A safe harbor for solar

Adam Boucher is one of three expert panelists scheduled to speak during Sustainable Industries' upcoming webinar, A Question of Scale: Financing Solar's 99% on December 8, 2011. The webinar is free and coincides with the launch of Sustainable Industries' microsite, the Sustainable Energy Guide.

Did you know there are over 17,000 solar companies in the US? These companies employ over 100,000 people – half of them in installation – and the vast majority of them are small-scale clean energy developers like Stacey Danner and Lea Keal in New Orleans.

When we first met Stacey and Lea they’d already founded Sustainable Environmental Enterprises (SEE) to help a low-income neighborhood in New Orleans offset energy bills with solar power. They’d built a demonstration center right in the neighborhood so residents could literally see how the panels worked, and compare real before-and-after energy bills. But despite having successfully installed dozens of systems already, they were unable to get loans from local banks to expand their program to more residents.

Across the country, thousands of community-scale clean energy developers are facing the same financing challenges as Stacey and Lea.

As a clean energy financier, we work with companies like SEE to lend them the capital they need to get their projects built. Instead of lending on credit, like a bank, we’ve developed an asset-based approach using government incentives as collateral. The stimulus program’s 1603 Cash Grant has been an enormous asset in this regard, supporting much of the growth of the community-scale solar market over the last two years. The Grant provides developers with a government check for 30 percent of the project’s cost upon completion. This means we can lend developers a portion of the financing they need to get projects built, and use the government rebate checks to pay back the loan.

Yet even with the 1603 Grant in place, it’s very challenging for community-scale developers to get upfront financing.

The reason these developers face such an uphill battle is because the government supports renewable energy largely through federal tax incentives that favor big players. A tax-based incentive structure is both costly and complicated. For solar’s top players the system works because they have the scale, sophistication and resources to put all the pieces together and access what we call the entire “capital stack.”