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Solar Investment Opportunities Being Overlooked (Sponsored Content)

SBJ Economic Growth Survey: Capital

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Although solar power isn’t new, it’s still novel to many, especially in Midwest states like Missouri. When it comes to installed solar power, Missouri’s 314.8 milliwatts ranks 34th nationally, according to a mid-September report from Solar Energy Industries Association.

The three top-ranking states in cumulative solar capacity are California, Texas and Florida. Overall, the report shows the solar market had a 42% average annual growth nationally over the last decade and, through the first half of 2021, comprised 56% of all new generating capacity.

The report identifies 137 solar companies in Missouri. In Springfield, one of those is Solera Energy LLC, co-founded by Will Cox and Mark Gardner. Although solar power has grown tremendously over the past decade, Missouri is behind, Cox says. According to SEIA, solar is responsible for less than 1% of the state’s electricity – enough to power 33,623 homes.

Gardner explains there are three kinds of solar projects: The smallest are residential roof-top solar panels; midsize are commercial, i.e., schools, warehouses and farms; and the largest are utility scale projects that provide electricity to a city or utility company. While Solera Energy’s largest client base is residential and commercial, the company has built roughly 90% of Missouri’s utility scale projects.

Although Missouri ranks behind two-thirds of the country, the state’s projected growth is 849 milliwatts over the next five years, according to SEIA. That could mean more opportunities for local and regional lenders and investors – opportunities Cox and Gardner say currently are overlooked with a few exceptions. While some Missouri banks finance a utility or commercial solar project, Gardner says, millions of dollars in residential and commercial solar capital goes to national institutions. Those institutions either specialize in solar projects or they understand the benefits to business owners and homeowners better than local banks do, he says.

Here’s the upshot: “If you’re a business, not only do you get the federal tax credit, you also are able to claim depreciation on the project. So, a commercial business owner is essentially able to get 50%-60% of the system paid off right off the bat. They are looking at double-digit returns,” Cox says. “And it’s a very safe investment, so financially there’s a tremendous upside for business owners and residential owners.”

With education, these solar executives say more lending institutions could participate as lenders or investors in the solar market. Part of the issue, Cox says, is that when commercial ventures or homeowners seek capital for a solar system, less experienced lenders consider it equipment, “as opposed to an investment,” Cox says. “So, there are roadblocks set up because of a lack of understanding of the financial benefits of solar.”

Whether local banks invest or not doesn’t impact Solera’s business.

“Quite frankly, we don’t need local banks; that’s the truth, but we want them,” Gardner says.

While they have and will continue to work with some local institutions, it’s tough to find the time to proactively educate others. Lenders get comfortable in what they know, Cox says, “so you have to ask them to reach and try something new. That’s the barrier.”

Bottom line, he says, most local banks and investors currently lack the desire, knowledge and infrastructure to take advantage of the solar industry the way national investors and lenders have. “We’d like to see local banks get more involved. But you have to be educated and you have to learn solar,” Gardner says.

He and Cox predict more will educate themselves as the industry and energy model matures.

“Then you’re going to see growth in the local banking community,” Cox says.

This content is brought to you by Solera Energy LLC.

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