Small utility scale driving growth in North Carolina

Small can be powerful: At least that is the message from Innovative Solar Systems (ISS), which claims to have developed around 1 GW of solar projects in North Carolina. It has granted approval for five 2 MW and two 5 MW PV power plant projects in the state, which is says can deliver returns to investors between 10% and 20%.

In figures from SEIA and GTM Research, North Carolina ranked in fourth place, in terms of amount of solar capacity added in Q1 2014. The capacity added in the quarters was around 350 MW, with the vast majority being utility scale.

The advantages of smaller utility scale projects, says Innovate Solar Systems’ CEO John Green, is that they require: “smaller capital outlay [and have a] faster commissioning time.”

In terms of financing the projects, ISS reports that the tax equity investor generally funds a large part of the project, leaving the debt equity investor with strong returns. ISS’ CEO Green says that project finance deals can be structured whereby the equity investor can gain long-term revenue streams through the PPA, while the tax equity investor funds a “large portion” of the construction finance.

ISS says that wealth management groups, hedge funds and institutional investors have “huge appetites” for solar assets. In particular, according to ISS, they are willing to pay a premium if not required to assume responsibility for the project’s construction.

“With tax credits ending in 2016, investors are hungry for solar farm projects,” said Green.

ISS says that “above average” tax credits and incentives are offered in North Carolina, although it does not elaborate further.