Signs of Recovery in Commercial Solar?

19 August of 2009 by

32 Signs of Recovery in Commercial Solar?

On August 13 of this year, Renewable Ventures (formerly MMA Renewable Ventures) announced a long-term power purchase agreement (PPA) with NV Energy, Inc. Renewable Ventures will fund, own, and operate a 26-megawatt solarpower plant northeast of Las Vegas. The Apex, NV plant is expected toprovide 200 new jobs and power the equivalent of 5,000 homes.

This is good news for Renewable Ventures and the commercial solar sector in general. Renewable Ventures describes itself as an Independent Power Producer(IPP) that develops, owns, and operates solar power plants atcommercial and utility sites.  They sell power to a host customer orutility through a long-term agreement. They are among 12 – 15 commercial US “PPA Companies” capable of funding such agreements.

Renewable Ventures surprised many by entering the Nevada market,first at Nellis AFB in 2007 and now at Apex, NV.  Many solar developersshun Nevada in favor of California’s higher net metering rates andproduction based cash incentives.

However, NV Energy purchases renewable energy credits (RECs) to meetNevada’s Renewable Portfolio Standard (RPS).  Rather than build solarfacilities, NV Energy meets its renewable energy obligations bypurchasing clean power from independent power generator and paying apremium for clean power in the form of RECs.  In 2007, MMA madeinnovative use of RECs to finance the Nellis project.

2009 has been a tough year for commercial solar.  PPA Companies providing power purchase agreements are backed by complex funding commitments with major banks.  Asthe banking crisis deepened in November of last year, only 4 of the 20banks funding commercial solar installation were still in the game.

As a subsidiary of Muni Mae, MMA Renewable Ventures may have alsobeen adversely affected as the Federal Reserve sorted out Fanny Mae andFreddie Mac.  Though Muni Mae appears to have survived, it sold its LowIncome Housing business and MMA Renewable Ventures, both powered by taxsubsidy financing.

In stepped Fotowatio, a global renewable energyproducer operating in the United States and Spain.  With theacquisition of MMA Renewable Ventures and its solar holdings,Fotowatio’s global portfolio will total more than 130 megawatts ofsolar installations.  Fotowatio also claims another 1,000 MW in somestage of development across the United States, Spain and Italy. Companypress claims investments of over $880 million in solar projects since2006 and plans to invest up to $3.2 billion by 2012. Fotowatio isone-third owned by GE Energy Financial Services.

Renewable Ventures has a short but storied history. As MMA, they were a leading provider of solar power purchase agreements(PPAs) in the commercial sector with over 16 megawatts (MW) ofinstalled power in 2008.  Only SunEdison installed more commercial MWin 2008.  Customers included Macy’s, the Denver Airport, theGAP, and Global Solar’s manufacturing facility.  In 2007, theycompleted the much-heralded 14.2 MW facility at Nellis Air Force Basein Nevada.

In October of 2008, MMA formed Gemini Solar, ajoint venture with Suntech Power Holdings Co. to develop and financephotovoltaic projects over 10 megawatts.  Suntech Power Holdings is theworld’s largest manufacturer of photovoltaic (PV) modules.  Gemini’s first project will sell the electricity to Austin Energy under a 25-year non-escalating power purchase agreement. Gemini will own and operate the 30MW power plant. Construction is schedules to begin in 2010.

In March, Renewable Ventures in association with Namaste Solar,Greenprint Denver, Oak Leaf Energy Partners, SunPower Corp., and XcelEnergy completed a 300 kW installation on the Colorado Convention Center. Renewable Ventures financed, owns and operates the system and sellspower to the convention center through a long-term contract known as aPower Purchase Agreement (PPA).

For PPA Companies, tax subsidy funding is essential.  In earlyAugust, Renewable Ventures announced new funding commitments from WellsFargo and John Hancock totaling $200 million.  Designated as Solar FundV, this commitment includes debt financing from John Hancock and equityfunding from both Wells Fargo and Renewable Ventures.  A joint press release suggests that this fund will produce 35 MW in new installations over the next year.The first installation is a 2MW installation that will sell energy toColorado State University in Fort Collins, CO, and renewable energycredits to Xcel Energy.  Completion is expected this year.

All of which might total 65 megawatts over the next 18months or about 40 MW per year or roughly twice the installation rateof 2007-2008.

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