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Financing programs for solar projects that enhance project completion

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Financing programs for solar projects that enhance project completion

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From 2010 until last year very few commercial and utility projects were financed by private funds. The selection consisted mainly of conventional banks so most projects getting financed were 15 MWs and more. There is a good reason for the selection of projects mainly consisting of 15 MWs or more. Time restraints and expenses caused by technical research and legal fees prevented smaller projects from getting conventional financing.

New forms of solar project financing help the PV industry

Over the last year there has been many new entrants into financing of projects. Below are a few examples. One example is Seminole Financial Services which for the last two plus years assisted by Chris Diaz has done construction financing. Their knowledge, experience and ability to make decision rapidly saves developers money. When I say rapidly what I mean is within 6 to 8 weeks or even faster. If you have a clean project and you are ready to begin construction, Chris has proven over and over, he can get construction funds for projects rapidly. His funds may cost a couple percent more than conventional financing but what you lose in finance charges you gain in G&A expenses while waiting for other financing to get approved.

Another form of financing comes from Developers that are interested in buying projects. An example is NuGen Capital that has private corporate capital to invest in projects that are close to end game but need some funds to get the project started and completed. Daniel and the entire team at NuGen come from the Energy Financing World. They can quickly asses a project and know whether it is financially viable. Their strength is to get projects completed in a weak SREC market. This skill and experience sets them apart from many institutions building and financing projects.

REITs Real Estate Investment Trust

Some of the most recent changes in financing are called real estate invest¬ment trust (REIT) capital. Currently, REITs are one of the largest sources of capital through which real property is financed. They are used to finance everything from apartment complexes and shopping malls to data centers and healthcare facilities.

REITs were created by Congress in 1960 to make large-scale, income-producing real estate accessible to all investors. REITs are afforded a tax deduction for dividends paid, which effectively creates one level of income taxation, because most REITs distrib¬ute 100% of their taxable income.

As a result, REITs can raise equity capital at low costs; the implied capi-talization rate for REITs is 6% to 7%. Structurally, REITs must be formed as a corporation, business trust or simi¬lar association. REITs must derive at least 75% of their gross income from rents on real property, be managed by a board of directors and have fully transferable shares with a minimum of 100 shareholders. There are cur¬rently 154 publicly traded REITs with an aggregate market capitalization of over $400 billion. In addition, there are approximately 1,000 privately held REITs.

Solar Mosaic allows you to invest, too

The most recent form of financing is what Solar Mosaic is doing. Greg Rosen was a recent speaker at GTM "US Solar Market insight". He presented the new program Solar Mosaic has been working on for a number of months and now have 5 projects completed. Mosaic offers competitively priced term loans to qualifying solar project owners. They will provide project information and documentation such as the pro forma, operating history, copies of PPA, SREC, Interconnection agreement and other relevant documentation. It is my understanding that they are presently completing the requirements to allow small investments as low as $50 to be place on a specific solar project. To me this is as exciting as it gets. Being a solar professional I know that if you have a good Developer, EPC and technology these projects will last beyond the 10 year investment period. For more information please contact Greg Rosen at greg.rosen@solarmosaic.com

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