23 Nov 2017
November 23, 2017

November Industry News

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Regulatory News

Section 201 Suniva Trade Dispute Update:

On November 10th, The International Trade Commission officially submitted 3 reports pertaining to the Section 201 Trade dispute on imported solar cells & modules. The reports explained the meaning behind the ruling and recommended several remedy scenarios to address the dispute. The president has 90 days to review these reports after-which he can choose to accept the proposed remedies or initiate others. Utility News

Puerto Rico Leadership Resigning Amidst Questionably Awarded Hurricane Response Contract

Aber Gomez, the Director of the Puerto Rico Emergency Management Agency resigned earlier this month as a result of pressure amounting from the failure in emergency response & lack of remedial action. One of the most pressing issues is that the island’s electrical grid is still under immense pressure and stress with as much as 50% of the island remains without power. Another main story to come out of the recovery efforts is a controversial contract signed with Whitefish Energy Holding, a small outfit that seemingly did not have the credentials or solution offering to have been awarded this $300 million contract.

PG&E Investigated for liabilities from Napa & Sonoma Fires

Officials from California’s Department of Forestry and Fire Protection disclosed that they have been investigating Pacific Gas & Electric’s power equipment as a possible cause for the Napa & Sonoma County fires that took place last month. PG&E has combatted this initial claim for the mean time while investigations will continue to shed light on the wildfires.

Technology News

Hybrid Wind+Energy Storage Technology Ready For Deployment

A Danish Wind Project Developer, KK Wind Solutions, is developing a wind turbine + Energy Storage System (ESS) combined product which would help to reduce fluctuations in output by 90%. The main purpose of the project is to develop a scalable modularized system that is more resilient to fluctuating environmental factors. Another company, Toshiba, recently installed a 2 MW storage system to go alongside NRG Yield’s Elbow Creek Wind Farm in TX. These hybrid systems are starting to leave the lab and meet real-world conditions so there will be much more insight into these projects moving forward.



Guest Blog By: Molly Suda and Ben Tejblum of K&L Gates 

Blockchain technology is on the rise.  Reports indicate that over $4 billion has been invested in blockchain startups in 2017 alone, and the general consensus is that the technology, coupled with smart contracts, has significant implications for a wide range of industries, with the potential to revolutionize how we manage and share data, streamline transactions, and reduce the costs of doing business. Although blockchain technology is still most commonly associated with crypto currencies (Bitcoin) and financial transactions, it also has widespread applications in the energy sector, particularly with respect to the integration of renewables, energy storage, and electric vehicles.  We see the top five trends in the development of blockchain technology for the renewable energy space to be the following.

  1. New Ways to Invest in Renewables – Powered by Blockchain

The rise of blockchain has provided new avenues for investing in renewable energy.  Using blockchain, companies are creating platforms through which investors can seamlessly invest in and promote renewable energy development around the world.  Some of these platforms allow investors to purchase a share of actual projects (similar to crowd-funding), while others sell tokens entitling the investors to a portion of project profits (similar to an investment fund).  Low transaction costs and real-time settlement allow these blockchain platforms to facilitate micro-transactions, and the blockchain software provides a secure, trustless architecture that is accessible to interested investors, regardless of their geographic location.

While many of these platforms are still under development, a few are already operational.  For example, the Sun Exchange has established a blockchain-powered marketplace that allows investors from all over the world to purchase interests in solar panels, which are then leased to projects in Africa.  Similar to conventional crowd-funding, investors can purchase shares of solar cells (using either local currency or Bitcoin) required to develop a project, and their ownership interests are recorded on Sun Exchange’s blockchain platform.  Once a project is funded, the solar panels are leased to the host facility, and the solar panel owners receive rental income through the blockchain-powered payment system.  According to the company’s website, Sun Exchange has already successfully funded four projects in South Africa.

  1. Technology to Facilitate Peer-to-Peer Energy Transactions

Blockchain’s ability to facilitate real time, peer-to-peer micro-transactions also has significant implications for distributed energy resources and transactive energy.  The basic premise is to use a blockchain-powered network, coupled with smart technology like smart meters or smart inverters, to create a secure, peer-to-peer marketplace where consumers can monitor their energy consumption, respond to favorable price signals, and sell excess energy produced by rooftop solar arrays.

The most commonly cited peer-to-peer application in the United States is the Brooklyn Microgrid, which aims to allow neighbors in Brooklyn to buy and sell energy generated from participants’ residential rooftop solar arrays, without the need for a central, third-party market operator.  Similar pilots are also emerging internationally, however, with blockchain-powered microgrid projects under development in Australia, England, and India.

Along with peer-to-peer energy sales, numerous blockchain-powered platforms are also being developed to facilitate peer-to-peer electric vehicle (“EV”) charging.  In California, startups like eMotorWerks and the Oxygen Initiative have launched networks to enable owners of EV charging stations to grant access to other EV owners and charge them for charging station privileges (think AirBnB for EVs).  Blockchain technology enables these platforms by allowing users to share pricing information and engage in real-time transactions in a secure, peer-to-peer environment.  Notably, development in this space is not limited to energy startups.  In Germany, one major utility has deployed a set of EV charging stations powered by a blockchain network that will allow users to purchase charging time through a blockchain-powered marketplace.

  1. Large Utility Investment

Along with EV charging, traditional utilities are also exploring the use of blockchain for many other applications, including utility billing, grid management, and energy trading.  To date, utility acceptance has been more prevalent in Europe and Asia, where utilities have already begun developing or testing a variety of blockchain-based pilots, including programs in the Netherlands and Germany designed to facilitate renewables (and EV) integration and promote grid stability, and a program in Japan to explore the viability of peer-to-peer energy transactions.  Although United States utilities have thus far been slower to publically embrace blockchain, momentum is growing.  Leading the charge is the Rocky Mountain Institute, which, together with a number of utilities, launched the Energy Web Foundation (“EWF”), a nonprofit organization formed to “accelerate the commercial deployment of blockchain technology in the energy sector.”  Along with exploring specific utility use cases for blockchain, EWF is also developing an open-source, energy-specific blockchain platform designed specifically to support energy applications.  EWF hopes its platform will become the standard platform for energy-specific blockchain networks.

  1. Search for Standardization and Interoperability

One of the challenges in the energy sector’s wide-scale implementation of blockchain technology is the need for interoperability across different blockchain platforms and the standardization of smart contracts.  To date, energy blockchain applications have been developed using a wide range of blockchain platforms, including popular “mainstream” platforms such as Ethereum and Hyperledger, as well as with custom blockchain solutions developed for a specific use case.  Because each of these platforms functions differently and may contain a different ruleset, the industry faces the challenge of how to share information across multiple blockchain networks, each with its own set of standards and protocols.

The need for standardization is one of the driving factors behind the development of the EWF blockchain, which aims to be the go-to blockchain for energy applications.  Blockchain companies are also coming together, however, to develop standards that could be applied across different blockchain platforms to ensure interoperability.  In September, the Trusted IoT Alliance was formed to align companies to develop standards to support “internet of things” technology with the goal of removing barriers to wide scale adoption of blockchain technology.

  1. Government Action and Regulatory Response

Finally, despite its relatively nascent stage, blockchain technology and its implications for the energy industry have already received a substantial amount of attention from legislators and government agencies.  Just last month, the Department of Energy selected several firms to receive a multi-million dollar grant to develop and enhance the security of blockchain technology specifically for energy grid applications, with a particular focus on distributed energy resources.  And, earlier this year, the state of Illinois announced that it was studying the development of a renewable energy credit marketplace as part of its state blockchain initiative.

Outside of the United States, several countries have already established “regulatory sandboxes” to allow companies to experiment with blockchain applications and other cutting-edge technologies without the need to comply with stringent energy-related regulations.  In June, Singapore’s Energy Market Authority outlined the framework for creating a regulatory sandbox to allow developers to test “innovative energy solutions” in a relaxed legal and regulatory environment.  A similar initiative was announced by the UK’s Office of Gas and Electricity Markets last February, and led to the testing of a blockchain-based peer-to-peer energy trading platform.  The success of the sandbox prompted OFGEM to announce a second regulatory sandbox last month, and to hold a roundtable to share information on how blockchain technology is being applied in the energy sector.

Interested in learning more about blockchain as it related to energy? Sign up for Blockchain Energizer, a biweekly newsletter highlighting recent blockchain developments in the energy space.

About K&L Gates: K&L Gates is a fully integrated global law firm with lawyers located across five continents.  K&L Gates serves clients in virtually all renewable energy and clean technology sectors in developed and developing nations alike.  K&L Gates clients operate in solar, wind, biomass, hydropower, geothermal, and complementary sectors, including energy storage, distributed generation, smart grid, transmission, and corporate energy sourcing.

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!

The solar Investment Tax Credit (ITC) is one of the most important federal policy mechanisms to support the deployment of solar energy in the United States.  The ITC continues to drive growth in the industry and thereby job creation across the country.  The ITC is a 30 percent tax credit for solar systems on residential (under Section 25D) and commercial (under Section 48) properties.

The existence of the ITC through 2021 provides market certainty for companies to develop long-term investments that drive competition and technological innovation, which in turn, lowers costs for consumers.  The ITC is based on the amount of investment in solar property.  Both the residential and commercial ITC are equal to 30 percent of the basis that is invested in eligible property which has commenced construction through 2019.  The ITC then steps down to 26 percent in 2020 and 22 percent in 2021.  After 2021, the residential credit will drop to zero while the commercial and utility credit will drop to a permanent 10 percent.

The residential and commercial solar ITC has helped annual solar installation grow by over 1,600 percent since the ITC was implemented in 2006, which represents a compound annual growth rate of 76 percent.  According to the Solar Energy Industries Association (SEIA), solar installations increased 30% in 2014, thanks partly to cheaper photovoltaic panels (according to GTM Research).  Solar proponents note that the solar industry employs more than twice as many U.S. workers as coal mining and has added jobs 20 times faster than the rest of the economy. Additionally, approximately 27 gigawatts of solar energy were installed in the US in 2015 with installations expected to reach nearly 100 gigawatts by the end of 2020.

The 30% investment tax credit is paying dividends for America.  Solar is growing faster than any other domestic energy source as prices continue to plummet, even beating out coal and cheap natural gas in some markets.  The solar industry created one in 78 of our country’s new jobs last year while providing living-wage salaries for more than 200,000 Americans.

Moreover, the roughly 210,000 Americans currently employed in solar is expected to double to 420,000 in the same time period, all this while spurring roughly $140 billion in economic activity.  The continued success of the ITC demonstrates that stable, long-term federal tax incentives can drive economic growth while reducing prices and creating jobs in one of America’s fastest-growing industries.

Many supporters say the abrupt end date of the 30% credit represents a “cliff” for the industry.  Without the current incentive, they argue, installation of solar-power systems will plummet, and thousands of jobs in the industry will be lost as a result.  However, others argue that the “cliff” isn’t as steep as it appears, and that solar will continue to grow even without the 30% credit—albeit not as quickly as before.

Can the solar industry survive without the current credit?

According to Energy Information Administration data in 2015 (when the ITC was scheduled to expire at the end of 2016), if the 30% credit was not extended, rooftop solar photovoltaic installations would plunge 94% in 2017 from a year earlier and utility-scale projects would decline 100%, with neither recovering anywhere close to today’s levels even a decade from now.  Bloomberg predicted solar installations would drop by two-thirds in 2017, which the Solar Energy Industries Association estimate would cost America 100,000 jobs.

The ITC provided certainty in the business model.  The multiyear assurance provided by the eight-year (2008 thru 2016) 30% credit leveraged billions in new high-tech innovation and project development, lowered risks to allow startups to launch new products and services, and resulted in tens of millions of panels installed across America.

According to the Natural Renewable Energy Laboratory (NREL), the elimination of the ITC would not impact the industry growth because financiers, not developers, grab about half of the tax credit.  The credit has proved an essential financing mechanism to getting solar built, even though some projects rely on complex tax-equity structures to monetize the credit.

Optimists also speculate that it will get easier for people to finance solar systems themselves with loans if the credit goes away.  The residential solar market is shifting to more self-financing, but rising prices in the absence of the credit could make solar uneconomical and scare off buyers.  The lack of a credit will also make it harder for utility-scale projects, which account for most solar investment dollars, to compete for scarce capital and against more carbon-intensive generation alternatives.

A study from Bloomberg estimates that the loss of the tax credit will cause solar capacity to only quadruple, instead of quintuple, by 2022, which is still a substantial increase.  A Wall Street Journal analysis reinforces this assessment.  In 22 states, at least one gigawatt of solar (and often much more) could be installed at a comparable cost to retail electricity prices by 2017, tax credit not included.

So why are the grimmer predictions about the future of solar incorrect?  For starters, the cliff that people talk about is smaller than it appears.  Most folks with solar on their rooftop used a third-party lease or power-purchase contract.  That third party took on much of the financial risk and the responsibility for redeeming the 30% tax credit.  These financial middlemen have absorbed nearly half of the tax credit, and as a result, solar developers and customers have received an effective discount of 15% instead of 30%.  So the current incentive isn’t as big as it looks, and the effect of losing the incentive won’t be as severe as many think.

What’s more, the change to the tax credit will open up new options for financing.  Solar energy’s low risk and steady returns are attracting new investors whose profit expectations are much lower than many currently participating in solar financing.  Additionally, solar securitizations are becoming more widely utilized, attracting new institutional investors.

If the change in the tax credit opens the door to more sizable, low-margin investors that offer a discounted cost of debt and equity for solar projects, The Wall Street Journal estimates that the net cost of solar would rise just 2.5% with the loss of the tax credit.

The change to the credit may also drive prospective solar clients, with decent credit, from leasing to lower-cost self-financing.  With less paperwork to file, the relatively lower costs and higher returns of ownership become more evident.

A November 2014 pro forma analysis by the National Renewable Energy Laboratory suggests that self-financing lowers the cost of solar by 23% for residential customers and 87% for commercial customers.

It’s easy to assume that losing the federal tax credit is nothing but a 30% cut in the growth potential for solar energy.  But this ignores several countervailing forces, from the middlemen’s current cut to falling costs to the advent of low-cost financing.  Even though coal and gas retain subsidies like heavily socialized pollution costs, solar doesn’t need the federal tax incentive to compete.  Instead, the market provides several ways to glide over the solar tax cliff.

Comparison of costs

A comparison of the cost per KWH for solar and existing electricity is as follows:

  1. Non-renewable retail residential electricity rates per kWh have increased about 4% on average (Nov 2005 thru Nov 2014), per year, over the last 10 years. According to the Energy Information Administration, residential electricity rates have increased nationally by around 30% in the last 10 years – from about 9¢ per kilowatt-hour (kWh) in 2005 to about 13¢/kWh in 2014.
  2. Natural gas prices are expected to increase, as a result of higher anticipated infrastructure costs.
  3. Coal-fired electricity will continue to rise.
  4. Solar rates per kWh have decreased from approximately $.071 in 2009, to $.050 in 2015.

The cost of renewable energy is decreasing, while the cost of traditional non-renewable energy sources is increasing.  However, the existing electrical grid is designed for continuous energy flow and is not designed to “store” any excess electricity.  If a new grid was to be built today, it would bear little resemblance to the existing system.  The United States electrical grid is wearing out.  Depreciation expense exceeds new investment.

Costs of generation, both fixed and variable are rising.  Costs of transmission and distribution are rising.  The costs of doing business are rising.  On the other hand, utility revenues from energy sales are declining as a result of conservation, energy efficiency, distributed generation and competition.  Utilities generally collect a majority of their revenue through charges for energy usage, a variable quantity, yet the majority of their costs are due to capacity, a fixed quantity that doesn’t diminish with diminished energy consumption.  Traditional approaches to rate design are no longer sufficient.  Simply raising rates to overcome declining revenues only increases the incentive for customers and competitors to further displace purchases from their utility.

According to Philip Moeller, a member of the Federal Energy Regulatory Commission,  “We are now in an era of rising electricity prices”,  the steady reduction in generating capacity across the nation means that prices are headed up.  “If you take enough supply out of the system, the price is going to increase”.

In fact, the price of electricity has already been rising over the last decade, jumping by double digits in many states, even after accounting for inflation.  In California, residential electricity prices shot up 30% between 2006 and 2012, adjusted for inflation, according to Energy Department figures.  Experts in the state’s energy markets project the price could jump an additional 47% over the next 15 years.

New investment has diminished:

  1. Growth in consumption has slowed since 1973
  2. Environmental and other concerns restrict construction of new facilities
  3. Utility companies now incur significant risk of not recovering all their costs much less a reasonable return on investment.

Other factors to consider

A key development and new concept is the “grid edge”.  As further discussed herein, the most important and impactful developments in the electric utility industry in the foreseeable future will be at the distribution edges of the grid, many if not most on the customers’ sides of the meter.  This means tremendous challenges for electric distribution utilities, but at the same time fantastic opportunities to bring a new and better world to their consumers and communities.

The key to the success in renewable energy sources is the development of a new grid system, which provided the following:

  1. Distributed generation and storage
  2. Two-way power flow
  3. Microgrids

The problems confronting the electricity system are the result of a wide range of forces: new federal regulations on toxic emissions, rules on greenhouse gases, state mandates for renewable power, technical problems at nuclear power plants and unpredictable price trends for natural gas.  Even cheap hydro power is declining in some areas, particularly California, owing to the long-lasting drought.

New emissions rules on mercury, acid gases and other toxics by the Environmental Protection Agency are expected to result in significant losses of the nation’s coal-generated power, historically the largest and cheapest source of electricity.  Already, two dozen coal generating units across the country are scheduled for decommissioning.  When the regulations go into effect next year, 60 gigawatts of capacity — equivalent to the output of 60 nuclear reactors — will be taken out of the system, according to Energy Department estimates.

Moeller, warns that these rapid changes are eroding the system’s ability to handle unexpected upsets, such as the polar vortex, and could result in brownouts or even blackouts in some regions as early as next year.  He doesn’t argue against the changes, but believes they are being phased in too quickly.

The federal government appears to have underestimated the impact as well.  An Environmental Protection Agency analysis in 2011 had asserted that new regulations would cause few coal plant retirements.  The forecast on coal plants turned out wrong almost immediately, as utilities decided it wasn’t economical to upgrade their plants and scheduled them for decommissioning.

The lost coal-generating capacity is being replaced largely with cleaner natural gas, but the result is that electricity prices are linked to a fuel that has been far more volatile in price than coal.  The price of natural gas now stands at about $4.50 per million BTUs, more expensive than coal.  Plans to export massive amounts of liquefied natural gas, the rapid construction of gas-fired power plants and the growing trend to convert the U.S. heavy truck fleet to natural gas could exert even more upward pressure on prices.  Malcolm Johnson, a former Shell Oil gas executive who now teaches the Oxford Princeton Program, a private energy training company, said prices could move toward European price levels of $10.

The loss of coal is being exacerbated by problems at the nation’s nuclear plants. Five reactors have been taken out of operation in the last few years, mainly due to technical problems.  Additional shutdowns are under consideration.

At the same time, 30 states have mandates for renewable energy that will require the use of more expensive wind and solar energy.  Since those sources depend on the weather, they require backup generation — a hidden factor that can add significantly to the overall cost to consumers.

Nowhere are the forces more in play than in California, which has the nation’s most aggressive mandate for renewable power. Major utilities must obtain 33% of their power from renewable sources by 2020, not counting low-cost hydropower from giant dams in the Sierra Nevada mountains.

In some cases, the renewable power costs as much as twice the price of electricity from new gas-fired power plants. Newer facilities are more competitive and improved technology should hold down future electricity prices, said former FERC Chairman Jon Wellinghoff, now a San Francisco attorney.

But San Francisco-based Energy + Environmental Economics, a respected consultant, has projected that the cost of California’s electricity is likely to increase 47% over the next 16 years, adjusted for inflation, in part because of the renewable power mandate and heavy investments in transmission lines.

The mandate is just one market force. California has all but phased out coal-generated electricity. The state lost the output of San Onofre’s two nuclear reactors and is facing the shutdown of 19 gas-fired power plants along the coast because of new state-imposed ocean water rules by 2020.

“Our rates are increasing because of all of these changes that are occurring and will continue to occur as far out as we can see,” said Phil Leiber, chief financial officer of the Los Angeles Department of Water and Power. “Renewable power has merit, but unfortunately it is more costly and is one of the drivers of our rates.”

“While renewables are coming down in cost, they are still more expensive,” said Russell Garwacki, manager of pricing design and research at Southern California Edison. The company is imposing a 10% price hike this year to catch up with increased costs in the past.

Officials at the California Public Utilities Commission, responsible for setting utility rates, dispute predictions of large-scale electricity price hikes in the near future.  Edward Randolph, head of the PUC’s energy division, said price increases were not likely to exceed the rate of inflation, though the commission has refused to spell out the data on which it bases its projections.  In any case, while California already has some of the highest hourly rates for electricity in the nation, the average consumer in the state pays bills that are below the national average because overall electricity use is so low.

The push to wean California off fossil fuels for electricity could cause a consumer backlash as the price for doing so becomes increasingly apparent, warns Alex Leupp, an executive with the Northern California Power Agency, a nonprofit that generates low-cost power for 15 agencies across the state.  The nonprofit was formed decades ago during a rebellion against the PUC and the high prices that resulted from its regulations.  “If power gets too expensive, there will be a revolt,” Leupp said. “If the state pushes too fast on renewables before the technology is viable, it could set back the environmental goals we all believe in at the end of the day.”


The solar industry will be economically viable without the ITC.  However, the planned growth would not be as dynamic.  Perhaps this is a good thing as the current grid system is not able to absorb this growth.  If you consider the increasing costs of energy as detailed above, perhaps the ITC could be used as an incentive to fund rebuilding the current grid system focusing on storage, sensors, meters and smart technology.  Hence, the ITC is important in terms of financing future development.

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!


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

Sign Up to Learn More about SCF:

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