PATHION also has projects that have long term government incentive programs that may either have some risk because the power is sold to one or more corporate customers or because they are participating in the sale of power into a commercial market where there may be some timing risk for customer acquisition. These are also extremely profitable, long term investments, with government incentives and insurance policies available to guarantee system performance. However, because the insurance cannot guarantee the ability to secure or preserve the customer for the power there is some degree of risk. However, these projects are typically much larger and the fund offers a higher return in recognition of the slightly higher risk.

An example of these projects are projects under the VDER program in New York state. VDER provides a 25 year annual incentive as well as an up front subsidy for storage, and a program that allows the system owner to either sell the energy to the utility under a long term agreement of 25 years OR to participate in the direct sale of power into the commercial markets. The difference in average revenue from the sale of power can be as much as 30-50%, in addition to what is generated by the incentives and service revenue but has some modest increase in risk. This fund will fund the latter, while the former would go through the LONG-TERM MINIMAL RISK FUND.

These projects are typically larger, as much as 7 megawatt vs 500 kilowatt solar production and development cost of $10-15 million as opposed to $1.5 million.

These are mostly new construction of solar on ground mounts in empty land with energy storage systems on-sight. Typically 30-50 acres in size.

Depending on where a project is located and how many projects have already been built nearby, the cash incentives reduce over time and can vary from $350-$125 per kilowatt of solar. That has a major impact on the capital risk and potential returns of the projects.

The larger projects are in the rural areas, but are also now getting smaller incentives. There are large numbers of smaller projects, similar to the size of the SMART projects in Massachusetts, in parts of New York City and the surrounding areas.

In addition to the Incentive Tax Credit and Accelerated Deprectiation, these projects receive an immediate cash payment of $125-375 per KW, which radically reduces the capital risk. However, the revenues from both the sale of power and services are lower than the SMART projects. As a result, these projects provide returns to investors of 10-14% because of the incremental risk. The fud will not invest in projects that cannot meet our minimum hurdle rate.

The goals of this fund are better return of 10%+, medium term, low risk

Some good examples of these projects are project numbers 616 and 662 in the Pathion pipeline.