While solar is booming in the U.S., large segments of the commercial solar market remain underserved -- and are ripe for expansion.

At Intersolar North America this week, we caught up with Bryce Smith, co-founder and CEO of OneEnergy Renewables, to get his insights on financing some of these commercial solar projects.

Who are these commercial customers? Those who:

• Don’t own their roof.

• Don’t have enough space for a solar array on their roof.

• Use large amounts of power.

Many universities and other institutions fall into the second two buckets. With electricity being used at all hours, they tend to have big power needs but not enough room for larger projects of, say 5 MW, which would cover those needs.

How to best serve these customers?

OneEnergy Renewables’ answer is a solar power purchase agreement (PPA). But not just any PPA. Solar PPAs have traditionally been applied to onsite projects. OneEnergy is expanding the market for this financing vehicle to offsite systems through the Purpose-Built Solar product, allowing corporate and institutional customers to build larger systems and lock in greater long-term savings.

Their particular arrangement is possible only in deregulated states with a wholesale electricity market -- and Smith says the company has projects in the works in most deregulated markets.

While this kind of project wasn’t economically feasible in the past, the time has come when it does make sense. “We see it as a huge trend going forward,” says Smith.

Smith sees this kind of project as a real win-win -- which means buy-in from utilities. There’s something in it for everyone.

• For developers: Traditionally, the only customer for a large offsite project was a utility. That would require applying to an RFP and possibly being turned down. This new model opens up the market for a whole new set of projects. And the university or other customer is guaranteeing a price that makes it economically viable.

• For financiers: OneEnergy provides low-risk projects with solid returns. “Our main job,” Smith says, “is to take the risk out of projects so financiers own and operate them. The biggest risk item is selling the power.”

• For customers: The wholesale market allows these projects to deliver price stability to customers. These customers currently have no way to hedge electricity prices, which makes it hard for them to budget for the future. OneEnergy’s PPAs give them a number of options. Depending on their finance needs they can pick a fixed price over the term of the PPA, start at a lower price with an escalator, or even pick a higher starting price with a de-escalator. The customers OneEnergy works with are expecting to be around for a while, so PPA terms of 15 – 25 years are not generally an issue.

• For utilities: These projects remove a lot of a utility’s usual objections to solar generation, because they don’t rely on mechanisms like net metering. The offsite project only gets paid for the power generated -- the utility customer still has to pay the utility for the distribution and transmission. The projects also help make the grid more resilient, because they add more distributed generating resources. “We think utilities will welcome this type of generation, which to them looks like the other types of generating assets they manage,” says Smith.

What does offsite mean? We’re talking projects ranging in size from 2 – 50 MW (with many in the 5 – 10 MW range). That can require 10 – 200 acres. OneEnergy works with low-value farmland as well as brownfield sites. A farmer, for example, may own 1000 acres with an unproductive patch of 50 acres. They can turn that patch into a revenue generator with a solar project and receive a steady lease payment for years.

Projects are sited at areas of the grid that are most in need of power generation, which also tend to be where power is most expensive. (It helps that in a wholesale market, projects have a right to connect to the grid.)

An interesting political sidenote: Many offsite projects are sited in red areas with the power generated going to blue customers -- a fine example of how solar spans the political spectrum.

Smith points out that there’s a real appetite among customers for the price stability these projects bring to their power bills. He notes, “There aren’t many things these folks buy where they just say, charge me whatever you want. They don’t do that for anything else in the value chain.” And without this hedge against rising utility rates, that’s what they’re doing for their electricity.

“This is the next big renewable energy product beyond rooftop solar,” he adds. “We’ve barely begun to build solar in this country.”

We can expect to hear more from OneEnergy Renewables, with announcements about new projects in the next couple weeks.