About the SOMAH program:

While the MASH (Multifamily Affordable Solar Housing) program is currently closed to new applicants, there is a new solar PV state incentive in town: Solar on Multifamily Affordable Housing (SOMAH); a program designed to help tenants in low-income housing benefit directly from solar savings.

The program works by giving credits to low-income tenants through virtual net metering (VNEM) tariffs, which allow system generation bill credits to be allocated among housing occupants. Each solar project will provide tenants with at least 51% of VNEM credits, saving them a significant amount of money and increasing good-will towards solar energy (one of the main intents of the program).

Property owners will still be eligible to receive the 30% Federal Incentive Tax Credit upon purchasing the solar system, and 49% of VNEM tariffs will go to common areas.

One interesting detail regarding SOMAH, the program is funded through California’s cap-and-trade greenhouse gas program, as opposed to its predecessor MASH which was mainly funded through large investor-owned state utilities.

Which properties are eligible for SOMAH?

There are several non-negotiable requirements that must be met in order to qualify for SOMAH, these are the important ones:

  • The property in question must be an existing building.
  • At least 1kW of electricity must be produced by the installed solar system, and no more than 5MW, alternating current rated peak electricity.
  • Property must be in a designated disadvantaged community (as defined by CalEPA), or 80% of the apartment’s households must earn at or below 60% of the median area income.
  • The building’s affordability restrictions must have at least 10 years remaining on the term.
  • You must separately meter units, and they must be eligible for a virtual VNEM tariff.
  • Your utility providers must be Pacific Gas and Electric Company, San Diego Gas & Electric Company, Southern California Edison Company, Liberty Utilities Company, and PacifiCorp Company.

Building owners are also unable to raise rent under the contract, which ensures that the system will not create any additional costs for renters, including utility allowance adjustments or other such methods of rent increase.

Timeline and funding:

The $1 billion program, which provides up to $100 million annually in incentives, will serve multi-family buildings with funding for up to 10 years. The target has been set at 300 megawatts of generating capacity by 2030, which means this program will likely be around for quite some time. SOMAH officially began in August 2018, and although there are still a few steps left before it is rolled out for applications, the program should officially begin in mid-September of 2019.

How SCF can help developers and owners make the most of SOMAH?

Sustainable Capital Finance is the perfect partner to help developers and multi-family home owners take advantage of SOMAH. Although applications will not be open until around September 2019, this is a well-funded program that will almost certainly stick around until at least 2030. If you are evaluating a project for the SOMAH program, or are interested in learning more, don’t hesitate to reach out to Dan Holloway @ dholloway@scf.com.

It’s Tuesday morning in Autumn, and your solar construction crew is on-site – looking into the the foundation holes they drilled the day before. The holes have filled with water due to some unexpected desert thunderstorms. Meanwhile, in the North-East, a crew is on the roof sorting through racking that has been blanketed in snow. What can an EPC do to deal with these issues? Foresight only goes so far as Mother Nature will inevitably bring her forces to bear – much to the chagrin of project managers everywhere.
 
We all know it; weather causes problems. If it’s bad, a Puerto Rican solar array can wind up in the sea or on an adjacent hillside. Force Majeure events aside, storms, wind, heat, and snow can be a troublesome burden and can each present their own obstacles that come between a contractor and their meticulous schedule. 
 
The key to overcoming these issues is agility. Crews need multiple tasks on their docket that can be completed whether or not the weather agrees. This can include completing staging work while it is raining or working on indoor electrical equipment when the installation is blanketed in snow, all while maintaining the flexible subcontractor schedule that allows the crews to remain working towards project completion regardless of what is going on outside. 
 
The contractors that can deal with impromptu weather issues will rise to the top – keeping their deadlines and signing more deals. Soon, they will be the only ones left in an industry that will quickly mature. 
 
If you’re an EPC that can weather the storm, we’d love to add you to our network!
Illinois has finalized their SREC program and it is going to be a monumental boon to the state’s solar market. With less expensive electricity than the North East and fewer hours of sunshine than the South West, the state decided to implement an SREC program with the ambitious goal of providing 25% renewable energy by 2025. The SRECs are particularly useful for financing in the C&I market. Essentially, the commercial blocks provide an additional twenty to fifty dollars per megawatt hour (or 2-5 cents per kilowatt hour) in revenue. In addition, Illinois took the unusual step of creating a 15 year SREC term, but paying for all fifteen years within the first 5 years of a system’s operation. They essentially front-loaded the SREC payments to the system owners. 
 
This effectively makes projects that previously did not pencil, much more tantalizing for financiers – and many of the projects that were tabled in the past can now be built at no cost to the customer with savings in year 1. This is another example of how utilities, governments, and the solar industry can work together to provide well paying jobs while reducing the state’s greenhouse gas emissions. 
 
We can expect Illinois to climb up the ladder of renewable energy production. It is currently ranked 37th in the US with 6.6% of electricity production coming from renewables. If they attain their goal, they will be well on their way to becoming one of the greenest states in the country.

With over 15,000 attendees year after year, Intersolar is one of North America’s largest solar exhibitions for its industry and partners. SCF had the opportunity to walk the floor this year and here’s what we learned:

1) Intersolar has grown with the solar market
Where once small shop entrepreneurs gathered in line to inspect racking attachments to increase their crews’ installation speeds, business professionals and executives speculate on the future of the industry and the challenges of a mature market. The vendors are largely the same, but their old products have been refined and perfected. This is a great accomplishment and shows monumental progress for an industry that has tripled in size since 2010.

Solar industry progress is outstanding; albeit it comes with issues that are ever present when a new industry flourishes. The problems are new and different. The focus is now on ways to incorporate solar into our outdated grid, which is why there is now an entire floor dedicated to energy storage. At stands brimming with developers seeking to get ahead of the curve, storage companies hawked their products to customers who have tried and failed to effectively implement a cost-effective solution to demand charges and utility push back.

Everyone knows storage is the big question; and the teams that master it first will be in a league of their own.

2) Software is Taking over the Origination Game
One thing that has become evident over recent years of attending the Intersolar Show is that a new breed of software providers are providing new value added services that are dramatically reducing the workload to the EPC/Developer marketplace. The landscape of origination is changing rapidly, and it appears that software is at the forefront of this new paradigm shift.

Companies like Aurora have reduced the work it takes to design large and complex commercial solar systems to simply entering an address and performing a handful of mouse clicks. Other companies are using large scale public (and private) databases to estimate building energy usage and electricity pricing to dramatically reduce the amount of time it takes to provide customers with detailed proposals. Still other companies are using software to target the best properties for land leases for Greenfield development. All of these new platforms are combining to drive down the cost of customer acquisition which in turn will drive down overall installation costs. With that being said, it’s an exciting time to be in the solar market.

3) Meeting Clients and Partners Face to Face is Always the Best Part
Participating in Trade Shows can impart numerous benefits. While they can be costly to attend, a lot of value to be derived if proper planning and preparation is undertaken. Most people attend shows in hopes of learning more about their industry through seminars, or walking the show to experience new products, services or industry trends. In SCF’s experience, the most valuable aspect of visiting industry trade shows is the in-person meetings that take place at these events.

Getting to meet with people in-person, and learn about their companies, projects, and personal lives is invaluable in creating rapport, and ultimately trust. In an industry known for terms like the “Solar Coaster”, and the “Wild West” it is vital to form long term relationships with those you partner with. There are numerous attendees at these shows that find the face to face meetings so valuable, that they never actually set foot on the show floor,  and simply purchase a show pass so that they can set up meetings with their clients and prospective vendors. At shows like Solar Power International, you will rarely have an opportunity to meet with as many partners in one place.

There is a lot that can be learned at any industry trade show, but the in-person meetings have the longest-lasting impact.

Since it is June, the 6th month of the year, we wanted to present you with our thoughts on the six hottest markets for solar financing in the country. If you have questions or thoughts on these markets or any others not listed, don’t hesitate to reach out to Dan Holloway @ Dholloway@scf.com or Joel Binstock @ jbinstock@scf.com

1) California: California is the most developed and saturated solar market in the United States. In 2016, approximately 10% of all energy produced in-state was from solar generation. With $0.15+ per kwh rates, utilities with experience working with solar developers, and ample sunshine California will continue to deploy solar at a substantial clip going forward, particularly in the C&I and community solar markets.

2) Massachusetts: Out with the old, in with the new. Massachusetts has begun to phase out their SREC II Carve-out program and replace it with the new and improved SMART program. SMART is expected to be one of the most attractive solar programs in the country in 2018 & 2019 with significant available capacity to be deployed. Read more about the SMART program and SCF’s SMART offering here!

3) Illinois: Illinois, much like Massachusetts has decided against pursuing a traditional SREC Program to achieve its RPS standards. Instead, it has established the Adjustable Block Program (AB Program) which offers fixed incentives over 5 years in order to encourage solar deployment. The AB program is still in its early stages but anticipated opening is Q4 2018 or early 2019. One thing to note here is that while the Community Renewable Generation category is substantially oversubscribed (some have said by as much as 500% or more), the Distributed Renewable Generation category (2 MW and less) is still relatively unsubscribed.  You can read more about it from SCF here!

4) New Jersey: New Jersey is a challenging but exciting market. While the SRECs in the state are some of the highest in the country, their price volatility creates uncertainty and risk exposure for owners of PV systems. As a result, the cost of capital typically is the highest for states like New Jersey with uncontracted risk exposure. However, there is considerable discussion going on within the state related to modifying the current SREC structure to make it look more like the MA and IL incentive programs. Everyone will have to wait to see how these conversations ultimately play out.
5) Rhode Island: Rhode Island is a smaller more nuanced market than the previous states listed. There is a feed-in-tariff opportunity called the Renewable Energy Growth Program which allows developers to supply electricity directly to National Grid in exchange for a bid-rate locked in for a 20 year term. Similar to the MA SMART program, SCF can provide programmatic site lease pricing using the SCF Suite. Please contact us if you would like to learn more.
6) Arizona: Sunshine galore. Arizona has some of the highest insolation rates in the country. Combined with sophisticated solar developers & installers, Arizona is a state that is trying to compete with California for state-unsubsidized solar. As build prices continue to decline and the price of electricity continues to rise, we are finally reaching an inflection point where financing becomes an attractive option for this market.