As a concentrated effort to increase access to public capital for PV solar ends in September, a California mutual benefit organization is taking over the reins.
The Solar Energy Finance Association (SEFA) — an 18-month-old group founded by industry heavyweights such as SolarCity, Sunrun, Locus Energy and Clean Power Finance — will continue the workstarted by the National Renewable Energy Laboratory (NREL)’s Solar Access to Public Capital(SAPC) workgroup to standardize power purchase agreement contracts, bring more capital to the market efficiently and promote solar as an asset class of investments.
“Our focus is really about the intersection of the solar industry and the capital markets,” said SEFA founding member and Trepp LLC Senior Vice President Thomas Fink.
SAPC — which was funded in 2012 through a three-year Department of Energy grant to NREL — brought together over 200 groups to advance the industry on a number of different solar financing fronts, such as standardizing Power Purchase Agreement templates, residential and commercial solar leases. SEFA hopes to add to that list by setting up standardized engineering, procurement and construction (EPC) agreements.
“To access capital markets efficiencies, you need as few things as different from loan to loan as possible,” Fink said of the impetus behind the group’s efforts. “In commercial and residential real estate there’s a lot of [standardization], which makes it easier to package and sell loans from one place to another to get the best financing at lowest possible rate.”
And although the solar industry — which is still relatively young — has made a speedy effort of this task compared to other industries, Fink says there’s still more work to do in order to reduce consumer costs by establishing avenues to secure capital at lower costs.
One of the tasks on their list is to begin the conversation with rating agencies — such as Fitch Ratings and Standard & Poor’s — to determine the type of information they’d need to see to get comfortable with to rate solar as an asset class.
“That’s a delicate balance and dialogue because the rating agencies are highly regulated agencies,” Fink said.
In the next six months, SEFA will be focusing in on best practices for consumer representation. It’s already published a consumer purchasing guide for homeowners and will be presenting the information at the end of March in San Francisco before the Solar Asset Management conference in San Francisco.
“It was important for the industry to not let that work go away at the end of the Department of Energy grant to provide that work going forward,” Fink said. “We hope to continue, become a good partner and address common concerns.”