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June 4, 2012 – Vol.17 No.12
SEVEN DAYS OF SOLAR 5-20-12.
Financing solar projects is on the brink of transformation. That’s the conclusion of a new report for the Reznick Group, authored by Bloomberg New Energy Finance.
"US solar projects have historically been bankrolled by some combination of energy sector players, banks, and the federal government, but the landscape is rapidly changing. New business models are emerging with an emphasis on third-party financing. New investors, including institutional players, are entering. And new financing vehicles such as project bonds and other securities are being assembled to tap the broader capital markets.
"The evolution towards a broader investor base will help maintain growth for US solar deployment. Asset financing for US photovoltaic (PV) projects has grown by a compound annual growth rate of 58% since 2004 and surged to a record $21.1 bn in 2011, fuelled by the one-year extension of the Department of Treasury cash grant program. Funding the next nine years of growth (2012-20) for US PV deployment will require about $6.9 bn annually on average.
"Two factors will drive the evolution. First, traditional players are scaling back their participation. Constrained by regulatory requirements and by the continent's financial crisis, Eurozone banks are offering loans of shorter duration and with slightly wider spreads. In the US, a key Department of Energy loan guarantee program lapsed in 2011 making less low-priced capital available for large-scale projects.
"Second, thanks to the continuing low-interest rate environment, nontraditional investors are becoming more interested, lured by the risk/return profiles of solar projects that employ well proven PV technology. Motivated by attractive yields and the examples set by Chevron and Google, US corporations are eyeing forays into tax equity. Pension funds and insurance companies are willing to give solar projects a serious look in the wake of the successful bond issuance for a solar project owned by a Warren Buffett-backed utility. The past year has seen a crescendo of conversations around financing vehicles that draw on the capital markets, such as solar-backed securitization, master limited partnerships (MLPs), structures resembling real estate investment trusts (REITs) and publicly listed solar ownership funds.
"In parallel, new business models for deployment of solar have flourished, including variations of third-party financing structures which enable customers to enjoy the benefit of local systems at little or no upfront cost. These models have the potential to broaden substantially the universe of solar investors."
Re-imagining US solar financing
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During the week beginning May 20, 2012, this publication received news announcements regarding more than 3.8 megawatts (MW) of solar projects completed and 257 MW of projects in the development pipeline.
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Completed.
--- Bella Energy has completed a 1.65 MW solar array atop the Calvin L. Rampton Salt Palace Convention Center in Salt Lake City, Utah. Covering 3.85 acres of rooftop, the project is currently the largest solar photovoltaic system on Rocky Mountain Power's entire electric grid. It is also the largest solar array in the State of Utah.
The 6,006 solar modules will produce an estimated 2.3 million kilowatt hours of electricity in its first year, covering approximately 17 percent of the Salt Palace's annual electrical usage. Project development began in 2010, construction began in December of 2011 and took about 6 months to complete.
--- The Frank Lloyd Wright Foundation has inaugurated a new 250 kW (AC) solar photovoltaic (PV) power system donated by First Solar which will help power the historic Taliesin West campus. The commissioning marks the successful completion of the first phase of the Energizing Taliesin West (tm) initiative, a pioneering effort to transform the entire National Historic Landmark Taliesin West site into a “net zero” energy customer, producing as much energy as it consumes annually, while maintaining the historic and architectural integrity of the site.
The comprehensive project, led by energy efficiency consultant Big Green Zero, is focused on the twin goals of maximizing the campus’ energy efficiency through improved lighting, insulation, climate controls and other techniques while also generating renewable energy on-site.
--- Ray Angelini, Inc. (RAI) has won Motech Solar’s East Coast Installation of the Year award for its solar photovoltaic (PV) system installations for the Long Branch School District, Long Branch, New Jersey. For a project to qualify as a Motech Installation of the Year it must embody innovative design, quality workmanship, efficient installation and best-in-class safety practices.
RAI utilized Motech 235W solar modules manufactured in Delaware to successfully complete the design and installation of 10 solar photovoltaic (PV) system installations for the district – eight roof arrays and two canopy arrays. The largest array – 559 kW consisting of 2,379 panels – was installed on the roof of the high school. There were seven other locations throughout the district where RAI installed solar panels, including a 100 kW installation at Anastasia Elementary School, a 62 kW installation at Gregory Elementary School, 156 kW at Lenna Conrow Elementary School, 101 kW at Audrey Clark Elementary School, 773 kW at Long Branch Middle School, 189 kW at Morris Avenue School, and 14 kW at the Long Branch Board of Education
In the development pipeline.
--- Kyocera Solar has begun shipments of 34 MW of its U.S.-made solar modules for a 127 MW, utility-scale photovoltaic (PV) installation in southwestern Arizona. Production of the modules for this large-scale project will continue through March 2013.
Manufactured in Kyocera’s San Diego production facility, the 245-watt and 315-watt modules will become part of the Arlington Valley Solar Energy II project (“AV Solar”), scheduled to begin operations in late 2013 on approximately 1,160 acres near Arizona’s Hassayampa Substation in Maricopa County. Once complete, the project’s 127 MW-generating capacity will place it among the largest solar photovoltaic installations in North America.
The AV Solar project is being developed by LS Power Group and will be the company’s largest solar facility to date. Renewable energy produced by the project will be sold to San Diego Gas & Electric.
--- Martifer Solar USA has high expectations for 2012, with a project pipeline exceeding 100 MW and an additional 30 MW already signed. The company aims to enter additional markets and to continue working with world-renowned clients, such as Hertz and the Westfield Group.
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