September 2014 Solar Project Finance Journal

16 Sep 2014


This month’s Project Finance Journal includes developments in the MA, MD and NC markets, advice on module price changes, and more.

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


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

Capacity: 110kW – 30MW
Average Capacity:  3.13MW

Developer all-in asking prices*

  • <500kW: $2.30-3.30/Watt
  • 500kW – 2MW: $1.80-3.15/Watt
  • >2 MW: $1.50-3.10/Watt

*The all-in price statistics listed above exclude projects from Ontario, the U.S. Virgin Islands, and Puerto Rico where prices exceed $3.50/W.

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

  • CA: 8 – 17 cents/kWh with escalators between 1.5-3%
  • CT: 7 – 14.5 cents/kWh with 2% escalator
  • DC: 7 – 8 cents/kWh with 2% escalator
  • HI: 16 – 22 cents/kWh with 2% escalator
  • IN: 9 – 11 cents/kWh with 2% escalator
  • MA: 6 – 11 cents/kWh with 2% escalator
  • MD: 7 – 11 cents/kWh with 2% escalator
  • NC: 6.5 – 8.5 cents/kWh with no escalator, 15-year term
  • NJ: 9 – 13 cents/kWh with 2% escalator
  • NY: 8.5 – 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)
  • 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)


Maryland: The Old Line State is a very rarely discussed solar market, and for that reason, we see it as one of the most promising. Despite the lack of attention, Maryland consistently meets its renewable portfolio standard (RPS) goals and ranks among the top 15 solar states. Unlike other markets, which can be either “boom-and-bust” (New Jersey) or “hurry up and wait” (Massachusetts, Connecticut, Rhode Island, and other states with unpredictable procurement schedules), Maryland’s growth has been stable and incremental, and projects with reasonable build costs and power purchase agreements (PPAs) will generally pencil. Sol Systems has recently refined its 20-year SREC assumptions and is interested in reviewing more commercial project pipeline out of Maryland.

Massachusetts: Given the recent Managed Growth announcement, the Massachusetts commercial solar market will consist of mostly landfills, brownfields, and rooftops. This means that many developers who have been accustomed to large ground mount projects may face challenges in pricing out their first roof leases, unless these projects are behind-the-meter (BTM). To maximize a deal, developers should look for BTM projects where electricity can be delivered on-site, and where they don’t have to worry about the extra lease costs – just the PPA. Sol Systems predicts that many commercial developers will attempt community solar, but we caution that this is not for everyone. Given the challenges with acquiring subscribers, we see residential players as extremely well-positioned to profit from community solar as they can get utility-scale build prices at residential retail rates. By searching lead lists for customers who were unsuitable for solar due to shading or roofing issues, residential installers will easily be able to locate community solar subscribers with few transaction costs.

North Carolina: Thanks to the prevalence of utility off-takers, ease of acquiring federal tax equity, and a strong state tax credit, North Carolina has established itself as one of the strongest solar markets in the country. There are now 627MW of solar and counting in the Tar Heel State, and we predict that 2015 will be another hot year as developers rush to complete projects before the state tax credit expires. Still, an unbelievable amount of capacity, perhaps over 1GW, is held up in development due to a shortage of investors that are able to monetize the state tax credit. We expect for this growth to continue in 2016 after the state tax credit expires, but likely not at the same pace. Interconnection may also become a constricting path as projects concentrate near one another.


  • South Carolina Electric & Gas released an RFP for 5MW of solar energy. Proposals are due on October 3.
  • The District of Columbia U.S. Court of Appeals upheld FERC’s Order 1000, which requires regional coordinated planning and renewable energy integration for major new transmission line projects. While we feel debottlenecking multi-interstate transmission will mostly apply to the wind industry, this could result in increased instances of solar from more remote locations (i.e.: Nevada) serving demand in more congested area (i.e. California).
  • The deadline for the third round of Rhode Island’s feed-in tariff will be in late fall. We previously financed Rhode Island feed-in tariff projects and are very interested in providing third-party financing to commercial projects in this market.
  • First Solar recently completed an 18MW merchant solar plant in Texas. This is the first utility-scale solar project in the U.S. that will sell its electricity on the open market. The project will be 30MW AC when complete.
  • Q4 is almost upon us, and Sol Systems has already begun to take a look at early stage 2015 pipeline for investment. We encourage developers starting on 2015 opportunities to call us now for advice. Our team will conduct initial diligence, provide feedback, and let you know the chances that the project has for obtaining financing.
  • <500kW behind-the-meter projects are taking off, especially for local or regional developers. This is a higher value model for these players, as it does not pit them against big national players who prefer larger or investment-grade projects. The greatest value a local or regional developer can bring to the table is their ability to originate sole-source (or at least low-competition) host bids.
  • As the summer comes to close, developers and installers in the Northeast are concerned that another severe winter may push back COD timelines. The sooner that projects close, the more likely they are to meet their construction deadlines prior to the onslaught of potentially inclement weather.
  • The Iowa commercial solar market is open for business. Bring it on, developers!
  • Tax matters can be taxing if a developer does not have their documentation ducks in a row. If you are a developer that has formed a special purpose entity (SPE) to develop a project opportunity and that SPE changes hands, it is especially essential that all formation documents, operating agreements, tax returns, etc. demonstrate a clear chain of title. Any document mix-up may interfere with an ability to sell your projects, or, in a better case scenario, you will have to wait for a lengthy close process as the end buyer works to rectify or understand all documentation prior to approval.

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

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Sara Rafalson

Sara Rafalson