Zenergy – Energy Finance Solutions

 

Zenergy is an energy finance advisory firm serving investors and developers.

Our core focus is project financing of solar PV and energy storage assets.

Investor Services

Zenergy helps investors with project origination, fund formation, due diligence, and valuation.

For Investors

Developer Services

Zenergy offers the project financing tools, investor network, and contracts needed to close your deal.

For Developers

What We Offer

Zenergy is an energy finance and project development advisory firm. The company has advised on $302 million of energy investments over the last 8 years, representing developers, installers, and investors. Zenergy taps it deep industry experience, knowledge of market rates, and extensive financial network to help its clients make smarter decisions.

Zenergy is particularly experienced with raising project finance for small commercial projects from non-traditional sources.

We combine deep financial, technical, and legal expertise in energy project development with specialization in structured finance, project finance, tax credits, debt, and equity private placement.

Zenergy specializes in commercial energy, solar PV project development, and project finance.

We help developers design early stage projects, secure power purchase agreements, formulate project financing plans, and support efforts to acquire funding or sell the project.

We help energy investors evaluate project investments by conducting diligence, preparing investment models, and advising on structuring strategies.

Zenergy has been developing and investing in renewable energy projects for over 8 years. We think like an investor/owner but understand the installer/developer’s challenges. Client’s hire us to gain this insider knowledge and structured finance expertise as they pursue a deal.


  • Fund Formation & Raising Tax Equity 80%
  • Energy & Project Finance Modeling 45%
  • Sourcing Projects For Funding 95%
  • Contract Templates & Negotiation 50%
Zenergy Developer Services

Project Design & Financing Strategy

Formulating PPA pricing, terms, and project agreements. Defining target investors and shaping deals toward their preferences.

Raising Tax Equity & Other Funding

Zenergy will match you with co-investors, tax equity, and debt. In addition to fund raising, we handle pitch decks, structuring deals, and fund formation. 

Project Finance Modeling & Contract Templates

Models scenarios across technical specs, PPA & EPC pricing, and tax equity structures. Templates for PPA, EPC, ProjectCo formation, and funding agreements.


Fund Formation

Assist in structuring the fund, sourcing tax equity and debt, and preparing fund agreements.

Project Origination

Leverage our extensive network of developers to source new projects, while also vetting and modeling new deals.

Project Diligence & Valuation

Zenergy has led diligence of 150MW+ of solar projects, ranging from utility scale, to commercial, to residential portfolios.

Zenergy Investor Services

Zenergy’s Publications & Resources

 

Solar Tax Equity Due Diligence Tips

Companies large and small are beginning to invest in solar tax credit deals as a smart tax strategy. Although these investments are smart and relatively straightforward, Zenergy’s team finds itself frequently educating new tax equity investors on a few key deal points. These are not tips in how to structure your investment, but rather how the underlying solar project deal with the customer should be structured (if you’d like a more in depth look, check out our Solar Due Diligence Checklist). Basic Solar Project Deal Structure Most commercial solar projects are financed using a Power Purchase Agreement (PPA) or a Solar Service Agreement which is similar. In a PPA, developers install solar on a building’s rooftop at no cost to the building owner. The building owner, in turn, agrees to pay the developer for all the solar electricity generated over the next 20 years. At the end of the 20 years, the developer either removes the system or the building owner buys it for a residual buyout price. The developer retains ownership of the solar system throughout the term of the PPA. As the system owner, the solar developer is entitled to take all the tax incentives offered to people who go solar. When you install a solar electricity system on a commercial rooftop, over 50% of the installation cost is repaid immediately through federal tax incentives. Unfortunately, many solar project developers lack the tax appetite to utilize those tax incentives. As a result, they form a joint venture with a company that has a large enough tax bill to use the tax credits. The way the joint venture... read more

Passive Activity for Tax Equity

Mid-Size CFO: Monetize Your Tax Bill Companies paying over $200,000 in income tax can turn their tax bill into a profitable short-term investment by becoming a “Tax Equity Investor” in a solar project. Large companies, like Google, have long been able to make tax credit investments. Meanwhile, mid-size companies were kept out because the deal exceeded their tax appetite. Now, that has changed thanks to the proliferation of firms developing tax-advantaged solar projects which demand corporate Tax Equity Investors of all sizes. The trick is figuring out if your company is an eligible investor, and if so, which solar projects are good investments. Below are a few important guidelines. A. Corporate Tax Equity Investing In A Nutshell A race is afoot to install solar on as much flat commercial roof space as possible using a financing mechanism called a Power Purchase Agreement (PPA). In a PPA, developers install solar on a building’s rooftop at no cost to the building owner. The building owner, in turn, agrees to pay the developer for all the solar electricity generated over the next 20 years. In other words, the solar developer becomes a utility company. It owns the generating assets and gets repaid over time for the sale of energy. In addition, as the system owner, the solar developer is entitled to take all the tax incentives offered to people who go solar. When you install a solar electricity system on a commercial rooftop, over 50% of the installation cost is repaid immediately through federal tax incentives. Unfortunately, many solar project developers lack the tax appetite to utilize those tax incentives. As a... read more

Cutting Transaction Costs for Solar PPAs

Solar power purchase agreements (PPA) steal a page from the cell phone playbook. In a PPA, the project developer pays to install the solar and, in exchange, the host facility’s owner agrees to buy the solar energy for the next 15 to 20 years. Companies like SunEdison and SolarCity are successfully using this brilliant approach to line up residential customers and large facility customers. The problem is virtually no one offers PPAs to the millions of small-to-medium size businesses in America. Why? Transaction costs. They eat up all the savings on small systems. Making solar PPAs available to small businesses requires understanding what currently drives these transaction costs, and then developing a new deal structure geared specifically to avoid those costs. When a business like a car dealership, small hotel, or 100-person office wants solar, they are typically looking for a 10kW to 20kW system. Right now, most PPA providers will not touch a commercial project under 40kW. The reason is the transaction cost for a 10kW PPA is the same as for a 100kW system. Often the costs are so high that they cannot beat utility prices on systems under 40kW. If you’d like to see this for yourself, you can use SolRiver Capital’s Developer Platform. They host a calculator that finds a financeable PPA rate based on certain project parameters. Current PPA Transaction Cost Drivers After examining these deals closely, Zenergy found three components of the deal structure significantly drove up transaction costs by consuming time through negotiations, lawyers fees, and expensive auditors. The good news is, we have developed a solution that can avoid these issues.... read more

Protecting Solar PPA From Seizure In Foreclosure

Solar PPA developers recognize host facility foreclosure is their big risk. The impact of that risk is bigger than many PPAs realize. Unless your PPA is set up right, a foreclosure does not just mean lost revenue. The foreclosing bank may be entitled to keep the solar as part of the building. Below are a few tips on how to avoid this devastating result. Foreclosure Law & Rooftop Solar PV Before explaining how solar PPA (Power Purchase Agreement) developers can protect themselves, let’s begin with a few basic legal principles. Most building owners are still paying off a mortgage on their building. They got that mortgage by offering their building as collateral to the bank. If the owner falls behind on his payments, the bank can foreclose on the building. Now here’s the scary part: When a bank forecloses on a property it gets to take the land, the building, and all the permanent fixtures attached to the building. Our focus is on this last part: permanent fixtures. When many PPA developers think about foreclosure they understand they’ll lose the ongoing energy payments, but they assume they’ll be able to salvage some value by repossessing the solar. That is not necessarily the case. If the solar PV is deemed a “fixture” on the building, then the foreclosing bank may get to keep the solar just like it gets to keep the HVAC, carpet, and water heaters. In other words, the PPA is facing an entire wipe out if the bank forecloses. To put it simply, in a foreclosure: If solar is a fixture, the foreclosing bank may get to... read more

Solar Tax Equity Investments 101 – How The ROI Works

Tax Equity is a common part of solar project finance deals. Everyone knows “the Tax Equity Investor invests in the solar project and in exchange gets all the tax incentives.” This sounds great, but not everyone knows how this works. People regularly ask Zenergy *how* the investor profits from buying tax credits. Below is an extremely simplified explanation of how a Tax Equity Investor makes money from its investment. What is a Tax Equity Investment? For purposes of this article, the Tax Equity Investor funds about 40% of the solar system installation cost and receives 100% of the tax incentives plus a share of the energy income stream. Over five years, the tax incentives received repay the Tax Equity Investor’s initial capital contribution. With its capital returned through the tax incentives, the additional cash proceeds received yield a nice profit. As explained below, the total return for a Tax Equity Investor can be close to a 16% IRR.   Background On 5 Year Deal Term Typically, the Tax Equity Investor owns 99% of the solar project company for 5 years and then exits. The reason for this structure comes from two important IRS rules. First – the tax incentives go to the legal owner of the solar system. Second – if system ownership changes within the first five years, the initial owner must repay the IRS a pro-rated amount of the tax incentives (called “recapture”). After the 5 year recapture period expires, the other project investors (called “Sponsor Equity”) buy out the Tax Equity Investor’s ownership in the project company. There are a myriad of ways to structure this... read more

Solar Tax Incentives Basics in 2013

Two Key Federal Solar Tax Incentives Before digging into the mechanics of Tax Equity Investing, you must first understand the underlying tax incentives at play. There are two main Federal tax incentives for solar:   30% Investment Tax Credit. The owner of a solar system is entitled to a 30% Investment Tax Credit (ITC) upon installing a system. The ITC is calculated as 30% of the total system’s eligible installation costs (for a breakdown on this, check out our ITC Eligibility Matrix). As a simple example, a $100,000 solar system = $30,000 tax credit.   Accelerated Deprecation. Under the Accelerated Depreciation rules, the owner of a solar system may deduct roughly 20% of the total system cost each year for five years. To be technical, the depreciable basis is the system price less its salvage value minus half of the ITC. To get the value of this deduction in real dollars you must multiply the deduction times the investor’s tax rate, often 36%. Therefore, the annual value of the accelerated depreciation is = 20% * ((Total Cost – 15% Salvage Value) – ½ ITC) * Tax Rate. If you add this up over five years, it typically returns 30% of the total system cost to the owner in after-tax dollars.   50% Bonus Deprecation. For solar systems installed in 2013, system owners are entitled to deduct 50% of the system cost as Bonus Depreciation (minus 50% of the ITC credit) in the first year of ownership. The remaining 50% of the system cost is deducted over the remaining 5 years under the Accelerated Depreciation method discussed above. Tax Incentives... read more

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