FINANCING: Partnership hires Zorya to refinance operating C&I portfolio

Blockchain-powered renewable investor Plural Energy, a new investment platform for renewable energy projects, has appointed Zorya Energy Advisors as its financial advisor to facilitate a partnership with Solaris Energy, said the company’s CEO and Co-Founder Adam Silver in an interview with NPM.

The partnership is looking to raise up USD 2.3m in debt and USD 900,000 in equity to refinance a portfolio of eight operating C&I solar projects across Colorado, Virginia, Oklahoma, New Jersey, and Arizona. Solaris would then retain its 10% equity stake in the 2.3 MW portfolio.

The debt raise is expected to be in the USD 1.9m to USD 2.3m range.

All of these projects are operational as the oldest one went online in September of 2014, and the youngest in December of 2018.

These projects are all under PPA’s with universities, tribes, community centers, municipalities, nonprofits, and other commercial organizations. The shortest contract ends in 9 years, and they are all expected to be renewed.

This capital raise will refinance the projects so Solaris can maintain 10 percent ownership and full operations and maintenance of the projects.

Plural will manage subscription agreements with investors and the digital team built a payment infrastructure to allow the renewable energy developers to directly pay their investors.

Plural is also in negotiations for another contracted portfolio set to be signed in the coming months, which will expand Plural’s reach over state lines. This is part of Plural’s overall pipeline worth USD 150m.

Solaris CEO and Co-Owner Nick Perugini explained in an interview with NPM the rules involved in crowdfunding are extensive and it is difficult to maintain compliance with SEC regulations, and this partnership is allowing the developer to sell only a portion of the assets instead of the entire portfolio to raise capital.

“Because of the investment tax credit rules and recapture rules specifically, an owner cannot transfer assets without running into penalties prior to about five and a half years, so these are all out of recapture,” Perugini said.

Perugini went further to say he always predicted a secondary market for operational solar projects after the recapture period of five-and-a-half to six years, but he has not seen the concept materialize to the extent he thought it would.

However, this deal is giving him hope there will be more platforms for it.

Next up for Solaris is completing another 20 MW of total capacity in the next two years. The company remains active in New Jersey, Massachusetts, Vermont, California, and Arizona and is also viewing Colorado, New York, and Connecticut for expansion. “This also includes an expansion into storage,” said Perugini.

C&I sector views

Plural’s Silver said C&I developers are often challenged to build a strong balance sheet, as they get caught in a cycle of raising capital to build, getting a project to NTP or COD and the only way they can access capital to keep the lights on or build another project is by selling out of their position completely.

When developers do not have active assets on their balance sheet, it can be harder to engage with capital markets, access debt, and to prove their track record as an operator.

“We see that happen across the space,” Silver said. “There is increased bifurcation between developers and asset managers or IPP's. We are really hoping that essentially, through this mechanism, there is more flywheels of capital going into projects and there is an easier way for these small to mid-scale projects and developers to engage with capital markets.”

Through Plural’s secondary market, developers can expand their position, buy more shares, and grow cash flow, and add equity to a portfolio to their balance sheet.

Before the launch of Plural, Silver’s team spoke to investment bankers and developers, who said banks only enter deals worth over USD 100m, leaving the distributed part of the market underserved by the capital markets.

Plural was founded to fill this gap, and Silver plans to continue executing small to mid-scale renewable deals on their platform.

In some cases, people will be able to invest as little as a few USD 100 in solar, with the same returns and the treatments as anyone else. This platform is also attractive for developers because all of the projects are operating, cash-flowing projects with a data history for investors to analyze themselves on the website.

The primary focus for the platform right now is equity, but Silver also plans to expand into debt and other models around virtual PPA’s.

*This story was originally published exclusively for NPM subscribers last month.

NPM US (New Project Media) is a leading data, intelligence and events company dedicated to providing origination led coverage of the renewable energy market for the development, finance, advisory & corporate community.

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