19 Oct 2017
October 19, 2017

October Industry News

0 Comment

Regulatory News

DOE Baseload Power Plant Cost-Recovery Proposal to FERC

Earlier this month, the DoE proposed cost-recovery provisions for baseload power plants helping keep nuclear and coal power plants online as they struggle with high operating costs while simultaneously competing with cheap natural gas and increasingly cheaper renewable energy resources. The FERC will take appropriate action within the timeframe established by the DOE with initial comments due by October 23rd. Robert Powelson, FERC Commissioner, criticized the DOE proposal decrying that this NOPR rule would destroy wholesale power markets.

USEPA (Pruitt) Repealing Clean Power Plan (Obama)

On October 10th 2017, US EPA Administrator Scott Pruitt signed a proposal to repeal the Clean Power Plan, a rule established during the Obama administration attempting to corral carbon emission from the power sector. Pruitt did not suggest a replacement policy, but merely asked the industry to craft an updated carbon rule. Pruitt’s focus would be on internal improvements to coal-based power generation vs requiring utilities to offset their carbon emissions through Renewable Energy Credits (RECS).

Section 201 Ruling

The Suniva trade dispute began when America’s biggest PV panel manufacturer Suniva filed an ill-advised petition with the U.S. International Trade Commission (ITC) on April 26, 2017. Two of our team members wrote an industry analysis on the topic. Read More Here!

 

Utility News

The Domestic Coal Fleet Continues Towards Retirement

As the DOE, EPA, and FERC all deal with the policies behind coal-based generation, the economics are becoming increasingly challenging for Coal plants to compete with other generation sources. A report by the Union of Concerned Scientists disclosed that roughly 25% of all remaining coal plants are expected to close or convert to natural gas. An additional 17% are at risk for early retirement due to natural gas generation. Many more will struggle to compete if there are changes in fuel or operating costs. From 2008 to 2016, the coal component of the US generation portfolio went from 51% to 31% mostly due to market forces (affordability of natural gas & renewable energy resources). A real-time example of this is with Luminant, a power generation business, that plans to retire it’s coal-fired plant in Monticello, Texas in January due to market economics, not environmental regulations.

 

Technology News

Microsoft continues advancing its renewable portfolio

Microsoft agreed to support a wind project in Ireland that will be the first European wind farm to integrate batteries into each turbine. The technology giant entered into a 15 year power purchase agreement (PPA) with GE to purchase all the generation from the 37 MW Tullahennel wind farm.

Bridgestone World Solar Challenge

Since its inception 30 years ago, the Bridgestone World Solar Challenge has been pushing the needle on cars powered exclusively from solar power. Originally in 1987, the solar arrays that were used were allowed to be 8 sq meters. In 2007 that size was reduced down to 6 sq meters and this year’s race has an even more stringent requirement of 4 sq meters. Only 30% of teams complete the journey and this year’s challenge is ramping up to be the toughest yet. The first place teams are expected to complete the journey from Darwin to Adelade, Australia (1,864 miles) on Friday October 13th.

Green Charge Announces Largest Energy Storage Project yet with New Financing Model

Green Charge, an energy storage solutions provider & subsidiary of Engie, an international power producer, recently announced a 3 MW–6 MWh energy storage project in Massachusetts that is expected to go online in April 2018. The project utilizes the investment tax credit by charging from the Mt. Tom Solar plant that Engie built earlier in 2017. The storage system will be owned by PNC Bank and leased back to Green Charge who will operate it on behalf of Holyoke Gas & Electric, its municipal utility customer. Green Tech Media notes that Bank interest in owning energy storage systems is nascent and bodes well for the future of financing for these types of energy solutions.

About Sustainable Capital Finance:  Sustainable Capital Finance (SCF) is a third party financier & owner/operator of commercial & industrial (C&I) solar assets and is comprised of experts that specialize in structured finance and solar development. SCF has a vast network of EPCs and Developers across the US that submit project development opportunities through SCF’s cloud-based platform, the “SCF Suite”. This allows SCF to acquire and develop early to mid-stage C&I solar projects, while aggregating them into large portfolios.

SCF has standardized the diligence and transaction process, thus creating cost-efficiencies and risk mitigation, in order to solidify the C&I marketplace as an investment-worthy asset class. For more information, visit http://www.scf.com. Connect with us on Twitter at @SCF_News and follow us on Linkedin and Facebook!
17 Oct 2017
October 17, 2017

Takeaways from Solar Connect 2017

0 Comment

After attending the Infocast Solar Connect Conference in La Jolla, CA earlier this month, a number of topics were raised that I thought were worth reflecting on:

Ongoing Suniva Trade Case

Without a doubt, the most discussed topic at the conference was the ongoing Trade Case brought by Suniva. There were many opinions on the subject, but the consensus was that the implemented tariff  would not be as draconian as the $0.40/watt duty initially requested by Suniva. The general view was that a tariff in the $0.15 – $0.20/watt range and a floor price between $0.50 – $0.55/watt was most likely. However, we are all going to have to wait until November to see what tariffs President Trump imposes.

Impacts of the Trade Case

As part of the same discussion, everyone shared their opinions on what the potential impacts of the Trade Case would be on the different segments of the solar industry. The consensus was that the utility sector would feel the strongest impact of any potential tariffs imposed because hardware costs make up a much larger percentage of their total project costs. There was also some discussion that if the tariff imposed was high enough,  a number of utility projects (projects in Georgia and North Carolina were mentioned) that are currently in play, would most likely fail because of the significant impact on financial returns.   Most opined that the C&I sector would feel an impact as well, but based on overall system size, the impact would likely be considerably less than that felt by the utility sector. The residential sector would also feel some impact, but like C&I, it would be considerably muted compared to the utility market.

Renewed Interest in the C&I Market

While the Infocast Conference tends to lean towards the utility solar sector, a number of attendants voiced a renewed interest in the C&I market, and I heard this from both residential and utility players. On the residential side, a number of installers felt that the sector had matured and had become more competitive over the past several years. These installers were viewing the C&I market as a less competitive (“Blue Ocean”) market that would allow them to improve overall margins. On the utility side, a number of installers/developers were voicing similar concerns. Essentially, they were saying that compared to previous years, there were more installers/developers chasing fewer projects, and margins were getting compressed. Much like the residential installers that I spoke with, they were looking to C&I as a potential path to improving overall margins.

Storage

Almost everyone I spoke with asked about storage, or solar plus storage as a topic; there was still a surprising lack of clarity as to how to finance these types of projects. While the underlying equipment has become more mature and bankable, there are still a lot of questions and confusion as to how to value potential savings related to the storage aspect of the system. Given the high volatility of demand charges related to customer load profiles and ever changing rate structures, it has historically been very challenging to calculate savings projections that finance companies can support. Based on input from other attendants, a new approach is being tested where finance companies separate the storage from the solar. A guaranteed monthly “Demand Shavings” is provided to the off taker, but not necessarily a defined savings amount. This allows the financier to mitigate the load and tariff risk onto the customer, where it currently resides. We will see if this approach continues to build momentum going forward.

Other than these topics, there was also a general sense that the financial markets were continuing to get more and more comfortable with the solar market, and more funds were becoming available to support projects, with a new emphasis targeted towards C&I projects specifically.

About Sustainable Capital Finance:  Sustainable Capital Finance (SCF) is a third party financier & owner/operator of commercial & industrial (C&I) solar assets and is comprised of experts that specialize in structured finance and solar development. SCF has a vast network of EPCs and Developers across the US that submit project development opportunities through SCF’s cloud-based platform, the “SCF Suite”. This allows SCF to acquire and develop early to mid-stage C&I solar projects, while aggregating them into large portfolios.

SCF has standardized the diligence and transaction process, thus creating cost-efficiencies and risk mitigation, in order to solidify the C&I marketplace as an investment-worthy asset class. For more information, visit http://www.scf.com. Connect with us on Twitter at @SCF_News and follow us on Linkedin and Facebook!
03 Oct 2017
October 3, 2017

Employee Spotlight: Joel Binstock

0 Comment

What are 3 words to describe SCF?

Creative, focused, entertaining

What do you like most about SCF?

Ability to mold and change processes, collaborating with other teams, and a friendly work environment.

What is your role at SCF

Working with solar developers & EPCs to create meaningful solar projects, Finding & developing PPA financing opportunities in the C&I solar space.

What career advice would you give for people trying to enter the solar field? 

Be patient as the solar industry has its ups and downs, but stay hungry, work hard, and develop relationships with industry professionals.

What professional accomplishment are you most proud of? 

Managing a marketing/sales campaign to encourage California public schools to explore energy storage as a way to improve their energy demand and sustainability goals.

What is the best book you’ve read?

The Quest: Energy, Security, and the Remaking of the Modern World by Daniel Yergin. Great industry insight with historical and cultural components.

What do you like to do in your free time?

I enjoy playing and watching sports, snowboarding & hiking, riding my electric skateboard through golden gate park, and drinking a nice sour beer.

You’re a new addition to the crayon box. What color would you be and why? 

Succulent green, because on my desk there is a beautiful succulent garden that has some great color to it.

What’s your favorite ’90’s jam?

I originally said “You Rock My World” by MJ but I see that its from 2001. Well I’m going to stick with that. Shamone

Superpower of choice? 

Teleportation

 

By Maggie Parkhurst and Joel Binstock

The Suniva trade dispute began when American PV panel manufacturer Suniva filed an ill-advised petition with the U.S. International Trade Commission (ITC) on Wednesday, April 26, 2017. The petition was filed under Section 201 of the Trade Act seeking complete relief from “dumping” (when a company sells products artificially below market rates to gain market share and drive away competitors) of foreign manufactured Crystalline Silicon Photovoltaic (CSPV) cell-based solar panels. According to the Solar Energy Industries Association® (SEIA), the petition could more than double the cost of solar and put more than 88,000 US jobs at risk.

The Suniva trade dispute could have an ever-expanding impact on the entire solar industry. Suniva’s argument is essentially that competing solar-panel production companies overseas, especially in China, are able to take advantage of government subsidies allowing them to produce artificially cheap panels. They can then flood the American market with these panels at a rate far below competing American firms, making it hard for American firms to compete and stay in business. Obviously, artificial trade imbalances are in no-ones favor: the subsequent market consolidation occurring as local firms fold and fall out of the marketplace can lead to later monopolistic/oligopolistic pricing tendencies by the “winners” after the market has been cornered.

However, this argument ignores important realities in the American solar panel industry: it’s just not that big. The largest solar industry in America is actually in service, installation, and maintenance, which formed itself based on the realities of cheap overseas material costs alongside the relatively high skill and safety requirements for solar installation and maintenance. Thus, an increase in pricing for solar panels will drive up the price of solar installation jobs, in turn reducing demand for solar projects and eventually reducing overall demand for solar service and maintenance.

Suniva requested that there be a tariff of $0.40/watt on imported modules and a floor price on all modules of $0.78/watt. The ITC ruled 4-0 in finding cause for severe injury to both Sunniva and Solarworld.  If the ITC’s recommendations to the President include establishing import tariffs, the solar module costs would effectively double, setting the solar industry back years. Not only would it increase costs for installation & sales jobs, inevitably slowing the market, but also affect secondary jobs supporting the industry (asset management, racking manufactures, etc).

In fact, SEIA predicts loss of solar jobs in all market segments due to the theoretically devastating impacts of the trade dispute. In their models, the utility-scale job market would shrink by 60%, while commercial and residential employment would fall by 46% and 44% respectively.

SolarWorld joined Suniva in the trade case and claims that SEIA is exaggerating the impacts instead of doing a thorough analysis. The company states that cheap imported solar panels have been affecting American manufacturers for decades.

SEIA believes that the imposition of price floors and tariffs for imported CSPV cells and modules would hamper the entire solar industry’s growth by vastly increasing up-front project costs. As one of the cheapest energy sources in the US, solar is a major economic force of the country, bringing billions of dollars in investment every year. However, this incredible growth will sputter if the ITC sides with Suniva & SolarWorld and recommends to the President a vast increase in the market rates for solar panels by instituting protective tariffs.

Consequently, a Section 201 action would create an economic loss for the vast majority of the solar industry for the small benefit of reinvigorating the small set of domestic solar manufacturing firms. Past examples of Section 201 cases in other industries like lamb meat, pipeline, and gluten have shown that the protective measures established did not always restore the industries to sustained competitiveness, as oftentimes foreign competitors enjoy other advantages besides direct government support for an industry, including cheaper labor and material costs, and less overhead due to less-stringent safety and regulatory standards. Needless to say, establishing protective floor-prices & import tariffs are not effective solutions to this proposed domestic manufacturing issue.

In fact, there are many other alternatives to tariffs to support real investment in domestic solar manufacturing without sacrificing the strategic market such as:

  • Support domestic panel manufacturing with a tiered investment tax credit
  • Expand federal targets for renewable energy procurement
  • Provide loan support or subsidize the solar supply chain
  • Encourage competitive advantages in materials quality and efficiency to differentiate domestic market from foreign markets
  • Integrate manufacturing firms and installation/service firms to provide internal cost-reductions
  • Provide assistance for technology and workforce development

GreenTechMedia (GTM) has estimated that the trade dispute could enormously reduce new solar projects by almost two-thirds or slash them by a total of about 47 GW by 2022. This is more solar capacity than what has been manufactured in the U.S in aggregate.

SEIA has already begun a ‘Save America’s Solar Jobs’ campaign. It has been active on multiple platforms to beat this case, including directly lobbying members of Congress and other policymakers, engaging in several legal proceedings with the ITC, conducting research to analyze and determine potential impacts, building a wide network of partners, and raising awareness among people for fair and free trade policies.

Sustainable Capital Finance (SCF) does not support the Suniva petition as over 250,000 workers are serving America’s solar industry currently, and any misguided trade protections for the solar manufacturing industry would threaten the continued health of the booming solar service industry and would be against the larger interests of the solar market and the United States as a whole.

SCF plans to tackle the upcoming challenge head on. We are exploring alternative financing options that will help more projects receive financing even as the costs increase. We are also working with developers and EPCs to help them procure panels in anticipation of potential import tariffs. The best strategy we recommend for our partners is to diversify your module expertise and supply so that you can work with what the market has to offer. With looming uncertainty hovering over the industry in several months, we can say that now is the time to get projects developed and installed. Please check out SCF.com and don’t hesitate to reach out to us to receive initial pricing on your C&I PPA projects.

About Sustainable Capital Finance:  Sustainable Capital Finance (SCF) is a third party financier & owner/operator of commercial & industrial (C&I) solar assets and is comprised of experts that specialize in structured finance and solar development. SCF has a vast network of EPCs and Developers across the US that submit project development opportunities through SCF’s cloud-based platform, the “SCF Suite”. This allows SCF to acquire and develop early to mid-stage C&I solar projects, while aggregating them into large portfolios.

SCF has standardized the diligence and transaction process, thus creating cost-efficiencies and risk mitigation, in order to solidify the C&I marketplace as an investment-worthy asset class. For more information, visit http://www.scf.com. Connect with us on Twitter at @SCF_News and follow us on Linkedin and Facebook!
31 Aug 2017
August 31, 2017

The Nonprofit Solar Conundrum

0 Comment

The U.S. Nonprofit sector is filled with entities that occupy, and often, own commercial buildings, with ideal roof and parking space for solar power. With the U.S. Government phasing out cash grants, while extending tax credits for renewable energy projects, it is unlikely that many of these buildings will ever see a solar system on their roof, or in their parking lot. Given that the current Federal Investment Tax Credit (ITC) for renewable energy equates to 30% of the total eligible cost of a solar PV system, this is a substantial incentive that non-profits cannot take advantage of since they don’t pay federal income tax. The typical system suitable for the vast majority of these buildings ranges between 50 kW and 500 kW in size, with a small percentage needing systems larger than 1 MW.

Solar Panels on ChurchTo demonstrate the magnitude of this problem, here are some numbers that show just how many buildings in the United States are currently unable to take advantage of the Federal ITC:

# of Churches in the U.S. – roughly 350,000 (as of 2010 census data)

# of Municipal buildings in the U.S. – roughly 20,000 municipal governments in the U.S. – if we assume each municipality has 5 government buildings, that’s about 100,000 total buildings

# of Public Schools – roughly 100,000 (as of 2010 census data)

Taking into account just these three categories of energy consumers, we are talking about over 550,000 buildings in the U.S. that cannot take advantage of the 30% ITC incentive. So, what’s being done about this? Let’s explore some different options:

    • Operating Leases – Operating leases are common financial instruments that are often used to acquire expensive equipment such as vehicles, computing equipment and machinery. Operating leases allow the lessee to benefit from lessor owned assets, over a number of years (typically 5-10) using fixed payments. Since this is such a well-known product, many nonprofits have looked to leases as a possible option for adopting solar. However, due to tax, code, lessors are unable to capture the ITC while offering operating leases to..
    • Loans –Loans, like operating leases allow borrowers to acquire assets over a number of years (typically 3-20 depending on the type of asset). However, because the borrower/owner is a nonprofit, this vehicle does not allow for the nonprofit to take advantage of the ITC. In addition, loans taken out to purchase solar systems reduce the amount of borrowing capacity of the borrower.
    • Power Purchase Agreements (PPAs) – PPAs are agreements that allow energy consumers to consume solar energy with no money out of pocket, and in most cases allow energy consumers to take advantage of lower electricity bills from day 1. In this case, a third party owner buys and installs the solar system and sells that building owner electricity at rates lower than their current utility rates. This allows the third party owner (which is a tax paying entity) to monetize the ITC, and offer discounted electricity rates to the building owner.
      Of these three options, PPAs have become the most popular financing vehicle for nonprofit entities for the reasons stated above. However, most companies that offer PPA financing do not offer financing for projects smaller than 1 MW, and almost none that will go below 500 kW.

Sustainable Capital (SCF) believes that this is a vast and very under supported part of the overall solar PV market. We offer PPA financing for projects as small as 100 kW and happily support nonprofit organizations. If you are a solar installer or a solar developer, please fill out our partner registration form to learn more.

About Sustainable Capital Finance:  Sustainable Capital Finance (SCF) is a third party financier & owner/operator of commercial & industrial (C&I) solar assets and is comprised of experts that specialize in structured finance and solar development. SCF has a vast network of EPCs and Developers across the US that submit project development opportunities through SCF’s cloud-based platform, the “SCF Suite”. This allows SCF to acquire and develop early to mid-stage C&I solar projects, while aggregating them into large portfolios.

SCF has standardized the diligence and transaction process, thus creating cost-efficiencies and risk mitigation, in order to solidify the C&I marketplace as an investment-worthy asset class. For more information, visit http://www.scf.com. Connect with us on Twitter at @SCF_News and follow us on Linkedin and Facebook!