Solar Builder

SEP-OCT 2017

Solar Builder focuses on the installation/construction of solar PV systems. We cover the latest PV technology (modules, mounting, inverters, storage, BOS) and equip installers/contractors with tips and tools to make informed purchasing decisions.

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SOLARBUILDERMAG.COM | 35 How boutique financing is growing this underserved solar segment By Charles W. Thurston B outique financiers armed with massive databases and complex algorithms are changing the way that small commercial and industrial (C&I) solar projects get financed. Typically targeting projects under 250 kW, these finan- ciers have automated and accelerated as much of the underwrit- ing chore as possible. The result is that old back-office costs largely have disappeared, making a small C&I loan possible, and even lucrative for certain classes of investors. "For C&I net metering deals, there likely will be a $5 billion to $6 billion market this year. If there is an avoided cost of power that is more than 10 cents/kWh, there is likely to be a workable deal. Our installers say C&I is where they see all the growth," says Dustin Keele, founder of SolRates, based in Silicon Valley. His company finances in all 50 states. This market is also huge in terms of number buildings. "About 90 percent of all U.S. commercial buildings have square footage below 25,000 sq ft. Using 10 watts per sq ft for a density average, you can install a 250-kW system on these buildings," says San Francisco-based Braggawatt founder Trey Ramsey. "When you focus on systems bigger than 250 kW, then you will find a higher concentration of blue chip companies, which have plenty of bor- rowing options." "We calculate that the medium U.S. business needs a $175,000 system," says Bryan Birsic, the CEO of Boulder, Colo.-based Wunder Capital. All of these boutique financiers say they want to see businesses save at least 10 percent off their utility bill. In states like New Jersey, however, with strong SREC markets, the savings can go up to as much as 50 percent. Crushing the Underwriting Barrier Most banks are not interested in considering a solar C&I deal for less than $5 million, these financiers say, since the labor cost of their staff of underwriters makes anything under that size unprofitable. But using a series of information tools, including business financials, tax documents and credit rating agency records, these financiers can generate a yes or no response in very little time, eliminating 90 percent of the time and effort that a team of staff underwriters might expend to reach a decision. "We have hundreds of data fields automated," Birsic says. "No one can compete with us in this space unless they have a high- technology platform." These small lenders also have adopted standardized and pro- prietary contracts to eliminate lawyer review and cost. The industry is likely to move toward a single C&I contract format in a few years' time. "One thing that's nice about 250-kW-and-under systems is that they are not much more technically complex than a residen- tial system, yet they can be many times larger," Ramsey notes. His finance platform version 2.0 was recently released with some 600 installers and other players in its database. "It's one of the final frontiers for solar," he says. Project photo via SunLink and RA Power & Light.

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