An AVANA Focus: Solar Power Energy

An AVANA Focus: Solar Power Energy

Closing the Year Strong

In a year of unprecedented change, the AVANA Family of Companies have had a tremendous year serving our client’s needs in our core industries.  We have been especially pleased with the number of projects we have been able to contribute to in the clean and renewable energy space. AVANA Capital has a long history of investing in renewable and solar energy, expanding economic and investment opportunities to a greater number of people, creating jobs, and ultimately a more sustainable future. Investing in and supporting economic, social and governance (ESG) projects is a cornerstone of our organization.

US Government Doubles-Down on Solar

By now, you have likely heard about the recent blueprint announced by the Biden administration outlining an ambitious call to address climate change by prioritizing solar power energy. The president has called for 100 percent of the nation’s electricity infrastructure to come from clean energy by 2035. The plan is to increase the use of solar energy to a level of half of the nation’s electricity by 2050.  

This bold plan, which will elicit forthcoming policies to decarbonize the country’s energy, will require a “massive and equitable” deployment of renewable energy. Steps to implement this have already been laid out in the bipartisan Infrastructure Investment and Jobs Act, which will soon be voted on in the House of Representatives.

This is the latest sign showing government support for sustainable energy investments and development is at an all-time high. Global momentum continues to build in sustainable energy investment.

The Solar Rising Tide

The federal government is only the latest facet of society to make a strong pivot toward clean energy. Many other factors have been driving the growth in sustainable energy as well.

1. Finance and investment sectors are also driving this shift to green energy with large private equity firms requiring their portfolio companies to report on ESG (Economic, Social, and Governance) indicators, demonstrating their businesses contribute to holistic, positive gains in communities, not profits at the expense of people, ethics or the environment.
2. Economic analysts have found that strong ESG performance correlates to higher returns on investments, lowered risks, and better crisis resiliency. Growing evidence shows that companies who have strong ESG indicators perform better financially. The bottom line is that climate risk is seen as investment risk, and investment in sustainable energy is rapidly increasing. In fact, the clean energy industry continued to receive increased capital allocation despite a volatile global economy during the pandemic’s downturn.
3. The Energy sector is accelerating in its transition from a fossil fuel, dominated industry to renewable and clean energy around the world. Both the economic benefits and concerns around Climate change are major drivers of this conversion to renewable energies. Consumers, Utilities and Corporations are all leading these investments.

Solar Industry Buzz on the New Plan

A new Department of Energy (DoE) study reflects the president’s vision to reshape the U.S. energy infrastructure and curb climate change. DoE released the Solar Futures Study, which found that “aggressive cost reductions, supportive policies, and large-scale electrification” could drive solar energy to produce as much as 40% of the US’s electricity supply by 2035.

Other important points of the study include:

• The plan would require the US to double its solar power every year for the next four years (using 2020 levels as a baseline), and then doubling it again by 2030.
• Analysis shows that the United States can scale up production of solar panels, which currently provide 3 percent of the nation’s electricity, to 45 percent over the next three decades.
• Solar deployment has grown more than tenfold in the U.S. with more than one million solar installations currently operating across the country. The cost of solar energy has also dropped as much as 65% in the past decade.
• The report imagines a 2050 in which solar power supplies 40 percent of the nation’s electricity, while employing somewhere in the ballpark of 1.5 million people.

How Do We Reach This Goal?

In 2020, solar energy represented just a 2.3 percent share of utility-scale electricity generation.

Solar energy production and installation will have to significantly ramp up to meet the demands that are currently being made by both the private and public sectors.

 

Cost reduction and financial innovations have cut the cost of clean energy to customers and businesses over the past 2 decades. Together with our lending partners, we are confident we can support the energy transformation by providing financing and loan products to experienced solar energy developers.

AVANA’s Core Mission and Special Industry Niche

We can help reach climate goals faster and ensure our clean energy future is reliable and affordable for all Americans.

AVANA focuses on solar, renewable and natural gas energy. We finance projects on energy efficiency, energy storage and batteries.

AVANA’s renewable energy team was able to support these projects by providing them with:

• Construction loans via AVANA Capital; and,
• Term loans from Extensia to support the projects for up to 25 years.

With typical loan sizes ranging from $1MM to $50MM, AVANA takes a problem-solving approach to provide creative solutions with flexible terms and efficient timelines, ensuring business success.

AVANA Capital partners with developers, EPC contractors, equipment manufacturers and system owners to provide project capital to create, build and operate renewable energy facilities across the country. AVANA Fund provides Environmental, Social and Governance (ESG) investment opportunities in senior commercial loans secured by utility scale renewable energy projects across the United States. The ESG Fund offers attractive risk-adjusted returns while deploying capital which positively impacts the communities around us through job creation and the expansion of the nation’s capacity for the production of clean energy.

Our why:

• Fostering the energy transformation from oil and gas to renewable and clean.
• Measurable and observable effects of climate change
• Committed to the sustainable/ESG sector
• Industry is downturn resistant in a volatile global economy
• 52% Average Annual Growth in the Solar Industry since 2006, when the US Solar Investment Tax Credit were enacted. – Solar Energy Association Industries

What we offer:

• 7-25 year, permanent loans through Extensia, the credit union arm of AVANA Companies
• Pre-NTP loans (notice to proceed) funded through AVANA Capital
• $1-50 million dollar projects

Featured Project – G&S Solar and Investors

Recently, AVANA Companies partnered with G&S Solar and Investors, a real estate and renewable energy developer and investor, to finance a large portfolio of rooftop community solar projects. With an estimated total cost of over $50M, 60 projects are planned to be installed in the New York City area, with some in the construction phase already underway. When the 60 solar sites are fully launched, this solar portfolio will generate over 26,000,000 kWh of electricity per year for participating New York City residents.

Walter Cuculic, AVANA’s Executive Vice President of Renewable Energy, recognized the high value of this project, along with the developer’s experience and track record to bring these projects to completion, and knew that AVANA could help make this happen.

Developers like G&S Solar bring additional revenue opportunities to building owners by leasing building owners unused rooftop space for their solar projects. Instead of using farmland or undeveloped land, G&S Solar partners with building owners. G&S Solar creates revenue by selling electricity under New York’s community solar program. It is from this revenue that they then make lease payments for the unused roof. 

Once G&S Solar finishes completion of the solar projects they can now sell their electricity to renters, condo owners, and even other businesses. The individuals and businesses buy this electricity at a 10% discount to their usual cost of electricity. This allows everyone the opportunity to save money by accessing the clean energy produced by the G&S Community Solar Projects.

Borrowers, like G&S Solar, are drawn to Extensia & AVANA because of our deep knowledge and experience in the energy sector from our industry leaders. AVANA is seen as a lender who understands the nuanced business models of renewable energy developers.

Join Us

AVANA Companies have a long history of financing renewable energy, expanding economic and investment opportunities to a greater number of people, creating jobs, and ultimately a more sustainable future. We collaborate with a diverse group of skilled professionals to foster our mission to support industries that bring value to communities like financing diverse renewable energy projects.

Over the last 4 years, AVANA has financed over $550MM in ESG projects within the solar, biogas, and energy-efficiency equipment sectors. We are committed to growing our investment and financing clean energy in the future, with a target of $500MM annually in renewable energy financing going forward.

AVANA’s number one goal is to promote local ESG (Environmental, Social and Corporate Governance) investment opportunities for the benefit of our communities. AVANA aims to educate potential investors about alternative investments and give them a platform to invest in commercial real estate projects that have a social and environmental impact.

Please reach out to us if we can help you strategize and support solar power development.