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green solar finance
Financing options are very different for individual homeowners versus corporate clients and State and Federal Agencies. Green Solar Finance addresses these different financing options separately below.
corporate clients / state & federal agencies
When financing projects for corporate clients and State and Federal agencies, there are three primary options: Capital Purchase; Lease; or Power Purchase Agreement ("PPA").
- The Capital Purchase option is when the client pays for the system, does not pay for the renewable energy generated by the system, and owns the economic benefits of the tax credits and/or rebates and accelerated Modified Accelerated Cost Recovery System ("MACRS") depreciation.
- The Lease option is when the Lessor (a third party investor), pays for the system—the client leases the system directly from the Lessor for a seven to ten year term with a commitment to purchase the system at the end of the term for an agreed upon residual value. With the Lease option, the client and Lessor agree on a payment structure for the renewable energy generated by the system and the Lessor receives the tax benefits, lease payments and the residual value.
- The PPA option is when the client enters into a long term agreement, usually fifteen to twenty-five years, to purchase solar electricity at an agreed upon payment plan over the life of the agreement. With the PPA option, the client has no up front capital outlay, the investor realizes the tax benefits and the client has the option to purchase the system at the end of the agreement.
Investors will consider financing solar projects in the 1 to 20 megawatt range and will consider larger investments on a case by case basis.
Each structure has pros and cons for the client as well as for the investor. There are also different challenges in securing the financing depending on the particular client, desired structure and investor appetite. In addition, there are varying degrees of risk with corporate clients versus State and Federal agencies. To address these challenges, Green Solar Finance has developed a Hybrid Structure.
- The hybrid structure offers a combination of the Capital Purchase and PPA options that can satisfy both the client and the investor. The client can pay for 20% to 30% of the cost of the system, while the investor finances the balance secured by the PPA. The client and investor share in ownership of the system and in the prorated tax benefits through a joint venture which reduces the lenders risk exposure. The client makes a smaller up front investment which can be more easily financed with various potential creative alternatives.
The following table offers a brief overview of the typical financing options and the hybrid structure with pros and cons for clients and investors as well as the current state of investor appetite for the respective structures.
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financing option
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client pros & cons
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investor pros & cons
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investor current appetite
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Capital Purchase
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Pros:
Cons:
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No Third Party Investor
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Not Applicable
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Lease |
Pros:
Cons:
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Pros:
Cons:
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PPA |
Pros:
Cons:
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Pros:
Cons:
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Green Solar Finance Hybrid Structure
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Pros:
Cons:
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Pros:
Cons:
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individual homeowners
Financing for individual homeowners is less challenging because the size of the projects and dollars required. If a homeowner has equity in their property, they can explore a cashout refinancing to cover the costs of the system. With mortgage rates at an all time low, there is presently a great opportunity for homeowners to look at lowering their cost of capital. Green Solar Finance assists individuals with evaluating their mortgage financing options to empower them to make an informed decision as to whether refinancing is a viable option. Green Solar Finance can also can recommend trusted in-house mortgage brokers to work with clients to achieve their goals.
Contact Green Solar Finance today to see how we can partner with you by clicking on the link below and completing the inquiry request.