With energy costs rising an average of 6% each year over the last decade and solar installations generally achieving returns of 7-12%, a solar energy installation clearly offers a strong return on investment. In addition to purchasing solar outright, new and innovative approaches have emerged to help organizations buy and finance solar energy. SolarCraft will work with you to put together a custom financing package that will result in the lowest cost for energy.
As a full service solar integrator our experienced staff at SolarCraft will work with you to explore your financing options and provide detailed analysis and projections to assist in your financing decisions. Below are some typical financing structures that are offered.
Cash or Loan Investment
The simplest path to financing a commercial solar project is to purchase the system directly. You own the solar installation which allows you to directly benefit from the 30% federal credit and any local solar incentives.
If you have available capital and tax appetite to absorb tax credits and accelerated depreciation, you may find cash purchases to be the best option.
Own the system and the energy
Solar Cash Purchase Benefits
- Quick, Streamlined Process: Reduced time required for a solar installation and begin benefiting from clean, solar electricity as soon as possible.
- Attain Greatest Potential Savings: Avoid third party expenses and interest rates – you can maintain complete control of your solar power system while realizing the highest savings from your solar investment.
- Take advantage of Financial Incentives: The owner of a commercial solar installation is eligible for a 30% federal investment tax credit.
- Protection from Rising Electricity Prices: Secure a low electricity rate for the lifetime of the system and reduce your exposure to rising energy rates.
- Promote Clean Energy: Take advantage of Renewable Energy Credits (RECs) and promote your organization’s corporate social responsibility message by becoming a solar powered company.
A solar lease allows organizations the ability to “lease-to-own” a solar system. In many cases, the electrical savings generated from the solar system is more than what your monthly solar lease installment will be, creating an instant electricity savings!
Lease to Own
Solar Lease Benefits
- Low Upfront Cost: There are little to no upfront costs for a lease, allowing you to reduce your initial capital investment.
- Save on Electricity Costs: Monthly lease payments are more than offset by the reduction in monthly electricity bills, resulting in savings on total electricity costs.
- Protection against Rising Electricity Prices: Secure a low electricity rate at a fixed price per kilowatt-hour and reduce your exposure to increasing energy rates.
- Flexible Options: At the end of the term, typically between 10 to 20 years, you may choose to purchase the solar power system for a small, residual value, renew the lease or opt to have the system removed.
- Partnership Choices: Allows you to work with your existing equipment lease financial partners.
Power Purchase Agreement
The Solar Power Purchase Agreement (PPA) is an alternative to financing and owning the system. A PPA affords you the opportunity to install solar power at your facility without paying upfront costs or worrying about system operation and maintenance. Sometimes referred to as a “third party” ownership model. For the duration of your contract (typically 15-20 years), you’ll enjoy lower, stable electricity rates along with the renewable, green energy generated from your solar power system.
A well-structured PPA allows you to reduce electricity costs immediately and realize increased savings over time as electricity prices continue to increase. At the end of the PPA contract period, you can purchase the system at a reduced price, initiate another PPA, or have the solar installation removed.
Low Upfront Cost
- No Capital Investment: No initial capital investment, you only pay for the solar electricity that is produced.
- Fixed Energy Rates: A PPA provides a powerful hedge against rising electricity prices.
- Full-Service Project Management & Maintenance: You have no responsibility for owning, operating or maintaining the solar system equipment.
- Monetize Tax Credits & Solar Incentives: Benefit from solar tax credits, even if your organization has no tax liability to offset. The PPA financier is able to monetize available tax incentives and pass these savings on to you in the form of a lower PPA rate.
Learn more about solar financing for government and non-profit organizations, which have special considerations.
Contact SolarCraft to learn more about solar financing options for your business.