Solar’s next top model: SEIA unveils standard commercial PPA contract

After years of struggling to find its feet in the ever-growing solar market while other segments boomed, the commercial & industrial (C&I) segment is now one of the hottest markets in solar. New companies are entering the market all the time.

To help those companies navigate the sometimes challenging world of the segment, the Solar Energy Industries Association (SEIA), through its C&I Working Group, has developed Version 2.0 of its model power-purchase agreement (PPA) for commercial customers. The new version is available for download on the SEIA site.

The working group has streamlined the commercial contract, building on the contract originally developed by the U.S. Department of Energy’s National Renewable Energy Laboratory (NREL). With the input of commercial installers, the new contract is shorter, written in plainer language and provides potential financiers with a straightforward description of projects that will make it easier for companies/owner-operators to get the necessary financing.

Finding commercial financing has been one of the major factors holding the segment back. While residential solar has boomed with leases (although the use of leases is diminishing as residential solar customers are investing more in owning their own systems) and utility-scale project developers have become better at accessing institutional capital, commercial projects have found it difficult to find banks willing to provide them the money they needed.

Commercial developments have a hard time getting financing because the clients often don’t have individual credit scores or, in the case of a multitenant development, it’s hard  to determine whether each tenant is creditworthy without an expensive cadre of lawyers and accountants before banks are willing to take the risk. In developing the new contract, SEIA vetted the contract with some of the biggest bankers and law firms to make sure it met the highest standards.

Teams from companies and banks like Tesla, Ballard Spahr, Nixon Peabody, and Blank Rome contributed to the effort.

“By easing the negotiation and contracting processes, the revised model PPA document allows for quicker financing of solar projects and better access to low-cost capital,” said Mike Mendelsohn, SEIA’s senior director of project finance and capital markets. “We believe these model contracts are a critical component of SEIA’s comprehensive consumer protection and industry facilitation efforts.”