New Yorks GP Renewables announced this week its intention to purchase an array of commercial solar PV projects worth $15 million in the New Jersey and Maryland area of east coast U.S.
The decision has been prompted by the impending expiration of a federal tax incentive at the end of the year designed to promote commercial and rooftop solar power in the two states.
This scheme, known as the Solar Renewable Energy Credit (SREC) program, was initially well received when launched in 2011, helping thousands invest in solar energy. But a sharp slowdown in 2013 has left many investors struggling to recoup their initial outlay. GP Renewables’ acquisition of these solar projects allows their former owners to either liquidize their assets completely or continue to purchase solar energy from GP Renewables under 10- or 20-year agreements.
"Were offering liquidity to people who want it," Gabe Phillips, CEO of GP Renewables, told Bloomberg. "In most instances, the end user is able to get out either flat or with a moderate gain on a per-watt basis, including system costs, SRECs and other incentives."
When the SREC was introduced, proactive state and local policy measures made the investment a sound one, creating a solar gold-rush where investors predicated a three- to four-year payoff period. In reality, that period has proven to be closer to 10-15 years as an increase in the number of solar installations drove down the price of the credits.
Through the proposed PPA agreement with GP Renewables, investors can buy back the solar power they help generate at a discounted rate, locking them into a secure tariff period while enjoying the upfront payment offered by the company.