A SEIA (Solar Energy Industries Association®) report published at year end 2022 on corporate solar highlighted the growth of big corporate solar adoption, which now accounts for 14% of the U.S. solar market.
To no one’s surprise tech companies, food and beverage, as well as healthcare giants lead a concentrated market in which 23 U.S. firms that have installed greater than 100MW of solar. The SEIA “Solar Means Business" report details that U.S. businesses have installed nearly 19 GW of an and off-site solar as of June, 2022 and projects that commercial solar installations are expected to double over the next three years with nearly 27 GW of off site scheduled to come online by 2025.
The top corporate solar users per SEIA in 2022 include giants such as Meta, Amazon, Walmart, Anheuser-Busch, Prologis, Kaiser Permanente with Corning rounding out the top 25.
Meanwhile, the middle market of Solar – we’ll use Solar Builder Magazine’s Chris Crowell’s definition – of purely commercial solar projects ranging from 200kW to 1MW – is poised for growth as several key market challenges are being met by expansion of state incentives and market standardization.
In Crowell’s July 2022 piece, “Investors are ready for mid-market C&I Solar – is solar ready for them?” he interviewed Michelle Davis, Principal Analyst, US Distributed Solar at Wood Mackenzie Power & Renewables. Davis suggested that while projects in the C&I market are relatively bespoke, financiers are beginning to find a way to deal with variables more efficiently and effectively.
Amidst this evolution, Crowell notes solar assets are becoming more consolidated by large aggregators. While this is good news for investors, middle market EPCs and Solar Developers who service both residential and C&I markets are not able to capture the full value of projects they create.
Sol-REIT Chief Credit Officer, Taimur Jamil sees an opportunity to support both middle market businesses and middle market solar developers. “We aim to address the capital constraints that today’s developers are facing by providing higher LTVs for projects and structuring our funding to allow developers to maintain ownership through the full life of the asset,” states Jamil.
“We aim to address the capital constraints that today’s developers are facing by providing higher LTVs for projects and structuring our funding to allow developers to maintain ownership through the full life of the asset.”
- Taimur Jamil, Chief Credit Officer
To do this for developers in the C&I space Sol-REIT commits up to 100% of the capital needed to construct a project, as well as long-term financing to match the asset’s lifecycle, significantly reducing the total cost of capital and eliminating the capital constraints that prevent developers from capturing the value they create. By providing 100% construction and long-term permanent financing, sponsor equity and the need for aggregation and sale at pre-construction valuation (development fee) is eliminated. This enables the developer to sell a de-risked operating asset (as opposed to a construction project) at a significantly higher valuation or retain it on balance sheet to securitize in the future.
All the value currently lost by middle market developers is captured by using more efficient debt capital vs. aggregator equity capital. This efficient capital supports middle market developers in their ability to service mid-size corporate and private business clients that define mid-market C&I solar with competitive power pricing.
