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New York Renewable Energy, Engineering, and Recycling

Commercial Financing

Home Commercial, Not For Profits, and Government Commercial Financing

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Today, there are more ways than ever before to finance the solar project for your business or organization. Our Financial Solutions vendors can help you determine which is the best option for your project since there simply isn’t a “one size fits all” answer. With the partnerships that we have pre-established, our team can help you:

Understand the pros and cons of the various options
Find the best way to structure your lease, loan or contract
Identify the best financing partner for your specific project

For a credit-worthy customer, we can arrange for a financing option that requires little or no money upfront. In many cases, the right financing option can also become cash flow positive, meaning that the energy savings and tax benefits would be worth more to the system owner than the payment cost. This essentially allows you to acquire your own “power plant” with money that otherwise would have gone out to the utility company or been paid in income taxes.

Discover the various financing options for solar panels for businesses big and small

Solar financing - Capital Lease

A Capital Lease can spread the costs over a 7 to 10-year term, just like a loan or mortgage, but unlike a loan there is no down payment required. Also like a loan, the tax benefits of ownership; including the 30% Investment Tax Credit, depreciation and the interest component of the lease payments, stay with the Lessee.

For a company or individuals that are paying taxes, the combination of energy savings and tax benefits can pay most, or even all, of the cost to install the solar PV system and once the Lease is paid off, the commercial entity can enjoy an additional 20 plus years of â€œfreeâ€ energy.

This solar financing option has several appealing advantages for traditional and non-profit organizations, however, they typically bring the most value to for-profit businesses with taxable income.

Features of capital leases:

Lease terms can be up to 10 years
Interest rates are determined by customer credit and project size but usually range from about 5% to 7%
For a Lessee paying taxes, often the best after-tax return on investment

Find the right option:
Contact us if you are seeking a solar financial solution for your customer and need more information.

Solar financing - Operating Lease

With an operating lease, the tax benefits are taken by the Lessor and much of their value passed back in the form of lower lease payments. All things being equal, expect an Operating Lease quote to be at least 30% less than a Capital Lease. For companies without much need for tax credits or deductions, an Operating Lease may be the best alternative.

Unlike a Capital Lease with a fixed purchase price at the end of the lease term, an Operating Lease requires a certain element of â€œfair market valueâ€ as to the end of lease purchase. Since the commercial entity will no doubt want to buy the system once the tax benefits are complete, we will work to ensure there are one or more purchase options that combine flexibility and fairness

Features of solar operating leases:

Operating leases require no initial investment, and have lease terms from 6 to 10 years
Lease payments are lower because the Lessor takes the tax benefits into account. For most customers, the effective interest rate is actuallyÂ negative
Operating Leases are â€œoff balance sheetâ€ for the Lessee

Find the right option:
Contact us if you are seeking a solar financial solution for your customer and need more information.

Solar financing - Power Purchase Agreements (PPAs)

A Power Purchase Agreement is a long term agreement where the business or organization agrees to purchase all of the electricity generated by a solar system at a contracted rate. The PPA provider installs, maintains, and operates the solar system – the commercial entity only pays for the power that is generated and usually at a small discount from what is charged by the current utility company.

A PPA can be a low risk option to finance a system and due to some vagaries in the Tax Code, the ONLY way for a non-profit or governmental entity to receive an indirect advantage from the tax benefits for solar PV. For commercial businesses looking for the highest possible return on investment, one of the other previously mentioned options is often a better choice as the system is paid off sooner. Also, due to the complexities and ongoing monitoring involved, most PPA funders will only consider projects that cost at least $300,000 and prefer ones much larger than that.

Typical Features of Solar Power Purchase Agreements (PPAs):

Power Purchase Agreements require no upfront investment or maintenance costs
Proposals vary based on the underlying economics, but typically the contract lasts for 15 to 20 years and may have up to a 3% annual rate increase escalator
At the end of the contract, a new PPA can be negotiated or the system purchased.

Find the right option:
Contact us if you are seeking a solar financial solution for your customer and need more information.

Solar financing - PACE

PACE (Property Assessed Clean Energy) funding is provided by a city or county and is repaid through a special property tax assessment over a term of up to 20 years. PACE for commercial projects has been authorized in 31 U.S. states and about a dozen currently have funding programs in place. New PACE programs are being launched each month so check with us for the latest update in your area.

Like a Capital Lease, tax benefits or other incentives remain with the property owner. Unlike a lease or loan, however, the credit decision is primarily based on having a reasonable amount of equity in the building or property where the solar PV system will be located.

Features of PACE:

With terms up to 20 years, odds are that the energy savings will exceed the payments and thereby increase operational cash flow for the business
If the property is sold, the PACE property tax assessment obligation transfers to the new owner
The obligation is off balance sheet with no recourse to the company

Find the right option:
Contact us if you are seeking a solar financial solution for your customer and need more information.

Solar financing - Municipal lease

NYREER and our Partners have experience helping government and municipal organizations reduce their operating expenses associated with utility bills by going solar. A qualified â€œtax exemptâ€ Municipal Lease financing typically provides very low interest rates over a 15 to 20 year financing term. Given the costs to underwrite a Municipal Lease, however, this generally means that the total project should be $1 million or more.

Features of solar municipal leases:

Lease terms of up to 20 years at low interest rates
Nominal fixed buyout at the end of the lease term
Combination of low rate and long term often results in savings which are more than the payments; i.e. cash flow positive by reducing overall costs

Find the right option:
Contact us if you are seeking a solar financial solution for your customer and need more information.

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NYREER – New York Renewable Energy, Engineering, and Recycling Group