Accredited investors interested in solar energy projects will soon be able to tap into the fast-growing market through a new web-based platform from Wiser Capital LLC of Santa Barbara, Calif. Additionally, legislation recently introduced in Congress could make it easier for a broader audience to also directly invest in solar and other clean energy projects.

The market value of U.S. solar installations reached $11.5 billion in 2012, up from $8.6 billion in 2011 and $3.6 billion in 2009, according to GTM Research and the Solar Energy Industries Association (SEIA). Wiser focuses on mid-scale commercial photovoltaic (PV) projects––those valued at $250,000 to $3 million with systems in the 100 kilowatt to 1 megawatt range.

“It is one of the largest sectors and the most underserved,” says Nathan Homan, Wiser’s managing partner. He notes that mid-scale commercial PV has had a difficult time getting financing because institutional money flows into larger projects.

Wiser matches and works closely with three parties: host facilities (businesses that lease out their roof tops for solar panels and use the energy that’s generated); systems integrators (solar project developers) and energy investors. The firm piloted its program this past year. It plans to roll out its host facility and systems integrator modules this month and its investor module by early fall.

Due to SEC restrictions, Wiser may not describe specific investment opportunities or publicly solicit investors. Accredited investors and family offices who want to learn more about if and how they may participate in commercial PV development can establish a relationship with Wiser and explore project parameters including returns, terms and type of investment vehicles (equity, debt or tax shelter), says Homan.

"We are always looking to work with RIAs and financial advisors to understand and educate their clients," he says.

How It Works

Wiser creates, actively participates in, and manages LLCs set up to develop, own and operate sustainable energy assets. Accredited investors can respond to private placement memorandums and choose to purchase membership interests in these LLCs as the projects are being developed. Currently, membership must be purchased during development to preserve tax benefits.

The company assigns project rating scores based on the creditworthiness of a host facility, operating and maintenance costs, factors affecting the project development cycle and other criteria. It analyzes whether host facilities seem solvent enough to survive the term of a contract—often 20 years. It also helps negotiate power in a way that makes financial sense for the host facilities, says Homan, who describes the projects as “low maintenance and predictable.”

Wiser finds that projects with lower purchase price agreements (PPAs)—a determinant of cash flow—and higher rating scores can produce yields of about 8 to 10 percent, while projects with a richer PPA on a lower rating score might drive 12 to 15 percent returns, says Homan. 

There is no fee for any party to use the platform, but Wiser charges a monthly access fee for optional, additional tools it developed for systems integrators. Examples include financial and utility analytical reports, as well as tools that enable systems integrators to put together proposals and financing comparisons for their leads and clients. Wiser does not require a standard minimum investment but it is not a crowdsourcing platform, says Homan.

Other firms offering investments in solar projects include Oakland, Calif.-based Mosaic, which uses a crowdfunding platform, and Santa Clara, Calif.-based SCS Renewables/Mercatus.

Political Picture

For decades, regulations have permitted fossil fuel developers to create master limited partnerships, which offer favorable tax benefits and can be publicly traded. “It’s astonishing to us that renewable energy projects don’t have the same treatment,” says Homan.

The Master Limited Partnership Parity Act, re-introduced in April in the House and Senate, seeks to extend the MLP structure to clean energy resources and infrastructure projects. The office of U.S. Senator Chris Coons (D-Del.), the bill’s sponsor, did not return messages by press time.

Tim Urban, a partner and principal with Ernst & Young, has been very involved with speaking to U.S. House and Senate members and staff about the MLP Parity Act and is optimistic. He is a member of Washington Council Ernst & Young, a legislative advisory services group that helps its clients, including the SEIA and other renewable energy associations, manage risks associated with the legislative process.

Urban says the MLP legislation must clear two hurdles. First, it has to be well regarded and popular, which he believes it arguably is. “It’s the unicorn of renewable energy tax proposals because it has broad bipartisan support across the political spectrum,” Urban says.

Second, he notes, it needs to find the appropriate legislative vehicle to be attached to, such as a tax bill with an energy title or an energy bill with a tax title.

Urban doesn’t expect action on the MLP legislation until the fall, at the earliest, but he’s confident it could be passed at some point. “In this business, you never say anything is a sure thing,” he says, “but if you look at this proposal, it shares the characteristics of many popular proposals that have been enacted into law.”

In addition to having bipartisan support, he says, it affects more than a narrow group of recipients and it’s a move toward the simplification and fairness that other energy projects and investors are already receiving.

Homan agrees. “Being able to offer renewable energy projects with an MLP structure would greatly simplify the transactions and bring a much greater audience to the space,” he says. He also thinks it would stimulate job growth and prompt more innovation in related technologies.
Homan recently met with his congresswoman and the U.S. Department of Energy, and will continue to push for reform. “We would like someone to step up with us and get involved,” he says.