Alumnus Honikman Forms Web-based ‘Marketplace’ to Back Solar Projects
For Stephen Honikman, JD ’98, MS ’98, his legal training combined with his master’s degree in technology and human affairs has allowed him to pursue a range of entrepreneurial interests in emerging markets. After law school, Honikman moved to Silicon Valley, where he began working with new and established “dot-com” companies, drafting privacy policies and other business documents, and participating in internet product development.
“Over time, I naturally fell into a sort of ‘business to technology liaison,’” he says, bridging the gap between software engineers and business executives to provide better understanding of the other’s needs and constraints.
“Born in a solar home,” Honikman has always had an interest in renewable energy. “After law school, I was looking for ways to merge my career in the web with my passion for all things related to sustainability, especially development of clean energy resources,” he says.
“The light bulb moment came,” Honikman says, “when I learned about an interesting financial concept called a Power Purchase Agreement (PPA) that had been used for decades by Utilities to buy energy, and was beginning to be used to finance development of solar projects. I saw how this could provide a path to securitize solar energy as an asset class. I took all I had learned in law school and all I knew about the power of the internet and applied that knowledge to enable and scale-up the ability for new participants to invest in solar energy projects.”
The result was Wiser Capital LLC, a financial services company that is building a web-based “marketplace” to source solar projects and structure third-party financing to get them built. Based in Santa Barbara, California, Wiser’s platform brings together the parties necessary for these projects—the host facility, or energy user; the system integrator, who builds the solar system; and the investor(s), who joins Wiser to capitalize the project and then achieve attractive and stable returns on the investment over time by selling the energy to the host-facility through a PPA.
The PPAs allow the host facility to lock in energy prices, often saving money in the first year, and hedge against the volatility of utility rate increases in the future. When the PPA term is done, the host facility is left owning the system outright without ever having to use their own capital to go solar. “It’s a sustainable and ‘win-win-win’ opportunity,” says Honikman, who serves as Wiser’s president.
Honikman also built sophisticated models of the factors affecting system and utility energy costs with the resulting data displayed on the internet in a user-friendly way. Additionally, his Wiser Solar Asset Rating serves as “a kind of ‘risk score’ for people wanting to invest in projects,” he says. Finally, Wiser’s platform produces “project specific turn-key transaction documents for the host facility and investor to use at costs far below the current market rate, enabling far more projects, that were held hostage by high transaction costs, to become economically viable,” he says.
The combination of the Web-based platform, the Wiser Solar Asset Rating, and the transaction documents gives all three parties the information they need to determine whether the transaction is beneficial to all parties or not. “At the end of the day, it’s about the quality of the deal,” Honikman says. “Law school gave me the skills I needed to evaluate potential deals quickly and effectively.”