News Article | April 14, 2016
Have you missed out on some of the latest renewable portfolio standard (RPS) updates? Don’t worry – we’ve got some of the major markets covered for you, and in one place. For more information on SREC pricing, visit http://www.solsystems.com/our-resources/srec-prices-and-knowledge. This is an excerpt from the April edition of SOURCE: the Sol Project Finance Journal, a monthly electronic newsletter analyzing the solar industry’s latest trends based on our unique position in the solar financing space. To view the full Journal or subscribe, please e-mail firstname.lastname@example.org. Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for over 400MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments, project acquisition and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.
Last year, thanks to the removal of a tree in my front yard and the confluence of low-cost solar technology and generous state incentives, I put solar on my roof and generated 4 megawatt-hours in my first year as a solar power plant owner. Everything performed as advertised: the 5.5-kilowatt SunPower system quickly cut my electric bill to $0, then generated a negative balance for most of the summer and fall. December came with a small bill (~$18), but also brought the news from my SREC broker (Knollwood Energy) that SRECs in Massachusetts are trading at $270 per megawatt-hour, so I stood to gain another $1,000 from the system. The 2.99 percent loan I have with EnerBank has a payment of around $189 per month, so if you combine the electric-bill savings with the income from the SRECs, I’m cash flow positive in year 1. But, as we’ve covered extensively over the past few weeks here, regulators in Nevada made the unprecedented and alarming decision not only to reform their net-metering program -- reducing compensation for exported power coupled with increases in monthly fixed charges -- but also to apply the reforms to all existing solar customers in a phased approach over four years. If regulators in Massachusetts made that same decision today, how would my investment in solar fare over the next 20 years? It’s worth taking a step back before digging into numbers, because it’s not clear to me how often people think of going solar as a purely economic undertaking. Solar, unlike other home repairs or remodels, feels different, wrapped as it should be in broader impulses to address climate change, energy independence, and overall energy resilience. In that context, the conversation with a solar installer tends toward one that for me felt more trusting (they sell solar, so they must be on my side). With that sense of trust, and the admittedly unfair access to a group of industry-leading market and technology solar analysts here at GTM Research, I went about selecting a solar system with confidence that I would make the right choice, from financing to vendor and installer selection. I honestly never considered that the assumptions around the incentives I would receive might change. I enlisted the help of EnergySage, a startup near our office in Boston that provides a platform to compare multiple bids from solar installers and attempt to normalize the assumptions behind those bids so I could make the most informed decision. Over the course of spring 2015, I uploaded all my power bills to the EnergySage platform, filled out all the other information required to receive bids, and within two weeks had about a half dozen. I had already chosen not to lease (I still don’t quite understand why anyone does) so my bids all included the option to pay outright or take out a loan to finance the installation. Throughout the process of reviewing bids, there were many elements of each proposal I needed help understanding (SREC price variability, power production and electric rate increase assumptions, and just what the difference between a DC optimizer and microinverter is), but I certainly understood how the ITC, a state rebate and tax credit, and net metering worked. I knew SREC prices were variable over 10 years, but also that Massachusetts had designed its system well enough to manage that within an acceptable window. If, in this thought experiment, the Nevada PUC picked up, came to Massachusetts and passed its solar tariff structure here today, what would happen to my electricity bill? For my system (a SunPower/SolarEdge system purchased in May 2015 at a net cost of around $21,000, which includes the ITC tax benefit and a Massachusetts state rebate), the original benefits of going solar looked like this: With the Nevada plan, my experience would look like this: Jumping out to year 5 -- let’s assume my system produces 6,295 kilowatt-hours of solar energy annually and half of it is exported back to the grid and compensated at wholesale rates. Instead of saving $1,346 on the electricity bills as planned, I would save $863 ($674 from load reduction plus $189 for my exported power). Add in annual SREC income of $1,200, and I would have a gross benefit of $2,063. Subtract my annual cost of the solar loan ($2,156) and the new fixed charges ($300) and I have a negative cash flow. Continue to draw the model out, and I have negative cash flow every year until year 13. If you look at this through the lens of payback on my investment, I don’t reach that until year 19. This is arguably too generous because 1) we have SRECs in Mass, 2) we have higher wholesale rates, and 3) I kept the fixed charges at $300 per year, whereas in Nevada they increase well beyond that over time. To summarize: my system today is cash flow positive in year 1, and the payback occurs in year 3 if SREC prices remain over $200 per megawatt-hour. If the Nevada PUC came to town, I would have to wait 20 years to break even. I would be 70 years old! Forget it; by then, I’ve moved. As a homeowner, I took on risk when signing a mortgage for my house at its particular price and interest rate, exposing myself to market fluctuations, tax increases, unforeseen repairs and more. Those were all fairly well-understood risks with precedents and experience. With my solar system, however, I took risks I understood (SREC variability) as well as those I didn’t (retail rate escalation, service obligations) and placed my trust in the ecosystem of suppliers, installers, the utility and its regulators. This trust is critical for any market to mature, for people on the sidelines to step in and continue to fuel its growth. In the case of Nevada, that trust has clearly been broken. If other states regard Nevada’s moves as precedent, this becomes much more than a thought experiment for me, but a chilling signal to anyone owning or considering owning rooftop solar. The U.S. residential solar market, which has been celebrating the extension of the ITC, would find itself unfairly hobbled just at the time of its most impressive growth.
News Article | March 3, 2016
Last year, New Jersey, in an attempt to improve the resiliency of their electricity infrastructure as well as for load shifting and frequency regulation, sought to incentivize behind the meter energy storage. The initial program, The Renewable Electric Storage Incentive, was aimed primarily at solar + storage installments and allotted $3 million to 13 separate projects throughout the state. The program appeared successful, but because of some misunderstandings with PJM about the ability to combine PJM grid incentives with the New Jersey energy storage incentive, 9 of the 13 approved projects have pulled out. The good news with this, however, is that the unused funds will be recycled back into the program for future use. Starting on March 1st,New Jersey will offer its second machination of its energy storage incentive and begin accepting applications. Round 2 has doubled the size of the program to $6 million and will distribute the funds in two separate allocations. The first $3 million will be offered in an open enrollment format, and the 2nd will come later in 2016 in a competitive solicitation dictated by research currently being conducted by the Rutgers Laboratory for Energy Smart Systems (LESS). To be eligible, projects must be connected to a class 1 renewable resource and have a minimum capacity of 50kW, which can be aggregated over multiple sites. The incentive is set at $300 per kWh of energy capacity, with a per-project ceiling of $300,000 or 30% of the total project cost. A single owner or developer can qualify for multiple projects up to a per-entity incentive cap of $500,000. For full list of requirements or to apply click here. What Does This Mean for Solar Developers? Driven by the combination of incentives like the New Jersey rebate program and improving system economics, the distributed storage market is growing and creating real opportunities for developers. The upcoming open enrollment for New Jersey presents a particularly attractive opportunity. Todd Olinsky-Paul of the Clean Energy group writes: An open enrollment rebate is much more reliable, and bankable, than a competitive solicitation, which may or may not result in a grant; this also happens to be the first dedicated energy storage rebate program in the country, which means the results should be of great interest to energy agencies in other states. To address this growing opportunity, Sol Systems is developing a solution to offer storage that can be paired with solar installations. For more information, contact Ben Margolis at email@example.com. Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for over 400MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments, project acquisition and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com.
News Article | April 7, 2016
New analysis from the US Solar Energy Industries Association has found inaction on solar in Massachusetts is costing cities and towns millions in lost revenue. According to a new analysis conducted by Vote Solar and the US Solar Energy Industries Association (SEIA), inaction on raising net metering caps and reforming the Commonwealth’s Solar Renewable Energy Credit (SREC) program in Massachusetts has halted construction on more than 500 separate solar projects around the state, valued at a total of $617 million, which in turn is costing cities and towns $3.2 million in annual tax revenues. Furthermore, according to Vote Solar and the SEIA, without further action by the Massachusetts Legislature, the state can expect the number of stalled or cancelled solar projects, accompanied by resultant financial losses, to increase. “Solar has become an integral part of the Massachusetts economy and job market,” said Sean Gallagher, vice president of state affairs for SEIA. “The state is leaving jobs and money on the table and ceding its place in the booming solar energy market to other states.” “Massachusetts has been burdened with some of the highest electricity rates in the country, and affordable solar offers families, schools, and public agencies a way to manage their bills and invest in our local economy at the same time,” added Sean Garren, northeast regional manager for Vote Solar. “Now the sun is setting on that tremendous solar opportunity. We need quick action from state lawmakers to raise caps on the net metering program and ensure consumers receive full credit for their valuable solar investment.” Massachusetts’s solar industry has been under growing pressure for over a year since the state’s successful net metering program reached caps in National Grid territory. This has grown worse, as caps have since been reached in Unitil and Eversource Energy territories, “effectively grinding solar growth to a standstill in more than half the state.” Now, not only is there a lack of the low-cost electricity that would have supported 50,000 homes in the state, but tax revenue from those same projects are lacking as well. Drive an electric car? Complete one of our short surveys for our next electric car report. Keep up to date with all the hottest cleantech news by subscribing to our (free) cleantech newsletter, or keep an eye on sector-specific news by getting our (also free) solar energy newsletter, electric vehicle newsletter, or wind energy newsletter.
News Article | March 29, 2016
By Lauren Miller For anyone looking to test the solar energy waters in Rhode Island, mark your calendars for April 18th at 9 a.m. National Grid has gotten approval from the Rhode Island Public Utilities Commission for its 2016 Renewable Energy (RE) Growth program. The first Open Enrollment for solar energy projects greater than 25kW will open on the 18th, and developers with solar projects will have two weeks, until April 29th at 5 p.m., to apply to the program. This will be the first of three Open Enrollment periods in the state for this year, with the second being tentatively set for some time in July. Looking at Past RE Growth Journeys National Grid’s RE Growth program is not new. It started in 2011 and later expanded in 2015 to include a total goal of 160MW of renewable energy by 2019. Eligible renewable sources include wind, hydro, and anaerobic digesters. Under the program, National Grid offers 20-year tariffs to solar projects for their solar energy generation. Developers with projects competitively bid into the program at a price below the ceiling and if selected, that bid price is offered to the different winning projects. In 2015, the ceiling prices for solar projects larger than 25kW were 16.70¢ per kWh for projects sized 1-5MW and 20.95¢ per kWh for projects sized 251-999kW. Medium-scale projects (26-250kW) did not have to bid in, and were able to enroll at a standard price of 24.40¢ per kWh. The RE Growth program also has a separate carve-out annually for small-scale solar projects under 25kW. Similar to the medium-scale solar projects, these do not have to be bid for, but rather have standard pricing, which varies from 29.80¢ per kWh to 41.35¢ per kWh, depending on size of the system and whether it is host or third-party owned. The 3MW that were set aside for these small-scale solar projects under the 2015 enrollment have not all been met, and as of March 1, 2016, 1,452kW were still up for grabs. This under-enrollment is not the first in the program’s history. The initial goal of 40MW of renewable energy by 2014 was 1.4MW shy at 38.6MW. In 2014, both small (<25kW) and large-scale (1-5MW) solar were unable to meet their targets of 500kW and 8.5MW, respectively. Meanwhile, wind exceeded its allocation of 1.5MW, but was alongside good company, as medium-scale solar (26-250kW) also exceeded its 1.5MW allocation. Rhode Island Solar Energy’s Turning Tides While overall solar energy enrollment fell slightly short in 2014, 2015 saw a surge in the greater than 25kW solar category, with over 13MW enrolled in the medium (26-250kW) to large-scale solar (1-5MW) capacity projects. Before 2015, according to SEIA, Rhode Island only had about 15MW of solar energy installed in the state. In other words, that number was almost double in 2015 just from the projects in the RE Growth program. Overall, according to a recent action plan entitled “Grow Green Jobs RI,” the RE Growth program has helped support almost 40MW of renewable energy capacity since its start in 2011, and solar is starting to lead the renewable energy pack as the largest component of the program’s projects. If it continues swimming toward the 2019 160MW goal, solar capacity in the Ocean State could increase almost ten-fold in just 5 years. Let us not forget that this growth of solar energy is also coupled with a growth in jobs. According to the “Grow Green Jobs RI” action plan, the clean energy sector in Rhode Island accounts for 9,832 jobs across the state and has six times the job growth rate than the overall rate in the state, and the solar energy sector specifically is seeing a 20 percent increase in job growth nationwide, according to the National Solar Jobs Census. Furthermore, according to the plan, the RE Growth program alone is expected to create 250 in-state jobs and increase state tax revenue by $1 million a year. Choppy Seas in Massachusetts? Check out Rhode Island for Smoother Sailing Market uncertainty in neighboring Massachusetts could steer developers to look at the Ocean State for new opportunities. At least, we hope so. The Rhode Island solar market – while smaller in installed capacity than nearby markets such as Massachusetts, Connecticut, New York, and New Jersey – is still attractive and offers above-market rates. If you are a solar developer looking to dive into the Ocean State, contact our project finance team firstname.lastname@example.org or (888) 235-1538 ext. 2 to see how Sol Systems can help secure financing for Rhode Island solar projects. Sol Systems has previously facilitated financing for solar projects in Rhode Island with feed-in tariff contracts. Check out our experience page to see our portfolio. ABOUT SOL SYSTEMS Sol Systems is a solar energy finance and investment firm. The company has facilitated financing for over 400MW of solar projects on behalf of Fortune 100 corporations, insurance companies, utilities, banks, family offices, and individuals. Sol Systems provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. The company’s tailored financial services range from tax structured investments, project acquisition and SREC portfolio management. Inc. Magazine named Sol Systems on its annual Inc. 500 list of the nation’s fastest-growing private companies for a second consecutive year, ranking it No. 6 in the nation’s top solar companies in 2014. For more information, please visit www.solsystems.com. Original article