How iSolarGen’s urban solar utility works


  • iSolarGen builds a solar power plant on the customer’s rooftop.  iSolarGen will continue to own the power plant for the life of the relationship, just as the customer’s existing utility company owns the coal- and gas-fired power plants that supply their electricity today.
  • iSolarGen becomes the customer’s provider of electricity. All electricity consumed by the customer will be purchased from iSolarGen. iSolarGen takes on direct responsibility for paying the regional electric utility for any grid power consumed by the customer. Electricity produced by the solar panels will be sold to the customer at a discount of approximately 30% below what the utility would have charged for the same amount of electricity during that time of use. (The cost of grid-supplied power will not change.)
  • The customer agrees to buy a minimum number of kilowatt-hours of solar-generated electricity per year. iSolarGen will size the power plant to target that amount of production.
  • During periods of low sunlight – e.g., at night and during the winter months – iSolarGen will not produce a sufficient quantity of electricity on the rooftop to meet 100% of the customer’s demand. During those times, iSolarGen will supply to the customer conventional grid power sourced from the regional utility company. So the customer will purchase 100% of the electricity they consume from iSolarGen. At any given moment, the intensity of the sun and the number of photovoltaic panels on the customer’s rooftop will determine what portion of the power consumed is purchased at a discount below the rate specified by the utility’s tariff structure.
  • If an external object (a building, a tree, a blimp, an alien spacecraft) casts a shadow on 10+% of the power plant for more than 60 days, iSolarGen will have the option to remove the power plant at its discretion. If this occurs, iSolarGen will leave the rooftop in substantially the same condition as it was before the power plant was installed. iSolarGen will be liable for any water damage to the customer’s building or business resulting from the roof leaking as a result of removing the power plant. If the plant is anchored into the structure of the roof to mitigate against high winds, the fittings may be left in place rather than violating the integrity of the roof to remove them.

For a draft of the letter of intent needed to get started, please visit Letter of Intent.

Two Ways to Structure the Customer-Vendor Relationship


iSolarGen’s Business Model

There are two ways iSolarGen can structure its business relationship with the consumer:

  1. Daytime Electricity Provider #2 – As a generator of daytime electricity, iSolarGen augments electricity provided by the consumer’s regional electric utility.  iSolarGen sells solar power to the consumer at prevailing retail market prices, and the customer’s benefit accrues from lower prices for grid power.
  2. The Consumer’s Sole Electricity Provider – As the consumer’s sole provider of electricity, iSolarGen generates solar electricity in the daytime and sources grid power from the regional electric utility as needed to fulfill 100% of the consumer’s requirements.

Let’s examine the differences between these relationship structures.

1. Daytime Electricity Provider #2

If iSolarGen becomes a second provider of daytime electricity, it will charge the consumer the same price per kilowatt-hour as their electric utility does.  The consumer’s benefit will accrue from the drop in its regional utility company’s price structure for grid power as a consequence of “peak shaving”.  When the consumer’s peak demand on the grid goes down as a result of drawing power first from the solar power plant, the consumer can apply to their utility company for a cheaper tariff plan.  Under the tariff plan for which the consumer can then qualify, demand charges based on their high-water mark of demand each month go down.  Also, the price per kilowatt-hour goes down under the new tariff plan.  So if the consumer has a relationship with iSolarGen as a second provider of daytime electricity, the consumer’s savings come from lower bills from their regional electric utility.

 2. The Consumer’s Sole Electricity Provider

If the consumer engages iSolarGen as their sole electricity provider, iSolarGen provides 100% of the consumer’s electricity and takes over the management of their relationship with the regional electric utility.  The consumer receives one invoice each month for all their electricity.  iSolarGen sells daytime kilowatt-hours generated by the solar power plant at a 30% discount below the utility’s prevailing price.  When the consumer needs electricity that the solar power plant cannot provide – e.g., at night and during periods of high usage when it’s cloudy – power comes in from the grid to meet the consumer’s demand, now at a lower price due to decreased demand on the grid.  In this case, the benefit from lower prices for conventional grid power due to peak shaving accrues to iSolarGen instead of to the consumer.


When iSolarGen becomes your sole provider of electricity, your cost for daytime power will go down significantly.  It will not change the price you would otherwise pay for power consumed from the grid in any way – neither lowering nor raising the price you pay.  Whatever then-current tariff plan is in effect from your regional electric utility, given your organization’s then-current pattern of power consumption, will be the basis on which iSolarGen invoices you for grid power – that is, the power you take from the grid at night and during times when your consumption exceeds the production of our solar power plant.

iSolarGen will provide you with one invoice for all of your electricity, just as your regional electric utility does now, and iSolarGen will be responsible for managing the relationship with your regional electric utility, including paying their invoice for the grid power you use.  iSolarGen’s billing algorithm will charge you 30% less for daytime power generated by the solar power plant, and it will apply your regional electric utility’s then-prevailing tariff plan for your energy usage pattern for all kilowatt-hours coming in from the grid.

Under the sole-provider relationship, the success of our business model depends on reducing your organization’s high-water mark of demand each month (in kW) in a way that lowers the price iSolarGen pays to your regional electric utility for kilowatt-hours coming in from the grid.  Paying a lower price than you would have to pay will result in net revenue for iSolarGen’s investors.  This helps us achieve a return on investment needed to compete for capital.  Our billing algorithm will demonstrate that you will continue paying the prevailing market price for grid electricity – no discount, no markup – relative to then-prevailing market rates, and receive a 30% discount on the kilowatt-hours consumed in the daytime that are generated by our power plant.

To give you a 30% discount on daytime electricity and deliver to investors a moderate return on investment, our business model requires that iSolarGen realize the benefit of the drop in cost for kilowatt-hours from the grid.

We can structure the deal the other way – as  a second provider of daytime electricity.  iSolarGen can charge you market rates for daytime power that’s generated on the roof, leaving you with the benefit for lower rates for grid power from your regional electric utility – a benefit for which iSolarGen will not be responsible and will not be able to quantify for you.  So the consumer continues to manage its relationship with the regional electric utility company.

It boils down to two methods of accounting for the same savings.  When iSolarGen takes full responsibility for providing electricity and for managing the relationship with the regional electric utility, we’re more accountable to you, the consumer, for delivering the savings.

A letter of intent is needed to start the process


Before allocating the funds to build a solar power plant on the customer’s roof, iSolarGen requires from the customer a letter of intent to purchase discounted renewable electricity.  Once the funds are allocated, iSolarGen and the prospective customer will enter into a power purchase agreement (PPA).  The following language is for the letter of intent, which may be delivered by e-mail or by hard copy.

Letter of Intent

  • It is the intent of ______(organization)______ to permit Interconnected Solar Generation LLC (iSolarGen) or its designee to install at its own expense an electricity-producing power plant consisting of photovoltaic panels, supporting structures, wiring and electronics on the roof of our building at ________(address)_________ for the purpose of generating renewable electricity to sell to the organization and to tie to the electric grid at our panel.
  • The owner of the building in which our organization is doing business is _________________________ (legal entity), phone number: ________________.
  • At its own expense, iSolarGen will obtain local building permits and regulatory clearances, comply with electric utility requirements and city ordinances, etc. with the customer’s assistance. iSolarGen will incur all engineering costs.
  • We authorize iSolarGen to act on our behalf in communications with our regional electric utility company regarding how we are invoiced for electricity in the past, present and future and to conduct an energy usage analysis.

    [Click here for the agent authorization form for SoCal Edison.]

  • ________(organization)_________ intends to enter into a power purchase agreement (PPA) to purchase all of the electricity it consumes from iSolarGen (or a designee). We will commit to purchase a minimum of _______ solar-generated kilowatt-hours per year, annually. The discounted price per kilowatt-hour of renewable energy will be 30% lower than the electric utility’s prevailing tariff for that electricity during the time of use. The discount applies only to the power generated by the rooftop power plant. The price for power consumed from the grid will not change. Each month, iSolarGen will invoice us for 1/12th of the estimated annual minimum purchase plus actual usage charges incurred during the previous period in excess of the guaranteed minimum.
  • iSolarGen may not be able to produce enough renewable solar power at all times and during all seasons to meet 100% of our organization’s demand for power.  During those times, iSolarGen will fulfill our need for electricity by sourcing it through the grid from the regional electric utility.
  • We expect to remain in this relationship with iSolarGen as our direct provider of electricity for a period of at least 10 years.
  • [With the approval of the organization’s governing body,] I have the legal authority to authorize the use of the rooftop space for this purpose and to execute a PPA, and I am now ready to do so.

Management Team


Matthew Aarsvold, Chief Executive Officer of iSolarGen | cell: (714) 272-8600
and CEO of FusionBridge Ltd.
FusionBridge Ltd. is a professional consulting and systems management company which has the experience of implementing and managing the business systems and process controllers for over 250 companies in 300 locations across 42 countries.  Its management team has served companies such as Chevron, Baxter Pharmaceutical and Dole Food for 24 years.  It has deployed and operated systems for several companies in similar industries including Public Utility and Energy Chemical.  FusionBridge will be contracted to provide all the process sensors, systems and management to track the status and output of all electricity generation devices and the electrical usage of all customers, the business systems for the company, and the utility billing and collections processing.  iSolarGen LLC in turn would become an anchor client for FusionBridge.  For more information on FusionBridge Ltd., go to

Dan Webb, Chief Technology Officer of iSolarGen | cell: (206) 818-2558
and Principal Consultant of Renewable Energy Technology Assessment Group (RETAG)

RETAG is an association of scientists and engineers focused on discovering, assessing and optimizing the most effective technologies in the fields of renewable energy and smart grid.
In 1975, Dan co-founded (with Ann Winblad, now a well-known software venture capitalist) Open Systems Inc., a Minneapolis-based pioneer in accounting software for small computers.  Open Systems was acquired by a software conglomerate in 1983 for $15.5 million.  Dan served as president and chairman of Open Systems Inc. from founding through acquisition. Dan has proven performance in leading a profitable technology development business from startup to acquisition.  In addition to serving in management and technical positions for several technology ventures — those he started as well as others’ ventures — Dan has offered professional consulting services in project management, strategic planning, effective teamwork, Web application development, and relational database application development to startups and large enterprises including many project-management contracts at both Microsoft and Boeing. Dan’s technical skills include expertise in diagramming complex processes and managing complex technology-development projects based on the practices of repeatable processes, success metrics, consensus, collaborative process management, and high-performance teamwork with the goal of superior accountability to requirements, schedule and budget.  He has been responsible for the design, development, and implementation of nationally-marketed products and enterprise-wide Web applications at Fortune 100 companies. For more information on Dan, go to

Bradley Bartz, CEO, ABC Solar Inc.
Since 2002, ABC Solar has installed and maintained residential and small, commercial solar installations in the Los Angeles metropolitan area. ABC Solar is currently generating $1.5 million in profitable revenues.  Its profits are a result of a strong grasp of the solar value proposition, a great sales team, excellent bidding and estimating for proposed installations, and strong project management deploying photovoltaic generation equipment.  ABC Solar is contracted to procure, engineer, install and maintain the photovoltaic equipment.  These installations include the solar panels, the controllers that manage the power to the customers and the grid, and the smart electric meters that will be used to bill customers for power.  For more information on ABC Solar Inc., go to

Walter O’Connell, advisor and energy finance executive

Walter has over 27 years in the energy business working in the oil-and-gas, power and pipeline industries.  He has an extensive track record in analyzing, structuring, negotiating, syndicating and closing corporate, project and structured financings in those industries.

Walter has led or participated in over $8 billion in financings, both in the U.S. and internationally.  He has also spent time working on natural gas storage, geothermal, solar and LNG projects.

He has served as CFO for two small startup companies.  Most recently, he was VP of Finance for Calpine Corporation and led and closed 5 power-plant financings totaling over $1.1 billion.

Walter started his career in Houston with Tenneco where he ran the economic analysis group for the pipeline and was a finance manager for the corporation.  He then worked for CSW Energy, Enron, Unocal and Chevron for various periods of time and in various financial roles.

He has a BS from Cornell University and an MBA from The University of North Carolina.

The combination of the experience and talent of FusionBridge, ABC Solar and RETAG provides the complete management, operations and engineering team required to successfully launch and operate ABC Solar Commercial Systems [Corp. | LLC | LLP].  The executives, managers and staff provided by these companies can expand and contract at will to ensure that the company’s administration and operations are constantly right-sized.

Economics for Investors


For tax-equity investors who expect to be full taxpayers over the depreciable life of the asset, the opportunity to invest with iSolarGen is competitive with other tax-equity investments.  The price of electricity in California is unlikely to decline in the foreseeable future.  iSolarGen generates the most electricity during the time of day when the price per kWh is the highest.  During the summer months when the likelihood of utility brownouts is the highest, iSolarGen isolates its customers from utility-imposed rolling brownouts.

Photovoltaic equipment consistently generates electricity with minimal maintenance over 30 years.

This investment strategy delivers to the tax-equity investor a return on investment of 30% ITC almost immediately upon deployment of the capital in the form of tax deductions.  The tax-equity investor also earns depreciation through the term of the investment, expected to be 6 years.

To the debt provider, project economics show a strong debt-service coverage ratio over the term of the loan.


Executive Summary


For information summarizing iSolarGen’s offering to prospective customers, please see How iSolarGen’s solar utility works


Interconnected Solar Generation LLC (“iSolarGen”) is an urban solar electric utility company. iSolarGen installs, owns and operates rooftop photovoltaic (solar) power plants to generate renewable energy for commercial businesses with large rooftops.  The system will take advantage of the local utility power grid as a secondary power source. iSolarGen provides customers with an on-site source of daytime power that …

  • Reduces the customer’s cost of electricity
  • Evens out their cash flow for electricity over a year’s time
  • Provides one invoice for electricity each month
  • Has a positive environmental impact
  • Helps the local economy

The company’s target is the State of California where market conditions are supportive for creating a profitable business.  iSolarGen will install, own, operate, and service these systems as an urban solar electric utility company and sell the power to the rooftop owner or the tenant(s) of the building under long-term power-purchase agreements (PPAs).

iSolarGen has sourced financing totaling $100 million in the form of tax-equity investment and debt for the first round of development and expects to access the market for the next tranche a year later after the first tranche has been deployed.  iSolarGen has already engaged in positive discussions with businesses representing near-term projects worth over $10 million and has identified other potential projects worth $100 million.

iSolarGen has been formed by three principals with extensive industry experience and complimentary skill sets.  The principals have studied the solar industry and power markets, waiting for the right opportunity to launch a commercial solar utility company.  The founders have installed photovoltaic generation equipment in California over the past 10 years.

A number of market conditions have emerged that make this business model viable and profitable going forward.  The primary driver has been the dramatic reduction in the cost of solar panels over the past several years.  The other main drivers include the high cost of power in California, continuation of Federal and California State incentives for renewables, limited competition pursuing this commercial market, and the California mandate for 30% of power derived from renewables by 2020.

The project’s economics offer healthy returns on equity and strong debt-service coverage ratios over the term of the loan.  The installed price for solar power has now reached an all-time low of $3 per Watt, which, according to our analysis, is the breakthrough price for making solar generation competitive with conventional generation.  And the cost continues to decline over time.  This translates to a price of $.17 per kWh, which is competitive with power prices in California.  iSolarGen will only pursue projects that deliver a minimum return on equity with creditworthy customers.

The investment’s project economics depend upon the inclusion of tax-equity investors who are able to utilize the federal 30% Investment Tax Credit (ITC) and the accelerated depreciation benefits that renewable projects generate.  There are three established structures that could be adopted for the tax-equity part of the deal: 1) partnership flip, 2) sale leaseback, and 3) inverted lease.  The financing alternatives and projected financial performance are described in more detail in the business plan.

The market for rooftop solar installations on commercial buildings is huge and largely untapped.  The targeted market also includes government, industrial and not-for-profit rooftops.  California has an estimated 6.6 billion square feet (237 square miles) of commercial rooftop space available.  Assuming 50% of each rooftop is available for solar panels, the current penetration rate is less than 1%.  iSolarGen will target specific power markets where prices are high and that offer variable pricing during peak periods into which solar generation dovetails perfectly.  The competition for this targeted market is currently very limited.  Companies have been targeting industrial-scale projects and residential rooftop installations.  There will be new competition for this market; however, as previously mentioned, the market is huge and virtually untapped.

iSolarGen has formed a strategic partnership with ABC Solar Inc. for installation services and maintenance and with several leading PV panel manufacturers for generation equipment.  Although there are preferred vendors, iSolarGen is not limited to these vendors and will use others when circumstances dictate.  iSolarGen will gradually build out marketing, administrative and installation capabilities.  Initially all meter reading and billing will be completely computerized by using ABC Solar’s existing systems.

Investment risk will be minimized by only drawing money from the debt and equity commitments once long-term PPAs have been signed with creditworthy entities.  iSolarGen expects to take approximately one year to execute contracts worth $100 million in capital cost which will enable development of between ten and twenty projects generating a total of approximately 40 megawatts of electricity.  In the event of a default by a PPA customer, iSolarGen will have the ability to stop selling power to that customer and sell directly to the local utility.  In this way a strong revenue stream can be maintained from that project regardless of the financial stability of the building tenant.  In addition, iSolarGen will focus on customers in high-cost electric markets where it will sell power to the customer at a price that is discounted approximately 10% below that of their local electric utility.

Summary for Investors

For tax-equity investors who expect to be full taxpayers over the depreciable life of the asset, the opportunity to invest with iSolarGen is competitive with other tax-equity investments.  The price of electricity in California is unlikely to decline in the foreseeable future.  iSolarGen generates the most electricity during the time of day when the price per kWh is the highest.  During the summer months when the likelihood of utility brownouts is the highest, iSolarGen isolates its customers from utility-imposed rolling brownouts.

Photovoltaic equipment consistently generates electricity with minimal maintenance over 30 years with approximately 15% degradation in generating capacity by year 30.

This investment strategy delivers to the tax-equity investor a return on investment of 30% ITC almost immediately upon deployment of the capital in the form of tax deductions.  The tax-equity investor also earns depreciation through the term of the investment, expected to be 6 years.

To the debt provider, project economics show a strong debt service coverage ratio over the term of the loan.

The commercial structure of the relationships in the deal is illustrated here:
How iSolarGen’s solar utility works

Timeline (Project Plan)

  1. Aggregate letters of intent from prospective customers to reach a threshold of 5 megawatts.
  2. Secure investor commitment for financing for the first deployment.
  3. Execute PPAs with first prospects.
  4. Secure permits and engineering documents.
  5. Purchase equipment, schedule installation, construct power plants, begin operations.
  6. Expansion into other markets
  7. Show potential exit strategies

The Business Model

  1. The market opportunity is to position the company as a distributed, interconnected, urban solar electric utility company.
  2. The available square footage of commercial rooftops is virtually unlimited.
  3. Standard-form, long-term PPAs
  4. Target markets are where prices are high in the Los Angeles metro area.
  5. A very experienced installation team will grow over time.
  6. Strong credit standards will be maintained.
  7. Expansion plans into other markets outside of CA

The Customer’s Guide to Solar Power Purchase Agreements (California Solar Center)

The Customer’s Guide to Solar Power Purchase Agreements

High Res Version, 6 MB pdf (v.20081005)
Low Res Version, 1.7MB pdf (v.20081005)

This pamphlet provides a lot of useful information for the solar power consumer who doesn’t want to invest capital in panels but simply wants to save money on electricity and help the environment.

(One inaccuracy in the pamphlet is that is says that all PPAs offer a fixed price per kilowatt-hour. That is not the case for iSolarGen’s offering.)