SolarWakeup Live! Video: Tax Reform Bill Explained by DC Lawyers from Stoel Rives and Mintz Levin

In this episode of SolarWakeup Live! I talk about the current Tax Reform Bill with Audrey Louison from Mintz and Greg Jenner from Stoel Rives. The tax reform bill was in conference committee at the time of this recording and had several issues that impacted the solar industry. The corporate AMT, a lower corporate tax rate and the BEAT provision. I walk through each of the items with Audrey and Greg, get an explanation (because nobody understood the BEAT provision) and how it impacts solar project financing going forward. Greg has been around tax law for many years, including as a tax counsel for the senate finance committee when the last major tax reform passed in 1986 and Audrey has completed over 500 project transaction. This bill will have major impacts to the way you present projects to your clients and investors and this episode helps guide you through that process with a bit more knowledge. This podcast was recorded in front of a live audience at SolarWakeup Live DC. Join us on January 31st in New York and look out for future events across the Country. https://www.youtube.com/watch?v=CT4zq-Ah23c

This is your SolarWakeup for December 8th, 2017

Tax Reform Explained. A quick turnaround for this important issue, a podcast on the tax reform bill. On December 6^th, I was joined on stage at SolarWakeup Live! DC by Greg Jenner, a tax lawyer at Stoel Rives, and Audrey Louison, a project finance attorney at Mintz Levin. Greg did a great job of explaining the various issues, from the corporate AMT, tax rates, BEAT and business income allocations while Audrey translated the potential effects on the partnership contracts. As someone that has had to live inside these agreements, I tried to get the information you need to think about as you raise capital for your projects – this was not a typical fluffy interview. Thanks to Audrey and Greg for bringing their knowledge to the SolarWakeup family.

The Goose Rule. Duke Energy is making a big deal as they acquire the remaining shares of REC Solar. Part of their commentary is how they plan on servicing the C&I segment. The irony is thick here as Duke brings a PPA case in North Carolina to the supreme court to stop a church from being able to buy solar energy while benefitting from the same policy in areas outside of its service territory. The rules of the monopoly should require consistent regulatory positions from the utilities. The deregulated side of the house benefits from the cost of capital provided by ratepayers but does not have to live within the same rules and that needs to change. I would like to see a regulatory body require the deregulated side of a monopoly to live by the same rules.

US Manufacturing. As the USTR held a hearing on the 201 issue to decide on tariffs, First Solar was updating its investors on the impressive Series 6 module. While First Solar has a factory in Ohio, it is also exempt from the 201 case which only pertains to crystalline technology. As First Solar has come out in support of tariffs, it is also adding another 1.2GW factory…in Vietnam. Great for America, I guess, as an American company innovates and develops in the US while manufacturing around the world.

GE Power. GE is active in renewable energy on the hardware and finance sides of the market. They are well aware that traditional power is changing and new energy sources like wind, solar, energy storage and efficiency are replacing the load and generation. Now the impact is felt widely by the power unit with layoffs which is unfortunate given the many attempts by GE to lead in the solar space.

Energy Lobbying. Name 4 companies that lobbied hard for tax reform and I wouldn’t have listed NextEra as one of them but Vox has reporting stating it was. I’d like to hear what solar lobbyists would say about that.

Sponsored by Mintz Levin. Mintz Levin is an Am Law 100 law firm with a nationally recognized Energy & Sustainability Practice that has completed more than 500 transactions across energy sectors totaling over $7.5 billion since 2006.

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E028: Tax Reform Bill Explained by DC Lawyers from Stoel Rives and Mintz Levin

In this episode of EnergyWakeup I talk about the current Tax Reform Bill with Audrey Louison from Mintz and Greg Jenner from Stoel Rives. The tax reform bill was in conference committee at the time of this recording and had several issues that impacted the solar industry. The corporate AMT, a lower corporate tax rate and the BEAT provision. I walk through each of the items with Audrey and Greg, get an explanation (because nobody understood the BEAT provision) and how it impacts solar project financing going forward. Greg has been around tax law for many years, including as a tax counsel for the senate finance committee when the last major tax reform passed in 1986 and Audrey has completed over 500 project transaction. This bill will have major impacts to the way you present projects to your clients and investors and this episode helps guide you through that process with a bit more knowledge. This podcast was recorded in front of a live audience at SolarWakeup Live DC. Make sure to catch previous episode on your favorite podcast platform Make sure to check out SolarWakeup Live! in New York on 1/31. If you enjoyed this episode as much as I did, make sure to subscribe on your favorite podcast platform including iTunes, SoundCloud and Stitcher radio. Please subscribe and share with your friends how much EnergyWakeup is helping you. [soundcloud id='366536594' height='false']  

This is your SolarWakeup for December 7th, 2017

USTR Hearing. There is great video online of the rally organized by SEIA in front of the trade hearing that only allowed about 100 folks into the room, mostly those testifying and their attorneys. Folks inside the room said the officials asked good questions and seemed more in tune with the issue, in some instances trying to understand the nuances of the impacts that a tariff could create. Many predictions about the possible next steps but nothing will be certain until the President makes up his mind.

South Carolina. The PAC, Solar Powers America, is focused on South Carolina and its Governor. In particular, around the 201 trade issue, no State is more directly impacted by tariffs than South Carolina. In October, the Governor of South Carolina directly intervened with the President as covered by the article highlighted below. There are no boundaries around political parties and this is a great exhibit of that.

GOP Members. 6 US Senators, all republicans, sent a letter to the trade representative urging the board to stop further tariffs from being enacted. Notable are the two US Senators from South Carolina, continuing the theme of good lobbying having a proportional result. Also a new radio ad from Sean Hannity on this issue, ignore the Obama bashing (it’s the price of admission).

DC Live. Thank you to everyone that showed up at SolarWakeup Live! DC and our happy hour afterwards. I hope you enjoyed the drinks and the good time with your solar colleagues. The discussions were great and our speakers brought news to the audience, including timely conversations about tax reform. Stay tuned for those conversations to be released in the very near future.

Presented by MMA Energy Capital. At MMA Energy Capital, we partner with developers, EPC contractors, and system owners to provide project capital necessary to develop, build, and operate world-class renewable energy systems. We are currently hiring at our growing company.

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This is your SolarWakeup for December 6th, 2017

Everyone Is In DC, Except. Rick Perry. He’s got his toes in the dunes, butt in the sand while touring Saudi Arabia on his America First Energy tour of the Middle East. As American solar workers are traveling to DC to rally in front of the USTR hearings, which could only accommodate about 100 people, Rick Perry is as far away as possible. If you can’t be in DC tomorrow, make a call to your Congressman/woman and ask them to help with the trade case. It will take a few minutes of your day and make a big impact.

America First Solar Plan. Yesterday morning, in a press conference held in DC, SEIA unveiled its America First Solar Energy Plan. SEIA CEO Hopper highlighted the fundamental risk of tariffs, more solar manufacturing jobs in the US will be lost than gained. Also speaking was the President of renewables at Swinerton and a Sunrun employee who served 5 years in the US Army and is now a disabled combat veteran. SEIA also secured additional messages signed by members of the Senate and House to be forwarded to the US Trade Representative ahead of the hearing later today.

Add Tax Reform. I will be joined by experienced tax and project finance lawyers tomorrow during SolarWakeup Live! in DC to talk about the potential impacts of the tax reform bill currently in conference. The goal is to turn this content around quickly and get it published for you to review. If you have thoughts on good content you want to hear about during our New York event, please send me a note.

A Rigged Game?  No surprise here in my opinion but Suniva met with the US Trade Rep office before filing the 201 petition. This seems like they met with the jury before filing a lawsuit. Going from a bad business to bankrupt to corrupt financial engineering in hopes of destroying the solar industry was just another day in the Suniva board room I guess, but that’s just what it seems like from where I sit.

Obama Goes Local. At a climate summit in Chicago, President Obama (come back, we miss you) praised and pushed Mayors to lead the fight on climate change. In Florida, a mayor is running for Governor and a big part of the platform is climate change. Glad to see Obama taking this issue on and lending his platform to Mayors.

SEIA Elected Seats. The SEIA Board has approved the election and notified the winning candidates for the elected seats which complement the board seats gained through membership level. These 5 seats are elected by the membership and is your opportunity to ask folks to carry your issue to the board at SEIA.

Presented By Standard Solar. With access to $300 million in low-cost project capital, Standard Solar delivers superior solar projects—from start to finish. From development and engineering to construction and maintenance our extensive team of experts guide our partners through each step of the solar-project process.”

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This is your SolarWakeup for December 5th, 2017

Monday Flights To DC. I sat down in my seat to be surprised to have a member of congress sitting across the aisle from me. As we started our descent, I introduced myself to the Representative as working in solar. Right away, “Why do utilities in Florida make it so hard to go solar? The prices really dropped so much, I should look at it again. The Florida PSC is totally owned by the utilities.” As I explained that solar is making small advances, I brought up the tax reform issue and the 201 case. “We shouldn’t be increasing the price of solar, we should be incentivizing people to do more of it.” The member is a Republican. Solar needs to do a better job educating members, so we need to go back to discussing the idea from last month where everyone spends 10 hours a month on political outreach and education.

Conference Committee. Last night, the House voted to send the bill to conference committee which starts the next step in the process of reconciliation between the House and Senate versions. This is where a lot of the lobbying gets done once again, once the conference agrees there are likely to be no changes. If solar is looking to stop provisions like BEAT from becoming law, this is the point where it would happen.

Coal Tax Credit Request. Coming out of nowhere, in addition to the FERC NOPR process, the coal lobby is seeking a tax credit to the tune of over $60billion over the next ten years. The hypocrisy is thick on this one and it’s a topic I will be covering with Amy Harder on Wednesday at SolarWakeup Live!

Choice For TVA Customers. Solar is an underused political issue. A recent poll of 600 Tennessee residents showed overwhelming support for more solar. All three questions below came back in the mid 80% approval range including when residents were asked if they would use solar in their homes if offered at the same price, whether Tennessee should use more solar and letting their local power company buy solar from generators. All of this while TVA, a public entity, prohibits the use of power purchase agreements. I’d like to see this used by campaign staff in the upcoming elections.

New Tax Equity. Listen to the latest podcast from SolarWakeup and my discussion with SunWealth CEO, Jon Abe. In part of the discussion I ask him about his capital sourcing from tax equity investors. If you are worried about the tax reform bill, you may want to arm yourself with information on how to diversify the tax equity pool of capital.

Presented By True Green Capital.  Our current partnership, Fund III, is actively seeking investment opportunities and channel partners to deploy capital in a scalable focused on DG and small scale projects.  Fund III has ~$350million in equity commitments to build out a ~$1billion solar portfolio.

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This is your SolarWakeup for December 4th, 2017

Another DC Week. I will be heading to DC this morning for a week of solar activities culminating in SolarWakeup Live! on Wednesday which is occurring at the same time as the solar rally in front of the US Trade Representative hearing on the 201 case. Of course the conversation about tax reform supplements the 201 process that is ongoing. At Live! we will talk about much of this with Amy Harder, Rep. Gonzalez-Colon, Lidija Sekaric, Kerinia Cusick, Andrea Luecke, Colin Murchie and Tony Clifford. Last minute tickets still available.

BEAT Tax Issue.  The Senate’s version of the tax reform bill includes the onerous BEAT (base erosion anti-abuse tax) provision that could reduce the ITC investments by multinational corporations significantly. As the bill proceeds to the conference, lobbyists from many sectors are mobilizing to argue their points. Expect to get some coverage on this topic from SolarWakeup this week once I chase down a tax lawyer for you all.

Small C&I. A new podcast is out today, my conversation with SunWealth CEO, Jon Abe. SunWealth is doing interesting things around the small C&I market from a financing standpoint and how they evaluate the credit profile in that segment. The company also partnered with a corporate to help with scaling, perhaps a sign of things to come. Catch the conversation here.

Sign My NDA. The headline from late last week was the Canadian Solar and Longi had engaged in conversations with Suniva for the purposes of acquisition. My reporting says that this has not gone much further than opening a data room for the companies by the Suniva representatives. This is in many ways like using a signed NDA as a way to show you’ve advanced a project. I remain skeptical that any 201 deal would get Suniva approval unless one of the following happens – a retroactive tariff payment to US manufacturers that yields cash in SQN’s pocket or an acquisition of the company entirely.

NY Storage. Big headlines out of New York about energy storage as the Governor signs a promising policy. More to come on this topic soon and it will be part of the conversation at SolarWakeup Live! New York.

Presented By NTCIC. National Trust Solar is a subsidiary of the National Trust for Community Investment Corporation.  We enable historic, new market and solar tax credit investments in support of communities nationwide.  Since our beginning in 2000, we have raised more than $1 billion in tax credits.  We are recruiting new sponsors and hiring for our dynamic team.

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E027: Financing Small Solar With New Tax Equity and Power Of The Crowd With SunWealth CEO Jon Abe

In this episode of energywakeup I am joined by Jon Abe the CEO of SunWealth. Sunwealth is a solar start up based in Boston Massachusetts focused on financing small commercial and nonprofit solar projects. The innovation at sunwealth is getting new capital into solar by educating them about the small C&I market. In our conversation Jon tells you about his work to grow a partner network for scaling and partnering with a corporate investor to fund the business. Jon is a solar veteran that made the jump to a startup and is looking to do great things. This podcast was recorded in front of a live audience at SolarWakeup Live Boston. Make sure to catch previous episode on your favorite podcast platform, episodes with the director of renewable energy at Massachussets DOER, the CEO of Sunpower, Former FERC Chairman and CEO of the Rocky Mountain Institute. Join us on January 31st in New York and look out for future events across the Country. Make sure to catch previous episode on your favorite podcast platform, episodes with Mike Judge from Mass DOER Jon Wellinghoff on the DOE NOPR Sunpower’s Tom Werner are now available Make sure to check out SolarWakeup Live! in D.C. on 12/6 and NYC late January. If you enjoyed this episode as much as I did, make sure to subscribe on your favorite podcast platform including iTunes, SoundCloud and Stitcher radio. Please subscribe and share with your friends how much EnergyWakeup is helping you. [soundcloud id='364642724' height='false'] YANN: We've got John Abe, he's CEO at Sun wealth and before I tell you a little bit about his background. I wanted to have John on and have him speak to you, because I believe in the market that he's serving. I spent many years focused on C and I and it's an incredibly frustrating, difficult, low margin business and you know, John is tackling it and I think he's tackling in a unique way and that's why we want to have him speak. But as by way of background he spent a few years at a Massachusetts state agency, which we're not going to- we're going to get into that a little bit and he was also a vice president NEX Amp before starting sun wealth. Well, we're going to start off the conversation because he told me a really interesting story about evergreen, and I almost asked the senator about, the history of manufacturing in Massachusetts but it's timely, right? We have this conversation about 201 happening and the role of manufacturing or module assembly in the US, versus the rest of the jobs that are created in the solar market. So John, welcome to solo wake up live why don't we-- why don't you tell that story so that people get a little bit of the background. ABE: Sure, well John thank you for having me and of course I'm not tackling C&I all my own but with great partners and with a great team and we'll get more into that. So, everyone knows how Obama has Solyndra, but most people don't know that Romney had evergreen. And I worked at the Massey's before was called the Massachusetts technology collaborative Renewable Energy Trust. And one of the things that we were tasked with there was making investments in creating jobs in the solar industry. And so, it was at that time when the state threw in large part the M. T. C Renewable Energy Trust made a large investment to help fund and largely subsidized a manufacturing plant for evergreen, in Massachusetts. And so, what was interesting enough is there was a lot of debate at the staff level, in that recommendation and I think the prevailing wisdom at the time was that. It made a lot of sense for Evergreen to have their R&D facility here in Massachusetts but that again this is just the staff level. That it probably did not make sense for them to have a manufacturing plant but hence you know the political winds prevail and of course we had Evergreen and the state funded manufacturing plant. YANN: So, the moral of the story is the 15,000 jobs and solar in Massachusetts came through the market, but not the manufacturing? ABE: Yes, at least at that stage. YANN: Well, I don't know what that mean. ABE: Yeah. YANN: Module manufacturing we're going to separate-- ABE:  The first 10,000 jobs here in Massachusetts were for the most part downstream solar jobs. YANN: Absolutely. So, tell us a little bit about Sun wealth and your focus on C&I in particular the--you focus on the small side of S&I and you've got some unique financing structures. But startup, give us the background of how you got to starting Sun wealth and what mission you're trying to solve. ABE: And so, as some of you know I used to work at NEX Amp and NEX Amp, basically started as a residential small C&I installer. Went to more of a C&I installer but really overnight went to a small utility scale. Develop build own operate model, and I really love the C&I business, I loved it when I was that NEX Amp I loved it, when I was working at Renewable Energy Trust, it was the champions are not-for-profits, local businesses and municipalities that really create the foundation for what Solar is today. Not just in Massachusetts but everywhere. And, I was in a boardroom doing what is about a million dollar, closing C&I deal and there were 27 file folders. There were, no three attorneys in bow ties walking around, one of them might have been an accountant. There was a really nice lunch that ultimately, we were paying for and you know a couple investors would come in and do their signatures and leave. And, we got the bill on that and it was probably a hundred and thirty, hundred and forty thousand dollars and third party legal consulting and accounting fees for that deal. Then you know fast forward a whole whopping two and a half months and you're in almost an identical room, but with the same law firms I think they're just on other sides of the deal, and the exact same deal structure and they still charge 120 thousand dollars on everything. And at that time, [inaudible 00:05:41] use the chairman of panel clause, well you looked that meaningless, “You know John there's a better way of doing this,” and I said, “Yeah, absolutely,” and so we've started and founded sun wealth on the premise that you could do a lot better around C&I deals or financing smaller solar projects in general. And so, what we did was, base that on the premise that with experience, standardization, of all the documentation, and a little bit of technology. You can work with developers to help them provide PPA’s to their small C&I projects and you can create a new source of capital that's going to reduce the transaction costs and believe in the standardized method, especially after you do a couple deals with them. YANN: But, you weren't further right? The standardization isn't-- that's not novel right? Sap C and now there's sap C 3.0 pace, you know some of these things have been around but you also merged crowd funding, kind of crowd sourcing whatever the term is that keeps you out of legal trouble. You also merge that into it you know. Why did you do that and what has that--what benefit has that created for the structure? ABE: Yeah and so, when we looked at the traditional sources of financing for solar projects, whether it's bundles of residential, assets or larger utility scale projects or even at the high end of C&I, where you have investment grade credits. There are a number of boxes that they just have to check to do those deals. And there's a number of fixed costs that goes into those deals and there's deal size limitations. So for example, you know we wanted to work with middle market local installers, to let them build and operate these projects and talk to XYZ institution, they said, sorry we can't underwrite that installer. That makes no sense! Some of the best projects that have been installed across the state have been done by qualified installers that Wall Street would never underwrite as an installer. YANN: Because of their bank ability? ABE: Because of a perceived Bank ability. And you know I've seen, other companies that are much larger and check the box on bank ability, build some really crappy projects that we would never underwrite. That's unlawful. YANN: I think we all have names to be redacted. ABE: So, a second thing that they might not under write is actually the credit of the off taker in the PP A's and I'll give you a couple examples. Where typically they're looking for a bundle of residential projects and they're underwriting a FICO score of 740 and above or something like that or they're looking for a very large C&I project or utility-scale project that has a contract with Google or Apple and they're underwriting that credit and that's being great. What they might not under write is, I'll give you an example the Walden Woods project where we couple solar projects with. So, this is a not-for-profit that was founded by Don Henley 25 years ago, because condo developers were about to buy and develop the land around Walden Pond State Park. So, he bought it with a couple other people and they basically funded it but you know what's worth probably tens or hundreds of millions of dollars with the property and endowed it, you know to basically do mission work, similar to Thoreau. And what they have now is, they have a center there, they have a library, that actually uses a lot of electricity because it houses some of the original Thoreau works, and it's dramatically sealed. They have, let's see over a 25-year operating history. They have a huge endowment relative to the size of their and budget and they own a ton of assets. And so by any logical underwriting process, their credit is good, and it's good for not just the 10-year PP A or 20-year PP A but probably for generations to come. And that is a credit that Wall Street would not underwrite. YANN: I mean credits, a bigger story right? Because there's the credit that won't default but then there's also the credit that you won't foreclose and maybe that you-- because a lot of pace lenders for example won't do deals with churches because who wants to foreclose a church? And you know, but if you don't have the credit, you know you and I could make a personal business decision and say, well that makes sense. But you still have to get the lender to-- unless you're going to just do unleveled deals throughout, you know how do you solve that piece? ABE: So, how do we get the lender comfortable-- YANN: With your portfolio? ABE: With our portfolio? So, there's a couple ways we do that. So, the first thing we do-- the first underwriting criteria we have, is that our PP A provides clear, long-term savings to our customers. So, you know people come to us and say, well you know they're willing to pay a 13 cents and I think they're avoided cost this, you know about 13 cents and I say well you know you're actually including demand charges and calculating their per kilowatt hours probably closer to 10 like, let's get them to 8 cents a kilowatt hour, we're not going to underwrite this project. So, operational savings is fundamental to every deal we do. Then we do your standard credit check, we review financials and then we ask this question. You know, has this business or organization or government entity been around for a generation and do they provide a product or service that's going to enable them to be around for a generation or more? The next criteria look at is geography, in terms of their replacement value in the event, you know they can't pay their bill somebody else can. Give in geography or building function and based on all those criteria, we get our debt to invest in the project. They want to see it, but it's not just the data, you have to tell a longer-term story about it. YANN: Are you going to traditional community banks, banks for your leverage or are you going into a different direction? ABE: So we can, but let me tell you a little bit about our investor community. So, we raise tax equity and solar bonds directly from our community investors. And I wouldn't say we're crowd sourcing it, but it's really as community sourcing it. We're building a community of accredited investors, that either have the-- much smaller percentage have the ability to invest in our tax equity products or as most or a larger number have the ability to invest in our solar bonds. And they are a combination of high net worth individuals, trusts, small institutions, wealth managers that believe in what we're doing and our product and you know we've been working with them for years now to get them to funnel their client money into projects. YANN: And the-- so how does that look from a fund raising, but also from a project finance perspective, tax equity investors, K Ones and then the bonds is that equity or is that debt structures with interest coupons? ABE: Yes, so technically to get into the details, we typically back lever our deals and so they have a membership interest in one of our LL C's and they get a k1 as well, with interest-- YANN: So the solar bonds are actual equity investor? ABE: Correct. YANN: Understood. So, let's jump over to the other side which is, you did an interesting corporate deal you know you what you-- maybe you raise some seed money but you did a corporate deal with panel call. Describe why you did that, how did you do it? But also what were what was the decision-making process in terms of, does this make sense for us and this is what we would get in return for doing that? ABE: Sure, and so from an early stage, what we wanted to do was assemble a board of directors and key investors that understands what we're trying to do and have deep expertise in the component of what we're doing. So, if you look on the project side, we wanted someone with market expertise. We wanted someone with technical expertise and we wanted someone with expertise on the built environment as well. So, when you look at the technical expertise and our desire to be in that space, panel claw is a perfect fit from our perspective. It was a real home run to get panel claw as a strategic investor. There's a couple reasons for that, when we work with developers and we try to be as agnostic as possible about equipment, choices, it doesn't really make sense to get a panel company to be our strategic technical expert in that space. Because well for obvious reasons, there's so many of them, it's commoditized. It didn't make sense for us to get an inverter company to be our technical strategic partner, for similar reasons though, perhaps not as extreme. And what really made sense from our perspective was to get someone who specialized in the same space we do. Basically, flattop commercial, rooftop systems though we do pitchers and we do aggregations of low to moderate income residential and we have some ground mounts but they really focus in that area and understand it. They have 40% market share and when we talk to a developer that in the rare instance doesn't know panel Claw, it's still a plus that panel Claw is an investor in our company, as a partner. YANN: But, I mean a) how hard is it to raise business model, venture investment and you know where else were you trying to get capital because there's other people that are you know similar ideas right? I spent three years doing a pace PP A startup and, let's just say I want three years of my life back[laughter], but you know leading question but I mean, how complicated is it to do what you did? ABE: It is really hard. I think the interview process with panel Claw started over ten years ago and that's when I was stuck into a cube when Next Amp and Panel Claw are bootstrapping in the same building next to Costa. YANN: How do you scale from here you know, I mean maybe that's a follow-on to how hard is it to get to get venture money. But how do you scale your business, where do you scale and to match on to the conversation I had with Daniel. What how does energy storage maybe help that? ABE: And, I don't be too coy about what I said about the relationship with panel Claws, because on the flip side our market, technical market investor is a company called Sky View. I don't know if you've heard them. But they have one the largest that's rack and rack positions in the entire country. And that was more of a deliberative four or five month discussion to get them on board. But they're a company that sees downstream solar every day and they understand the problems. The first meeting was fairly straightforward and then they just needed to understand the business model and why it was the best for trying to do, what we're trying to do. And, the great thing about having them on board is that, they had some good ideas on how we would tweak to make things better. Now, in terms of scaling this business, I think you know we're essentially a two sided market or a bridge between projects and investors. And on the project side I think it's evident to a lot of people in this room but there's a huge untapped opportunity around C&I, and it's just a matter of cultivating and cost-effectively bringing those projects to the point they're shovel-ready. On the investor side, what we're doing is we're creating a new source of capital for solar. And it is challenging to do, but where we started was you know with a community our first project we did we had nine investors and there was 100% tax equity basically investment. And from there we now a community of 80 investors, but what has changed since then in the last two-and-a-half years, well we went from having a number of individuals to now we have several institutional investors. We have several foundations that invested in us and we have a number of wealth managers as well that are funneling clients to us as well. And then, the other thing that's changes obviously, the transaction size has gone from 25-- our average transaction size, has gone from 25,000 to over 50,000 per transaction. YANN: And I mean, what kind of deals are you looking for, how many states are you active in, you know how many projects have you completed? ABE: So, let’s see, so we've completed almost 30 projects and we have completed projects in Vermont, Massachusetts, Connecticut, New York State, Delaware, Pennsylvania, Maryland and DC. We have a California project in the pipeline, with our trusted development partner central plan as well and so we do see ourselves as relatively geographically agnostic. And, our goal is to really find projects that basically pencil have good IRS, not only do they have to have a good-- a decent IRR for us to do the deal but in addition to that we have to make sure that the PP A is providing a value to the host and that we can underwrite the host and our development partner as well. YANN: And where are you getting your deal flow from? ABE: So, when we look at the market there are probably no more than a hundred to two hundred developers across the country that would make really good partners for us. So, at least initially we are talking to people one at a time and we're trying to source a good partner, you know we have a great partner in Buffalo. We have a great partner in the Boston area we have a couple partners in the Boston area that we work with. One out in western mass, one in Connecticut, one in Vermont and what we are planning to do once we really want to grow our project pipeline as well, I mean we do have an investor that has 40% market share in the commercial rooftop racking system and deals with a hundreds of customers a number of which would be ideal partners with us and we haven't even tapped into that faucet yet. YANN: So, from a business perspective right I mean you know, I think we all recognize how difficult it is that you do you know as you're talking about different geographies all I can think of is there's so much regulatory and so many regulatory things that I don't know about, that I would have for large projects hired a lawyer for, which sort of part of your original plan of not doing, so that you can routinely standardize. But, we live in a in an energy market where there are 200 markets it's not one country it's 200-300 energy-- ABE: At least. YANN:  At least, how do you keep your margin up, so that you can drive value back to your shareholders? ABE: So, this is where tactically how we've built the team and basically when you talk about, well standardization is great but it only take you so far. And so, in addition to being you know, my role at next amp, I was also in charge of regulatory affairs. So, I have a decent amount of knowledge on each of the markets, the key ones, we're not trying to do every market but, the ones we do you know the ten markets we have a pretty good understanding institutionalized within us. One of my partners Omar, he comes from both Wall Street where he worked on fixed income, he worked at Cohn Reznick Capital Markets, where he structured deals and then he was CFO for green Scots as well. So, he brings not just deal experience and transaction experience, but he also understands four or five markets really, really well. Our other partner Ryan comes from the social impact investing space. So, he understands our investing community really well and the regulations around that as well. So, we focused on building the right team, not necessarily in an entrepreneurial way but in very functional way in order to get the job done, that we needed to do and to do it very cost-effectively. YANN: So, from an exit standpoint, do you see kind of in a few years are you the mosaic- and I use mosaic in a broad term of residential loan provider- are you the mosaic of the C&I market, providing an ability for whether I'm a small you know maybe I'm a Sun Power dealer and all of a sudden the house-- I install solar in a house and the guy owns, you know the family owns some business and I as a residential install all of a sudden find myself with a hundred kW and I need an investing source. And are you the provider of that capital to solar companies around the country? ABE: Yes, recognizing that the developers as far as we work with, they are likely going to be small or medium sized players but we will pre qualify them. YANN: Okay, and are there instances where someone would bring you a project, that you say, Listen, this isn't your expertise but we have someone in that area that you can work with? ABE: To help them with the development of the deal? YANN: Sure. ABE: Yes, that might be the case. However the C&I projects we tend to focus on, aren't development intensive and so you know a lot of our partners they might not have developed a hundred kilowatt project before on their own and they but they're used to selling them and building them. We are glad to work with them through the first couple ones to share our recipe with them, so that they can do it themselves and on the next deal, develop it on their own and bring it to us for financing. YANN: What's the best advice you've gotten in starting this business? ABE: The best advice I've got on this, was that because we're raising money and we're raising money from a new source of capital that our business wasn't going to grow at the speed of technology or how fast we could integrate and update our advancement platform that our business is going to grow at the speed of trust. YANN: It's good advice. What advice would you give to your competitor? Someone in this room is going to knock you off all point of this conversation. ABE: So you know I think, we learned a lot from-- before mosaic was a residential lending platform-- YANN: It was a crowd funding company. ABE: It was a crowd funding company for C&I projects. So, we learned a lot from them and I think that what we've learned and this might change and maybe someone's going to disagree with us and meet us in the middle, is that if you want to do what we're doing in terms of accelerating the flow of capital and to undeserved commercial solar projects, you got to do it from the ground up, it's not a top-down type of business. YANN:  Right, so you've got a regulatory background and we had Senator Boncore earlier, and we have Michael Judge, coming up tell Senator Boncore, why you need the net metering caps raised and ask Michael a question, no. You're the regulatory guy. ABE: That's right, so you know one of the things I promised my investors being a former regulatory guy and knowing how wonky and times lucky that can be is, I wouldn't do a lot of advocacy as CEO Son Watt Lee son for the first couple years. However, I'm going to take this opportunity to say a couple things. So, you know we need the nebular in caps and it in Massachusetts because, you have a lot of jobs and you have a lot of projects that are tied up in National Grid and a couple other service territories that won't move forward until they're done. And it's not just having smart on but we need those to kind of fill the gap between now and that. And so, if you're interested in you know essentially reducing the cost of this business over time, one of the things you have to get rid of and smart program is going to help do that is, staying the course and smoothing over these stops and starts that we experience in the market because it's really inefficient. It does spawn a little bit of creativity and ingenuity, but at the end of the day what it really does is it really hurts, local installation jobs across the board. So, then what I would ask Michael is, to provide more transparency around and be more actively involved in developing some of the DPU related rules that need to be put in place before you know somewhat as a financier can really understand and start to underwrite the smart program. So, this has to do with the details around, where the utility meter is going to go? And how long is it going to take for that meter to be installed? And what happens if it doesn't get installed in time? And what is really the definition of a bill credit in the smart program? And where is that going to show? And how does that differ from a net metering credit? And how are these programs going to interact? I think they've done a great job, and they've passed the ball over the DPU, they still have to go through the option process as well but I'm confident that they're going to get that done. But the DPU to me is a bit of a black hole in terms of what they're going to do and how they're going to ultimately carry the ball across the finish line and get this implemented. YANN: Sure, before we take some questions, where is Sun wealth in two years? ABE: So, Sun wealth in two years is based out of Davis Square and Somerville mass and-- JOHN: Is that close to your house? ABE: It's within four miles in my house yeah, it's mile walk and two t-stops some it's great. And we are-- we basically in two years we have funded including our pipeline close to 100 million dollars of deals and these include commercial and seeing ideals that range from projects with-- we just finished two fire departments in upstate New York to small municipalities. We did a water treatment plan people are like, wow! That must've been a big project 170 kilowatts cover the entire load for that water treatment plan. We continue to grow our portfolio of houses of worship we're now at about seven that's probably in the 20s or 30s by then, we have a great relationship with Boston Properties, where they've gotten tired of issuing RFPs for essentially 100, 150 kilowatt projects and as long as we can meet their numbers they'll continue to work with us, they have some great tenants. We just finished the project on the Clarke Shoes headquarters on 128, using Panel Claw racking system out there. And, we are also starting to do what we call solar access. So, you know when you dig a little deeper the undeserved commercial solar market, you really have an undeserved solar market. That if you spend a little time you can figure out ways to finance. So, we're doing a lot of low to moderate income homeowners and the way we are doing it, is that we are leasing their roofs, we're putting a separate meter on for the solar project and we are giving them a percentage of the net metering credits generated by the project. So, it simplifies the underwriting process, it gives them a guaranteed benefit in the project. Probably much better than they would get through a standard power purchase agreement and then we aggregate all the remaining net metering credits and we sell it to a credit worthy entities, such as the city of Somerville or someone like that. So, it's reverse community solar almost, where we'll have 25 projects and then a single off taker for all the power from those deals. YANN: Interesting, so I appreciate your time John, just so that everyone knows, because I do talk to a lot of people in the space. The reason I wanted John to tell the story is, even though he's targeting the C&I space, he might have the best terms on tax equity in the entire solar space and that includes the really large-scale developers and I'm hearing-- this is what I'm hearing directly from tax equity investors. So, you know just because the market says one thing, doesn't mean that if you have a good idea you can't execute in a different way. A lot of people don't achieve it, but at the end of the day you have and for that congratulations. ABE: Thank you everyone. [Applause]

This is your SolarWakeup for December 1st, 2017

SEIA Board Elections. Today is the last day to vote for the elected seats of the SEIA board. I do not know all of the candidates but I know too many to tell you who to vote for. So let me highlight the folks I know, that read SolarWakeup, or have introduced themselves to me in advance of this writing. The top story today is the link to the login for your SEIA membership so you can vote. Please do so. In general, I would recommend you vote for people that have helped you move your business forward, have gone out of their way to advocate in your State or helped the industry even if it didn’t look like it would help themselves. In no particular order, my highlights below. I do ask you however, that you vote for Kendra Hubbard, my reason below.

Kendra Hubbard. Currently with UniRac, Kendra is passionate about solar. I first met her at InterSolar when she came to the conference even though she wasn’t working in solar yet but knew she wanted to get herself into it. I’ll never forget sitting at the dinner speaking with Kendra and wondering to myself who would do such a thing. Kendra should be on the board, her passion is needed and I hope you will cast this vote for Kendra.
Chris Diaz. Chris has been in solar a long time a Principal at Seminole Financial based in Florida.
Bret Sowers. Bret is with Southern Current and works very closely with Solar Powers America, the PAC working to educate legislators on a bipartisan basis.
Tom Hunt. Tom is with Clean Energy Collective  based in Denver and a loyal reader of SolarWakeup.
Adam Shor. Adam is based in Golden, Colorado and Principal at Shor Power.
Brad Stutzman. Brad is the COO and co-founder at O3 Energy based in Dallas, Texas.

DC Agenda Is Final! We will have 5 fantastic conversations. Three 1 on 1 interviews and two discussions with two speakers joining me. The interviews are with Amy Harder of Axios, Congresswoman Gonzalez-Colon of Puerto Rico and Andrea Luecke of The Solar Foundation. The discussions will be about how 100% renewable energy is feasible and what would need to happen to execute on this and what it will take to reinvigorate the Maryland solar market. Join us if you can, we added a few more seats for last minute registrations.

Sponsored by Mintz Levin. Mintz Levin is an Am Law 100 law firm with a nationally recognized Energy & Sustainability Practice that has completed more than 500 transactions across energy sectors totaling over $7.5 billion since 2006.

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Have a great day!
Yann

This is your SolarWakeup for November 30th, 2017

A Carbon Tax. Amy Harder, who is joining us next week at SolarWakeup Live, has an interesting top 4 list of reasons why a carbon tax is hard to come by. The first two are primary examples of where we fall short as a solar industry. Political capital still remains on the sidelines for our sector but I hope that changes soon. Educating politicians of the political power of clean air and clean energy means showing them the voters will follow. Part of my conversation with Amy will be about this topic, where the lobbying on clean energy finds openings with republican legislators.

Problematic Tax Language. Language called the ‘Base Erosion Tax’ has shown up in the tax reform bill floating in DC currently. This complicated language appears to cause a quasi alternative minimum tax for multinational corporations. Amongst other things, it hurts the market for domestic deduction and credit investments like the solar ITC. The tax reform conversations are very frustrating because our code is used as an economic development tool. For centuries we have focused tax credits and deductions on sectors we want to see growth in. If we remove the supply of demand, by lowering tax liabilities, then growth in these sectors will slow as well.

The Massachusetts House. One of the things that I gathered from my interview with Senator Boncore was his description of the process to raise the NEM caps. While there was some view on how the Senate could move this forward, he sounded skeptical about the potential of getting the house to do the same. Listen to the interview to hear the skepticism yourself.

New Trade Info. The nuances are getting a bit legal but as I read between the lines, I see a less bureaucratic approach from the trade rep. In asking for the details that led to the complaint by bankrupt Suniva, now owned by an offshore hedge fund. The ask is to find “unforeseen developments” causing the alleged injury. With two prior complaints about dumping, there is hardly anything unforeseen and furthermore begs to ask why Suniva didn’t participate in those prior cases.

Another Coal Plant Closed. This time We Energies has announced the closure of 1.2GW coal plant in Wisconsin, to be replaced by gas and renewables.

Presented by MMA Energy Capital. At MMA Energy Capital, we partner with developers, EPC contractors, and system owners to provide project capital necessary to develop, build, and operate world-class renewable energy systems. We are currently hiring at our growing company.

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Have a great day!
Yann