FINANCING A SOLAR SYSTEM
The main difference between purchasing and signing a Power Purchase Agreement (PPA) for a new a solar system is ownership. If you purchase a solar system, you own the system, either outright (if purchasing with cash) or by financing the investment with a loan. If you sign a power purchase agreement (PPA), a third party owns the solar system, and you are not entitled to incentives & tax credits. With a PPA you could save approximately 25% on your electricity cost using the alternative finance programs below, versus saving up to 85% - 90% on your electricity cost if you purchased the system yourself.
Solar System Ownership Benefits
- Improve Property’s Net Operating Income (NOI)
- Extend Lease Terms and Increase NPV
- Receive lucrative state and federal tax credits and accelerated depreciation
- Leverage current low interest rate loans
- Note that government, schools, and nonprofit organizations cannot apply for any of the state & federal benefits mentioned above. The alternative project financing programs are the best avenue for solar project financing.
ALTERNATIVE PROJECT FINANCING
If you could get 25%+ savings on your electricity costs for the next 25 years without spending a dime, would you do it ?
Sky bridge Renewables has partnered with SD Renewables and Safari Energy to make it easy for commercial, government, school, and no profit property owners to reap all the benefits of solar without using their own capital.
- PPA4 – Power Purchase Agreement
- Clean Energy PPA5 – Through PACE financing
- C-Pace Loans6 – Location must be in a C-PACE eligible area
Finance Program Benefits
- Our Finance Partner will own and operate, you benefit
- No upfront costs, only savings
- Off-balance sheet, no personal / business guarantee needed
- Flexible financing for every scenario with market leading rates
About SD Renewables: Market leading solar industry financiers making solar available to all commercial, industrial, agriculture, and non-profit property owners without having to use your own capital.
About Safari Energy: Safari Energy has developed or acquired more than 500 projects nation wide, including some of the nation's most sophisticated solar projects from Boston onto Honolulu. Safari I saw holly owned subsidiary of PPL Corporation, a $7.8B utility company with $45.6B in assets.
1. Businesses that install solar photovoltaic (PV) systems are eligible to receive an (ITC) investment tax credit, which can be used to directly offset federal tax liability on a dollar-for-dollar basis. If the tax credit exceeds your tax liability you can roll the credit into future tax periods for 20 years. Commercial projects that commence construction through the end of 2022 are eligible to receive a 26% tax credit of the total PV system cost. The ITC steps down thereafter: 2023 projects qualify for a 22% ITC, 2024 and later projects qualify for a 10% ITC.
2. The Tax Reform Bill modifies bonus depreciation under Code Section 168(k) to allow 100% expensing for property placed in service after September 27, 2017, and before January 1, 2023. By increasing bonus depreciation to 100 percent, the new tax bill essentially allows eligible entities to deduct the entire allowable tax basis of the system in the first year of operation. Under the federal Modified Cost Recovery System (MACRS), businesses may recover investments in certain property through depreciation deductions. MACRS establishes a lifespan for various types of property over which the property may be depreciated. For PV systems, the taxable basis of the equipment must be reduced by 50% of any federal tax credits associated with the system.
3. Under the Modified Cost Recovery System (MACRS), businesses may recover investments in certain property through depreciation deductions. The MACRS establishes a set of class lives for various types of property over which the property may be depreciated.
4. A solar power purchase agreement (PPA) is a financial agreement where a developer arranges for the design, permitting, financing, procurement, installation, and operations & maintenance of a solar energy system on a customer’s property at no cost. The developer sells the power generated to the host customer at a fixed rate that is typically lower than the local utility’s retail rate. This lower electricity price serves to offset the customer’s purchase of electricity from the grid while the developer receives the income from the sale of electricity as well as any tax credits and other incentives generated from the system. PPAs typically range from 15 to 25 years and the developer remains responsible for the operation and maintenance of the system for the duration of the agreement. At The end of the PPA term, a customer may be able to extend the PPA, have the developer remove the system, or choose to buy the solar energy system from the developer.
5. The Property-Assessed Clean Energy (PACE) financing is a finance model for property owner who are interested in making valuable upgrades that promote energy efficiency and building performance. PACE allows local governments to provide financing for projects centered around renewable energy and energy efficiency. Financing is repaid over time through property taxes, making it one of the most affordable and efficient ways to pay for any project. PACE provides 100% upfront funding for a project, and financing, and the amount you finance won’t impact your future debt-to-income ratio.
6. CPACE Loan
- Address must be in a C-PACE eligible area
- Minimum Project Cost = $500,000
- Loan Term = up to 30 years (tied to useful life of asset)
- Loan to Value Limit = 35% for most properties, 25% for education, medical and non-profits
- Eligible Projects = Solar Energy Efficiency, Storage and Roofing
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