Wunder Project Expectations

Speed and transparency are the two biggest advantages to working with Wunder. We strive to be as open as possible with the requirements for each project, how Wunder financing can be obtained, and how Wunder financing is deployed.

To that end, this document articulates Wunder’s expectations and requirements for projects we finance. Please read through the document thoroughly, ask questions liberally, and revisit it often so that for every current and future project, we can start from a place of basic alignment and understanding . This will enable us to give an accurate assessment your project’s eligibility and financing timeline and ensure your project moves smoothly through our process.

In this article, you will find sections about the following topics:

Again, feedback, questions, or requests for clarification are very welcome.

Project Structuring

• Wunder expects to provide project-level debt to the legal owner of the solar system (“borrower”).
• The borrower must be a special purpose entity (SPE) created specifically to own the solar system(s) seeking financing.
• Wunder files an all assets lien against the borrowing SPE, and expects to be the only lender listed on any lien search for the borrower.
• Wunder expects to be provided with documented evidence of the borrower’s ownership of the system and claim to all revenues. This means that the borrower must be a counterparty to, or assignee of, any PPA or equivalent contract, incentive documentation, and all other project contracts.
• The borrower must be able to provide an operating agreement or entity bylaws, which clearly articulate all members’ ownership stakes, voting rights, and signatory authority.
• If the tax equity investment on your project is represented by an outside party that will be looking for specific lender concessions (e.g. forbearance) please bring this up to your project lead as soon as possible. Wunder is able to provide forbearance to the customers via our Loan & Security Agreement. 

PPA (or Equivalent Contract)

• PPA agreements must be signed directly or indirectly (via an assignment agreement) by the ‘owner’ (our borrower) and ‘offtaker’ organizations. If you are unclear about which organizations Wunder has identified in these roles, please ask.
• A core tenant to Wunder’s project review methodology is ensuring that the incentives of all parties involved are aligned. Wunder requires that the power purchaser is incentivized by energy savings of at least 10% throughout the loan term.
• PPA escalators that exceed typical rate escalation assumptions (~2-3% for most regions) may be underwritten at a more conservative rate depending on the strength of the offtaker.
• When modeling the system, Wunder caps the amount of power that a system produces at 90% of the site’s historical consumption. This cap may be removed if the solar system has a storage component.
• Wunder will review the PPA (or equivalent contract) language, to ensure that it meets industry standards along a number of different dimensions including, but not limited to:
  • Actions around PPA termination on the part of both parties are clearly defined. Specifically, termination fee schedule over time is articulated and is at no point lower than the forecasted outstanding principal amount.
  • Clear language is included that articulates the system owner’s (1) right to assign the contract to a third party, (2) right to finance the project, and (3) claim of the system as personal property.

Other Incentives

• Wunder will lend against 90% of the value of one-time Fixed Solar Incentives. For fixed Production-Based Incentives, Wunder will typically value them at their contracted rate.
• For any market-based solar incentives (i.e. SRECs), Wunder has developed its own assumptions about pricing expectations. We are constantly updating our curve assumptions in response to market data so pricing assumptions may change slightly during the underwriting process.
• Wunder is typically able to lend more (10 - 20%) when the Borrower has forward-sold SREC contracts through an external counterparty.

Power Offtakers 

• Note: We understand that many offtaker scenarios can exist. If you have a project that falls out of the bounds of these expectations, check with your Wunder project lead to see if it still qualifies. This section is not applicable for Community Solar projects - see here for details on these.

• Offtaker financials are an essential element of Wunder’s ability to underwrite most projects. Wunder requires the three most recent years of financial data (including balance sheet, profit and loss statement, and cash flow statement) from the PPA offtaker.

• The financial information provided must be for the same entity as the PPA offtaker. In other words, Wunder is not able to attribute financial information from subsidiaries or parent organizations unless that organization has executed a guaranty or other legal substantiation of financial backing on behalf of the child organization either on a general basis or for the purposes of the PPA project Wunder is looking to finance.
• If the offtaker has a recent ‘Investment Grade’ rating from Moody’s, Standard & Poor's, or Fitch, this may materially improve the interest rate and amortization term that Wunder is able to offer.
• The offtaker’s operating history, core focus and reputation is important to us. We are typically looking to see that the offtaker has been in business for at least 8 years, does not have a concerning history of bankruptcy or litigation, and is in good standing  to conduct business in the relevant jurisdictions it operates in. In addition, certain types of offtakers (e.g. churches, schools) may require additional review criteria.

Site Control

• Demonstrated site control is critical to ensuring that the system will be able to maintain ongoing operation at the project site.
• Site control can also be demonstrated through a number of different contractual mechanisms, but we typically find a site lease, site license, or easement to be the most common form of agreement with the site owner. In this scenario, additional information about the building and/or the building owner may be required. Appropriate termination language in the lease will also need to be confirmed.
• The site lease must extend at least as long as the term of the PPA.
• If the site owner is the same entity as the offtaker, site control can be articulated in the PPA.
• The site lease or easement must be publicly recorded. This is the case even if site control is articulated in the PPA.
• There must be a direct paper trail (document assignments and guarantees if necessary) from legal owner of site and legal owner of system (i.e. Wunder’s borrower).
• The Site Control Contract must either not be terminable by the landlord or, in the event of termination, must specify a termination penalty that is greater than the outstanding principal on the loan in every year of the loan term.
• In instances where either (a) there is a lender who has an existing claim against the asset or (b) the site owner is in financial distress, Wunder may require either a publicly filed easement or an SNDA from the lender.

Site Vacancy Dynamics

• Note: site review is substantially relaxed on projects with offsite consumption dynamics.
• Wunder focuses on financing solar systems located on sites defined by low long-term vacancy risk. This means that the location is urban or suburban and the building can be used by many different types of occupants.
• Sites that are deemed to be ‘special purpose’ (i.e. at a higher risk of protracted vacancy due to building type or location) will undergo a higher level of scrutiny and have stricter offtake review requirements.
• Sites that are general purpose but have many tenants will be reviewed for additional criteria such as current rent roll, vacancy history, and building LTV.

Guarantees

• Wunder is a commercial lender and does not lend on the basis of personal financials. As such, personal guarantees from any party involved will not serve to improve the offer or likelihood of approval. Wunder will not request personal financials from any individual associated with a possible transaction.
• Corporate guarantees on a PPA or equivalent contract can be a helpful credit enhancement if the guarantor meets certain financial or operating history criteria that the immediate offtaker does not.

Use of Funds

• In order to verify that loan funds are being used to build/acquire the expected solar project, Wunder seeks to release funds directly in response to an invoice for acquisition or construction of the subject system. For more information about disbursement expectations and timing, please visit our Disbursement Schedule page.
• Wunder’s financing offer will be based on expected revenue streams of the solar system; as such, we cannot provide additional financing for building improvements.
• Wunder is interested in lending against solar projects with a storage component. As such, battery purchase is an acceptable use of proceeds.
• Wunder does not finance development activities at this time. The earliest project stage in which a partner be able to expect disbursement is at the time of equipment procurement. Please see Cost-Based Disbursement Framework for more details.  

Equipment

• Wunder will confirm that all major equipment used in a solar system has industry-standard performance and workmanship warranties.
• Wunder is not able to finance technologies that have not been deployed in the commercial sector at scale (1 GW+). Examples of unapproved technologies include dual axis trackers, floating solar, solar thermal, and solar-integrated buildings.
• If the installed equipment deviates in any way from the expected equipment, as indicated in final (stamped) engineering designs, please notify your Wunder project lead so that they will be able to advise you about any potential impact to your financing as well as help avoid disbursement delays.
• Please see here for a list of Wunder's approved equipment manufacturers.

Asset Management

• Above all, Wunder expects asset management teams to be able to demonstrate a high degree of competence and thoughtfulness when it comes to managing a solar asset. In part, this refers back to the first section and the general assertion that all incentives should be well-aligned. Wunder expects asset managers to be able to speak to a coherent plan for ongoing management, including billing, operations and maintenance, and issue resolution.
• Capabilities may need to be demonstrated via a number of review items including but not limited to: evidence of cash reserves, O&M provider diligence, and inspection of past systems.

Project Team

• Wunder defines ‘Project Team’ as the entity or entities directly responsible for the development, construction, and ongoing maintenance of the system. This can include developers, EPCs, O&M providers, and any number of subcontractors.
• Wunder performs diligence on all members of the team who participate in the project during our loan term.  For loans that include a construction component, this will include your EPC. Wunder will need to see demonstrated experience of all build team members, including a number of years and MWs built by that organization. We may look to inspect previously built systems as well (at Wunder’s cost). The experience of one build team member will not offset limited experience across the rest of the build team.
• If the project is not receiving construction financing, Wunder may require the business name(s) and applicable contracts (e.g., EPC agreement) and then rely on the results of an onsite inspection to guide project funding.
• We understand that sometimes there are many parties involved in the development and installation process and expect to receive a partner application and/or statement of qualifications from any organization who has a part in ensuring the timely and quality installation and startup of the system.