Corporate, Commercial & Industrial and Community Solar are deeply-underserved markets by all accounts. Almost all community solar projects are third-party owned according to a new report published by GTM. Larger-sized solar projects are expected to gain in financing from third parties. On the other hand, third party solar investing is not expected to benefit small-to-medium scale projects because they share similar start-up expenses (credit analysis, due diligence, etc.) to large projects. Therefore these projects are unlikely to be financed by third parties.
Sun Fund is developing a producer-to-investor platform will facilitate third-party investment, incentivizing all stakeholders to adopt the Producer-to-Investor Platform. Invest in Sun Fund at www.StartEngine.com/sun-fund-dc.
On average, over the next five years, community solar is anticipated to be 30 percent of the market, with solar-plus-storage and large projects accounting for an additional 19 percent and 23 percent, respectively. With community solar and solar-plus-storage systems almost entirely third-party owned, and large projects over 70 percent third-party owned, third-party ownership will rise quickly in the near term — from 53 percent today to a peak of 78 percent by 2021.
But outside of these specific commercial solar segments, the increase in third-party ownership is expected to be more moderate. Since small- and medium-scale projects (<1 megawatt) are more difficult to finance, this segment will remain mostly customer-owned for the next five years.
There are tremendous opportunities for development of solar energy projects of all sizes, and some will be financed by third party solar investing. Sun Fund’s direct experience is that larger solar projects can find financing readily. Sun Fund can help get financing to small to medium projects with third-party solar investing facilitated by our Producer to Investor platform.
Deals in the medium-to-small market, though, are structurally similar to the larger projects. They all require some amount of due diligence, credit checks and so forth that eliminate small-to-medium projects from third-party financing from consideration. The fixed transaction costs make these projects unviable for most 3rd party lenders.
Sun Fund is developing a producer-to-investor platform that allows third-party financing of small-to-medium sized renewable energy projects. Many of the off-takers in the Commercial & Industrial space don’t have investment-grade credit. This is dissuasive to investors.
The tokenized renewable assets within Sun Fund’s portfolio will allow off-takers to build a payment history which, over time, will support their ability to take on new projects. Their record of payments is immutably recorded on a distributed ledger that does not require a trusted third party to validate.
The platform will also use big data, algorithmic analysis of data inputs that will partially automate the underwriting of renewable energy assets. As projects are built and off-takers (buyers of electricity) make monthly payments for their solar electricity, a credit history will be automatically updated in real time and immutably imbedded into our distributed ledger. The credit-score of the off-taker will impact the value of the asset. For example, an off-taker who is never past due with payments will increase the market value of the project because the credit quality will be confirmed. These credit scores may also be sold to credit-rating services, which will unlock further shareholder value. Automation of this function will require less human capital (fewer credit analysts) and materially reduce transaction costs. These will help provide a strong foundation for third party solar investing.
There is additional functionality in the Producer-to-Investor Platform as well: Our blockchain technology will utilize algorithms which will automatically parse and analyze data such as forecasted production, weather and equipment selection and then score each project accordingly. The goal will be to analyze the actual vs. forecasted performance of each project. Ratings will in part determine the market value of a project. For example, underperforming assets will be marked down or discounted. This will, in turn, allow for “automatic price discovery” of assets, which will reduce the human capital required for analysis and reduce transaction costs as assets are bought and sold.
Third party solar investing will be easier than ever with Sun Fund’s Producer to Investor Platform. Check out how to get early-stage upside exposure to fintech, renewable energy, socially responsible investing, ESG and more here: www.StartEngine.com/sun-fund-dc.