SOURCE: The Sol Project Finance Journal, July 2016

20 Jul 2016


SOURCE is a monthly solar project finance journal that our 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 industry resources.

Below, we have included excerpts from the July 2016 edition. To receive future Journals, please email


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




District of Columbia – Washington, D.C. has become the latest “state” (statehood being a sore subject for us District residents) to pass legislation increasing its renewable portfolio standard (RPS). Under a policy crafted by D.C. Councilmember Mary Cheh, D.C. will procure 50% of its electricity needs from renewable energy by 2032, 5% of which will come from solar. The increased support to the solar renewable energy credit (SREC) market – which will have a significantly heightened price ceiling until 2023 – will facilitate financing for rooftop and carport projects as low as <200kW that are otherwise challenging to pencil in other markets.

Despite the SREC market hyper-boost, developers will still have to somehow find room for approximately 300MW in 68.34 square miles of heavily urbanized space over the next 16 years. The District’s biggest challenge remains a scarcity of available land and eligible roof space. Eligible commercial rooftops in D.C. often house bulky HVAC equipment or rooftop decks.  Solar must also compete with green roofs, which are incentivized through a rebate, or in the case of new construction, effectively required as a storm water protection measure. Developers interested in learning more about the D.C. market can e-mail our team at for more information.

New Jersey – On June 27, the New Jersey Senate passed legislation – S2276 – to “pull forward” the state’s solar carve-out from 3.47% to 4.1% by 2021. If passed and ultimately signed into law by Vice President Governor Christie, the New Jersey solar industry would be better equipped to meet its build rate potential after the solar investment tax credit (ITC) extension; the market has softened over the past couple months as residential build has increased drastically. The General Assembly is expected to take up the bill in early September.

Meanwhile, Expressions of Interest (EOI) for new Grid Supply projects were due to the Board of Public Utilities (BPU) on July 15. The BPU will make a decision after assessing the impact on the stability of the SREC market. If the pull forward does not become law, we estimate that very few projects that submitted an EOI will be allowed to move forward.

Rhode Island – On July 7, Governor Gina Raimondo signed a package of legislation that will encourage solar development in the Ocean State. The legislation will open the RE Growth program to community solar facilities, streamline permitting, standardize property tax rules, and expand third party financing opportunities. The package also includes legislation that will increase the renewable energy standard to 38.5% by 2035. In related Rhode Island news, developers have until July 29 to submit bids into the RE Growth program’s latest enrollment. Developers in need of assistance with their bids may contact our team at We’d be happy to help.

What do D.C., New Jersey, and Rhode Island all have in common? They are all strengthening their renewable energy targets. Meanwhile, Ohio is considering a freeze to its moderate 12.5% renewables target, and in Maryland, Governor Hogan recently vetoed legislation that would have modestly increased its RPS.


  • After about two years of waiting, the 50(d) income ruling is expected to be released soon. This guidance will be impactful for tax equity investors utilizing the inverted lease structure. In its issuance, the IRS will clarify how it recognizes the income associated with the tax credit and determine whether that income should be included in a partner’s outside basis calculations.
  • We’ve got our eyes on the Connecticut ZREC program, which announced its winning bids last week. Developers in need of financing for Connecticut projects should connect with our team via their account manager or
  • Never a dull moment… The next month will be a time for change in the Massachusetts market. The Massachusetts Department of Energy Resources (DOER) will announce its first draft of the next solar incentive regime within the next couple weeks, and the Department of Public Utilities (DPU) will clarify the notification date for Market Net Metering Credits at the end of the month. On August 23, the DPU will hold a technical workshop to discuss the implementation of Minimum Monthly Reliability Contributions (MMRCs). Stayed tuned.
  • Rumor has it that a certain big name tax equity provider has run out of tax efficient capital…for now. It’s a buyer’s market.
  • As new programs sprout up around the country, financing for community solar is becoming more mainstream. We predict more business models evolving to incorporate community solar and smaller project sizes, especially with the continued challenges faced by qualifying facilities (QFs).
  • The struggle is real, at least for Arizona projects. Existing rate structures are making commercial solar projects tough to pencil with obscure fixed and demand charges, as well as an assessed solar adder in certain service territories.
  • Add Vermont to the list of states who love all things “green” – including green energy – so long as it does not interfere with its green space. We’ve heard stories of greenfield development facing new permitting hurdles in the Green Mountain state. Solar development in Frederick County, Maryland is facing similar obstacles. Last week, County Executive Jan Gardner extended a moratorium on solar projects 10 acres and above until the County Council can approve new zoning regulations for ground mount solar projects.
  • Post-PPA residual value is an ongoing topic of discussion throughout the industry. Sol Systems keeps tabs on wholesale electricity projections from various third-party firms for utility-scale project post-PPA revenue estimates. The team also recently dug into precedent set by North Carolina’s oldest hydropower qualifying facility (QF) contracts. When possible, we recommend that developers secure unilateral site control extension options beyond the initial term of the PPA so a longer operating life can be considered – sometimes up to 35 or 40 years – but caution that various economic and regulatory risks must be considered.


Sol Systems is a leading solar energy investment and development firm with an established reputation for integrity and reliability. The company has financed approximately 450MW of solar projects, and manages over $500 million in assets on behalf of insurance companies, utilities, banks, and Fortune 500 companies.

Sol Systems works with its corporate and institutional clients to develop customized energy procurement solutions, and to architect and deploy structured investments in the solar asset class with a dedicated team of investment professionals, lawyers, accountants, engineers, and project finance analysts.

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Sara Rafalson

Sara Rafalson