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Want to do more solar in the C&I sector? Good luck finding a credit rating for most of your would-be offtakers. The finance sector uses a Moody’s rating to assess credit risk for commercial entities; this is the corporate equivalent to a FICO score, and it’s something that is not so common to find for smaller companies. Yet, if we can achieve this level of “bankability” broadly in the C&I sector, it would unlock massive potential for developers who could target a wider range of potential solar clients.
Why does bankability matter for financing these systems? Simply put, the banks want to know who will cover the revenue stream if that local business (Offtaker) defaults on payments. Kind of like a landlord still wanting to get paid even if the tenant can no longer pay - today’s guests have innovated around the downside risk of the solar offtaker revenue stream.
Jeff McAulay and Jim Bowen are back on SunCast to discuss how we can reach more Commercial & Industrial (C&I) customers and accelerate the adoption curve for this critical segment of the industry. I’ve had Jeff on the show before talking about how, through their company Energetic Insurance, they have helped developers improve the credit rating of their solar clients such that they are able to do more projects more quickly. Today Jeff & Jim talk about how the solar market is evolving to address our collective ability to reach more clients faster within the C&I sector. Among the questions we touch on in today’s discussion are:
How do you evaluate the risk of unrated solar projects?
How do you move at the pace of startup in an otherwise glacial industry?
How do you innovate on an existing product (credit insurance)? \
What shifts are they seeing in the industry, and are they achieving commercial traction?
How does Tax Equity play a role?
How has the rise of ESG increased capital available to build projects?
And what Trends are they watching unfold?
This is a fun discussion that I hope will equip you to better understand & execute on solar projects for the C&I sector. I’d love your feedback on whether we hit the mark, or what other aspects of this subject you’d like to see us cover here.
Timestamps
(4:45) The product of insurance
(7:30) How the Energetic Insurance team come togethe
(9:36) Jeff's background
(11:34) Jim's background
(12:59) How property ownership can affect a business going solar
(17:26) What makes Energetic Insurance different
(20:05) Is project size a critical element?
(22:03) Clarifying what is covered under Energetic's insurance product
(24:11) What Energetic Insurance is focusing on
(25:51) How market volatility affects the developer
(29:18) The biggest ah ha moment
(30:01) Leveraging financial products to increase cash flow
(32:19) Wrap up
PODCASTS MENTIONED:
Episode 206 - Unlocking Financing For Unrated Organizations [SPI 2019]
NOTEWORTHY QUOTES:
“The really interesting thing about insurance, if you think about it, is we shouldn’t have a sweet spot. We need diversity. We need different industries, different geographies, different sizes. All of those are different types of risks. We want small, medium and large projects. And collectively, we build a diverse portfolio of insurance assets. ”
“Coming from that customer focused project development perspective, we invented the insurance policy that we wanted to buy. So imagine that, an insurance policy that you actually want to buy, because it helps enable something that is essential for your business.”
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ABOUT THE HOST OF SUNCAST:
Nico Johnson is the creator and host of SunCast, consistently rated a top solar podcast in the clean energy sector. The content of the show is geared towards listeners looking for insights on where the markets are headed, how to position themselves or their companies, and what today's market leaders do to stay ahead of the pack.
Nico is an Investor, Executive Coach, and 15-year veteran of the solar industry, having led development in the US and Latin America for global companies like Trina Solar and Conergy.
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