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Developers will gain an advantage if from the earliest stages they work closely
with financiers that have the expertise and capital to execute deals and see
projects through to fruition, according to Coleman Adams, Crescendo Power
co-founder and managing director.
Crescendo Power was created with just that in mind. Co-founded by Adams
and Todd Price, Crescendo last year announced it had secured $30 million to
finance and acquire mid-tier, behind the meter, projects in the 1-10 MW
range. The firm is focusing on the commercial, industrial, higher education
and hospital segments of the market.
Microgrid Knowledge recently spoke with Adams for insight into the state of
play for microgrid project finance, and Crescendo’s approach, plans,
execution and distinct place in the market.
Price and Adams launched Crescendo Power in March 2017, after working for
Hitachi Consulting and Hitachi Energy Solutions. Urs Gisiger, also from
Hitachi, joined them as a managing director in November.
“There are more technology vendors and EPC (engineering, procurement and
construction) firms doing development, as well as more ‘pure play’ developers
active, in the market today,” Adams said. “They’re looking for more assurance
regarding how they can exit and cash out on projects. We believe we can
provide that by working more collaboratively with independent developers
from the outset to assure successful exits. In that way we can give them, and
off-takers, a much greater level of confidence and comfort regarding the
viability of and the ability to successfully execute their technology and
business models.”
Working together, Texas-based Crescendo and Kokua Aina will finance and
develop microgrid projects in the US, its territories and Canada. This includes
the Hawaiian island chain. “Our interest in Hawaii comes from a demand
standpoint, and really stems from a willingness to engage in the market,”
Adams said.
“They all vary by project, location and utility jurisdiction. We don’t see this
becoming narrowing or becoming more standardized in the next five years.
The necessity of microgrid financing is determined by the client or off-taker,
and right now there is a need for developers to offer financing to bring
projects to market on behalf of their clients.”
Is there one fatal flaw that project developers and off-takers are prone to
make when seeking microgrid project finance?
“We don’t see one, common fatal flaw per se, but I would say project
developers, and all market participants, can benefit by avoiding waiting until
the last minute to clear a last hurdle and obtain project financing. It’s far
better to gain an understanding of financing options and structures from the
beginning. So we collaborate early and often between off-takers, developers
and funders so as to establish a solid, underlying financial arrangement early
on in the project development cycle.”
As for the solar ITC, Adams said microgrid project developers have had to
change the structure of some deals in light of the ratcheting down and
phasing out of the federal tax credit. “In some cases, it makes things a bit
more complicated, but extension of the tax credit was a very good thing, as
well. A lot more in the way of projects will be deployed as a result.”