US: Commercial rooftop opportunity opening up with project finance

The Intersolar North America conference kicked off today in San Francisco, bringing together solar technology and financing experts. While much discussion centered around the potential reduction of the Investment Tax Credit and its possible impact on the market, new financing models appear likely to unlock certain market segments.

Open Energy Group’s founder and CEO Graham Smith is attending Intersolar North America and he believes that providing project finance to commercial rooftop developers has the potential to see the segment make progress in catching up to the fast-growing residential rooftop and utility scale solar segments.

“I think that commercial and industrial solar [in the U.S.] is at an early stage of maturity,” Open Energy’s Smith told pv magazine. “Anecdotally, when taking off from one of the major airports in the U.S. you can see a huge number of warehouses and there are a lot of rooftops without solar. The infrastructure for financing and sources for financing from those rooftops is emerging.”

Open Energy has only funded USD$2 million in commercial rooftop and small utility scale PV projects to date, however it intends to grow this to $5 million in the coming weeks and targets between $20 – $30 million by the end of 2015. Company CEO Smith reported that the level of understanding of solar as an investment class has increased over the last four or five years, to a level at which there is strong appetite for project finance.

More recently, Open Energy Group’s Smith added, the offtaker landscape has also undergone somewhat of a transformation.

“Initially it was restricted to relatively few offtakers and primarily utilities,” said Smith. “But what is exciting is that there is a democracy of solar. Through the lower cost of equipment people can afford to access solar and again understanding plays a role.” Smith pointed to offtakers such as schools and universities, municipal and local government bodies as all being investment grade offtakers that are expressing an interest in solar.

Public buildings are also looking increasingly to add storage with PV, largely to provide backup power supply during outages. Open Energy is looking at providing project finance for some solar+storage arrays.

Open Energy Group will launch a new borrower platform in the coming months. Currently Open Energy is backed by the UK’s GLI Finance, however it plans to open up its platform to more lenders in the future.

In April, solar leaser SolarCity announced that it would look to fund 300 MW of commercial PV through a new fund.