EDITORIAL FEATURE
C.J. Colavito VP of Engineering, Standard Solar
Every solar project is different, and nowhere is that truer than when it comes to developing and financing commercial and community solar projects in different states. Solar companies must tailor their projects according to the regulations set in each state’s solar policies, what investors are looking for and the utility where the project will be interconnected. Navigating states’ regulatory and utility environments poses some of the largest challenges to solar companies in successfully constructing and financing projects on time and on budget. When it comes to finance, tax equity drives the industry. Whether investors see solar projects as a safe bet, however, is often determined by regulations set in each state. Take community solar projects, for instance. In Minnesota, state regulations allow community solar projects to allocate capacity to large commercial off-takers. This allows project owners to allocate a material portion of the project capacity to investment grade qualify off-takers at fixed rates. Other states, such as New York, require certain percentages to be allocated to residential subscribers, making it more challenging for investors to fully grasp the risk. Illinois’ community solar regulations, on the other hand, heavily compensate investors for the value of Renewable Energy Credits (RECs) in the first four years, making it an attractive state to focus on. “Any time you’re participating in a market we must carefully understand and evaluate the rules of the program and the NAVIGATING SOLAR FINANCE AND INTERCONNECTION: How A Patchwork of State Policies and Utilities Post Challenges to Solar Projects
Peter Coleman Senior Vice President of Structured Finance, Standard Solar
associated risks,” said Peter Coleman, Senior Vice President of Structured Finance at Standard Solar. Project financiers and investors will look closely at the compensation structure and risk, which in large part is determined by the state regulatory bodies. It’s not enough that a state is generally supportive of solar
energy—the specific details of the state regulations can make or break solar investments. The role of the off-takers (the purchaser of credits generated by a solar project) in a community solar program, for instance, is particularly important. “If the off- takers are credit-worthy, and will be around for the next 20 years, that’s very attractive
The states that are most attractive to financing are where the utilities drive the regulations and support the programs to be successful.
to investors,” said Coleman, “and even better if the rate that the customer is going to pay will not change over the term of the agreement.” Coleman says that the states that are most attractive to financing are where the utilities drive the regulations and support the programs to be successful. Fundamentally, it “gets down to how a program is structured and how projects are compensated under a program,” says Coleman. “The best states
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