SunPower secures funding to bolster its residential solar lease business

sunpower logo

SunPower has secured financing commitments for its residential solar lease program (with Hannon Armstrong Sustainable Infrastructure Capital and SunStrong Capital Holdings) that will make its financing provisions “more attractive” and will supplement the solar loan and cash sale alternatives currently offered by the company. SunPower has provided solar lease financing options to customers since 2010.

The new fund is structured as a levered tax equity partnership with a multi-party forward purchase commitment, allowing generation of upfront cash margins for residential solar leases. The financing commitments for this new fund are being provided largely from a repeat group of loan and equity providers that continue to have strong long-term relationships with SunPower and Hannon Armstrong.

“SunPower’s strong suite of acquisition options, and our technologically superior solar energy solutions, allows us to continue meeting growing customer demand,” said Tom Werner, SunPower CEO and chairman of the board. “Thanks to our financing partners, who share our clean energy future goals, we’re able to ensure funding to meet the needs of those customers who desire a leasing option.”

Additionally, SunStrong has acquired a residential lease portfolio from Capital Dynamics. This transaction adds to SunStrong’s existing high-quality asset portfolio with the addition of more than 41 MW and 5,100 residential systems.

“This transaction reinforces SunStrong’s belief in the long-term value of owning high quality solar systems and SunPower’s commitment to providing on-going products and services to our customers,” said Werner.

Bank of America Merrill Lynch acted as the sole structuring and placement agent for the cash equity and multi-draw term loan, as well as the sole tax equity investor. Additional equity capital was provided by SunPower, Hannon Armstrong and their joint venture SunStrong, which holds equity interests in more than 55,000 residential solar energy systems.

Last year, SunPower’s U.S. residential business saw annual deployment growth of more than 15 percent, bringing the total number of American homes with SunPower solar to over 275,000 consumers.

— Solar Builder magazine

Tesla drops to third in U.S. Solar Installer Rankings due to its strategy shift

dropping PPA prices

Tesla installed 6.3 percent of U.S. residential solar capacity in the first quarter of 2019, marking the first time the company has fallen to third place since Wood Mackenzie Power & Renewables has been tracking installer market shares in its U.S. PV Leaderboard, dating back to Q1 2013. Vivint Solar reclaimed the number two for the first time since falling to third in Q3 2017.

Meanwhile, Sunrun which overtook Tesla for first place in the second quarter of 2018, gained market share over both Tesla and Vivint Solar. Sunrun installed 11 percent of all home solar capacity installed in the first quarter of the year, notching its highest share ever.

Leading U.S. residential solar installers

Tesla Sunrun market share

Source: Wood Mackenzie Power & Renewables U.S. PV Leaderboard

The top three residential solar installers combined to install 25 percent of all new U.S. residential capacity in the first quarter of the year. This is a significant departure from Tesla’s (then SolarCity’s) peak quarters when it alone accounted for more than a third of the entire U.S. residential solar market.

“Tesla has essentially thrown in the towel on pursuing growth in the residential solar space because it has concluded that acquiring customers is simply too expensive,” writes Austin Perea, Wood Mackenzie Senior Solar Analyst, in a recent report on Tesla’s store closures. “Rather, Tesla will rely on its brand power and low-cost referral methods to keep the solar business afloat until it stabilizes.”

From the same report, Perea writes:

“For Tesla, the installation bleeding lasted into 2018 when its national residential installation volume fell another 41% annually despite other national installers experiencing growth. Vivint and Sunrun’s direct businesses grew 7% and 37%, respectively. But even as other installers grew in 2018, Tesla’s standing continued to have a substantial impact on the national residential solar market.”

According to the report, in 2017 the U.S. residential solar market as a whole fell 15 percent. However, if you were to exclude Tesla from the equation, the market would have only fallen two percent. Similarly, the residential market grew 7 percent in 2018, however excluding Tesla entirely, it would have grown by 15 percent. “Clearly, Tesla had a marked drag on residential solar in 2017 and, to a lesser degree, in 2018,” writes Perea.

“Despite stronger growth from the rest of the market, the growth outlook for 2019 – like 2017 and 2018 – continues to be hampered by Tesla’s decisions to cut back on its customer acquisition channels, though less severely than in previous years,” said Perea.

According to the latest U.S. Solar Market Insight report, Wood Mackenzie forecasts the U.S. residential solar market to grow a modest three percent by the end of this year.

“Tesla stepping away from being a growth driver for solar reaffirms our hypothesis that long-term national growth will continue to be driven by smaller local and regional players and less reliant on national players, though Sunrun and Vivint will remain important,” said Perea. “Indeed, in the long run, it seems that Tesla’s decisions may send a vital message about how solar is sold.”

Additional key findings

• CS Energy (formerly Conti Solar) rose to the top of the commercial solar installer rankings with nearly 48 MW of installations across New York, New Jersey, Minnesota and Rhode Island in Q1 2019.

• Constellation leads the rankings for commercial solar asset ownership this quarter, commanding 5% of the market.

• Both Sunrun and Vivint Solar have now surpassed SolarCity/Tesla as the largest residential solar installers in the US.

• Loanpal leads the financier rankings for the first time ever, less than 1.5 years after entering the solar loan space.

— Solar Builder magazine

How have utilities changed the value of solar? Aurora Solar runs 45 million scenarios to find out

Aurora_remote assessment

Net energy metering (NEM) policies have played a crucial role in making residential solar installations a good investment for homeowners in the United States. However, as installed solar capacity has increased, many utility companies have introduced changes to their NEM programs that reduce the value of distributed solar.

Aurora used its proprietary solar financial analysis tools to conduct a large parametric study that analyzed over 45 million scenarios to determine how these new programs impact solar customers’ savings across the United States. The study analyzes the financial impacts of specific billing mechanisms, as well as the cumulative impacts of different combinations of these mechanisms as implemented by utilities in different states. The policies evaluated slightly diminish the financial value of installed solar but also promote larger system designs in certain circumstances.

Head here to download it and read the results for yourself.

Random notes from the analysis

  • Policies that reduce the compensated value of excess energy impacts customers differently than policies related to monthly fees.
  • Annual credit expiration policies can make or break the financial benefit for the customers depending on the time of year when credits are expired.
  • Hourly export rules scale with system size – high usage households are hit more than small usage.
  • Monthly minimum fees are more likely to impact customers with lower energy consumption and encourage smaller systems compared to ideal designed under standard NEM policy.
  • Installers need to pay attention to the month in which credits expire, as that can have a big impact on financial return.
  • New York’s VDER program promotes an optimal system size of around 105% energy offset while the prior target was around 98%. In Utah, new policy promotes slightly smaller systems for households that have a smaller energy consumption and slightly larger system for households with higher consumption. Over in Hawaii, under a zero-export policy, a sweet sport for design is around 60 percent energy offset for households with low energy consumption and 70 percent for larger households.

The overall takeaway

Knowledgeable solar installers play a huge part in designing systems that make financial sense for customers under the various billing scenarios. Some customers may need to over-size a system to see the best financial return, while others may need a smaller system. Some may need to curtail their usage and couple their system with energy efficiency measures to realize better value.

— Solar Builder magazine

Oklahoma homebuilder adds custom-designed solar systems to 54-home development

Sunview Development Company, a 15-year veteran of the Oklahoma home building industry, has tapped Dallas-based Sunfinity Renewable Energy to install custom-designed solar systems in a 54-home development located in Calera, Oklahoma. The project marks Sunfinity’s entry into the Oklahoma solar market and makes the company the largest installer of residential solar in the state. Sunfinity estimates that each home will save more than $840 annually in electric bills, for a cumulative savings nearing $1,360,000 over the 30-year life of the system.

The development started in 2016. The subdivision includes 54 units composed of 1800-square foot duplexes, which are all rental units. The developer will be adding additional amenities, such as storage units, covered parking, walking tracks and a soccer field.

“The solar installations make our properties significantly more competitive in the market,” said Jay Mauck, manager with Sunview Development. “We’ve stepped up our offense on electric bills using a natural resource that’s available to us all. It truly is a win-win for us as a company, doing what’s good for the environment and the tenants.”

“Installation was completed earlier this year, so families will begin realizing savings in time for summer heat and the year’s highest electric bills hit,” said John Billingsley, Chairman and CEO of Sunfinity Renewable Energy. Each home will have a 15-16 panel system capable of offsetting 68% of the home’s required electric needs, based on average use.

“Sunview was able to take advantage of the 30% federal tax credit, which decreases at the end of 2019,” said Billingsley. “This literally means they had a 30% discount on the cost of the systems, with a payback period just over five years.”

According to the Solar Energy Industries Association (SEIA), prices for solar in Oklahoma have fallen 43% over the last five years – and the state’s Department of Commerce estimates as the solar industry matures, nearly 45% of all energy in the state could be solar powered.

“Oklahoma is subject to extremes in temperatures, resulting in high electric bills for many homeowners,” said Billingsley. “Solar is a wonderful alternative to help those families save significant amounts of money, and that’s a key reason the industry is expected to continue growing in this state in the near term.”

— Solar Builder magazine

GRID Alternatives awarded $4.4 million in funding for California’s first low-income community solar projects

The California Department of Community Services and Development (CSD) announced final awards totaling $4.4 million to GRID Alternatives for two Community Solar Pilot projects in Contra Costa and Riverside Counties. These first-in-California low-income community solar projects are part of California Climate Investments and will make the cost-saving benefits of solar energy accessible to more low-income households while contributing to California’s efforts to reduce greenhouse gas emissions.

“CSD is excited to have the opportunity to pilot new program models like community solar to help ensure that the investments the state is making to fight climate change continue to benefit all Californians,” said CSD Director Linné Stout. “The innovative projects that are being funded under the Community Solar Pilot Program will deliver financial savings to low-income households that otherwise can’t be served by existing solar programs, while also reducing greenhouse gas emissions.”

Program details

The Community Solar Pilot Program, part of CSD’s Low-Income Weatherization Program (LIWP), is designed to reduce energy costs for households that are not currently able to benefit from existing low-income solar programs. Most Californians face barriers to traditional rooftop solar, including those who rent, don’t have a roof suitable for solar, who live in an apartment building, or lack financing options.

Well-designed community solar increases access to clean renewable energy by enabling multiple households or buildings to participate in a larger scale shared solar installation located in their community. The goal of CSD’s Community Solar Pilot Program is to provide funding for the implementation and testing of models to deliver community solar to low-income households in innovative ways that have the potential to be replicated elsewhere and to scale, reduce greenhouse gas and toxic air emissions, reduce household energy costs, and provide workforce development opportunities and other co-benefits to communities.

“Community solar can provide more equitable access to renewable power and the clean energy economy. We’re thrilled to be part of California’s first community solar projects which will exclusively benefit low-income families,” said Stan Greschner, chief policy and business development officer with GRID Alternatives. “Not only will the Community Solar Pilot Program directly lower residents’ energy costs and provide workforce development opportunities in low-income communities, but these projects will be models for scalable programs in the future.”

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GRID’s projects

Following a competitive procurement, CSD selected two projects led by GRID Alternatives to receive funding under the Pilot. GRID has partnered with the Santa Rosa Band of Cahuilla Indians and City of Richmond for these community solar projects.

GRID Alternatives Inland Empire was awarded $2.05 million to install a 994 kilowatt (kW) ground mounted solar array in partnership with the Santa Rosa Band of Cahuilla Indians and the Anza Electric Cooperative, Inc. The community solar system will be sited on Santa Rosa Tribal lands in Riverside County, an area designated as a low-income community, and will benefit approximately 38 homes on tribal land and 150-250 other low-income households served by Anza Electric. The project is expected to produce more than 42,000,000 kilowatt hours (kWh) of energy over the next 30 years and provide up to $5.4 million in savings to participants over the life of the project.

“The Santa Rosa Band of Cahuilla Indians is proud to partner with Anza Electric Cooperative and GRID Alternatives to provide clean energy to not only Tribal Members, but also other surrounding mountain community members,” said Tribal Chairman, Steven Estrada. “We are thankful for the opportunity to facilitate this project by using our tribal lands in a sustainable way.”

GRID Alternatives Bay Area was awarded $2.38 million to install a 989 kW solar array in partnership with the City of Richmond. The community solar system will be sited at the Port of Richmond and demonstrates how solar can play a key role in decarbonizing California’s ports. The project will benefit 155 low-income households in designated disadvantaged communities in Richmond. Approximately 80 to 95 percent of subscribers are anticipated to be residents of affordable housing properties near the Port of Richmond that are not good candidates for rooftop solar; and who will receive direct financial benefits equal to approximately 75 percent of typical renter electricity costs. The remaining 5 to 20 percent of subscribers will be local renters and homeowners that are not able to benefit from existing low-income solar programs. The community solar project is expected to generate approximately $81,000 per year in revenue over 20 years for distribution to local low-income households.

“This is a perfect example of how cities can leverage land use authority and community choice energy programs to spur local clean energy development,” said Richmond Mayor Tom Butt. “There is a rich history of shipbuilding and manufacturing at the Port of Richmond during the WWII era, now we’re using that same innovative spirit to build renewable energy systems that offset residents’ energy costs.”

Each community solar project will provide solar installation training and meet specific local hiring and wage requirements. For the Santa Rosa project, residents from the Santa Rosa Band will participate in paid job training opportunities during the solar installation. Both projects are estimated to be completed by the first quarter of 2021.

— Solar Builder magazine