Last month, the long winded debate regarding the Investment Tax Credit (ITC) step-down was put to rest. Under the revised legislation, the credit will stay at 30%, and will be extended 5 years with the credit set to scale down to 26% in 2020, 22% in 2021, and then finally settling at 10% for commercial projects and 0% for residential by the end of 2022. With the extension in place, it is predicted that there will be an additional 225,000 solar jobs by 2020: this is nearly double the number of currently-existing solar jobs. (Source SEIA)
What does this mean for the solar industry as a whole? According to research conducted by SEIA and Greentech Media, the credit is projected to spur a 54% increase in total installations through 2020, which translates to roughly 20 GW of solar deployed annually. The commercial sector similarly predicted to increase by 51%. (Source GTM)
How will the credit specifically affect the Commercial and Industrial (C&I) sector? With lowered costs and less of a scramble towards the end of 2016, we will see a gradual increase in installs instead of a huge burst in Q4 of 2016. This is great news for the industry, but more importantly for the C&I sector, as this untapped market should begin to flourish in the wake of this extension.
Oftentimes, C&I projects require more time, coordination, and expertise to take projects to NTP. This extension will provide time for more project planning without a restrictive time frame, and will also allow for industry investors and developers to fully realize the sector’s growth potential.
SCF has standardized the underwriting process for commercial off-takers with the implementation of software tools and standardized ratings. This has mitigated many of the former risks associated with C&I, making the sector more attractive for investors.
While residential solar has always been on the forefront of solar installs, the C&I space will now be able to streamline efficiencies within businesses models, and work on lowering production costs and fees associated with commercial solar. This makes this sector more financially feasible for large-scale customers, a market that up to this point has been largely untapped.
New solar marketplace matches projects from solar integrators with project capital from solar investors, to finance commercial, non-profit, and municipal solar projects and aggregated portfolios.
SAN JOSE, California – April 9, 2014. Sustainable Capital Finance Inc., a solar financing firm, announced today the launch of the SCF Suite and a fund, raised specifically for projects submitted within the Suite. The fund, which contains $50 million of committed project capital through SCF’s investor network, is earmarked for projects submitted and approved through the Suite.
The proprietary web-based suite provides the solar industry with a new marketplace dedicated to financing commercial solar projects. The SCF integrator network is limited to organizations that meet its experience and financial strength standards.
Integrator’s projects and investors are linked to the same robust network, which provides integrators with expedited financing decisions and investors with multiple investment opportunities.
The SCF Suite allows integrators to streamline the project funding cycle by gathering all information necessary for SCF and its networked investors to analyze a project or portfolio. The Suite properly prices projects to meet economic benchmarks.
SCF’s investor network consists of hedge funds, private equity, utility companies and other institutional investors. Investors can acquire or invest in projects specific to their unique investment requirements and can form aggregated portfolios consisting of multiple commercial projects, meeting their desired portfolio size. Investors can dedicate less time to reviewing a single project, knowing that a SCF project analyst has previously evaluated the project, based on their investment criteria.
Shiraz Madan, CEO and President of SCF, was quoted as saying:
The SCF Suite is a first of its kind in the solar industry. Efficient and affordable financing has always been the biggest challenge for integrators within the commercial solar space. Our Suite provides an efficient means for integrators to submit and properly price projects in order to obtain financing. A stream-lined, standardized approach allows investors to specify project and portfolio requirements, saving them valuable time and ultimately providing them with economically viable projects. The commercial solar space has been vastly underserved; that’s now going to change.
The Suite is going through a roll-up phase, with access immediately available to the SCF integrator network. Sustainable Capital Finance will be providing online access to the Suite for its investor network in the very near future.
Solar integrators or investors interested in learning more about the SCF Suite can visit http://www.scf.com to learn more.
For media inquiries, please contact SCF at firstname.lastname@example.org.
About Sustainable Capital Finance:
SCF serves as a domestic renewable financing firm, providing financing vehicles and solar expertise in commercial solar. SCF is comprised of experts whom specialize in solar financing and solar development. Relationships with a multitude of investors have allowed SCF to structure solar projects into desirable investment vehicles, catering to the underserved commercial solar market. Sustainable Capital Finance and SCF Suite are service marks of Sustainable Capital Finance Inc.
Sustainable Capital Finance is eagerly awaiting the start of the 2013 Solar Power International Conference next week! The Solar Power International Conference is considered to be one of America’s largest and most comprehensive solar industry conferences and is powered by Solar Energy Industries Association (SEIA) and Solar Electric Power Association (SEPA). We’re also excited because Solar Power International is known for its ability to offer power packed education, training, and information components to those who attend.
The 10th annual North American conference will be held in Chicago, Illinois from Monday October 21st through Thursday October 24th. Solar Power International (SPI) is a global event that drives buying decisions and business solutions for the entire solar energy industry. The Solar Power International Conference is North America’s premier business-to-business event for professionals in solar energy industries. We’re looking forward to reconnecting and meeting so many people who share in our passion for solar!
“SPI is a well-run conference with representatives from all niches of the solar industry,” said Shiraz Madan, Sustainable Capital Finance’s CEO. “SPI is an opportunity for introduction to new companies, technology and most importantly, stay connected with industry contacts that you may not be able to see or speak with regularly. Not to mention it is in Chicago this time around; the best city in the country!”
In attendance at this year’s SPI Conference will be more than 15,000 solar energy professionals, and more than 700 leading manufactures, service providers and vendors with booths on the expo floor. We’re looking forward to learning about all the latest products and ideas happening in the industry as well as the unique networking opportunities.
Statics presented in Mercom Capital Group’s report on venture capital spending for the 3rd quarter of 2013, portray a brighter outlook for solar demand for the rest of 2013. Although VC funding for the solar industry is down 54% from the same time last year, spending has seen a recent increase from the previous 2013 fiscal quarters and appears to be gaining momentum.
Key findings from the Mercom Capital Group Q3 Report:
• Increase in venture capital spending for solar
• Rise in third-party solar financing
• Growing number of large-scale solar projects
Solar becomes more appealing to Venture Capitalists:
Global venture capital funding for Q3 in 2013, totaled $207 million, which is a slight increase from the $189 million, from Q2 of 2013. In comparison to the 27 investors who participated in funding rounds from Q2 of 2013, there were 35 venture capitalists that participated in funding rounds in 3Q13. The average deal size in Q3 came to $7.4 million, down from $9.9 million in the previous quarter. In addition, there were 37 announced large-scale project funding deals in Q3 2013. Overall, a total of 52 investors took part in project funding deals in Q3 2013.
3rd-party financing takes off:
Third-party solar financing companies raised approximately $584 million in the past quarter, with help from banks. So far with 3 months to go, third-party solar leasing firms have raised roughly $2.5 billion this year, compared to just $2 billion in both 2012 and 2011.
Financing for solar, especially utility-scale projects, continues to improve. There were 37 large-scale project funding deals listed in Q3 2013 with a total of $2.89 billion, bringing year-to-date funding deals to 106 compared with just 84 in 2012. With the addition of 37 large scale projects from Q3, the total for 2013 comes to 106, which is 22 more than projects completed for the entire year of 2012.
Large-scale solar projects experience a growth spurt:
Project acquisitions were the highest in three years, with around 5.5 gigawatts (GW) of large-scale projects announced in the 3rd quarter of 2013. Disclosed large-scale project funding came to $2.89 billion in Q3 2013; with large-scale projects totaling 1,267 megawatts (MW) announced funding this quarter.
“It’s important for utility-scale projects to be really successful in the next two or three years, because they bring the costs down for the entire industry. And as costs continue to fall, developers are jumping market to market wherever they see the best returns”, according to industry expert Prabhu.
More than half of this quarter’s 30 project acquisitions involved investment firms, not developers or solar companies. After the 2010-2012 financial collapse, developers found it difficult to get big projects financed, but the solar industry is seeing a more steady return on investments, which is seen as less of a risk for investors.
According to the LA Times, California is now equipped to produce 1,629 megawatts (MW) of solar power from 168,000 locations. Solar installations in California grew by 26% in 2012 from the previous year, according to a report by the Public Utilities Commission. A record-setting 391 MWs of solar power were installed in 2012, which made it the biggest year ever for rooftop solar installations.
California’s photovoltaic (PV) market has seen continued growth amidst the dwindling incentives offered by the California Solar Initiative. Q2 2013, ranks as the strongest second quarter in the state’s history, with installations up 78% in the residential market and 26% in the non-residential market year-over-year.
California’s solar market is the fourth most expensive in the U.S. for systems smaller than 10 kilowatts (kW), which represents all of the residential market and a majority of the commercial market as well.
The current U.S Solar Market at a glance
The recent Q2 report released by SEIA and GTM Research, forecasts a renewal of PV growth in the second half of 2013. Cumulative operating PV capacity in the U.S. now stands at 8,858 MW. PV installations totaled 832 MW in Q2 2013, up 15% over Q1 2013.
According to Shayle Kann, the vice President at GTM Research, the Q2’13 report shows that the solar market, despite experiencing continual growth, is beginning to stabilize in the U.S. Kann expressed that the solar market will not likely see the extreme growth spurts, it has been experiencing in the last few years.
Edison Electric Institute explains that solar is now “in the market” for 16 % of U.S. retail electricity sales, and has the potential to double by 2017, allowing solar to compete for $170 billion of annual utility revenue.
In the commercial PV market, only 13 out of the 28 states tracked in the report experienced quarterly growth. The non-residential market was down in Q2, continuing a relatively light year for the commercial segment.
The utility sector added 452MW of PV installations, a jump of 42% over last quarter while the residential market broke its streak of incremental quarterly growth with a flat quarter. According to the Q2’13 Market Insight Repot, there were 38 individual utility PV projects completed in Q2 2013, totaling 452 MW of new installed generating capacity. All ten of the largest projects completed were installed in the states of California and Arizona. Meanwhile, the utility PV pipeline grew marginally in Q2, reaching 12.1 GW of projects with power purchase agreements (PPAs) in place and 4.1 GW of projects currently under construction.
Solar Market Forecasts:
According to GTM Research and the SEIA’s insight report, Q2 2013 was somewhat softer than expected, but preliminary data suggests that Q3 will be considerably stronger, with the hopes of bringing the U.S. global solar shares of installations to a high of 13%, compared to the 8% in 2008.
The report stated that 4.4 GW of PV is expected to come online in 2013, compared to the 3.3 GWs in 2012. Research from the Solar Market Insight Report 2013 Q2, also predicts that worldwide installations of PV energy storage systems for commercial use will grow to 2.3 GW in 2017. The commercial sector’s share of global PV installations will also experience an extensive jump, from 5% in 2012 to 40% in 2017, the report stated.
In the IHS Electronics & Media’s report, The Role of Energy Storage in the PV Industry 2013 World Edition, it can be forecasted that North America will emerge as the world leader in commercial PV energy storage, with more than 40% of global installations in 2017.