SEIA to create finance advisory council

Solar Energy Industries Association (SEIA) has announced that it is collaborating with the Solar Energy Finance Association (SEFA) to create an advisory council focused on helping solar developers, investors and lenders lower the cost of capital for the solar industry.

The organizations have laid out four goals for the Solar Energy Finance Advisory Council (SEFAC): Expanding the supply of tax equity, opening capital market opportunities, reducing tension points in debt and tax equity, and communicating the technical and financial performance of solar projects. SEFAC will work in all major market segments, including residential, commercial and industrial and utility scale project development and finance.

The formation of the advisory council can be seen in part as the result of policy success. In late 2015 SEIA and individuals in the solar industry successfully lobbied for a four-year extension of the 30% Investment Tax Credit, but this means that developers are competing for a limited pool of tax equity financing to make use of this credit.

“We think that part of the reason (tax equity) is such a constrained market is because there is a lot of uncertainty among corporates and other entities who may wish to supply tax equity on how exactly it will impact their balance sheet, the benefit that they can take from the ITC and how all of that translates,” SEIA Senior Director of Project Finance & Capital Markets Mike Mendelsohn told pv magazine.

In achieving its targets, SEIA says that communication will be a “key aspect” of SEFAC’s work. “I think if we can develop communication and education tools and databases that may be able to indicate technical and credit performance of assets, that might facilitate more confidence by investors in solar as an asset class,” explains Mendelsohn.

Mendelsohn notes that the group has been building relationships with key constituencies such as the Retail Industry Leaders Association and the Structured Finance Industry Group, and that he hopes to leverage these and other relationships in the council’s work.

Mendelsohn was more vague on other avenues that the group could pursue, noting that it is still very early in the formation of the advisory council. “It could go beyond education based on the innovation our members can come up with,” he noted.

Initial reaction to the concept has been positive. “It sounds like a good idea,” stated Mercom Capital CEO Raj Prabhu. “I look forward to more details as to how this new organization can help solar companies achieve financing cheaply and easily the future.”