Future Solar Systems LLC

FSS Business
August 24, 2009, 1:00 am
Filed under: Our Business

wpInstantSolar2Future Solar Systems is a private limited liability company created to focus on the design, sales, installation and strategic ownership of commercial, public, and private solar Photovoltaic, (PV), projects in the 100-500KW range.  Our initial target market is public and private schools, hospitals, churches and other not for profit (NFP) organizations in the north-east US, with a limited number of commercial installations, and direct PV panel, arrays, and system sales.  Future Solar is creating and implementing unique financing methods that will allow customers the benefits and ultimate ownership of solar PV renewable energy systems with NO capital cost.  Through the use of simplified power purchase agreements, (PPA’s), and ‘shared savings plans’, Future Solar offers schools, colleges, private companies, and other organizations the ability to purchase renewable energy under competitive, long-term, predictably priced power purchase contracts, while avoiding the significant capital costs of owning and operating a solar system.

Future Solar structures a basic LLC  for each project, that will own the system, and sell electricity produced under a PPA or PV ‘shared savings plan’, with a predictable future payment stream.  These LLC’s offer Future Solar’s investors the benefit of the Federal ITC and Accelerated Depreciation and long-term stable returns.  Furthermore, Future Solar will utilize both federal and state grants/tax credits and REC’s for leveraged ownership in PV system assets, significantly enhancing the return profile for FUTURE SOLAR, their customers, and investors.

Future Solar is developing several novel proprietary ways to dramatically reduce the cost of large solar systems with pre-engineered arrays of 6-12 PV modules for rapid integration on rooftops, carports, and ground mounts, reducing labor costs by over 60%, and optimizing the rapid installation of large, 100-1500KW systems.

Future Solar performs the marketing, selling, site assessment, design, and contract efforts; utilizing established installers to perform the actual system installation.  Future Solar purchases all of the major components at low contract prices, through strategic supply relationships.  Future Solar is technology agnostic, but outsources the installation and system maintenance to certified installers and Electric contractors.  Through strategic partner relationships and the outsourcing of labor intensive work, Future Solar is able to efficiently run the business with a minimal staff, while leveraging their solid buying power, and special contactor and customer agreements.

Background / Opportunity:
The solar electric industry has seen exponential growth over the last ten years, fueled largely by attractive incentive programs in Europe and Japan.   During 2005-2008, a shortage of Silicon and bottlenecks in the solar value chain limited production and availability of PV modules while demand throughout Europe and the US continued to increase rapidly; this market dynamic benefitting the sellers of both poly-silicon and other solar modules.  However, with the world financial downturn at the end of 2008, a major transition began in the PV industry, due to an oversupply of PV panels and insufficient financing to complete a host of large projects in Spain and Italy.  Industry experts expected to see a mild oversupply in 2009 as additional upstream capacity came online; however, the expected oversupply has been exacerbated by the deterioration in global project financing, the significant increase in the availability of Solar grade silicon, the downturn in the semiconductor market and the rapid growth of thin film solar panels.  These key market dynamics have quickly transitioned the Solar PV manufacturing industry to a ‘buyers’ market’ from that of a ‘sellers’ market.  In fact, the market has not proven elastic enough to absorb the recent fall in module prices (due to huge Asian oversupply), creating a major opportunity for both the project installer and third party investor.  This reduced pricing of key components, combined with the new US Tax Credit program and numerous state incentives and rebates, now offer a very unique opportunity for companies like Future Solar to capitalize on these unique market conditions.  This market scenario provides our investors an unusually strong and secure opportunity, with high margins and solid ongoing profits, and minimal risk.   Further benefits and increased profit will be afforded by Future Solar’s proprietary new pre-engineered arrays, which eliminate over 75% of the expensive roof installation labor costs, reducing typical total job installation costs by over 60%, by using low cost off-site labor in automated pre-assembly facilities.

Corporate Structure – Future Solar Systems LLC is structured to be the beneficial owner of both the Future Solar PPA Systems Division and the Future Solar Integration Division.  Our Integration business is responsible for overseeing the sale, installation and maintenance of the solar asset with the customer. In efforts to keep the organization lean and minimize costs, Future Solar’s Integration Div. will outsource most of the labor intensive aspects of installation to proven established electrical contractors and installers.  As previously noted, Future Solar Systems LLC will leverage key strategic relationships to procure low cost modules and inverters, using just in time delivery to avoid owning excess modules in a ‘price declining’ market.

Upon completion of the installation, Future Solar  sells the asset to an independent LLC ownership company which, as the owner of the asset, will receive any eligible federal/state incentives, rebates, depreciation and tax benefits, current and future income from the sale of electricity as well as renewable energy certificates (REC’s).   Future Solar will partner with outside investors either per PPA tranche or bundle several PPA’s tranches together offering investors an attractive yield    over 10-15 years on an unleveraged basis.  Each LLC (PPA) package / tranche may have more than one member, with Future Solar’s (Holding LLC) being a senior partner member in each investment (for a 25-35% interest) to oversee the investment and manage all disbursements, tax filings, accounting, etc.


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