2015 is gearing up to be a very interesting year for the United States’ solar Market. The US installed 6.2 GW of solar in 2014, that’s a 30% increase over installed capacity in the previous year. All available indicators point to even more capacity added this year. Solar modules and installation costs have decreased dramatically, allowing for solar to become affordable in many states where it previously hadn’t been. While the residential (2-10 kW) and large commercial (5MW+) sectors have experienced consistent to explosive growth, the light commercial sector has lagged behind. The NY- Sun Initiative is making strides to tap that middle-market sector.
Due to solar’s significant up-front costs, installations have generally been financed either through loans or 3rd party PPA’s. Financiers in residential projects rely on FICO scores to qualify projects. Large companies or municipalities with investment grade credit ratings are the hosts for large commercial solar projects. Small- to medium-sized businesses rarely, if ever, achieve an investment grade credit rating; leaving millions of US businesses locked out of participation in the solar market.
In August of 2014, Governor Cuomo announced the NY-Sun Initiative. The statewide solar program provides $1 billion in new funding to build 3 GW by 2023. Light commercial projects up to 200 kW will benefit significantly from the availability of these funds. Developers are already feeling the impact of the initiative. Two regionally based developers, Sustainable Energy Developments and RER & Sunvestment Group are playing a major role in the development of the light commercial sector.
Kevin Schulte, CEO of Sustainable Energy Developments, a New York-based contractor says, “[Our staff] grew to 42 people last year and we are continuing to grow. We are a company on the rise and a lot of that is attributable to the benefits of the New York Sun program.” Jim Kurtz, Founder and CEO of the RER Group and Sunvestment, echoed the sentiment, “We are appreciative of innovativeness of the New York Sun Program that is being pursued by Governor Cuomo. The full spectrum of benefits including grants through NYSERDA, financing options available through the Green Bank and the state of New York are moving ahead and pushing the message that solar should be pursued throughout the state.”
Light commercial is a niche sector where some of the large national developers are not currently focused. Programs like NY-Sun Initiative give local, regional developers space to grow and establish a footing in the industry without being crowded out by the economies of scale the big national firms bring to bear. According to Kevin Schulte, “We focus on the different pieces of the Sun New York program. There is a place for up to 200 kW projects on the commercial side. We like the market opportunity, particularly in Western New York, where you have a lot of small to midsize businesses.”
RER & Sunvestment group is an example of a regional player looking to seize this new opportunity. RER group is an installer and Sunvestment group is the financing company focusing on allowing community members to complete the financing of their projects. “The light commercial space is a niche that is underserved. We are focused on this niche,” said Kurtz. Sunvestment group has received a US Department of Energy “Sun Shot Initiative” grant for pioneering a new model of bringing local investors to solar projects.
The New York Solar market is expanding, in no small part, due to the NY-Sun Initiative. New York is proving that local and regional players have a role to play in the solar revolution. Developing solar capacity for the light commerical space is a near-term challenge, but New York and the regional players empowered by the NY-SUN Initiative are positioned to address this perennially underserved market.
