MONEY FOR SUN

Solar finance deals as COP15 U.N. Climate Change talks approach
Brian Coppa, December 3, 2009 (Phoenix Green Business Examiner)

"The COP15 climate change meeting starting December 7 in Copenhagen, Denmark is the 15th international gathering of the Conference of the Parties (COP) under the United Nations Framework Convention on Climate Change. This summit is a major opportunity for the international community to take decisive multi-lateral action on reducing greenhouse gas (GHG) emissions…

"Advocates of GHG reductions were originally hoping for the establishment of an ambitious, legally binding global emissions reduction agreement for implementation by 2012…President Obama will participate in international climate change talks on December 9 in Copenhagen, and he will be proposing an 83 percent reduction in GHG emissions by 2050 and a 17 percent reduction below 2005 levels by 2020…In contrast to many news reporting agencies, the general unwillingness and lack of interest of India and China in GHG emissions reductions and clean energy is not true…China announced that it would slow its GHG emissions by 2020, mainly by increasing energy efficiency. Furthermore, the Chinese propose to reduce the amount of carbon emitted per unit of economic output by 40-45 percent compared to 2005 levels. In addition, India has previously indicated that they would announce their own emissions reduction plans after the U.S. offered its own official proposal."


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"…California [is] getting ahead of the curve…[It leads] the country, by far, in cleantech policy-making, R&D and deployment…[and the] California Air Resources Board released a draft rule creating a cap-and-trade system aimed at meeting California’s goal of reducing global warming emissions to 1990 levels by 2020. The measure is proposed to start in 2012 with 600 major pollution sources…Regardless of one’s opinion on the relationship between GHG emissions and global warming, clean energy is worth pursuing simply based on a country’s economic and national security…However, the recession has taken its toll on cleantech finance, as the bank credit markets struggle to recover to pre-recession levels. As a result, many companies inside and outside of the green arena have been unable to obtain the necessary loans for expansion and creating new jobs…

"As the bank credit market began slowly improving earlier this year, an initial indication was recognized in the solar energy space. In June, SolarCity and U.S. Bancorp Community Development Corporation (USBCDC) formed a partnership for small- and medium-scale solar finance deals for homeowners and businesses across the U.S. The two companies created a new $50 million tax-equity based fund to finance projects under SolarCity's SolarLease program. This program, which was originally supported by Morgan Stanley, who along with J.P. Morgan and Goldman Sachs, have been leading the charge in recent years in this finance area, allows homeowners and businesses to purchase power from systems owned and installed by SolarCity through a power purchase agreement (PPA). SolarCity is utilizing commercial tax credits, which are applied towards customer financing."

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"…[The] USBCDC fund was one of only two tax-equity funds initiated in the U.S. during the first half of 2009 that applied to residential solar projects and both of the funds were created in conjunction with SolarCity to finance solar installations. Earlier this fall, SolarCity and USBCDC increased the size of the fund two-fold to $100 million. SolarCity’s PurePower program in Oregon allows homeowners to pay the same rate they were previously paying for electricity from their utility company…[A] 3.5-kilowatt solar system, designed for a typical three or four-bedroom home, is approximately $30/month. This company is expanding into Arizona as well, while the city of Phoenix recently announced a new program of its own…

"USBCDC, one of the nation's largest tax-credit investors, focuses on investments in tax-credit equity and the Investment Tax Credit (ITC)…The return on investment is primarily derived from the tax credits; thus, most funds have short investment timeframes of about 5 years…Moreover, the conversion of the ITC to a cash grant has improved the tax-equity market with the entrance of new investors and it is hoped that the cash grants are extended through 2012…Financing at the customer level is a critical link for the enormous residential solar market opportunity…However, in order to meet pending GHG emissions reductions and cap-and-trade restrictions at the industry level, enhanced financing options are also necessary for large-scale capital projects such as concentrating solar power facilities and solar farms, and the U.S. Department of Energy has been offering various programs…"