Although solar power is often thought of as a bespoke investment, recent trends are causing investors and sources of capital to fight for limited supplies of feasible solar power projects. What has led investors to battle for solar power? The Distributed Energy System experts at Intersect Energy have outlined the three reasons why so many are now fighting over solar power projects.
Increases in Tax Equity Markets
Despite the many tax reforms that have recently occurred, the market for tax equity has significantly increased since 2016. In fact, Michelle Davis, a senior analyst at Wood Mackenzie Renewables & Power, stated that: “There’s 40% more tax equity investors since 2016, margins for debt are compressing, and residual value is making up 50%+ of utility solar required returns”. Because of this, the solar power investment landscape is evolving and tax equity investors, lenders and sponsors are being impacted.
More Competition Means More Willingness to Invest
As solar power becomes increasingly popular, investors are beginning to broaden the types of projects in which they are willing to invest. Although the heavy hitters are still only targeting projects that are $25 million or more, small projects that are significantly less than that number are now being considered by more and more investors. However, there is currently more demand for projects than there is projects available for purchase.
Solar Power Success is Leading to Evolving Deal Structures
The P50 and P90 ratings (the levels of generation forecasted to exceed 50% or 90%) are showing high confidence in the success of solar power construction. This has led to a change when it comes to solar power purchasing structures, as project sponsors have more capital available to distribute among development. Also, less cash is being required for a down payment, making the investment less of a risk for investors.
Interested in investing in a solar power project, but not sure how to find opportunities? As a Distributed Energy System developer, Intersect Energy has the expertise and services you need to find solar power opportunities and capital. Contact us today so we can help you get started with your solar power investment and make sure you keep up with the latest news in the world of renewable energy by following us on LinkedIn!
Xi and Trump have agreed to a 90 day ceasefire on future tariffs in order to discuss significant structural changes to the trading relationship between the US and China. Currently, there is a 30% tariff on any imported solar panels, which equates to approximately $0.09/watt of an installation. For utility scale solar, this would be approximately 10% of the total installation cost of a solar project. This will significantly impact the solar industry’s ability to grow and doesn’t make clear sense given the number of jobs created from solar development in the United States.
Solar Manufacturing Capacity by the Numbers
The solar industry has two primary parts in order to produce electricity from the sun. The first is the actual PV panels, or photovoltaic panels. These panels capture the sun’s energy and convert it into electricity. These panels are almost exclusively made in China, with only a small amount (about 4% market share) being made in the United States. This can be seen in the current manufacturing capacity by country, with China being the single largest producer by a large margin. There are economic reasons why this is the case, primarily a labor cost issue, that will continue to create this imbalance.
Figure 1: 2017 Solar Photovoltaic Manufacturing Capacity
*Chart from statista.com*
The Emphasis on Electrical Inverters
The other part that makes solar panels produce power are the electrical inverters. These inverters take the direct current (DC) output from the solar and invert it to Alternating Current (AC) output to the Grid. These inverters are a significant cost to every solar project and they are also technically difficult to make. The largest factor here is that the inverters die faster than the panels and thus need to be replaced more often. Paying slightly more for inverters makes sense upfront when you can have a product that lasts longer. Due to the complexity of this equipment, the industry generally buys these inverters from either the United States or Germany. There is a large emphasis in the United States for this due to the technical difficulty and electrical architectures being developed and manufactured here. China has recently opened several inverter companies, but they have not had a lot of success breaking into the developed world’s market due to concerns over their equipment’s longevity.
So essentially today, the solar industry has a natural economic equilibrium where China sells the PV panels to the world due to their low cost of labor and the United States/Germany sell the inverters to the world due to the complexity and intellectual prowess required to manufacture. Because PV panels last about 20 years and Inverters last about 7 years, the $0.10/watt inverter price becomes $0.30/watt price over the lifetime of the project, which equals the PV panel cost per project. The solar industry needs China’s cheaper panels to continue to expand, whereas the solar industry needs the technically superior US inverters to continue to expand. It is a very simple quid pro quo situation that the existing tariffs are impacting dramatically. Higher tariffs will accelerate China opening up inverter manufacturers and beginning to gain the intellectual abilities needed to manufacture these difficult pieces of equipment. Without the tariffs, we believe the US will continue to be a major manufacture of inverters for the foreseeable future.
In conclusion, the best outcome for the United States (jobs, domestic energy, reduction of carbon emissions, etc.), as the Trump Administration and Congress work with China on trade negotiations, will be not to increase and actually remove existing tariffs on solar equipment.
The 2018 elections on November 6th proved to be a big day for energy and climate policies. According to a report released by Wood Mackenzie and Renewables, we could see a 17.7 GWac (gigawatt alternating current) increase in total market solar energy in five states where new governors were elected. That is if all five states (Illinois, Nevada, Colorado, Minnesota and New Mexico) pass the 50% by 2030 mandates. Three states, New Jersey, New York and California, have already mandated 50% renewable energy by 2030.
The Report Rundown
Wood Mackenzie’s recent report found that if all five of these states pass the 50% by 2030 renewable portfolio standards (RPS) policies, there will be a 17.7 GWac increase for total solar built and a 16.5 GW increase for total wind built by the year 2030. Although these findings are based on current electric demand and each state’s current wind and solar ratio, these findings could be influenced by other renewable development factors, such as: meeting current RPS mandates or being driven by voluntary utility or corporate procurement.
Illinois and Nevada Would See the Most Growth
While both of these states would benefit from a more aggressive RPS, Illinois would be the one to see the most increase—at 9.1 GWac. This makes up more than half of the total forecasted increase. Coming in second is Nevada, but even though it’s Governor-elect, Steve Sisolak (D), would like to see Nevada use 100% renewable energy, it will ultimately be up to Nevada voters. Although the November 6th election resulted in an electoral victory for the 50% renewables by 2030, the bill has to be voted on one more time before it can become a law.
These Three States Would Also Increase Their Renewable Energy Usage
Also in this report is a projection that Colorado, Minnesota and New Mexico will deploy 1-2 GWac of additional solar energy in order to meet the 50% by 2030 RPS. In regards to wind energy, Colorado and Minnesota are predicted to dominate wind energy capacity additions, but it’s important to note that these two states don’t have large populations or electric demand.
As the November 6th elections indicate, renewable energy is beginning to become the popular energy choice. The renewable energy experts at Intersect Energy are here to breakdown the report and discuss the changes that could be on the horizon. Not only does renewable energy generate savings for companies and individuals, but they’re also immensely better for the environment. Ready to join in on this popular movement and save an average of 20% in energy costs by switching to renewable energy? Contact the experts at Intersect Energy today!
It has been a great year for renewable energy! So far, U.S. corporations have invested in 4.81 Gigawatts (GW) of renewable energy–a number already up 2.03 GW from last year. A gigawatt is a unit of power equal to one billion watts, compared to a megawatt which is equal to one million watts. According to the 2018 Corporate Renewable Energy Procurement Mid-year Market Update, published by the Renewable Energy Buyers Alliance, this number is expected to easily surpass 5 GW by December of this year. Which companies have contributed to this advancement? Let’s take a look at a few of the most substantial projects.
Corporations That Have Obtained the Most GWs
Leading the way with 15 deals across various states is Facebook with a total of just under 1.5 GW. Following behind Facebook is AT&T with four deals and a total of just under 1 GW. Rounding out the top five is Walmart (five deals totaling under 1 GW), Apple (two deals totaling under 1 GW) and Microsoft (two deals totaling under 1 GW). Microsoft’s deal with sPower for 315 megawatts (MW) of solar power in Virginia, is actually 2018’s largest corporate procurement in terms of a single deal.
Which States Have Closed the Most Deals?
Although Virginia had the largest deal of the year, thanks to Microsoft, Texas has become a hub for corporate renewable deals. With an impressive 42 deals, Texas’ deals are triple that of Oklahoma’s and North Carolina’s 14 deals. However, this doesn’t mean the market is centralized. In fact, 26 states have completed corporate renewable deals to date!
Leading the Pack!
Not surprisingly, tech companies have the highest percentage of deals signed in 2018 with 29% to be exact. Following behind at 23% are consumer discretionary companies. At 13%, financial and consumer staples come in third; then healthcare at 9.7% and industrial and telecommunication companies each at 6.5%.
Since renewable energy is better for the environment, increases efficiency and decreases costs, expansion is going to continue. At Intersect Energy, we’re committed to reducing environmental impact while maximizing savings for corporations. Ready to reap the benefits of renewable energy for your own corporation? Contact the experts at Intersect Energy today to request your consultation!
Who’s on the Job?
Six Flags Great Adventure is partnering with KDC Solar LLC to build a 23.5 MW solar photovoltaic system. This system will be the largest net metering solar installation in the state. The project will install solar carports over selected parking lots and 40 acres of ground mounted solar panels. The system will produce 30 million kWh of clean electricity in one year. This is enough to power everything in the park all year!
This investment will lead to many financial benefits for Six Flags. Although the project is expensive, Seminole Financial Services is providing debt financing for the project through a construction and permanent loan facility. Additionally, development capital and project equity were arranged by GoldenSet Capital Partners. The park is also excited for the social impact of this project, which is equivalent to providing energy for almost 3,000 homes and getting over 100,000 cars off the road!
Net Metered Solar Systems
Within the last few years, net metered solar panel arrays have been on the rise across the nation. Net metered solar panel arrays are being installed on schools, businesses and even private homes. Net metering is simply a mechanism that offers credit to customers who produce more energy than they are using. You can even see your meter go down as you are only charged for the “net” energy used each month. This is why many states are implementing programs to encourage net metering, but are capping the size of the system you may own.
New Jersey is one of the few states that doesn’t have a cap on net metering programs. This means that the energy plant can be as large as the source needs it to be. Six Flags Great Adventure, located in Jackson NJ, is taking advantage of these laws and making huge energy strides!
Why Intersect Energy?
We at Intersect Energy are here to keep you updated on all of your renewable energy news! We focus on commercial and industrial solar energy development projects in New Jersey, New York and Massachusetts. We offer innovative solutions to facility upgrades when paired with a new solar project, at little to no capital cost to our clients. To learn more, follow us on LinkedIn!
Solar power has become increasingly popular throughout the country in recent years. Solar energy has created major competition for fossil fuels, and it is a key element in improving air quality and sustainability in the energy industry. The International Renewable Energy Agency (IRENA) estimates that by 2020 the price of energy production in large solar power plants could fall to around three US cents per kWh. On a local level, states like California, Massachusetts and New Jersey are just a few of the states that are moving towards 100% clean energy. Let’s take a further look at the steps these states are taking.
Solar in New Jersey
In New Jersey, a community solar pilot program is expected to bring great economic benefit to the state. This program will bring $797.9 million in local economic benefits. This is a three-year pilot program that will be permanently implemented after 36 months.
Solar in California
California is quickly moving towards a clean electric grid, after governor Brown signed a bill in September to speed up the transition. The bill requires the state to source 60% of its energy from renewable sources by 2030 with the goal of implementing 100% carbon-free electricity by 2045.
Solar in Massachusetts
Massachusetts is launching a new solar program called the SMART program. This will add 1,600 MW of solar capacity to the state’s energy portfolio. Although the Massachusetts solar market was stalled for the past two years, the hope is that this program will help them get back on track.
Solar Across the U.S.
The Global Strategy Group has released a poll that found more than three-quarters of voters want to see their electric utilities providers invest in more solar energy. Solar was the most favored form of electricity among the individuals who were polled. “Democrats, Republicans and Independents all said, everything being equal, they would vote against a politician who opposed solar power,” said Solar Energy Industries Association (SEIA) president and CEO, Abigail Ross Hopper.
What We are Doing to Help
At Intersect Energy we are committed to developing solar, CHP, fuel cell and wind projects to provide clean energy. We focus on commercial and industrial solar energy development projects in New Jersey, New York and Massachusetts. Intersect Energy can offer innovative solutions to facility upgrades when paired with a new solar project, at little to no capital cost to our clients.
Intersect Energy is your guide when it comes to information about renewable energy and offers our services with energy reduction technologies, aggregate energy, and more. To keep up with all the latest news in the renewable energy field, follow us on LinkedIn!
Northeastern Solar Power This Summer
The summer has come to an end, but the heat wave in New England and the Northeast last month has created some ground-breaking records for solar power. The heat wave in New England and the Northeast lasted a week, allowing solar power to save $30 million in wholesale electricity costs because of lowered demand during it’s typical midday peak. With savings this large, regions across the country have began the shift toward solar.
During the heatwave, solar power provided 15% of total electricity in New England. New England ISO explained, “Solar generation peaked each day at around 2 p.m. during the heat wave, providing approximately 2,000 MW. Solar contributes to the reduction in the peak load and also contributes to moving the peak that we see here at ISO New England to that 5 to 6 p.m. time frame.” Homes and businesses were getting their electricity through solar power which lowered the demand from the regional power systems by about 2,000 MW.
In recent months, solar power now makes up more than 10% of electricity in five states! Massachusetts is one of the states that has joined California, Hawaii, Nevada and Vermont in this group. Solar power in Massachusetts has grown 34% each year and is expected to grow continuously each year. In the U.S., the west coast is leading the country when it comes to the application and pursuit of solar energy. California has the highest generation growth in the first half of 2018 at 20%.
Overall, solar in the United States in the first half of 2018 has grown 28%, which is 2.4% of all electricity generation. In turn, coal generation has fallen 6% each year. Although solar has become more affordable, accessible and is the cleanest domestic energy source available, it still has a long way to go before it meets its full potential in the U.S..
The move from fossil fuels to clean energy is growing every day. At Intersect Energy, we are committed to providing analysis, financing and structuring of alternative energy solutions to reduce the environmental impact and maximize savings for companies. We proudly share renewable energy news and information to all our customers and those interested in seeing renewable energy expand. Stay up-to-date with all the happenings at Intersect Energy by following us on LinkedIn!
We are in a new world when it comes to financing for solar projects! Last year, more money was invested in solar projects than coal, gas or nuclear. That is great news, but there is even more on the way! Recently, kWh Analytics and Swiss Re have structured a deal with GCL New Energy, a top five global solar developer and PNC Bank, an industry-leading investor in U.S. solar projects since 2007, for 50 MW of solar projects financed using the Solar Revenue Put to guarantee 95% of solar generation. Dick Rai, the manager of PNC, “We have long-standing relationships with both GCL New Energy and kWh Analytics, dating back to their respective entries into the U.S. solar market.”
Solar Revenue Put
kWh Analytics has developed the Solar Revenue Put , which is an enhancement for financial investors to lower the investment risk, and encourage the development of clean, low-cost solar energy. This credit enhancement will guarantee up to 95% of a solar project’s expected energy output. Essentially, investors will purchase solar energy from sunlight farmers, and there will be a guaranteed net profit for the farmers and a lower risk for the investors. This is a win for both lenders and farmers.
The Future of Solar After Solar Revenue Put
A recent survey, conducted by kWh Analytics, found that 40% of lenders are now valuing the Solar Revenue Put as a credit enhancement. From residential rooftops to utility scale plants, financing structures have been supported by the Solar Revenue Put. This reduces the risk for investors and will improve the bottom line. Less risk means less cost, which means more solar.
“We have a global mandate to rapidly expand our investment portfolio of solar projects,” says Frank Zhu, Executive President of GCL New Energy. “To support us in this growth, we were pleased to have found efficient and reliable execution with our partners, PNC Bank and kWh Analytics.” Renewable energy accounted for two-thirds of the new power added to the world’s grids in 2016. With this latest advancement, The Solar Revenue Put will help to increase the amount of renewable energy every year.
At Intersect Energy, we provide turnkey service to our customers, from assessment, design, financing, installation and management. We offer innovative solutions to facility upgrades when paired with a new solar project, at little to no capital cost to our clients. To learn more about our services, contact us today! Don’t forget to stay up-to-date with all the happenings at Intersect Energy by following us on LinkedIn!
Large Corporations Have Been Shifting Toward Renewable Energy in Recent Years
This is a major step forward for the renewable energy industry, but there is still work to be done. For commercial and industrial developers, it is important to retain tenants, not just acquire sites. Intersect Energy is here to help commercial developers lower energy costs, meet social demands and improve client retention. Let’s take a deeper look at the shift toward renewable energy and what we can do to help you succeed as a developer.
Solar Energy and Lower Costs
When discussing the benefits of renewable energy, lower costs is usually one of the first things mentioned. The reason why is because renewable facilities not only operate at a very low cost, but the prices are stable because green energy comes from the sun or wind, which is free fuel. For developers, it is key to emphasize the stability of pricing to tenants, as they will find comfort in the fact that prices will not drastically increase over time.
Increased Solar Social Awareness
Another reason that there has been such a strong shift toward renewable energy is because of increased social awareness. The public is putting a stronger emphasis on clean energy due to the positive effects it has on the environment. From a decrease in global warming to improved public health, it’s hard to ignore the benefits. Corporations, both large and small, want to maintain a strong social presence. As developers, we at Intersect Energy believe it is important to stress these benefits to both new and existing tenants as they will want consumers to see them as environmentally conscious.
The Industry Leaders are Switching to Solar
With companies such as Facebook, Microsoft, Apple and General Motors shifting toward renewable energy in recent years, it’s exciting to see large companies looking toward the future. For many years, consumers thought renewable energy was just a trend, but these companies are proving that green energy is the future. Each year new companies are added to the corporate energy renewable contracts list. So far in 2018, as stated by The Business Renewables Center, companies such as Adobe, Etsy and Nestle have invested in renewable energy. To put things in perspective of just how much growth we’ve seen so far this year, there were 31 corporate renewable energy deals in 2017. So far in 2018, there have been 46 public transactions. These numbers suggest that renewable energy is more than just a trend!
All of Intersect Energy’s projects are completed with the highest quality materials and experienced team of partners to provide the best workmanship and maximize the economic benefits to our clients. Contact the team at Intersect Energy so we can help your firm save money while acquiring and retaining tenants!
State-level renewable solar energy storage is on the rise
It is projected that about 73 GW of solar Photovoltaic Systems will be installed in the United States from 2018 to 2022. One gigawatt (aka GW) can provide enough energy for about 700,000 homes. California leads the states in most solar energy, and on May 9th the CEC (California Energy Commission) approved measures that all residential homes must adopt or incorporate solar power in the state starting in January 2020.
California is also pushing for battery storage during new home construction
Increased battery storage optimizes renewable energy consumption. Additionally, it will expand the industry by tying suppliers and home builders. However, there are bound to be questions related to the new standards. For example, the increase in construction costs will be a common question that users have. It will be important that the states educate users of the benefits that the energy savings will bring, which will greatly outweigh the costs.
Recently, New Jersey became the fifth state to adopt an energy storage target
New Jersey is now alongside states such as Hawaii, New York and California, the leading clean energy states. PV Magazine USA reports that the goal is to increase New Jersey’s renewable standard (amount of power from Utilities coming from renewable energy sources) to 35% by 2025 and 50% by 2030. If New Jersey is able to meet their goals, this will be a huge advancement for the renewable energy industry!
Hopeful for the future
This will hopefully give the energy storage industry more momentum to spread to the East coast. The industry is already setting plans for future renewable energy storage targets across the country. With California and New Jersey continuing to increase their renewable power, other states will more than likely begin to do the same. The question then becomes if other states will take a more proactive approach or a reactive one. Some states may be more skeptical, thus they may wait to see the results of the new standard in California and New Jersey before they fully commit.
Intersect Energy proudly shares renewable energy news and information to all our customers and those interested in seeing renewable energy expand. Stay up-to-date with all the happenings at Intersect Energy by following us on LinkedIn!