Sol Systems Co-founders to Travel to New York as Solar Shines on Wall Street
The Sunshine Backed Bonds Conference will be held May 3rd, 2013
On May 3rd, the Information Management Network will be hosting its first annual Sunshine Backed Bonds conference in New York. The event, aimed at introducing investors to solar as a viable asset class, will be located at the Union League Club in lower Manhattan. Sol Systems’ co-founders, George Ashton and Yuri Horwitz, will both be in attendance. George will be participating in a panel discussion entitled “Exploring the Role of Securitization in Renewable Energy Finance.” The conference will largely focus on large-scale financing opportunities available through securities, allowing typical developers to network with ABS investors seeking alternative financing ventures.
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Sol Systems to Speak at Novogradac’s Financing Renewable Energy Conference in San Francisco
The Financing Renewable Energy Conference will be held in San Francisco, California.
Sol Systems CEO Yuri Horwitz and Dan Yonkin, Director of Tax Equity, will be attending the upcoming Novogradac Financing Renewable Energy Conference in San Francisco. The event will be held April 24-25th and will include dozens of expert speakers and hundreds of renewable finance professionals. Yuri, our CEO and co-founder, will be featured on Wednesday the 24th in a panel titled “Searching for the Lowest Cost of Capital,” sharing his expertise on securing investment in the growing and complex green energy industry. Yuri will join executives from Deutsche Bank, Clean Power Finance, and other financing institutions to discuss the potential and viability of debt financing through asset-backed securities, master limited partnerships and even a federal production tax credit for solar energy.
Sol Systems offers investors a diverse range of opportunities to deploy capital in the renewable energy asset class. Our team originates project opportunities from our national network, conducts thorough due diligence of each projects, structures and negotiates complex tax transactions, and manages the asset post-closing to maximize each project’s cash and tax benefits.
Sol Systems Speaks at the American Solar Energy Society Conference in Baltimore
Sol Systems CFO and co-founder, George Ashton, will be attending SOLAR 2013, an annual conference held by the American Solar Energy Society. This is the 42nd installment of the event, and will be held April 16-20 at the Baltimore Convention Center. George will be participating in a 90-minute panel discussion titled “Financing DG Projects,” where he will speak alongside Rich Deutschmann of Ameresco, Chris Lord of Capiron, and Steve Remen of GroSolar. The panel will be held on Wednesday, April 17th, from 1 PM until 2:30 PM and will focus on funding distributed generation installations.
Potential Changes to Hawaii’s 35% State Tax Credit
New temporary rules will place restrictions on the ability of developers in Hawaii to claim the 35% state tax credit. The new rules, issued by the Department of Taxation in November of 2012, will be in effect for no longer than 18 months, starting for systems installed on January 1st, 2013 and after. The Hawaiian House of Representatives also recently moved HB 497 to the Senate, a proposal to permanently decrease the tax credit level given to renewable energy developers.
The new structure, under the temporary rules, places a minimum on kilowatt output of PV systems, referred to in the legislation as “other solar systems” or those projects neither for solar thermal nor from wind energy. Single-family residential properties have a minimum of 5 KW per system, multi-family residential properties have a minimum of .360 KW per unit per system, and commercial properties’ systems must have a capacity of 1MW in order to receive the current 35% of costs income tax credit. There is also a cap of $5,000 of credit for residences and $500,000 for commercial enterprises.
Community Solar Bill Reintroduced to the DC Council
The DC Council has reintroduced the Community Solar Bill which would allow for anyone to reap the energy benefits associated with owning a solar installation.
In January, Councilmembers Alexander, Cheh, Bonds, Grosso, Barry and Wells co-introduced the Community Renewables Energy Act of 2013 (B20-0057).
The Community Renewables Energy Act of 2012 (B19-0715), the 2012 version of B20-0057, was originally circulated in early 2012. A hearing followed in the middle of June 2012, where Sol Systems Chief Business Officer, Sudha Gollapudi, testified in support of the legislation. The hearing resulted in a working group dedicated to finding an effective way to implement the community solar bill. The working group was unable to complete its work during last year’s legislative session, and thus the bill was reintroduced in 2013.
The Community Renewables Energy Act of 2013 is almost identical to the 2012 version. Many DC residents are unable to use solar energy because they are renters, or they own a property that is not ideal for a solar installation. With these restrictions, a large portion of DC residents do not have the ability to participate in the solar industry. The legislation would allow for any and all DC residents to purchase a share in a community solar system located anywhere in DC and receive credit for solar electricity from that system to offset their own utility bill in the form of virtual net metering. This form of virtual net metering would allow for anyone to reap the energy benefits associated with owning a solar installation.
The re-introduction of this bill to the DC Council for the 2013 legislative session illustrates the Council’s commitment to expanding access to solar for all DC residents. Furthermore, the passage of the Community Solar Act would help the District to achieve its aggressive solar carve-out requirements by installing a great capacity of solar.
Developers or investors interested in commercial scale project finance within the District should contact our project finance team at info@solmarket.com. In addition to project financing services, Sol Systems currently offers three SREC solutions for photovoltaic and solar thermal systems located in the District: Sol Annuity, Sol Brokerage, and Sol Upfront. Please email info@solsystemscompany.com for more information.
Sol Systems will continue to track the progress of this bill. Please check out our blog for further updates.
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 arranged financing for thousands of projects and facilitated hundreds of millions in investment on behalf of Fortune 100 companies, private equity, family offices and individuals.
Top Names in Solar Industry Tackle Tax Equity Investing, Distributed Generation, and Mainstreaming Solar Power
By Josh Garrett for Sol Systems
Ahead of MDV SEIA’s conference “Solar Energy Focus 2012: Developing and Financing Solar on the East Coast,” Sol Systems asked a sampling of conference speakers for previews of their thoughts and remarks. Among other topics, speakers discussed tax equity investment and the challenges it presents, the advantages of distributed generation, and solar energy moving out of the “alternative” category and into the mainstream energy mix. Below are highlights from conversations with two conference speakers.
The U.S. solar industry has made important advancements in recent years, entering new regional markets and vastly improving its competitiveness with conventional power. Richard Moore, the Head of Strategy and Business Development at Washington Gas, believes it’s time to make those advancements part of the industry’s public image. “The solar industry needs to avoid painting itself into a ‘green’ corner,” he explains. “Solar needs to be just ‘another’ energy source, not an ‘alternative’ energy source,” he says. The challenge, Moore states, is showing the public that solar can compete with other energy sources on production levels, durability, and maintenance costs. Moore believes that, in the end, it all comes down to price. In his view, a potential solar customer is simply “a person who wants reliable energy at a reasonable price.” Which is great news for the industry because, as Moore points out, “that describes most of the population.”
To help shift solar into the mainstream energy conversation, Moore thinks the industry needs to more quickly eliminate its reliance on government subsidies. In his view, there is no way to predict or hedge against the constantly changing political trends that could lead to sudden changes in policies that support the industry. That said, solar needs to be proactive in shaping energy legislation, says Moore. He speculates progress can be made on this front by stepping up direct lobbying efforts, but believes that grassroots endeavors would be the most effective. “In our world of electronic communication and social media,” he says, “there are so many ways for citizens to directly influence policy.”
When it comes to the nuts and bolts of expanding the solar industry in the U.S., Moore is a believer in distributed generation in the residential sector. He sees the location of energy generation close to points of consumption as ideal. “Residential distributed generation offers predictable, often lower pricing; enhanced reliability; more control over generation units; and environmental benefits,” he explains. “By bringing all of these benefits together, distributed generation meets the requirements of our consumers,” he continues. “And those requirements need to be met, first and foremost, in order to meet the needs of investors, installers or other participants in the market.”
Turning to the subject of financing for solar projects, Moore offers his take on tax equity investing, which has taken on enhanced significance in the solar industry following the expiration of the federal 1603 grant program. He suggests making it easier for investors outside the renewable energy space to put their tax equity into solar projects by allowing them to invest without learning all of the financial and technical details associated with solar deals. More importantly, Moore believes that the industry should be devoting resources to making tax equity investing a part of the equation rather than the driving force. “If you need to choose between spending time and effort on achieving grid parity and spending time on developing new ways to structure tax equity and incentive funding, it makes a lot of sense to focus on grid parity,” he argues. “Ultimately, this is where the future of the industry resides.”
In the estimation of Zach Axelrod, CEO of solar thermal company Skyline Innovations, tax equity investing is shaping the future of the industry. “There are only 15 to 20 tax equity players,” he says, “not nearly enough to match the number of solar developers in the U.S. Because of this supply/demand imbalance, the investors hold the power. I think this will lead to consolidation in the industry—the number of developers will shrink to get closer to the number of tax equity investors,” he predicts.
Like Mr. Moore, Axelrod sees promise for expansion of solar in the residential sector, though for different reasons. Axelrod enjoys the accessibility to decision-makers afforded by residential projects. “In commercial and utility projects, the decision-maker is known, but often difficult to reach, and competition for his or her time and interest tends to be stiff,” he explains. But Axelrod sees pros and cons of solar projects in all three sectors: residential, commercial, and utility, calling none of them the “perfect target” for solar developers.
Overall, Alexrod takes an optimistic view of today’s U.S. solar industry. He acknowledges that the industry must still overcome significant obstacles, most importantly achieving and/or maintaining profitability while it grows. In his view, solar is here to stay. “You couldn’t say that five or ten years ago,” he elaborates. “Right now, even if all solar incentives were to disappear tomorrow, projects would continue to be planned and built. Market participants will come and go, but solar will not disappear. This is a relatively new development, and one that’s good for the world.”
About the Solar Energy Focus 2012 Conference
Sol Systems is proud to be sponsoring the Solar Energy Focus 2012 conference which will host 50+ speakers, 12 breakout sessions, 350+ business leaders, investors, legal experts, developers and policy-makers. The conference will take place on November 28, 2012 at the Marriott at Metro Center in Washington, DC. To register for the conference, please visit www.solarenergyfocusconference.com.
About Sol Systems
Sol Systems is a solar finance firm and a leader in financial innovation in the renewable energy industry. Since its inception in 2008, Sol Systems has partnered with 350 solar installers and developers to bring over 3,000 solar projects from conception to completion by offering innovative financing solutions for residential, commercial, and utility-scale projects.
Sol Systems’ financing programs catalyze investments for a broad set of solar projects by simplifying their origination, diligence, and financing processes. Developers seeking financing for solar projects can access over $2.5 billion in capital through the Sol Systems investor network.
In addition to providing financing, Sol Systems also offers project due diligence, deal structuring, and asset management services – all designed to reduce overhead and transaction costs and quicken project development timelines.
For more information, please visit www.solsystemscompany.com or www.solmarket.com
S-REITs – The Closest Option to Public Solar Financing?
Solar finance is not a new concept, but it’s predominately controlled through private and business to business transactions. The limited availability of capital, combined with the risks associated with a still maturing solar market, leave developers with a higher transaction costs in the search of financing for solar projects. Platforms such as SolMarket attempt to mitigate the challenges of solar finance by matching projects with an appropriate network of pre-qualified investors.
In the search for new sources of capital, topics of “real property” and REITs (Real Estate Investment Trusts) have arisen within the solar community. A REIT, as defined by the Securities and Exchange Commission, “is a company that owns – and typically operates – income-producing real estate or real estate-related assets.” REITs act similar to exchange traded funds where public investors can participate in a diversified pool of real estate investments without owning or purchasing property. Investors would earn a share of the income produced through the commercial site through dividend payments. Currently, there are two tests for REITs. First, the income test requires that 95% of income must come from approved sources (usually rent). Second, the asset test requires that 75% of its assets must be real property.
If the property definition for solar PV systems is changed through tax code reform, investors could begin to explore the potential world of S-REITs (Solar Real Estate Investment Trusts). S-REIT’s would allow for a more transparent, secure, and competitive method of financing solar projects. The pool of investors would expand beyond private investment funds, to retail investors and even pension funds. One of the most attractive features of a REIT is its exemption from corporate taxation, as long as it distributes 90% of income to investors. In the case of solar, the main challenge arises with the income test. Unfortunately, the qualifications of a power purchase agreement as a form of rent are, at best, questionable.
Of course, even if solar fulfills the requirements of a REIT system through PPA installments, PV systems are still considered personal property. A change in the property tax code has to occur in order for S-REITs to exist. One important definition by the Internal Revenue Service regarding real property includes “land or improvements thereon, such as buildings or other inherently permanent structures thereon,” (Section 1.856-3(d) of the Income Tax Regulations) while personal property is essentially everything else that you own.
While solar energy systems can be physically moved, they are often fixed for periods up to, and beyond, 25 years. The main inhibitor to establishing solar as real property is the concept that solar panels operate in a system. That is, if the inverter or mounting is removed from a solar installation, the array’s functionality is reduced or completely eliminated.
The National Renewable Energy Laboratory recently wrote a detailed report on S-REITs.
S-REITs are yet another innovation of the solar finance community. However, like other facets of the solar market, S-REITS face the challenges of complex state regulations and tax codes. While the concept may never come to fruition, the idea signals a greater demand for a more transparent, liquid, and stable solar market.
About Sol Systems
Sol Systems is a solar finance firm and a leader in financial innovation in the renewable energy industry. Since its inception in 2008, Sol Systems has partnered with 350 installers and developers to bring over 3,000 solar projects from conception to completion by offering innovative financing solutions for residential, commercial, and utility-scale projects.
Sol Systems’ financing programs catalyze investments for a broad set of solar projects by simplifying the origination, diligence, and financing processes. Developers seeking financing for projects can access over $2.5 billion in capital through the Sol Systems investor network.
In addition to providing financing, Sol Systems also offers project due diligence, deal structuring, and asset management services – all designed to reduce overhead and transaction costs and quicken project development timelines.
For more information, please visit www.solsystemscompany.com.
Sol Systems to Host Webinar on Investor Preferences for Solar Projects
This Thursday, May 3, 2012, at 12:00 EST, Sol Systems will be hosting a webinar, “Investor Preferences: Key Solar Project Traits that Lead to Successful Financing.”
In this presentation, Yuri Horwitz and Jigar Shah will discuss the benchmarks for successful solar development of commercial and utility-scale solar projects in the United States. Drawing significant experience in the commercial solar space, as well as data-driven aggregate statistics from SolMarket projects and investor partners, the webinar will highlight key characteristics of both successful and unsuccessful solar projects while providing specific examples. The presentation will also examine the different types of investors in the solar space currently and what they are looking for when projects come across their desk, as well as what may ultimately doom or save a project.
Yuri Horwitz is the CEO of Sol Systems and developed, and now manages, the $2 billion SolMarket investor network, composed of independent power producers, family offices, tax equity, private equity, and others. Jigar Shah founded SunEdison, one of the world’s leading solar services company and currently serves as the CEO of the Carbon War Room. Mr. Shah has also developed and run distributed solar funds and now sits on the board of a number of solar development and financing companies.
Space for this webinar is limited, so we encourage you to register early. This should be a great event.
About Sol Systems
Sol Systems is a Washington D.C. based solar energy finance and development firm that was built on the principle that solar energy should be an economically viable energy solution. To date, Sol Systems has helped over 3,000 customers finance projects ranging in size from 1 kW to multi-megawatts in size. Sol Systems currently operates throughout the United States and has partnerships in place with hundreds of solar installers and developers. For more information, please visit www.solsystemscompany.com.
About SolMarket
SolMarket is a transaction-driven ecosystem for the solar industry that catalyzes investment in solar energy by transforming how solar projects are financed. SolMarket provides investors and developers with the tools they need to efficiently originate, evaluate, finance, and construct renewable energy projects. SolMarket has over $1.9 billion in committed partnership funds seeking qualified solar projects and hundreds of users from the solar community. SolMarketis a wholly owned subsidiary of Sol Systems, the country’s oldest and largest SREC aggregator. For more information, please visit www.solmarket.com.
1603 Grant Fails to Pass in the Senate
The 1603 Treasury Program expired at the end of 2011 sparking much debate over the critical role it plays in growth for the solar industry. Without the 1603 Treasury Program, providing payments for solar facilities in lieu of tax credits, accessibility to financing for these systems will be much more limited and the solar industry is expected to take a slight hit in installations in the near future. The US Partnership for Renewable Energy (USPREF) expects a 50% decline in tax equity for solar projects- from peak equity levels of $7.5 billion in 2011 to $3.5 billion. However, growth is expected to continue in the industry due to declining production costs, existing tax equity programs, and general momentum in the market.
From the President to Senate, action has been taken to bring this program back to the forefront of discussion. In President Obama’s most recent budget proposal, he expressed his support for the clean energy industry by including language on a “Clean Energy Standard,” which would look to produce 85 percent of the country’s electrical power from clean energy sources by 2035 (including solar, wind, nuclear, and natural gas). Keeping this “Clean Energy Standard” in mind, President Obama also included increased funding and opportunities for the above mentioned energy industries – highlighting the extension of the 1603 Treasury Program for the solar industry.
President Obama’s support for the clean energy industry sparked movement in Congress to bring the President’s suggestions to life. Senator Jeff Bingaman (D-NM) answered the President’s call for improvements and greater support for the clean energy industry by proposing legislation that would establish a Clean Energy Standard for America. Moreover, Senator Debbie Stabenow (D-MI) took similar action by introducing an amendment to the Highway and Transportation Bill (S. 1813) that would extend the 1603 Treasury Program, as well as many other renewable energy-related programs (S. Amdt. 1812).
Sen. Stabenow introduced the amendment on Wednesday, March 7, 2012 and was joined by many of her colleagues on either side of the aisle who introduced their own partisan energy-related amendments. Senator Jim DeMint (R-S.C.) introduced an amendment that would put an end to energy subsidies, while leaving oil and gas incentives untouched (Senate Amendment 1589). Less than a week later, the Senate passed the transportation bill without the presence of Sen. Stabenow’s amendment, which failed to receive bipartisan support with a 49-49 final vote. In a small victory for the industry, DeMint’s amendment failed to pass during the March 13 vote. Other amendments supporting the advancement of the renewable energy industry and the energy independence of our country failed to reach approval as well. With a lack of full support from the Democrats and immense opposition on the Republican side, the partisanship of Congress created a harsh environment to ensure the passage of this amendment.
The benefits of the 1603 extended well beyond large-scale solar projects. The majority of the 5,000 solar firms in the US are small businesses, many of which have benefitted on some level from this program to acquire capital for their projects. These companies, otherwise unable to monetize the various tax equity incentives because of a lack of immediate capital, have been able to create successful businesses through the section 1603 grant. In 2011, the 1603 grant filled a $3.5 billion void in demand for financing that totaled $7.5 billion. The program created a low-risk cash transfer for projects, aiding the industry to grow at astronomical rates during its lifecycle, as well as lower capital costs to the producer and subsequently lowering consumer costs. It enabled the solar industry to reach grid parity in Hawaii and California, and placed it on the same track for several other states. The USPREF estimated that the 1603 grant created about 155,000 direct industry jobs, with the potential to create an additional 37,000 if renewed.
However, the opposition points to the failure of large-scale, capital-intensive projects as wasted expenses, funded by taxpayer money. The program did not limit eligibility based on the size of the system. Therefore, all levels of the commercial sized system can qualify. Perhaps future attempts to extend the 1603 grant should contain language that would target smaller commercial systems from larger commercial systems, which can qualify for tax equity incentives. Limiting the size of qualifying systems would shrink the magnitude of the funds supplied by the grant, thus reducing the size of the losses when they occur. This will not only continue to benefit businesses that have thrived under the availability of cheap and reliable capital, but could also placate the Congressional opposition that highlights the loss of revenue from costly failed projects.
Sol Systems will continue to track any progress of this grant and any other initiatives supporting the solar industry on the federal level. Please also check out our blog for updates on state legislation as well.
About Sol Systems
Sol Systems is a solar energy finance and development firm that was built on the principle that solar energy should be an economically viable energy solution. With thousands of customers and hundreds of partners throughout the United States, Sol Systems is the largest and oldest SREC aggregator. We provide homeowners, businesses, solar installers, and developers with sophisticated financing solutions that help make solar energy more affordable. Sol Systems also helps energy suppliers and utilitiesmanage and meet their solar RPS requirements efficiently by providing them with access to diverse portfolios of SRECs. For more information, please visit http://www.solsystemscompany.com.
Maryland General Assembly on Track to Pass Legislation to Accelerate the State’s Solar RPS Requirement
Due to sun-setting Federal incentive programs for solar energy and the current structure of Maryland’s Renewable Portfolio Standard (RPS), Del. Sally Jameson (D-28) and Sen. Rob Garagiola (D-15) proposed legislation that attempts to address this concern. House Bill 1187 will accelerate the solar carve-out expecting utilities in Maryland to achieve the 2% solar energy generation requirement by 2020, instead of the current requirement of 2% by 2022. The belief is that the current standard will create a glut, or oversupply, of SRECs due to a higher annual increase in solar energy after 2016. This could distort supply and demand of SRECs, thus making the market volatile and less predictable. HB 1187 aims to provide stability to a potentially volatile market by “smoothing” out the growth of solar in Maryland.
HB 1187 does not increase the overall solar requirement for Maryland; rather it accelerates the achievement of 2% solar by two years (see chart below for comparison). Moreover, although from 2013-2020 there will be yearly increases in demand, as compared to the current requirements, the end goal and requirements for solar will not be affected.
| Energy Year | Current Requirements | Proposed Requirements |
| 2012 | 0.10% | 0.10% |
| 2013 | 0.20% | 0.25% |
| 2014 | 0.30% | 0.35% |
| 2015 | 0.40% | 0.50% |
| 2016 | 0.50% | 0.70% |
| 2017 | 0.55% | 0.95% |
| 2018 | 0.90% | 1.40% |
| 2019 | 1.20% | 1.75% |
| 2020 | 1.50% | 2.00% |
| 2021 | 1.85% | 2.00% |
| 2022 | 2.00% | 2.00% |
The estimated benefits of this acceleration could not only create a more stable market with a steadier roadmap of SREC prices, but will also extend into the Maryland economy as a whole. Based upon industry information, HB 1187 could create over 10,000 jobs across the Maryland economy by 2018. Industry predictions state that the legislation could incentivize over $3 billion in investment and $144 million in revenue for the State as a result of job creation.
What does this mean for the ratepayer? The legislation was designed with a 1% price impact on the customer. HB 1187 anticipates a residential compliance cost of $0.19 per month and an average commercial electrical bill increase of 0.11%. However, the proposed RPS will actually create savings for the ratepayer when compared to the costs incurred from the current RPS schedule.
HB 1187 passed the House with unanimous support on March 21, 2012 and is currently proceeding through the Senate. After having initially failed the Senate Finance committee, SB 791 managed to pass through the committee 8-2 upon reconsideration during a vote late March 29, 2012. After a final lobbying effort by stakeholders and advocacy groups, SB 791 passed upon second reading in the Senate on April 2nd and will undergo its third reading tonight, April 4th, when it is likely to become law. Sol Systems will post an update as soon as more information is released on the status of the bill.
Sol Systems currently offers three types of SREC agreements for Maryland solar systems (both photovoltaic and solar thermal): Sol Brokerage, Sol Upfront, and Sol Annuity. Please email info@solsystemscompany.com or contact your solar installer for more specific pricing.
About Sol Systems
Sol Systems is a solar energy finance and development firm that was built on the principle that solar energy should be an economically viable energy solution. With thousands of customers and hundreds of partners throughout the United States, Sol Systems is the largest and oldest SREC aggregator. We provide homeowners, businesses, solar installers, and developers with sophisticated financing solutions that help make solar energy more affordable. Sol Systems also helps energy suppliers and utilities manage and meet their solar RPS requirements efficiently by providing them with access to diverse portfolios of SRECs. For more information, please visit http://www.solsystemscompany.com.