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Posts Tagged ‘Solar finance’

Massachusetts Updates 2016 Managed Growth Allocation, Developers Still on Edge

Massachusetts solar developers breathed a sigh of relief after last week’s announcement.

Some developers of 650kW+ solar projects may get their projects built after all.

Some developers of 650kW+ solar projects may get their projects built after all.

After the initial August 26th announcement that the 2016 Managed Growth Capacity Block would be 0MW, the Massachusetts Department of Energy Resources (DOER) opened a public comment period.  As expected, solar stakeholders expressed their concern over the 2016 allocation, citing that the DOER had projected overly ambitious growth in Market Sectors A-C. In response to these comments, DOER adjusted the 2016 Managed Growth Capacity Block allocation from 0MW to 20MW .

What is Managed Growth in Massachusetts?

The Massachusetts SREC-II Program, initiated in April, creates differentiated financial incentives for each market sector (“SREC Factor”) to level the playing field. This program makes smaller solar projects more competitive compared to larger ones by ideally giving financial preference to residential and rooftop projects (a higher SREC Factor close to 1.0) and providing less support for larger projects (ground mount, landfill or brownfield projects less than 650kW.) Previously, this program allocated 26MW and 81MW for the Managed Growth sector in 2014 and 2015 respectively.  As the legislation mandates, the reconsideration and final decision of the 2016 Managed Growth Capacity Block came from the following formula:

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Get in Line and Get Creative: How to Deal with Module Price Changes

The following is an excerpt from our Solar 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

Solar tariffs are impacting module procurement and selection.

Solar tariffs are impacting module procurement and selection.

The solar tariff dispute is leading to longer procurement times and altering module selection. Now, as developers build out their initial design specs with a specific module in mind, we are finding that as a project approaches NTP, the modules may become unavailable or too costly. In other words, both developers and investors are finding themselves compromising on module selection, or at least dealing with a scarcity of choices once it comes time to actually procure equipment for a given project.

Some developers we work with have kept their eyes out for module deals throughout the transaction process, and even after financial close, with the hope that another supplier can bring comparable modules into the U.S. market at a more affordable price. As a result, it is becoming increasingly common for developers to swap modules. Overall, investors are comfortable with this last minute module swap as long as the modules are solidly Tier 1 – or the investor has already provided a list of approved vendors. In one case, we made the decision to switch modules on a project rather than wait through a several-month delivery timeline, even though the swap required some redesign in order to accommodate the change. We do not encourage these module “swaps,” but we recognize that sometimes they may be necessary. 

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Interested in Developing a 650 kW+ Solar Project in Massachusetts? Think Again (Or Be Very Patient)

The countdown is now over, and the DOER has released their initial analysis and expectation for the Managed Growth Capacity Block for 2016.

The Massachusetts DOER has released their expectation for the SREC-II program’s 2016 Managed Growth Capacity Block.

Yesterday’s announcement from the Massachusetts Department of Energy Resources (DOER) may have taken some Massachusetts solar developers by surprise.

Immediately following the announcement of the allocations for the 2014 and 2015 Managed Growth capacity, commercial and utility scale solar developers across New England began counting down the days to when the 2016 capacity amount would be revealed. Developers had long awaiting the final figures for the DOER’s 2016 allocation, hoping they could fit their 650 kW+ solar projects into the Massachusetts solar program.

The countdown is now over, and the DOER has released their initial analysis and expectation for the Managed Growth Capacity Block for 2016.  The final result is… 0 MW.

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South Carolina Solar is Rising

South Carolina solar

The South Carolina solar market may grow to 300 MW. Sol Systems is actively seeking to invest in commercial solar projects in the Palmetto State.

After two years of negotiations, the South Carolina House of Representatives voted unanimously on new legislation to promote solar inthe Palmetto State. As a result of the South Carolina Distributed Energy Resource Act (S.B. 1189), Sol Systems expects the South Carolina solar market to expand from a mere 8 MW to 300 MW or more by 2021. Here’s how.

South Carolina’s New Solar Program

Under S.B. 1189, larger utilities (those who serve 100,000+ customers – effectively SCE&G and Duke Power) must obtain 2% of their average 5-year peak power demand from solar energy sources. Of this 2%, 1% must be comprised of 1-10 MW solar projects; the other 1% must be comprised of solar projects under 1 MW, 25% of which must be 20 kW or smaller. Here’s the breakdown of that 2%.

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Massachusetts SREC-I Auction Throws a Curveball to the Markets: Here’s how this will impact SREC-II projects.

Massachusetts proposes new solar policy...again. The new proposal is a compromise to address net metering and the SREC market.

The Massachusetts SREC Clearinghouse did not clear. Here’s what comes next.

Round II of the Massachusetts SREC-I clearinghouse auction failed to clear yesterday, July 30. A third round will be held on Friday, August 1st, 2014. As we described earlier in an explanation of the Massachusetts SREC-I auction, This annual auction, which is based on the volume demanded, allows SREC sellers the opportunity to auction their SRECs at the end of each summer for a fixed price of $300/SREC, minus an auction fee (most customers will net $285)

Implications of the Massachusetts SREC-I Clearinghouse Round II

An Auction failing to clear Round II automatically increases the Renewable Portfolio Standard (RPS) obligation by 142,504 to 1,054,933 SRECs for compliance year (CY) 2015. An increase in demand generally pushes prices higher, which is what Sol Systems’ SREC trading team saw yesterday. Massachusetts SRECs with a 2015 vintage stamp increased $35 per SREC to $320 from $285. Since a partial clearance of the Auction is allowed in Round III, compliance entities and SREC investors are likely to bank some SRECs in expectance of this increase in CY 2015 RPS obligation. All unsold auction SRECs will be returned to the owners (with extended life of three years) in proportion to the clearance volume in Round III and will have to be sold on the spot market.

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Massachusetts DOER SREC Clearinghouse Auction is Underway, Here’s What You Need to Know.

The Massachusetts solar renewable energy credit (SREC) market is undoubtedly the most complex incentive program among its peers. Among its complexities is the annual clearinghouse auction mechanism, which allows SREC sellers the opportunity to auction their SRECs at the end of each summer for a fixed price of $300/SREC, minus any auction and aggregation fees (most customers will net around $271). Sol Systems can provide you with fixed forward pricing. Having a fixed forward price eliminates the need to enter the auction and deal with reminted SRECs. Right now, our 4-year pricing for SREC-I is $270. We offer 3-year, 4-year, 5-year and 10-year pricing for SREC-I and SREC-II. Sol Systems takes care of customer accounts throughout this process, thus allowing our customers to pursue their core business. For more information, email us today at

The first round of the SREC clearinghouse auction took place today and did not clear; 141,504 SRECs were deposited. Anxious SREC sellers are hopeful all SRECs will be cleared by the end of round two, which is to be held tomorrow, 30th July, 2014. It makes sense for auctions to enter Round II as an increase in the shelf life of SRECs is beneficial for both, compliance entities and SREC owners.

MA SREC Auction Mechanism

MA SREC Auction Mechanism

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A Sixth YieldCo Goes Public as the Asset Class Has its First Anniversary

Today TerraForm Power Inc. (TERP), a spinoff from SunEdison (SUNE), had its IPO making it the sixth yield corporation or “yieldco” to go public since NRG Yield (NYLD) became the first yieldco one year ago.  High dividend yields and rising stock prices have encouraged a wealth of investment in these new companies. However, investors should be aware of the differences that exist between yieldcos and longer term risks associated with the application of this new corporate structure to the power generation industry.

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Will the Eagle Point Solar Decision Open Up the Midwest Solar Market?

Eagle Point Solar’s victory is a big win for rooftop solar in Iowa and opens up the state to further solar investment.

On July 11, 2014, the Iowa Supreme Court ruled in favor of Eagle Point Solar (EPS), a Dubuque, IA based solar installer, affirming that the company was not acting as a utility when it arranged a third-party power purchase agreement (PPA) with the city of Dubuque. The ruling caps a two year battle between rooftop solar and the two leading utilities in the state, MidAmerican Energy and Alliant Energy. With this decision, the Iowa court system clarified the status of behind the meter solar installations, and opened up the state to further solar investment.

The history of the case goes back to 2012 when MidAmerican and Alliant challenged Eagle Point Solar, stating that the firm’s arrangement with the city violated the utilities’ exclusive right to sell electricity within a given area or region.  The Iowa Utilities Board (IUB) sided with the utilities, issuing a Declarative Ruling which defined EPS as a public utility, and therefore unable to sell electricity in Alliant’s state-granted exclusive monopoly territory. Eagle Point Solar appealed the decision and it was subsequently reversed in 2013 by the Polk County District Court.

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Beyond the Meter: Remote Solar on the Horizon?

A Less-Than-Totally-Addressable Market

Commercial solar can be an extremely difficult, uphill sell. Not only must a salesperson overcome traditional customer barriers of ignorance, indifference, or fear, with a product that can seem formidably technical, but they have to do so in what is to date an inordinately small addressable market. Consider a Venn diagram, but one where you must intersect a highly creditworthy client, with a large-enough-to-bother roof, such roof being fairly new (but not covered with mechanical equipment), with some spare structural capacity; generally, commercial instead of industrial electricity rates, low shading, a PPA-friendly state, and one of the markets that makes sense for solar this quarter. In considering all of this, you’ve no longer got a Venn diagram; you’ve got something else entirely.

Remote solar could allow for greater utilization of ideal project sites and a larger set of potential customers reaping the benefits.

It’s part of the reason solar developers like to press their nose against the glass as their plane comes in over the big flat roofs on the warehouses next to the airport and dream of what might be.

Of course we should pursue such low hanging fruit where we can find it – and keep in mind that some finance providers are more innovative on host credit than others.

However, there are only so many big retailers and Fortune 500 distribution centers out there. Great credit often comes with truly challenging host sites and vice versa.  Further, we’ve seen other issues with over-concentration.  In certain substations serving Southern New Jersey office parks, we’ve seen interconnection study results that look like all Three Stooges trying to fit through a door at the same time.

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Sol Systems to Speak at Intersolar North America in San Francisco

intersolar picSeveral members of the Sol Systems team will attend the Intersolar North America conference in San Francisco next week from July 7-9. Sol Systems’ CFO, George Ashton will share Sol Systems’ experiences financing commercial solar projects on the panel entitled The DG Future – the ITC, Cost-cutting & Positioning Yourself for Ever Changing Incentive Regimes. To date, Sol Systems has facilitated financing for approximately 100 MW of solar projects throughout the United States and has another 84 MW at term sheet. Sol Systems finances DG solar projects through a combination of its tax structured investments, construction and term debt offerings, project purchases, and solar renewable energy credit (SREC) solutions.

Several members of the Sol Systems team will be in San Francisco to meet with developer clients to discuss their solar financing needs. To meet with Sol Systems in San Francisco, please contact our team at

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Sol Systems to Speak at PV America Conference in Boston

Sol Systems will speak at the PV America 2014 Conference in Boston.

Sol Systems will speak at the PV America 2014 Conference in Boston.

The Sol Systems team will attend the PV America 2014 Conference in Boston, MA next week from June 23-25. Sol Systems’ CEO, Yuri Horwitz is the conference’s finance chair this year and will speak on a panel entitled The Future of Solar Financing & Challenges Ahead at 1:30 PM in room 153. Sol Systems will also host a cocktail reception with Hannon Armstrong, our partner on a $100 million solar debt fund that addresses financing challenges in the commercial and industrial (C&I) solar sector.

Several members of the Sol Systems team will be in Boston meeting with developer and investor clients. To meet with Sol Systems in Boston, please contact our team at

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Ohio Becomes the First State to Freeze its Renewable Portfolio Standard

The passage of Senate Bill 310 (SB310) has frozen Ohio’s Renewable Portfolio Standard until 2017, making Ohio the first state to roll back renewable energy and efficiency measures.

The passage of Senate Bill 310 (SB310) has frozen Ohio’s Renewable Portfolio Standard until 2017, making Ohio the first state to roll back renewable energy and efficiency measures.

With the signing of Senate Bill 310 (SB 310), Ohio has become the first state to “freeze” its Renewable Portfolio Standard (RPS). Ohio Governor John Kasich signed the bill into law on June 13th, effectively halting the state’s mandates for efficiency and renewables until 2017. Come 2017, these mandates will pick up where they left off when the freeze occurred, as opposed to the annual increases in renewable energy and efficiency measures that would have occurred with the RPS.

SB310 will significantly harm Ohio’s solar industry by driving SREC prices down in both the Buckeye state as well as the surrounding states such as Kentucky, Pennsylvania, West Virginia, Indiana, and Michigan that sell their SRECs into Ohio. The bill faced tremendous opposition from health and environmental coalitions, as well as a group of 70 businesses and organizations, including Honda and Whirlpool, who urged Governor Kasich not to sign the bill.

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2014 U.S. Solar Projects Face Greatest Hardships in the Chinese Trade Case

Here's how new tariffs on Chinese module manufacturers will affect solar project finance deals in 2014.

Here’s how new tariffs on Chinese module manufacturers will affect solar project finance deals in 2014.

In the first week of June, the U.S. Department of Commerce (DoC) announced its decision to levy tariffs ranging from 18.5-35% against Chinese solar manufacturers such as ReneSola, Suntech, Trina Solar, and Yingli as countervailing measures against Chinese subsidies for solar products. The DoC enacted the duty after deeming that such subsidies give Chinese solar manufacturers an undue advantage over competing domestic firms (such as SolarWorld).

From our team’s perspective, the trade tariff is most taxing for U.S. developers and investors who are trying to finance solar projects in Q3 and Q4 of 2014. Earlier this year, solar panels could be procured at a cost of $0.60-0.70/Watt, but now, panel prices are more likely to be procured at a cost of $0.70-0.80/Watt. The tariff falls hardest on (1) those who have projects with thin profit margins, and (2) those who have previously negotiated prices for Chinese panels, but who have not actually purchased the equipment. In addition to the cost impact, many project developers and EPC’s are now without a secure supply of modules and must now actively shop for them. This can wreak potential havoc for delivery risk with respect to project schedules.

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Will the Panel Price Bump be a Q3 Solar Deal Breaker?

Solar panel prices are trending up.

Solar panel prices are trending up.

Panel prices are trending up. Depending on module make, model, and the order size, the increase looks to be somewhere to the tune of 6-8 cents per watt, or a cost of 70-75 cents per watt for projects that will be built in Q3 of 2014.

The price bump may be attributed to the U.S.-China trade dispute, which has yet to be resolved. The continued delay in the international trade tariff decision has created urgency for panel suppliers to move modules, leading to material price increases. The price bump may also be the result of some module suppliers using the dispute to raise prices. If module tariffs related to the trade dispute do indeed move forward, the solar panel price surge could kill many solar deals.  Although the module price bump is impacting near-term solar projects, we see it as a temporary spike.

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May 2014 Solar Project Finance Journal

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.

This month’s Solar Project Finance Journal includes info on the most competitive PPA prices, developments in Connecticut, Hawaii, Massachusetts, and New York, and information on the importance of inverter choice, an update on our construction and term debt offerings, EPA’s upcoming rulings on greenhouse gas emissions, and more.

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

Project Finance Statistics

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

Capacity: 200 kW – 37 MW
Average Capacity:  5.2 MW

Developer all-in (asking) prices*: 

  • <500 kW:  $2.60-3.00/Watt
  • 500 kW–2 MW:  $1.85 – 3.20/Watt
  • >2 MW:  $1.60-3.00/Watt

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New York Launches New Incentive Round for Large Solar Projects

The New York State Energy Research and Development Authority (NYSERDA) unveiled a new funding program for solar systems over 200kW in size.

The New York State Energy Research and Development Authority (NYSERDA) unveiled a new funding program for solar systems over 200kW in size.

New York is in a solar state of mind. On the heels of the recent announcement to commit an additional $1B to New York solar incentives over the next decade, the New York State Energy Research and Development Authority (NYSERDA) unveiled the next anticipated funding program for large solar systems, over 200kW in size. This round of funding closely resembles previous offerings, and does not appear to be part of the “megawatt block” structure highlighted in the April announcement. PON 2956 (short for Program Opportunity Notice) went live this week, promising $60M in available incentives or more, to be awarded at NYSERDA’s discretion. Applications are due July 17th, 2014 and all systems must come online by April of 2016.

Changes from Previous NYSERDA Large Solar Incentives

Unlike past PONs for large projects, all New York Independent System Operator (NYISO) load zones are in play. Several favorable tweaks to this year’s program, compared to earlier New York solar incentive rounds like PON 2860 and 2589 in the past, indicate a willingness on NYSERDA’s part to see this program drive more project development this year than ever before. In previous PONs for large projects, awardees received the full incentive amount in five payments – 30% at project completion paid out in two upfront installments, and 70% paid out as a PBI split between the first three years of production. PON 2956 will see that 30% upfront payment occur in one installment instead of two, and the remaining 70% condensed to only two years’ worth of production, paid at year’s end. The incentive for any project cannot exceed 50% of project installed costs.

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How Third Party Financing Can Be a Growth Strategy for Commercial Solar Developers

Third party financing allows developers to do what they do best, develop projects and build relationships with hosts.

Third party financing allows developers to do what they do best: develop projects and build relationships with hosts.

The solar industry has experienced tremendous growth over the past few years. In the early 2000s, the industry was composed of a few specialized players. With the growth of federal and state level incentive programs as well as innovations in financing, more players entered the space. Programs like the 1603 Cash Grant allowed developers and those that did not have access to tax equity to enter the commercial solar space in a meaningful way by offering Power Purchase Agreements (PPAs). But as stocks of safe-harbored modules dwindle, more of these developers are pursuing PPA financing partners as well as external tax-equity.

With third-party financing developers originate, permit and build the project with the assurance that an investor will buy the project at COD. In some cases a developer will package the project and sell it once the project is “shovel ready” to an  investor to build and own. Under this structure, a developer sells the asset outright and receives payment at COD or through milestone payments during construction.  By spending more time developing project pipeline, developers can build up sales and therefore tax appetite. Eventually they can take advantage of the ITC and look to re-invest the capital in owning projects and actively investing in other projects as well.  Lastly, as the industry consolidates, developing more projects can be a strategy to demonstrate increased value.  The more project pipeline and development experience a developer has the more valuable he becomes to a potential investor or buyer.

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Cashing in on Solar’s Hidden Value

Solar and Battery

Batteries may first enter the solar space in demand charge reduction.

The solar value proposition remains very attractive to homeowners and facility managers across the United States. However, the industry sells itself with one arm tied behind its back…

From a consumer’s perspective, there are two key pieces of energy demand—capacity and cumulative usage. Many utility bills are comprised by 1) a demand charge, set by measuring the customer’s most energy intensive hour within a given billing period, and 2) marginal energy use, which is simply the per kWh rate with which the solar crowd is fairly familiar. While solar can predictably reduce overall energy drawn from the traditional utility over a given period, it remains more difficult to predict and quantify its reduction in peak demand for consumers. In short, solar has yet to add capacity to its appeal in predictable, scalable forms. However, capacity can be added to solar’s arsenal through a combination of technological and financial innovations.

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Sol Systems Speaks at 2nd Annual Sunshine Backed Bonds Conference in New York

George Ashton and Daniel Yonkin will speak about financing alternatives and tax equity in the solar energy space.

George Ashton and Daniel Yonkin will speak about solar financing and tax equity in New York today.

Sol Systems’ CFO, George Ashton, and Director of Tax Equity, Daniel Yonkin, are speaking at the 2nd Annual Sunshine Backed Bonds conference in New York today.

Mr. Ashton will participate in a panel discussion on options and considerations for lowering the cost of capital for renewable energy. Panelists will focus on current financing alternatives available to solar developers and provide an outlook for the role of securitization in the solar space.

Mr. Yonkin will speak on a panel detailing tax equity and accounting considerations in the asset-backed security field. The panel will provide updates on tax equity structures, discuss the friction points between tax equity and securitization, and explore options for resolving these frictions.

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New York Commits Another $1 Billion to Solar. Here’s What You Need to Know.

Will New York join Massachusetts and California as an enduring solar state?

Last Thursday, New York Governor Andrew Cuomo announced an additional $1 billion in funding for the NY-Sun initiative, making good on his promise to extend the program through 2023. The funding announcement includes an overhaul of New York State Energy Research and Development Authority’s (NYSERDA) current incentive program, previously doled out through Program Opportunity Notices (PONs) with varying availability for different solar project sizes and geographies. The new program will take effect June 1st.

With this new initiative, solar should remain a crucial part of the Empire State’s energy portfolio

New York Solar Incentives Explained

The NY-Sun initiative, founded in 2011, coordinates solar programs between the Long Island Power Authority (LIPA, now PSEG Long Island), the New York Power Authority (NYPA), and NYSERDA. The new program, called “Megawatt Block”, will break out MW capacity allocations to specific regions of the state, and then further break down target capacities in each block. Solar incentives in New York will be awarded on a per watt basis for residential PV (up to 25 kW), small PV (non-residential up to 200 kW), and large PV (over 200 kW). Similar to the popular California Solar Initiative rebates, prices will step down as capacity blocks in each region and sector are filled, allowing the market to grow at a steady pace and eventually stand on its own. If the geographic preference follows the earlier program, we can expect to see preference given to areas downstate near New York City.

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