Mainstreaming Solar PV: Assurant Joins truSolar Underwriting Initiative
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Led by Distributed Sun and DuPont Photovoltaic Solutions, the truSolar consortium of 16 leading solar industry participants have established a working group that aims to address “a broad array of project risks through the development of uniform standards that will facilitate lower transaction and capital costs, and improve project finance liquidity within the commercial and industrial solar segment.”
Joining the founding members’ group, commercial solar PV insurance and emerging integrated PV project services provider Assurant, Inc. on January 23 announced it’s joining truSolar, “the first industry-wide effort designed to increase available capital for solar project developments.” Also included are credit rating agency Standard & Poors and Solar Mosaic, another solar energy finance innovator that recently had great success in launching the nation’s first online retail investment marketplace for solar energy projects.
Standards, Framework for Underwriting Solar PV Emerging
Shaping up to provide what may prove to be another catalyst for accelerating growth in residential and commercial US solar photovoltaic (PV) installations, the truSolar consortium will “address a comprehensive range of commercial and industrial-scale project risks that have prevented more lending institutions from participating in the industry,” according to an Assurant press release.
The lack of a historical track record of financial, technical, and operational performance data on solar PV projects and installations has held back banks, insurers, and credit rating agencies from getting more actively involved in financing residential and commercial solar PV projects, according to group members.
That’s changing for the better with the fast-rising popularity of third-party solar leasing and community solar programs, as well as efforts to expand solar PV financing vehicles to include Master Limited Partnerships (MLPs) and Real Estate Investment Trusts (REITs).
“The consortium is an exciting step forward for the industry, and we are thrilled to take part in the dialogue to develop uniform project standards to encourage solar project development,” Jeanne Schwartz, Assurant’s vice president of new venture commercialization, stated.
“More than 95 percent of the country’s lending institutions have been sitting on the sidelines watching the solar industry’s rapid growth during the past few years. To improve participation and fuel continued growth, the industry needs to adopt these standards to deliver greater efficiency to the loan underwriting process.”
More specifically, the truSolar consortium aims to develop and field test a standard framework for assessing the viability of solar energy projects that encompasses solar project credit screening, rating, and underwriting standards. TruSolar anticipates developing and testing the standard framework this year and transferring it to a standards body in 2014.
Bringing together a diverse range of organizations wth expertise spanning solar and renewable energy, business management, and finance, truSolar’s founding members also include ABB, PanelClaw, SMA America, Booz Allen & Hamilton, Rocky Mountain Institute, the National Renewable Energy Laboratory (NREL), and Sandia National Laboratories.
Integrated Bundle of Services for Commerical Solar PV Project Owners
Zooming in on commerical solar projects, truSolar consortium founding member Assurant, Inc. is helping pave the way forward. Developing the methods and mechanisms required to provide insurance and warranties for commercial solar energy projects, Assurant has also partnered with solar PV operations and maintentance (O&M) specialist Solarrus and its True South Renewables subsidiary to offer operations and maintenance (O&M) services to project developers and owners.
In a December CleanTechnica interview, Assurant’s Schwartz and Solarrus VP of strategic planning Robert Forster explained that the two organizations are working to provide commercial PV project developers and owners a set of bundled services along the lines of a “one-stop shop.”
Offering a single point of contact and provider of commercial PV insurance, warranty, and O&M services all revolves around mitigating risk, Forster and Schwartz elaborated.
“We have an aligned interest in mitigating risk, and we believe we can be more efficient in doing so than an individual system owner having to contract for each one individually,” Forster said.
Gathering data to investigate the risks and pricing for their bundle of services, Assurant and Solarrus found the commercial segment of the solar PV market to be underserved. “We’ve targeted our offering to the commercial side… with annual premiums for our bundle less than 1% of projects’ total capital costs; more like 1/2%, actually,” Schwartz explained.
A comparison of solar PV system’s performance data from a project in Southern California in the year before and after True South began providing O&M services in 2010 revealed an average monthly improvement of 14%. “With a TOU/GS3 tariff set at 16.5 cents/kWh (kilowatt-hour), the True South Renewables O&M yielded an additional 152,789 kWh from the system, translating into $25,000 in additional revenue over the course of a year.”
Assurant has taken a gradualist, step-by-careful-step approach in its efforts to provide insurance, warranties, and other commercial PV services. “We got comfortable with modeling the costs of solar PV. We take small bites of the apple before we go into a new field,” she related.
Assurant has gone so far as to install and operate its own rooftop solar PV system, a 1.7 megawatt (MW) installation in Springfield, Ohio that’s still online. The experience has been “tremendously helpful,” Schwartz commented. “To be a customer ourselves has helped us see what’s needed in the marketplace.”
Solar PV Asset Management Program
The capstone, so to speak, of Assurant and Solarrus’ commercial solar PV services bundle is their asset management program.
“Whether a project owner knows it or not, there are mutliple activities owners are paying for,” Forster elaborated. “It starts with solar O&M, but financial administration, though less apparent, is costly and time consuming.”
Alongside Assurant’s insurance and warranty programs is Solarrus’ technical operations management service, which is run out of its network operations center. The final layer added to the service bundle is financial asset management.
“Very often these solar installations are an LLC (Limited Liability Company), a legal construct,” Forster explained, that often amounts to little more than a physical address and a skeletal administrative staff.
Covering the technical, financial and operations aspects of commercial solar PV projects in an integrated fashion at its network operations center “we can mitigate risk, optimize performance, and offer a better return on the capital the customer has invested in the project,” Forster concluded.
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