to go with a higher bid (even if it is from a less experienced investor), securing an experienced investor when time is of the essence is critical. Additionally, a reputable investor with prior history in a regional solar program may be better positioned to close and hit deadlines than an investor who does not have the same regional knowledge or set of relationships.

SREC Roundup

Sol Systems has increased pricing for SREC contracts in Washington, D.C., New Jersey, and Massachusetts this month.

In Massachusetts, we continue to offer 3, 5, and 10-year annuity SREC contracts for SREC I projects. We are also offering a spot market brokering service for projects that will be in SREC II. In certain cases Sol Systems is offering up-front financing for SRECs in the state for projects or portfolios.

In addition to helping clients secure SREC contracts for their solar projects, we also offer SREC portfolio management services to developers and investors who own SREC-producing solar assets but may not have the resources to manage them on a daily basis. We work with these clients to create and execute a customized step-by-step strategy to maximize the profitability of their SREC portfolio.

To learn about our SREC services, please contact us at or 888-235-1538 x 1.

About Sol Systems

Sol Systems is a boutique financial services firm that offers investor clients direct access to the renewable energy asset class and provides developers with sophisticated project financing solutions. Founded in 2008, Sol Systems focuses on meeting the most critical needs of the industry, including SREC monetization, capital placement, tax equity, and New Market Tax Credits. To date, the company has facilitated financing for thousands of projects and hundreds of millions in investment on behalf of Fortune 100 companies, private equity, family offices and individuals. For more information, please visit

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Natacha Kiler

Natacha Kiler