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Financing

The main questions that prospective solar customers have is how much is this going to cost and how do I pay for it? Most clients expect sticker shock and assume that there is no way to afford a new solar energy system. However, there is a huge array of financing options available and most customers are able to find at least one solution. Depending on the size, location, and type of system, as well as the customers tax appetite and cashflow, certain financing options may be preferable to others.

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This guide is meant to give an overview of the main financing options available in the commercial solar market. It is always advisable that you speak with a professional financial advisor as well as a solar expert to determine the best match for you.

1. Cash Purchase / Self-Finance: The client pays total project cost upfront and takes advantage of all tax savings and incentives, as well as all energy savings from solar. This is the simplest and most financially advantageous way to go solar.

2. Term Loan Financing: a loan that is paid in set increments over a period of time.

3. Commercial Property Assessed Clean Energy (C-PACE): Flexible financing terms for up to 20 years (available in select states). PACE financing is attached to the property and repaid through your property taxes, it's classified as a property assessment instead of a loan. PACE transfers with the property to the next owner if the property is sold. This option is not available for nonprofits, as they do not pay property taxes.

States in which C-PACE is currently available:

  • California
  • Colorado
  • Connecticut
  • Delaware
  • Florida
  • Illinois
  • Kentucky
  • Maryland
  • Massachusetts (Coming 2021)
  • Michigan
  • Minnesota
  • Missouri
  • Nebraska
  • New York
  • Ohio
  • Oregon
  • Pennsylvania
  • Rhode Island
  • Texas
  • Utah
  • Washington, DC
  • Wisconsin

4. Power Purchase Agreements (PPA): the financial institution develops, owns and maintains the solar project. They retain all of the tax and financial incentives and sell all the power to the customer at a discounted rate ($/KWH) . While both for-profit and nonprofit organizations can take advantage of this financing option, it is typically most advantageous to nonprofits as they do not have as many financing options available to them.

5. Operating Lease: Lessor (financial institution) owns the system and provides 7 years of 100% tax-deductible fixed lease payments (sometimes referred to as rent) to the Lessee (client). The customer keeps all solar generation and local incentives. After year 7, the client can purchase the system at a discounted price. This option is also attractive to nonprofit organizations.

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