Wiser Capital Blog

March 30, 2015 | No comments yet

Medium Scale Solar’s Chicken and Egg Problem: Financing and Project Pipeline

For years, as the residential and utility scale commercial solar markets expanded, the commercial sector has remained stagnant. Financing has not been available so no one is marketing to the sector…or is it the other way around? No one is marketing to the sector so there isn’t deal flow to have investors get excited?

We have been dealing with this chicken/egg issue for several years now, as has the rest of the segment. There was pipeline back in 2013, but no financing. Since installers could not get access to financing, they stopped doing outreach and marketing. Now the financing industry is ready to fund good projects but the pipeline is weak. So how do we crack this chicken and egg problem? We create solutions that both address the investor’s need for quality projects and the solar integrators need for easy access to financing.

Investors haven’t touched small and medium scale commercial solar projects on unrated facilities because of unknown risks. The uncertainty meant increased costs and even strong projects were priced out of the market. With the implementation of the Wiser Solar Asset Rating (WSAR) score, Wiser Capital has brought certainty to the market. This objective risk rating score allows investors to compare all aspects of a project, from development and host facility creditworthiness to equipment and O&M. Investors are also able to self-select projects based on geography, risk and return, meaning they are only reviewing projects that will work for them – cutting down on the cost and time it takes to get to ‘yes’ for a given project.

Likewise, solar installers have shied away from nonprofits and small commercial deals because if the host can’t take the Investment Tax Credit or provide the upfront capital, the project tends to be dead on arrival. They need a tool that can quickly and easily help them judge bankability on a given project so they can decide where to spend their time and resources. With the Wiser Capital Platform, solar installers get access to robust utility analytics that optimize system size and utility tariff to maximize host facility savings. The WSAR Scorecard acts as a checklist so that all parties involved know exactly what is required to gain access to financing. There is no more guesswork.

Combined, these resources help solve the chicken and egg problem for this sector. Solar installers are given the resources to bring strong projects to the financing market, and investors are able to understand risk and set their requirements in a transparent way that helps everyone cross the finish line.

In the coming months, Wiser Capital will be bringing you webinars and blog posts on how to help crack open this exciting market as an investor, a solar installer or a host facility. Be sure to sign up for our enews, or follow us on social media (FaceBook, Twitter, LinkedIn, Google+) so you don’t miss out.

Megan Birney is the Director of Strategic Affairs for Wiser Capital. She handles account management, platform implementation, business development, partnership initiatives and outreach.

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