Solar Industry Tackles Financial Barriers by Merging Two Key Organizations

The alphabet soup of solar industry organizations just got a little bit less cluttered.

The Solar Energy Finance Association has been working to break down barriers keeping solar companies away from the cheap capital they need to grow. That's also been an increasingly critical goal of the 42-year-old Solar Energy Industries Association. Instead of pursuing these goals separately, the two have decided to join forces.

As of January 3, SEFA will convert into a committee-style body housed under SEIA's organizational umbrella and dubbed the Solar Energy Finance Advisory Council. All you have to remember is SEFA has become SEFAC, part of SEIA. More succinctly, consider the mnemonic “SEIA later, SEFA.”

Funding and staff limitations drove SEFA to band together with the larger industry group to pursue their joint goals, said SEFA President Mary Rottman.

“As a newer organization, sometimes it was a struggle to have the resources to implement our ideas,” Rottman said. Now, “We can focus all our energies on the problems at hand in solar finance and not as much on the day-to-day running of the organization.”

Rottman and the SEFA team will be able to join the new council, which will be overseen by Mike Mendelsohn, SEIA's senior director of project finance and capital markets. Since this is a SEIA team, people will need to be SEIA members to participate, but most of SEFA already was, Rottman noted.

That points to another benefit of the merger: simplifying the list of organizations that solar industry members need to be a part of.

“We no longer have to explain why these two organizations exist,” Rottman said. 

It's a particularly friendly takeover because Rottman and Mendelsohn have known each other for years.

Mendelsohn previously worked at the National Renewable Energy Laboratory, where he got a SunShot grant to run a Solar Access to Public Capital working group. Rottman served as a consultant on that project, which convened 500 members spanning investors, solar companies, law firms and credit rating agencies to tackle the kinds of questions that SEFAC will address.

Much of the agenda is yet to be decided, pending the wishes of the members, Mendelsohn said. Some of the work will focus on easing the industry's path to more complicated financing tools, like asset-backed securities, warehousing structures and private placements. The bread-and-butter task, though, is convincing investors who haven't made the leap that their money is safe with solar.

“We would love to open up tax equity and increase supplies from mid-tier banks and corporates that have not been in the asset class,” Mendelsohn said. “We want to be the conduit so the solar industry can speak to the investment industry in a clear and well-formed voice.”

That entails educating investors on the technical and credit aspects of solar power, and providing data where necessary. A particular frustration for solar companies, Rottman said, is when lenders require more “bells and whistles” in a solar contract than they do for comparable asset classes. This makes the contracting process unpredictable and more expensive.

SEFAC can address that challenge by showing investors the ways in which solar systems behave similarly to more traditional asset classes, like real estate or equipment, in terms of cash flow, asset ownership and other key characteristics.

“If you can show them a parallel risk, a parallel business model, it helps them understand and tell the story to whomever they're working with,” Rottman said.

from GTM Solar https://www.greentechmedia.com/articles/read/solar-industry-tackles-financial-obstacles-by-merging-two-key-organizations

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