When a conscious person or group of individuals decide to start a company to benefit society there is a decision making process that takes place about what type of company they feel will take them to the financial promises land. There are few endeavors in this economy that makes us feel we are going to reach financial success while doing something valuable to society and the planet. If this person or group of individuals comes from the financial and or business arena they get together and review all the potential options available with the thought in mind, “where is the money”? In a down economy there may not be many options if you plan on getting financing so it would be best if you find an industry that has immense growth capacity. The two most important questions should be “where is the money” and “is this company financially viable to investors”.
If you find and industry where the answer is yes to these two questions next you want to find a niche within the industry where you can be a strong player within a short period of time. This means that it is probably a relatively young industry or the industry is in its early stages of development. Once you have found the niche one of your next steps would be to put together the right team to execute the executive plan you have developed.
Importance of having a knowledgeable Board of Directors
During the process of finding the industry constructing an advantageous Board of Directors with expertise that will assist in the development and decision making of the company is important. Finding specialist for your Board of Directors that is knowledgeable and experienced in crucial aspects of the company will assist and enhance your chances for success. Also, they should be able to help attract capital and give you advice along the growth path to your success.
When I interviewed Chase Weir, CEO of Distributed Sun (D-SUN) what I found was an amazingly talented person that understood the necessary steps of starting a company and executing each facet of the start up process. Along with his partners they had the necessary connections in the financial world to bring together a financial portfolio which brought investors that have been sitting on the sidelines and not investing because of the economic weakness that is and has been pervasive over the last two and a half (2 ½) years.
Financial analysis and vetting opportunities
Two activities necessary to understand in the decision making process was multiple financial analysis for each solar project and vetting concisely potential opportunities. From their analysis the decision to enter the solar industry became easy because they felt the solar development space had the right entry point, the right risk factor and the right reward profile. The future D-SUN team concluded the solar integrator space had all the essentials to be a real business that has huge upside potential.
There were other factors that the team took into consideration one being a scalable business with long term potential while being an advantage to the community. What Chase saw is that to enter the solar space they would have to find a niche within the space that has the upside potential they were looking for. The D-SUN team knew they would be competing with well established companies that have a proven track record. To overcome and win projects against well established integrators they decided to compete by developing tools that would separate them from the rest of the integration companies in the industry.
Instead of just focusing on investment grade portfolios only they also recognized there were many properties of premium high end, high occupancy really great low risk sites but as a credited entity it is not graded paper. In this economy where financial institutions are putting a squeeze on debt and credit compliance committees are moving the credit rating bar really high this meant they absolutely had to establish a strong group of investors willing to invest in both rated and unrated paper.
Financial modeling and mitigation tools
Additionally in address this financial situation D-SUN has created proprietary financial modeling and risk mitigation tools which allow them to deliver exceptional return on capital. These tools include their sunRise Database, Radiance Dial, Azimuth Panel and a Sol Index. The SunRise Database drives their solar policy intelligence, tracking all state and federal impacts to risk and return outcomes for their projects and funds. This tool is giving D-SUN the opportunity to select projects of optimum performance which ensures results in the best net cost inputs for their investment fund.
The Radiance Dial Builds project financials in minutes, precisely measuring the sensitivity of return-on-investment projections to a wide array of input variables while measuring cost, revenue, and performance metrics. The Azimuth Panel points their project and finance committees to decide whether to investments and what is needed to meet or exceed the financial hurdles to be approved.
After rigorous analysis and integration of real-world inputs, only projects expected to outperform these strict standards are approved. Last D-SUN uses the Sol Index which drives partner quotes and savings schedules, while reporting environmental attributes, derivative income, and expense benefits. Sol Index calculates the savings over the lifetime of the solar system to educate their project partners.
Solar commercial ready for scale
Chase said, “solar commercial regeneration was ready for scale, we as a team deciding on a business didn’t want to pour our dreams, hopes and desires into a business that would take us 15 to 20 years to achieve our personal and financial goals”. They wanted to stand on the shoulders of the many hardworking smart people that brought the solar industry to a place that actually had real impact. Impact meaning a business that is good for rate payers, good for investors, good for jobs, good for the people operating the company, and of great importance to the environment.
Additionally Chase felt solar has enough support to become a policy driven model where solar is on course to being supported by the Federal, State and Local governments. Even tax payers benefit from the policy because of the Federal tax credit of thirty percent (30%). If you live in an area in the US where your state and or local governments understand the value of solar and the government legislates policy in favor of solar, then you benefit more by reducing the total cost of the project through some form of feed-in-tariff. In turn this increases your return on investment (ROI). In fact no one is left out of reducing their personal and or corporate tax.
When Chase and his partners reviewed all this data in 2009 it compelled them to start Distributed Sun. They realized that in the short term, midterm and long term they have a business that benefits everyone in addition to our environment. Since opening their doors to business they have a number of finished projects and projects in their pipeline that are at one stage or another in the development process.
Projects that have been completed include Data Center, Hunt Valley DC, Voorhees Corporate Center, in Southern New Jersey, Hilton Hotel near BWI Airport, Baltimore MD and the Buccini Pollin Group Headquarters located in Wilmington Delaware. Each site ranges in size and they are excellent demonstrations of quality project integration and monitoring. I asked Chase if I could get some reference of the work they have performed and it was impressive to get reference from people associated with D-SUN and the following are some of the references:
Jigar Shah – Founder, SunEdison who stated “When I think about the next generation of solar project developers – the new pace-setters – I think of Distributed Sun.” additionally, John Sachs – Partner, Latham & Watkins said “When I think about savvy solar investing and project finance innovation, I think of the solar energy investment companies managed by Distributed Sun.” and lastly Stephen Chin – Analyst, UBS Investment Research said “When we think about the new thought leaders and solar players with real analytical heft, we think about Distributed Sun.”
In summary D-Sun has gotten on the fast track in a short period of time because they have assembled a team of ambitious, smart, hardworking analytical thinking team wanting to build a new age of solar integration. They have perfected the skills to operate state-of-the-art solar power generation systems, delivering utility rate savings at no upfront cost to their project partners. Their mission is to be a catalyst for green-collar jobs, environmental change, and reduced dependence on foreign fuels.