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.
- 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.
- 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.
- 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.
- 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 https://www.scf.com. Connect with us on Twitter at @SCF_News and follow us on Linkedin and Facebook!