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Verdant Advises on First Solar Sale Leaseback with Energetic Insurance

April 10, 2020, 07:00 AM
Filed Under: Industry News

Verdant Commercial Capital and Energetic Insurance announced EneRate Credit Cover has been applied to a transaction that utilized a sale leaseback tax equity investment structure, marking the first time the EneRate Credit Cover policy had been used on this particular structure. The insurance policy backstops payment default risk on commercial solar projects, which enables project developers to obtain affordable financing by providing confidence and certainty in project cash flows.

The project is a commercial scale installation and includes battery storage. Verdant Commercial Capital facilitated the tax equity investment and is expected to utilize the EneRate Credit Cover product on a series of additional sites with the same development group.
EneRate Credit Cover helps project developers install more solar projects with PPA off-takers who have varying credit quality. Developers can transact more project volume with more speed of execution because their financiers can quickly become comfortable with PPA cash flows when they are insured by Energetic Insurance’s AA-/Aa3 rated insurance partner.
James Bowen, co-founder and CEO of Energetic Insurance, said: “Sale leaseback transactions are often the most economically favorable tax equity option for smaller C&I projects. Because these small projects often include unrated and below-investment grade off-takers, it is important that the tax investor receive additional confidence that the PPA cash flows will continue throughout the term of their lease.  Energetic is enthusiastic about applying their product to close this type of transaction and thus enabling more transaction velocity for developers in the C&I segment.”
Energetic operates as a Managing General Underwriter (MGU) with initial capacity provided by SCOR Global P&C, allowing project financiers to benefit from SCOR’s AA-/Aa3 credit rating and unlocking access to more attractive financing options.
Project developers can purchase EneRate Credit Cover™ to protect against default risk for up to a 10-year term on solar projects with unrated non-residential customers, as well as community solar projects.
John Merritt, Executive Vice President at Verdant Commercial Capital said: “We are excited to collaborate with Energetic Insurance on this project. The most attractive features of EneRate Credit Cover on a sale leaseback transaction are that it can make a non-investment grade project financeable, and that it can preserve the project sponsor’s economics by allowing them to realize a full and fair
market value sale price under the sale leaseback transaction.”

Energetic Insurance is a venture-backed company which includes investments from Congruent Ventures, Powerhouse Ventures, Clocktower Technology Ventures and Clean Energy Venture Group.  Energetic Insurance is also the recipient of an $800,000 award from the US Department of Energy Solar Energy Technologies Office (SETO). To date, Energetic Insurance has raised $5 million including grant funding.

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