Conergy’s innovative solar investment fund for the U.S. market completed its first installation project this week a 397.5 kW, 1,800-panel array for the Oshman Family Jewish Community Center (JCC), in Palo Alto, California.
The installation is the first to fully benefit from the launch in January of a $100 million solar fund designed to bring financing to smaller PV projects that would ordinarily struggle to attract capital. The Conergy Fund I is backed by Conergy’s main shareholder, Kawa Capital Management, and aims to use its initial target volume to finance power plants and qualified commercial PV projects up to 25 MW.
For the JCC, it meant a zero dollar down, 20-year power purchase agreement (PPA) on the installation, which will save the center an estimated $26,000 in its first year of operation, and as much as $1.5 million over the duration of its PPA.
"This is a landmark transaction, one of the first leveraged partnership structures to successfully close with individual investors," said John Marciano, a partner at Chadbourne and Park LLP, who acted as tax counsel for Kawa and Conergy on the project.
The installation at JCC will generate 616,920 kWh of clean power per year, generating 20% of the local community’s energy needs, while mitigating for the effects of 3,000 tons of C02 in the atmosphere. Development of the project was initiated and managed by THiNKnrg – an energy solutions specialist with its main office in Palo Alto.
The deal was arranged as a leveraged tax equity partnership, creating a structure whereby individual investors can utilize investment tax credits to finance their projects. The fund is backed by an unnamed Fortune 500 bank, and project managed by Conergy the company using its expertise in the solar market to identify, develop and procure those projects best positioned to take advantage of the funding arrangement.
"Conergy and Kawas goal in developing this new, largely untapped source of tax equity is to enable more organizations and businesses to have solar," said Conergy Americas CEO, Anthony Fotopoulos. "The limited number of tax equity sources in the U.S. who prefer very large projects is a barrier to widespread solar adoption.
"Combining individual investor appetite for investment tax credits alongside debt from specialized financial institutions like Kawa in this new structure allows Conergy to uniquely finance projects that previously were too small for typical tax equity investors, or didnt fit usual tax equity requirements.
"Solar projects that were previously considered un-financeable can now be financed."