Tag: Solar Financing
Project financing and the basics of PPAs
From the East Coast to the West Coast and everywhere in-between, businesses and organizations of all types—universities, colleges, municipalities, government buildings, agricultural and farming operations and more—are realizing the benefits of solar power. One popular option available for financing commercial-scale installations is a power purchase agreement, or PPA. Many of the projects that we have worked on in the last few years or so have come to fruition as a result of this kind of partnership, from the Perdue installations in Delaware and Maryland to Washington, DC’s American University. If your organization is interested in benefiting from solar energy, this type of financing should most certainly be on your radar. So how does it work?
PPAs are arrangements through which a host customer agrees to provide the physical property on which a solar PV system is built, and purchases the resulting electricity at a stable price for a number of years. The system is owned and maintained by the developer, or solar service provider.
PPAs are attractive to organizations for several reasons. The arrangement allows an organization to fix the cost of electricity for many years, and do so without much of an upfront capital investment. The installation also increases the valueof the property on which it’s built. In addition, the organization can meet its own internal goals for sustainability while making a visible, tangible commitment to the environment.
For example, in June of last year, we installed a 753 kW system for Maryland’s Anne Arundel Community College (AACC). The entire photovoltaic (PV) system was installed on top of a covered parking structure – the largest such system in Maryland and one of the largest carport systems on the East Coast (pictured below). It is expected to generate approximately one million kilowatt hours of electricity in its first year of operations, enough to power about 100 average homes and the equivalent of eliminating greenhouse gas emissions from more than 77,000 gallons of gasoline per year, or over 1 million gallons over the next 15 years. The system is projected to save the college more than $300,000 over the next 15 years.
AACC received a $750,000 grant from the Maryland Energy Administration via the American Reinvestment and Recovery Act to contribute to the financing of the system. Washington Gas Energy Services (WGES) provided the financing for the balance of the project costs and owns and operates the PV system. WGES will sell the output of the solar panels to AACC through a 15-year PPA, enabling AACC to host the solar project without any capital outlay.
Prefer a visual of how a PPA works and all the parties involved? The image below (from the U.S. EPA) does a pretty good job (we think) of laying out the different entities and responsibilities involved.
We’ve been in the position of both the installer and solar services provider for a wide variety of projects. Our experience has given us a wealth of knowledge to draw from, which we are happy to share with organizations that are considering adding solar power to their facilities. If that’s you, we are here to help.
Standard Solar Offers 12-Month Bridge Loan As Added Incentive To Go Solar Now
Go Solar Payment Program Can Ease The Wait for Federal, State and Any Local Incentive Credits or Payments
GAITHERSBURG, Md., March 3 — Homeowners in Maryland and the District of Columbia now have the option of purchasing solar electric systems through Standard Solar’s new “Go Solar Payment Program.” The program features no-interest financing for 12 months which can serve as a loan to help bridge the time between when a system is paid for and the receipt of payments for government incentives or tax credits.
The “Go Solar Payment Program” makes as much as $45,000 available to qualifying homeowners. The government incentives available to homeowners and businesses include, but are not limited to, the new 30% Federal Investment Tax Credit, Maryland’s solar grant, local property tax credits in certain Maryland counties and Washington, DC’s new Renewable Energy Incentive Program.
“For homeowners who repay the loan within 12 months, this essentially is free money,” said Standard Solar President and Chief Executive Officer, Anthony Clifford.
Homeowners apply for 12-month same-as-cash through the “Go Solar Payment Program” by phone and get a credit decision in about 10 minutes. The paperless application process is quick, easy, and secure. To get started, contact a Standard Solar consultant at 1-888-474-3843 or via email at firstname.lastname@example.org. Homeowners interested in speeding up the process can jump-start the assessment of their home’s suitability for solar by filling out an evaluation at http://www.standardsolar.com/Solar-Evaluation.aspx .
New solar incentives, combined with the 12-Month Same-As-Cash payment option, present an unprecedented value for homeowners. “For homeowners who want to save money, reduce their reliance on the ever-increasing cost of utility-supplied electricity, lower their impact on the environment and help relieve stress on the regional power grid, there simply has never been a better time to go solar,” Clifford said.
Solar systems are especially helpful in taking stress off the network of regional transmission lines that funnel electricity throughout the region. As those lines are used more heavily, the risks to residents of Maryland and DC of brown-outs — even blackouts — grows.
“Some homeowners,” Clifford added, “are asking us why it doesn’t make sense to draw on their home equity lines of credit to finance their solar systems. Our response to them is this: that home equity line is charging you interest. The “Go Solar Payment Program” offers no interest (if paid in full during the same-as-cash period) and a payment deferral of 12 months. Prior to the expiration of the same-as-cash period, the homeowner can always use their home equity credit line to pay-off the loan.”
Information about the Renewable Energy Incentive Program in the District of Columbia launched February 23, 2009 is available at www.standardsolar.com/dc. There District homeowners can see how the “GreenDC” incentives, together with a 30% Federal tax credit, can pay for more than half of the up-front system cost. Once energy savings and the sale of Solar Renewable Energy Credits are taken into account every year going forward, the time needed to recover that net investment on a typical 3-kilowatt system approaches four years.
In states requiring that a certain percentage of electricity be generated from renewable resources such as solar and wind, homes and businesses that generate a portion of their own electricity earn Solar Renewable Energy Credits.
A Solar Renewable Energy Credit certificate is earned for each 1,000 kilowatt hours of electricity generated annually and can be worth $300 or more to homeowners. A typical 3 kilowatt system can be expected to generate more than 3,500 kilowatt hours of electricity every year. The sale of the Solar Renewable Energy Credits would earn homeowners an average of at least $1,000 annually.