Solar power is becoming an investment class all its own, this is clear. pv magazine covers some of the largest projects in the country moving from developer hands into long term institutional investor hands, we like to show off when all star companies like SunRun deliver the highest quality portfolios, and very recently we’re getting to talk about finance tool enhancements, like kWh Analytics’ Solar Put.
Engie has partnered with Goldman Sachs to complete deployment of up to 75 MW of solar plus energy storage on distributed commercial and industrial sites. Goldman Sachs provided access to tax equity, debt, and sponsor equity investors. ENGIE will retain an ownership interest in the portfolio, and will construct, manage, and operate the assets.
The portfolio comprises behind-the-meter installations that will provide power to commercial and municipal customers, and small-scale front-of-the-meter projects with rural electric cooperatives under previously signed long-term Power Purchase Agreements (PPAs).
One thing to notice about the majority of the investments, are that they’re either large (20 MW or more) or small (15 kW or less) but in large batches. The Commercial & Industrial space (mostly rooftop 100 kW through ~2 to 5 MW) hasn’t gotten as much attention yet, and the small business sector (smaller than 100 kW) has gotten even less attention in the investment grade sector. This is probably due to the challenge of underwriting.
Large projects with single high quality off takers are easy to analyze, and many many small projects in residential portfolios are easy to group and create an average risk that many finance people are quite used to. Whereas, creating a “investment grade” portfolio from small businesses is much more challenging.Financial positions of small business is less predictable than a homeowner, and the larger size of the projects makes it harder to spread risk.
Further portfolio details weren’t available, so it wasn’t possible determine project sizes, and the ownership of business inside building vs building itself, and then speculate on risk appetites. However, as a C&I developer in the Massachusetts market with the SMART program partially underwriting 20 year PPAs with state backed incentives, there is clear hunger for projects as small as 50 kW-AC by finance groups. Though, it seems at that size, the small savings to business owners doesn’t drive much interest, but as sizes increase toward 250 kW-AC customer interest peaks considerably.
Good to see the investment growing both in size, and into new market sectors.