New, largely untapped source of tax equity and unique financial structure for the US market
Conergy, a leading global solar photovoltaic downstream company, along with its owner, Kawa Capital Management, Inc. (Kawa) has closed one of the first leveraged tax equity partnership structures with individual investors who could utilize the investment tax credits. This financial innovation will further broaden the types of solar projects that can be financed across the United States.
“This is a landmark transaction, one of the first leveraged partnership structures to successfully close with individual investors”, said John Marciano, Partner at Chadbourne and Park, LLP, tax counsel for Conergy and Kawa on the project.
Unrated credit customers with smaller solar projects are typically difficult to finance with tax equity. However, Conergy’s strong balance sheet and partnership with Kawa offers these smaller organizations customized economic solutions. Conergy organized the funding and management for the solar installation on the Oshman Family Jewish Community Center (JCC) in Palo Alto, California, enabling a zero dollars down, 20-year power purchase agreement (PPA) for the JCC that allows the JCC to save more than $26,000 in the first year of operation and more than $1.5 million over the term of the agreement from electricity cost savings.
“Conergy and Kawa’s goal in developing this new, largely untapped source of tax equity is to enable more organizations and businesses to have solar. The limited number of tax equity sources in the United States who prefer very large projects is a barrier to widespread solar adoption. Combining individual investor appetite for investment tax credits alongside debt from specialized financial institutions like Kawa in this new structure allows Conergy to uniquely finance projects that previously were too small for typical tax equity investors, or didn’t fit usual tax equity requirements. Solar projects that were previously considered un-financeable, can now be financed.” said Anthony Fotopoulos, CEO, Conergy Americas.
“Conergy’s expertise in providing complete solar energy solutions and Kawa’s financial structuring experience allows the Conergy – Kawa partnership to be a unique player in the solar energy industry. We have the ability to work with both investors and project developers or owners to build innovative financing solutions that work for all parties in a project.” said Andrew dePass, the partner at Kawa Capital Management responsible for the Conergy investment.
Conergy enabled the JCC to install the more than 1,800 solar panels on its roof without the large upfront cost. The 397.5 Kilowatt installation is expected to generate 616,920 kilowatt-hours of electricity, in the first year providing the JCC campus and surrounding community with 20 percent of its electricity needs. In addition to its financial savings, the JCC will reduce its carbon footprint by more than 3,000 tons of CO2 during the 20-year lease, which is the equivalent to planting 68 acres trees.
“This new financing structure is now available for our partners and customers. It will enhance and complement our recently announced Conergy Fund I as another tool in our toolbox that Conergy can use to broaden the definition of a “financeable solar project”. Financing innovations such as these are revolutionizing the industry by making solar an affordable reality. Conergy plans to continue to push the envelope and develop additional financing solutions to meet the needs of organizations of all sizes.” said Fotopoulos. “There’s no reason any building or land should be prevented from having solar on it should they want it.”
For more information on: Conergy