10 Nov 2017
November 10, 2017

The Sun is Shining on Illinois

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One might say that the Midwestern region of the USA has been slow to adopt solar and other renewable energy sources… not because of a lack of sun, but due to the inherently low price of electricity in this region. This is largely a result of the natural gas fracking boom starting in the early 2000’s. A multitude of factors, namely the cost effectiveness of solar & customer preference, have led to legislative changes that promote the growth of renewables. No Midwestern state has positioned itself to achieve a lofty energy paradigm shift more so than Illinois, when the Commerce Commission passed the Energy Infrastructure Modernization Act (EIMA) in 2011.

EIMA has provided $3.2 billion for grid modernization, in addition to a significant investment into smart meters with a goal of installing more than two million new meters by the end of 2018. Smart meters provide much more accurate data, reducing the need to estimate usage for utility bills. In addition, service activation and efficiency improvements are all made easier through the use of smart meters, versus traditional metering devices.

Through the grid modernization process, EIMA established the framework and the data acquisition tools needed for future programs to be successful, particularly the Future Energy Jobs Act (FEJA), established in 2016.

FEJA is perhaps the most critical piece of legislation pertaining to energy & grid modernization to ever come out of the Midwest. There were 3 major focuses that FEJA attempted to address:

  • Stimulating job creation within renewables, energy efficiency, & grid modernization
  • Statewide energy efficiency improvements:
    •  Illinois’ current goal is to reduce demand by 13%-17% across the two major utilities (ComEd & Ameren) by 2025
    • Loftier goals have been set for 2030 (in the range of 16-21.5%)
  • Significant improvement to the state’s Renewable Portfolio Standards (RPS):
    •  RPS Goal is to have 25% of electricity generated by renewable sources by 2025
    • Shift in REC program to encourage solar deployment (previously wind-centric)
    •  4 million Renewable Energy Credits (RECs) for 1.3 GW of wind projects
    • 4 million RECS for 3 GW of solar projects
      •  Specific carve-outs for utility scale, brownfield development, as well as residential solar projects

Delving further into the RPS program, FEJA helped establish the Adjustable Block (AB) Program. State RECs have traditionally been able to fluctuate in value due to market trends and policy changes. However, through learned experience of other REC markets, the Illinois IPA adopted a modern approach, guaranteeing 15-year fixed-price contracts under the AB program. From a financing perspective, this is a huge win due to the strengthened bankability of these RECs. Now locked into long-term contracts, these RECs can be effectively utilized to drive down the cost of solar to make it much more competitive with traditional energy sources.

New projects energized on or after June 1st 2017 by pre-approved developers, are eligible to participate in the AB program with each block anticipated to be 22 MW in size. Between each block there will be a 4% decline in the value of RECs, so for those looking to maximize the REC values, it is important to be ready to apply once the program opens.

The Timeline:
The AB program is still being finalized and is open to comment until November 13th 2017. It is anticipated that the Illinois Commerce Commission will issue an order confirming or modifying the AB program by April 3rd 2018. The first block of the AB program will have a soft closing, meaning that every project that applies for the program in the first 60 days of commencement will be locked in to the Block 1 prices, regardless if the block’s assigned capacity is filled.

If you’re a solar developer, installer, or are just looking to learn more about the Illinois solar market and how SCF plans on participating in the AB program, please don’t hesitate to reach out to Joel Binstock of SCF, @ jbinstock@scf.com.


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!

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Each solar financing company has its own set of guidelines when financing solar installations with PPAs. At SCF, we’ve methodically standardized the financing process despite the inconsistencies across different states. Here are four things EPCs and Developers should know about PPAs. Following this guide will allow for a streamlined commercial solar financing process.

  1. Complete Financials – Three years of audited off-taker financials with organized income statement, balance sheet, and notes are crucial in underwriting the project. Unaudited financials and tax returns often do not have enough information for a complete analysis. A complete picture of an off-taker’s financials is needed in order to quantify the risk of default and ultimately price the project. When it comes to financials, more information is always welcome.
  2. Standard PPA Forms – SCF has modified the Standardized Solar Access to Public Capital (SAPC) PPA form, and adopted it as its PPA. Utilizing SCF’s form PPA will allow for better pricing and quicker financing by focusing review on (hopefully!) a few redlines from counter parties. Additionally, SCF’s form PPA is integrated within the SCF Suite, which is its proprietary software used to compile all necessary agreements and diligence items. Using the Suite creates a standard transaction flow for each project and allows efficiencies to be realized throughout the diligence and construction process.
  3. Minimum Project Sizes – One should know the minimum project size for their financing partner. SCF’s minimum project size is 100 kW; a relatively small number compared to the marketplace. SCF has reduced its soft costs in order to finance smaller commercial projects that have historically been leases or cash deals. Systems smaller than 100 kW typically can’t overcome the soft costs including real estate, underwriting and legal costs. SCF is also equipped to transact projects as large as 20 MW. SCF’s Quick Quote is a great way to see if a project meets SCF’s minimum requirements.
  4. State Regulations – Each state has different laws regarding renewable energy and many states have ambiguous laws that are constantly changing. Some states, such as Florida, are in the midst of legal battles to allow third party ownership of solar projects. Currently, Georgia, Kentucky, North Carolina, and Oklahoma don’t allow PPAs. In states such as Arizona, PPAs are not allowed, but Solar Services Agreements (SSAs) are permitted. SCF has experience with SSAs and can guide you to the right financing solution in your state. Despite the current political climate, most states have gravitated towards legislation that is pro renewable energy.

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!

Photo Credit: WCS

The 4th annual Women in Cleantech Talks takes place Saturday, November 4th, 2018 at the Google campus in Mountain View. 2016 was the first year that SCF was represented at the event, and the company is looking forward to another insightful day filled with speakers from various clean tech companies across the nation.

The Ted Talk-style event hosts industry leaders from companies such as Google, Namaste Solar, oPower, and Levi Strauss & Co. Each speaker spends roughly 15 minutes on topics including personal experiences, industry news and trending clean tech topics. This year’s highlighted  talks include: Making Demand Response Fun, Cities in the Circular Economy: The Role of Digital Technology, and What California’s Climate Change Investments Mean For Your Business.  The full day event ends with a happy hour and networking. To purchase your tickets for the event click here.

Photo Credit: WCS

The Women in Cleantech and Sustainability group regularly hosts events across the Bay Area that focuses on the advancement and retention of women in the Cleantech industry.  SCF’s Maggie Parkhurst is an active member of the group and recently participated in their mentorship program. If you are interested in meeting with Maggie at the event to learn more about SCF, she can be reached at Mparkhurst@scf.com

You can find a full listing of Women in Cleantech’s upcoming events here: http://www.womencleantechsustainability.org/events.html

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!

19 Oct 2017
October 19, 2017

October Industry News

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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

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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!