December, 2015

Solar Energy Infrastructure Fund

Over the last 10 years the cost of solar energy has come down significantly, to the point where in some states today solar is less expensive than buying off the grid. Technological advancements have made for panel life spans of 35 years, so the revenue streams attached to solar projects can have contractual cash flow for more than 20 years. For that reason, current generation commercial-grade solar assets are attracting buyers. With all utility providers now operating under a renewable energy mandate, they will increasingly be aggressive buyers of renewal energy projects in the years ahead.

We identified and funded an organization that actively finances, constructs, and owns more than 60 solar projects, primarily in the northeastern United States. These properties, as well as a large pipeline of new acquisitions, are located in states with high electricity rates where solar power is already price competitive. The strategy is to acquire concentrations of assets in these states, recognizing that the local utilities will be active buyers of solar assets over time as they seek to satisfy mandated renewable energy. These properties come with contracted cash flows of 20 years plus various tax benefits that flow through to the owners. We expect annual tax-advantaged distributable cash flow to be 10%-12% with modest leverage and an annualized return of 15%-17% over the life of the fund.