It was early 2002 and the idea of a solar PPA was in its infancy. I got an email from a guy from BP Solar seeing if I was interested in buying some solar panels. His name was Jigar Shah.
That email and subsequent follow up phone call built upon a friendship and future business relationship that illustrates something important.
In general ideas don’t form in a vacuum, but by sharing concepts and ideas with people that are in your close circle of influence and expanding outside of that sphere.
As the solar industry back then was looking for a way to structure an investment in solar assets in which we are all too familiar with today, this was nothing short of revolutionary. At the time the only way similar assets were financed was through energy services contracts. These often were on government facilities and were performance based. The categories for these back then were for new air conditioning to lighting.
With solar on the rise and manufacturers eager to feed a burgeoning industry, we needed a way to finance the offerings. Lease companies were first to enter the arena. They had experience with equipment finance, just like the energy performance contracts. But back then there were changes to the laws that made this kind of lease less desirable.
And boom- the PPA was born.
But it wasn’t just about the PPA. Just like these other evolutionary financial vehicles, it too collaboration. Lots of it. A legion of lawyers, accountants, high net-worth investors and a bet on the solar manufacturers and installation partners to ensure systems had long service lives and met the criteria set forth in the first PPA documents.
There was a lot of risk back then. High degrees of uncertainty.
Today, the idea of a fund to support the ability to aggregate these assets is the norm. Engineering firms are there to verify that systems meet performance projections. EPC firms are mature in their execution of projects. Law and accounting firms have a clear understanding of how these structures work and how the benefits are distributed.
All in the name of collaboration.
The three takeaway lessons where simple, yet took time to evolve. Identify an opportunity. Find people that believe in your ideas. Be willing to be patient in the process to keep your collaboration partners time to understand the value proposition and the risk.
If you want to learn how to collaborate with people in the value chain and get better and deal flow and knowing the value of your projects and ideas, come join Chris Lord and me. We are kicking off the next Solar MBA class soon. Be a part of over 300 alumni from a wide swath of industries and interests to catapult your solar career to new heights.