Two solar energy associations are joining together to create an advisory council meant to draw more investments to solar projects.
In an effort to increase funding for and lower the cost of harnessing solar power, the Solar Energy Industries Association (SEIA) is working with the Solar Energy Finance Association (SEFA) to form a new advisory council.
The Solar Energy Finance Advisory Council (SEFAC) will work with its members—consisting of SEFA and SEIA members, investors, and other entities—to explore new sources of investment and ways to reduce the cost of finding capital.
“We are excited to combine with SEFA for the good of the solar industry,” interim SEIA President Tom Kimbis said in a press release. “Solar projects represent a high-quality source of long-term cash flows, making them great investment opportunities. Through this finance advisory council, we aim to lower the cost of capital and make solar even more cost-effective for residential, business, and utility customers.”
Established jointly by both organizations, SEFAC will function as an entity within SEIA. Eventually, SEFA will also stop functioning as a separate organization.
“This is an important strategic move for us,” SEFA President Mary Rottman said in the statement. “Backed by the staff and resources from SEIA, we are very optimistic that we will achieve our mission of reducing the cost of capital and furthering growth in the solar industry.”
To open up new investment sources, SEFAC will expand tax equity—in which investors can fund solar projects in exchange for tax incentives—to midlevel banks and other corporations, find new sources of debt securities, and open new investment markets by educating investors on the technical and financial performance of solar-energy technologies.
“We’d like to facilitate opening up as many sources and different supplies of investment capital for solar deployment as possible,” SEIA’s Senior Director of Project Finance and Capital Markets Mike Mendelsohn told Associations Now.
“Capital formation for solar deployment is always challenging,” he continued. “There’s continually a constraint on availability of tax equity and complexities between raising debt and tax equity at the same time.”
Mendelsohn said SEFAC’s work will particularly benefit smaller entities working on solar projects, which struggle to attract investors to new projects because of their small project portfolios. But he explained that the challenge to draw enough capital at the lowest price still affects the entire industry.
Ultimately the hope is to help customers rely more on solar energy and reduce dependence on more harmful energy sources. “To reduce the impact of our energy economy, relying more on clean technologies will allow us to reduce our impact on the environment and the planet,” Mendelsohn said.