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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Operating Leases Popular If a business is not able to use the ITC benefit, or is willing to forego it, the project becomes that much easier to place. An operating lease, in which the lessee does not own the system until all payments are made and a buyout is paid, is one popular mechanism. "Operating leases assign the tax credits and depreci- ation benefits to the bank, so effective interest rates can be negative," Keele says. "For instance a $500,000 system might have $425,000 in lease payments including the system buyout payment at the end of seven years." The SolRates system (free for installers to use) sim- plifies these equations. "Once the data is loaded, SolRates provides instant online financing options, where our algorithm finds the optimal lender and financing structure for the deal," he says. Some of these financiers make their money by originating the leases or loans for an insti- tution that will hold it and use the associated ITC benefit. Others work the margins the good old way. Broadening Investor Base Apart from small banks and credit unions, small C&I loans are frequently funded by private equity, be the investor an individual, a family office, a financial adviser or a foundation. "Business owners going solar with our financing can and frequently do achieve ROIs of greater than 10x on their out of pocket capital," Keele says. Wunder Capital packages its own term invest- ment products from the various loans it closes. The company's Term Fund pays 8.5 percent for the seven-year instrument; the minimum invest- ment is as little as $1,000. In its end-June mid- year review, Wunder reported funding 53 projects this year to date, with the majority involving Term Fund investors. One risk mitigating factor in private equity invest- ing is the higher quality of warranties, Birsic says. Some lesser known manufacturers have secured these via third parties specialized in the product. While Tier 1 manufacturers tend to service the warranties from their balance sheet, the practice of re-insuring warranty risk has accelerated. Not every solar manu- facturer open for business today can safely be assumed to be in business in seven years. Seven-Year Loan Demand to Grow Loans for purchased C&I systems are rapidly emerging as the popular financing tool for the seg- ment. Even with seven-year terms, the buyers can save money along the way. "The loan rates that customers pay can vary depending on their credit: If it's good, high 5 percent or low 6 percent is typical. If it's less good, then mid-7 percent," Keele says. The complexity of the loan tends to go up with value. "Our focus is toward the lower end, so for a 100-kW deal, it may only be worth $200,000. But for a 1-MW deal, worth $2 million, it may be a very dif- ferent set of conditions," Ramsey says. The financiers agree that as the ITC dwindles away, there will be more loans to the small C&I segment than operating leases. Charles W. Thurston is a freelance writer who covers solar energy from Northern California. Efficiently financing small- and medium-sized businesses is the solar industry's white whale. At SPI, Braggawatt Energy is officially launching its new platform, specifically built to address these needs. How? What they are calling a partner- driven model designed for simple navigation, creation of financing proposals and automation of credit reviews and financing contracts to implement reliable onsite energy solutions that uniquely address the needs of SME customers. "Unlike disjointed software platforms or standalone financing providers, Braggawatt's platform streamlines the origination, development and financing of distributed energy solutions for SMEs," said Trey Ramsey, co-founder and CEO of Braggawatt. "We connect the dots between local installers, solar-ready businesses and the financing necessary to make it all happen," Oleg Popovsky, Braggawatt's co-founder and CCO, added. Braggawatt will be offering free demos of the platform for project integrators at SPI. SPI DEBUT: THE BRAGGAWATT ENERGY PLATFORM

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