by Adam Jordan, Head of Commercial Solutions, Trina Solar
It’s no secret that the novel coronavirus has dampened solar industry growth, along with much of the economy. Despite this slowdown, C&I solar project developers and EPCs should remain on the lookout for new opportunities now. This way, projects can be shovel ready once the sector picks up again.
In addition, HVAC or electrical contractors may find this as the perfect time to start planning on how to enter the C&I solar market. It’s true that the on-going slowdown from the pandemic has put many organizations and businesses in a holding pattern as we await a full re-opening of the economy. However, there’s still a flurry of activity for networking and deal-making to get pipelines in place for this re-opening, and now’s the time for post-shutdown positioning.
Right now, the potential for C&I solar projects has never been greater — with a massive addressable market for the taking. According to a recent first-of-its-kind study by Wood Mackenzie and Station A, only about 3.5 percent of all commercial buildings have on-site solar. An additional 1 percent use off-site solar, such as community solar subscriptions.
The study’s authors analyzed the remaining market and found approximately 70 percent of commercial buildings, or more than 600,000 sites, remain as prime targets for solar projects. This figure excludes commercial buildings that lack the space for an on-site installation and those without the electricity needs to make solar a cost-effective option. The study estimates the remaining sites have the potential solar capacity for around 145 gigawatts. To put this into context, as of the end of 2019, the United States had around 71.3 GW of installed PV capacity.
While the pandemic has altered the C&I solar sector landscape, there are several options available to continue building pipelines for the future.
Credit Squeeze Could Mean Flight to Quality
Although C&I solar potential is high, there are obstacles to overcome.
One of the biggest hurdles on the horizon may revolve around solar project financing. Analysts expect debt financing to plateau as lenders take a more cautious approach due to the economic slowdown. As a result, there’s a chance tax equity supply might decrease. It’s too soon to forecast exactly how this will constrain project financing, but extrapolations can be made.
However, commercial operations still have an appetite for solar energy. From sustainability goals to renewable energy commitments, companies of all sizes are seeking ways to further decarbonize their businesses. As underwriting becomes tighter, this demand will drive a flight to quality. Now more than ever, lenders will look for projects backed by bankable solar companies with Tier 1 components.
In the past, smaller solar project developers and EPCs would have to work through distributors to obtain PV modules and components. But the current economic slowdown has been generally more favorable for larger contractors, leaving smaller ones behind.
As the next wave of commercial solar, Trina Solar’s C&I Solutions is a fully bankable solar offering that provides Tier 1 PV modules, along with the necessary inverters and racking, for developers of all sizes. This gives smaller project developers and EPCs, and even HVAC and electrical contractors, the opportunity they need to meet the growing commercial solar demand.
Preparing Your Solar Pipeline
Another origination factor to keep in mind is the growing number of portfolio transactions that include securitized solar assets. While it’s still early days for solar as an asset-backed security (ABS), many lenders and market analysts appear bullish on these financial instruments for long-term value.
Developers that can map their pipeline specifically for portfolio transactions can potentially get a leg up and gain better financing terms. With a well-defined pipeline in place, lenders and financiers can more easily bundle together several solar assets based on firm installation timelines and accurate energy projections.
Trina’s C&I Solutions helps streamline and shorten project installation timelines, while providing on-time component delivery. This allows developers to better plan their pipelines, which can make portfolio transactions more appealing for lenders willing to securitize solar assets.
Project developers, EPCs and even HVAC and electrical contractors looking for ways to originate new commercial solar projects can reach out to the experts at Trina Solar. With our vast network of partners, we can offer guidance on potential routes that might work and how Trina Solar’s C&I Solutions might be able to play a role.
Click here to learn more about the all-in-one C&I Solutions from Trina Solar.
This is the first part of a four-part series on C&I solar opportunities. Check back soon for more expert insight into this growing sector.
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