Hungry, Hungry Yieldcos Hit a Snag

20 Oct 2015


Now that YieldCos have hit a snag, where will all of the projects go?

Unless you are living under a rock, you may have seen the news that YieldCos, the most hyped financing vehicle of the past several years, have run into a few snags. Cost of capital has increased for many, and their already tight standards for projects have in some cases gotten even tighter.

We work with YieldCos for some of our largest projects. They are a useful and incredibly powerful tool, but not the all-encompassing, all-purpose tool that some in the media originally made them out to be.  A large and well-made socket wrench, but not a Leatherman, if you will.  We have written about some of their shortcomings before and predicted that a snag would occur in 2015.  The New York Times also had a sold write-up last week for those who want a more thorough read. But, from the perspective of developers that we work with, one downside of selling projects into YieldCos has been the waiting period as investors assemble a portfolio of individual projects, together with, upon NTP, the layers upon layers of approvals a project must go through before any individual payment is made. This can make directing cash flow to construction a slower process, and one in which developers must keep hosts waiting and placated until given hurdles are cleared.

One potential limitation for YieldCos – and developers who work with them– is the tight “credit box” they require. This means that projects on schools, religious institutions, non-profits, small businesses, and others often do not qualify.

What do these snags mean for the solar industry? For one, developers that had previously been selling their projects more or less exclusively to YieldCos are reconsidering tax efficient capital as a means to finance their deals. Instead of waiting for YieldCos to reprice their deals under new market conditions, the YieldCo train has left the station for some developers, and developers are rebooking their projects elsewhere.

Got a stranded project? Contact our team at, and we’ll take a look.

This is an excerpt from our October edition of SOURCE: the Sol Project Finance Journal, a monthly electronic newsletter analyzing the solar industry’s latest trends based on our unique position in the solar financing space. To view the full Journal or subscribe, please e-mail


Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for 333MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. 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. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit

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Sara Rafalson

Sara Rafalson