At Wunder, we believe that community solar presents an exciting opportunity to open up the market of potential solar customers and bring more systems online than ever before. We’ve been involved since the early development of community solar programs to drive this space's growth.
Wunder's community solar underwriting framework considers the merits of your project without the traditionally onerous requirements that have plagued this segment of the solar market, making financing community solar arrays completely straightforward. Some of the main benefits of our underwriting process are:
- Subscription not required: Wunder does not require the system to be fully subscribed prior to loan contracting as long as you're working with a reputable subscription manager.
- Subscriber agreements can be flexible: For customers who make up less than 20% of the system, we do not need subscriber agreements to contain punitive termination fees.
- Residential offtake acceptable: Wunder is OK with 100% residential subscription.
- FICO scores not required: Wunder does not require FICO scores for residential customers, instead placing more emphasis on the supply and demand dynamics of each specific market.
Community Solar Underwriting
Wunder’s unique community solar underwriting framework was developed in collaboration with our partners and subscription managers to focus on a deep understanding of the value associated with community solar assets in a more holistic manner.
Wunder’s list of pre-approved third-party subscription managers is as follows:
- PowerMarket (aka ProjectEconomics)
- Solstice Power
- Common Energy
Ask your Account Manager if your subscription manager is approved.
For ones who have not yet been vetted, we take a holistic view at the entity performing subscription management: we’ll ask for an application to better understand the scale at which subscription managers have subscribed, onboarded, and managed subscribers for community solar arrays. We'll also want to understand their technology platform, subscription contract structure, customer billing and information access, and any plans for filling subscriber gaps, prior to and after project completion. For certain programs - such as those that provide an adder for subscribing low-to-moderate income individuals - Wunder may request additional details on your subscription manager's experience with this specific subscriber type.
Wunder understands that change in subscriber composition over the course of a community solar system's operation is inevitable. Wunder accounts for this dynamic by incorporating vacancy estimates into our system revenue expectations, continually updating our supply and demand projects for a given market, as well as requiring a debt service reserve fund for all community solar projects.
Understanding your Offer
As with all of our loan offers, Wunder has established in-house underwriting criteria that determine a project’s eligibility and loan size. While many factors play a part in Wunder’s ultimate lending decision - engineering specifications, site control, the offtaker’s credit profile, and more - the offered loan amount is most heavily influenced by the expected cash flows of the system that can service project-level debt.
- Leverage: For Community Solar projects, our team first looks at how the bill credit is valued in the project’s jurisdiction, including local solar supply and energy demand dynamics. In markets where the bill credit "floats" on the retail price of power, we may incorporate a more conservative valuation of system revenues in the out-years. Wunder will also model some expected operating expense associated with subscription management, even if the project under review will be handled internally.
Rate: Rates on community solar projects are determined by a variety of factors, most notably power market economics and subscriber management practices. Rates tend to be consistent within programs (e.g. MA SMART) and geographies (e.g. each zone in the NY VDER program).
Debt Service Reserves: Wunder requires a debt service reserve for every community solar project to mitigate the potential subscriber vacancy risk to a project’s anticipated cash flows. The debt reserve is a product of subscriber composition, which means both the mix of customers in the subscriber base and the credit profiles and scores of those customers. Approved subscription managers or contracted sale of system energy to a single subscription manager may lower debt service reserve requirements.
We understand the challenges of capital draws being limited by initial subscription obligations and untenable subscriber contracts, and we have as much interest in avoiding subscriber loss due to construction delays as you do. That’s why Wunder utilizes the same cost-based construction disbursement framework as for any other project. In order to flip the loan from construction to term, Wunder will require proof of 100% subscription.
Large Commercial Subscribers
Wunder will ultimately need complete understanding of subscription dynamics. To that end, given the risk dynamics and cash flow loss presented by different customer types, Wunder’s Loan & Security Agreement includes covenants that require approval for any C&I off-taker that will make up 20% or more of the array composition, as a percent of total production.