Graham has over 15 years of experience in renewable energy finance and building capital markets brokerage platforms. He founded Open Energy in 2013 to use financial technology innovation to unlock capital and drive debt financing in commercial solar. Prior to Open Energy, he founded two brokerage firms – Axiom Global in 2004 and Phoenix Partners Group in 2006, co-running the latter for seven years. Under Graham’s leadership at Phoenix, the company generated $15 million in revenue within the first two years. Graham also started and managed Phoenix Greenworks Capital, a renewable energy advisory business, and secured $75 million of construction finance for 15 megawatts (MW) of some of the U.K.’s first utility-scale solar projects.
Under Graham’s leadership, Open Energy has developed an innovative online platform that has reduced total transaction costs for commercial solar loans by up to 70 percent. Through its unique marketplace lending model, Open Energy offers investment opportunities for non-recourse secured project debt with long-term, non-market correlated and strong risk-adjusted returns.
Graham studied at both the University of Cambridge and University College in London. He also represented Great Britain in rowing at the 1996 Olympics in Atlanta.
Vishal Sapru (VS), Research Manager for Energy & Power Systems Group had an opportunity to conduct a Movers & Shakers interview with Graham Smith (GS), CEO and Founder of Open Energy.
VS: Can you start by providing our readers a brief overview of Open Energy including the vision behind its formation and its current role in the market?
GS: Open Energy provides innovative debt financing solutions to the United States commercial and industrial solar energy market. While the commercial solar segment has tremendous growth potential, it is the only part of the US solar market that has failed to grow rapidly in recent years. At Open Energy, our objective is to help US commercial solar reach its full potential by increasing access to capital. Our solutions provide solar developers and asset owners with unparalleled efficiency in the financing application process, fixed transaction costs, and the expertise required to fulfill each project’s financing needs. These are the features that will be integral to enabling project ownership and overcoming the barriers that cause stagnation in commercial solar.
VS: Please describe your solution for our readers?
GS: Open Energy provides non-recourse debt financing to enable the development and ownership of high-quality commercial and industrial solar projects. The innate heterogeneity of the commercial solar sector, which encompasses a wide variety of project sizes and power purchasers, often leads to cost-prohibitive transaction fees and convoluted due diligence processes. These factors have often limited solar developers and asset owners from growing their commercial portfolios.
By creating the first online lending platform in US commercial solar, we intake project information in a streamlined fashion in order to efficiently provide solar developers with non-recourse debt financing for their commercial solar projects. Open Energy’s loan application process allows for a rapid review of project information and eliminates unnecessary steps, reducing the time required to approve a loan and significantly driving down the costs associated with obtaining a loan.
VS: What is Open Energy’s greatest challenge and what strategy is in place to overcome it?
GS: One of our biggest challenges and opportunities right now is the need to educate investors about commercial solar as an attractive asset class. By bringing the tenets of traditional project finance to commercial solar, we are demonstrating that this is an investment offering lower risk, stable, long-term, and often non-market correlated yields. The need to inform investors about credit evaluation in commercial solar and build confidence in the sector is a market barrier that Open Energy is addressing through education and a growing portfolio of successes.
VS: What is the unique value proposition of Open Energy and what are your key competitive differentiators?
GS: Open Energy affords increased access to capital for borrowers through a highly time and cost efficient loan application process. By creating an interactive online application and standardizing documentation, Open Energy offers a straightforward route to debt financing. Obtaining financing from traditional lenders can take up to six months. Open Energy can provide capital within as little as 60 days once a term sheet is finalized, and can decrease the costs incurred by up to 70 percent.
Additionally, Open Energy’s flexibility is unparalleled; we tailor each loan to suit the borrower and project. We’re always willing to take extra steps to empower borrowers, whether that means connecting them to potential tax equity investors, understanding the nuances of a local market, or reviewing the financials of a non-publicly rated off taker.
VS: What is your strategy in regards to offering best value to customer for the price, compared to similar offerings from competitors?
GS: Open Energy has developed a sophisticated technology platform that makes it possible to intake project information and analyzes it against our underwriting criteria in a highly efficient way. We’re committed to providing borrowers with the best value for their money, so we work to continuously drive down legal, engineering, and closing costs. Because many of our borrowers work with us more than once, we are able to drive down transaction costs even further by standardizing documentation.
VS: What do you want the company to accomplish in the next couple of years and how would you define success for Open Energy?
GS: Open Energy is ready to drive the growth of commercial and industrial solar nationally and channel billions of dollars into the sector. Over the next two years, we anticipate scaling quickly to deploy capital to high quality developers and asset owners throughout the US, and ensure that every industry player knows where to turn when a project requires debt.
VS: What is your key value proposition that provides your firm a major competitive advantage over other players in the industry?
GS: As the first online loan platform for commercial solar, we maintain first-mover advantage in the industry. We have built and are further developing a brand known for solar and financial expertise, creativity, and an uncompromising commitment to our customers and their projects. Furthermore, we created a business model that pairs technology with human expertise and allows us to keep operating costs low, which in turn means we can offer a very compelling product to our customers.
VS: Could you elaborate on the acceptance of your solution in the marketplace and are there any positive client testimonials that can be shared with us?
GS: The commercial and industrial solar market has embraced Open Energy’s lending platform enthusiastically. We not only work with solar developers and asset owners but also EPCs, manufa cturers, service providers, and other key industry players who want a high-quality debt solution to point to when they hear about a commercial project requiring capital. Below please find a customer testimonial from a solar developer:
“Vis Solis has borrowed through the Open Energy platform to release development capital and build out further commercial solar projects. We recognize the need for a change in commercial and industrial solar financing, and Open Energy is providing the means to achieve that with a technology-enabled, holistic debt financing solution. The platform provides a clear loan application process, a fast response time with loan terms, followed by transparent, clear due diligence steps. The compact loan package keeps legal expenses to a minimum and greatly expedites the time to access loan funds. On average, Open Energy operates in excess of 100 percent faster than the alternatives (if an alternative is even available). This speed and transparency can make the difference in whether or not a project is built.”
VS: As a general conclusion, what do you think the future holds for such solutions and, more specifically, what role can we expect Open Energy to play in shaping the future of the industry?
GS: In the wake of positive policy developments such as the COP21 agreement, we are going to continue seeing a strong push for renewables worldwide. The global market for solar power has been projected to reach $21 billion by 2019, with the greatest growth expected to be seen in the commercial sector, according to a report from analysis firm IHS. In the United States alone, 75 percent of the 5.6 million commercial buildings are 10,000 square feet or less, making them ideal candidates for midsize solar installations.
There is clearly an incredible market opportunity for commercial solar in the United States, but in order to achieve growth, we will need innovative financing solutions. Open Energy is strongly positioned to lead in this space, and make it so that access to capital is never a barrier to the completion of high-quality projects.
VS: What are your company’s marketing and product positioning strategies? Do you plan to form any strategic alliances with other client companies?
GS: Open Energy works closely with a wide variety of developers, asset owners, EPCs, component manufacturers, and other market participants to develop strategic partnerships. By understanding each part of a solar developer’s project timeline, we are able to provide our customers with the financing and advisory solutions they need, when they need them. We are committed to soliciting feedback and constantly refining our platform and financing processes in order ensure high customer satisfaction, the lowest possible transaction costs and overall cost of capital. We have already been able to reduce transaction costs for borrowers by up to 70 percent. Utilizing feedback from our customers, our market experience and our exciting partnership pipeline, Open Energy will continue to establish itself as a market leader in commercial solar financing.
VS: What is unique about your company in regards to offering the best and differentiated service experience to customers?
GS: We work hard to develop solutions that make sense for our customers. From a user-friendly, intuitive application process to tailored loan products and broad advisory capabilities, our goal is to develop strategic partnerships with customers and constantly help them grow their businesses.
VS: Please describe the importance and focus of your company towards building and strengthening the brand equity of your offering?
GS: Our goal is to serve as a knowledge base for borrowers and investors alike on the benefits, challenges, and huge potential of commercial solar in order to build confidence in the sector. To this end, we utilize targeted media, thoughtful market commentary and analysis, industry organization participation, conferences, and networking events to raise awareness of our creative financing solutions and their role in growing US commercial solar.