Game-changing Solar Finance Model for Mid-size Projects

by Guest Contributor Camilo Patrignani, CEO of Greenwood Energy

Mid-size solar farms hit the ‘sweet spot’ with investor groups willing to invest in renewable energy. 2.9MW ground-mounted Soltage-Greenwood Walpole, MA solar array image via Greenwood Energy
Mid-size solar farms hit the ‘sweet spot’ with investor groups willing to invest in renewable energy. 2.9MW ground-mounted Soltage-Greenwood Walpole, MA solar array. Image via Greenwood Energy

These days, a $40 million dollar equity financing deal might not seem groundbreaking in America’s power markets. But for the keen analyst of distributed solar energy, that same investment may just herald a shift toward the future of project financing.

Count our team at Soltage-Greenwood among the latter, with an outlook brightened by the recent announcement John Hancock Life Insurance would lead a $40 million initial round of equity funding destined to finance multiple project pools across America, starting with 13 megawatts (MW) at six locations across four northeastern state.

Just another solar investment, right? Not really. While the boom in distributed solar energy generation is one of the hottest topics in today’s energy economy, most large institutional investors haven’t traditionally been interested in medium-sized solar installations, and as such, are just now getting into the game.

This trend is especially important considering clean energy investment fell for the second year in a row in 2013, down 11 percent after a similar 10 percent decline in 2012, according to Bloomberg New Energy Finance. While investor appetites in solar are growing, good investment opportunities can often be hard to find, meaning dollars are scarcer and thus more important for solar developers.

Big investors typically want to invest in big projects and standardized contracts, creating difficulty financing distributed solar. That problem hasn’t played out in the rooftop residential market, where developers like SolarCity have installed record amounts of solar panels because all contracts are standard and investors only need to review a diversified pool of credit scores. The same pattern is true for the large utility-scale market where companies like SunEdison have been able to construct massive solar farms and investors only need to review one set of contracts.

But that problem has vexed mid-sized developers who can often fund project-planning phases on their own but rely on securing long-term investors after projects are fully permitted and construction can begin. Individual arrays aren’t large enough to attract large investors, but project pools can involve many different contracts. Without investment to cover the long period of exposure between when the first rack goes in to when the system switches on, potential projects pile up but result in far too few interconnections to fulfill America’s solar energy promise.

Our approach to this problem may seem simple, but it’s been a success: Package together multiple solar projects in states with favorable renewable polices to create the scale and standardization required for big investors to take notice.

Think back to that 13MW project pool I mentioned earlier – it was sizable enough to attract a major institutional investor and secure sufficient equity financing that not only funds our initial project pool, but empowers Soltage-Greenwood to look ahead to an aggressive series of additional (and larger) project pools in 2014.

Now combine that equity financing with our business model of partnering with leading solar developers through the Soltage-Greenwood joint venture, and solar engineering, procurement, and construction contractors through the Greenwood Biosar joint venture to handle every aspect of projects from engineering to procurement and construction through maintenance, and the reason for our optimism comes into focus.

By vertically integrating the solar development business, mid-sized developers like Soltage-Greenwood can reach the scale needed to attract institutional investors, ensuring project financing through construction and interconnection, allowing power-purchase agreements to be put in place, and providing a positive return on investment that encourages additional investment.

Add it all up, and we believe we are well positioned to quickly and efficiently capitalize on the growing demand for distributed clean energy well into the future.

Greenwood Energy is the North American clean energy division of the Libra Group, a privately owned international business group comprising 30 subsidiaries operating across five continents.

Greenwood creates clean energy options by building and investing in new solar energy projects, manufacturing sustainable fuel to replace coal, and developing combined heat and power fuel cell systems.

This article, Just Another Solar Deal, Or The Future Of Mid-Size Project Financing?, is syndicated from Clean Technica and is posted here with permission.

Fascinating Infographic: What Solar Investors Really Want

by Zachary Shahan.

Sara Rafalson of Sol Systems recently sent along an infographic on What Solar Investors Want that her company put together. This isn’t just another flimsy infographic, though. The data came from “a year of our Project Finance Journals, which we distribute on the 15th of every month to approximately 2700 industry professionals” Sara noted. She also commented on why there was even a need for such an infographic:

The shortage of project finance is a limitation to the non-residential, commercial and industrial (C&I) sector of the solar market. Especially compared with other sectors of the market, C&I distributed generation solar is plagued with high transaction costs and a lack of standardization. Though there is no shortage of solar investors trying to break into the promising solar asset class, there is a true shortage of financeable, quality project pipeline. This lack of financeable deal flow is stifling the market and limiting the growth potential of the U.S. solar industry.

So, with that background out of the way, let’s start offering investors more financeable solar projects! Here’s how:

Repost.Us - Republish This Article

This article, What Solar Investors Want (Infographic), is syndicated from Clean Technica and is posted here with permission.

About the Author

 

Renewable Energy. Zachary Shahan.Zachary Shahan is the director of CleanTechnica, the most popular cleantech-focused website in the world, and Planetsave, a world-leading green and science news site. He has been covering green news of various sorts since 2008, and he has been especially focused on solar energy, electric vehicles, and wind energy for the past four years or so. Aside from his work on CleanTechnica and Planetsave, he’s the Network Manager for their parent organization – Important Media – and he’s the Owner/Founder of Solar Love, EV Obsession, and Bikocity. To connect with Zach on some of your favorite social networks, go to ZacharyShahan.com and click on the relevant buttons.

Four ‘Good News’ Solar Stories

Clean Power

first solar

First Solar To Invest $100 Million Into Japanese Solar

Published on November 19th, 2013 | by Joshua S Hill

Japan hasn’t been a target market for companies like First Solar, due in part to the country’s reliance upon nuclear technology. However, as Japan attempts to move herself away from reliance upon nuclear — in the … Read More

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Clean Power

Photo credit: OregonDOT / Foter.com / CC BY

500MW Of Solar Plants Due For Construction In Uganda

Published on November 18th, 2013 | by Nicholas Brown

The government of Uganda has just signed a memorandum of understanding (MoU) for the construction of four large solar power plants totaling 500 megawatts (MW) of capacity! According to PV-Tech, these solar power plants will be … Read More

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Clean Power

Image Credit: Chile Flag via Shutterstock

181 MW Of Solar Projects Approved For Chile

Published on November 18th, 2013 | by Nicholas Brown

The Environmental Evaluation Service of Chile (SEA) recently approved the construction of two solar power plants totaling 181 megawatts (MW). The plants are titled Project Pampa Sur and Project Pampa Norte. They are to be developed … Read More

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Clean Power

SolarCity-logoNEWS

SolarCity Leads Way Into Low-Interest Solar Financing That Could Be Huge Boost To Solar Industry

Published on November 17th, 2013 | by Giles Parkinson

Originally published on RenewEconomy. The solar industry has achieved another significant breakthrough, after US solar leasing specialist SolarCity issued the first asset back notes for the solar industry, and achieved an interest rate significantly below expectations. … Read More