So You Want to Finance Your Solar Array?
What do we know about financing solar?• We are a Solar Developing/Contracting Business;
• We are involved in Solar PPA Financing and S-REC retailing;
• Our overseas non-profit has financed and developed thousands of solar systems;
• We financed and developed near zero energy homes in Chicago; and,
The Solar Patriot on the National Mall Earth Day, 2001
Financed our first Zero Energy Home solar system w/ Sun Trust Mortgage
Our Solar House at Williams Point, Georgia 2015
Financed our second Zero Energy Home solar system with our 401k
Buyer Beware!!
A few questions/issues to keep in Mind…
1. How Financed? PPA – 3rd Party Owned Lease – PACE – Bank - Self2. What are the Origination Fees?3. What is the Interest Rate?4. What does the Financing Company levy on the Solar Contractor?5. Who Owns System - Gets the Tax Credit?6. What is the Term?7. Who Keeps/Owns the S-RECs?8. What is Local Utility Net Metering Policy?9. What does Current Mortgager Allow?
PPAs and 3rd Party Leases• These financing instruments are based on the
financier owning the system, tax credits, SRECs, and energy generation;
• Because these are leases and not a loan, there is no obligation to disclose the cost of capital to the financing customer;
• Often the hidden cost of capital is in excess of 20% that goes to the financing organization
Utility Net Metering vs Interest Rate
• A large number of electric utilities are buying back solar power at avoided electric rates (often 1/3 the value of retail electricity);
• This often depresses the monthly benefit of 8 kW solar to less than $100 per month;
• The difference in interest rate from 4% to 6% for an 8 kW Solar Array will increase monthly payments by $20 + per month from $100 to $120+. Lower interest rates are usually available for an additional up front settlement cost or payoff of 30% ITC.
Solar Renewable Energy Certificates (S-RECs)
• Most financing organizations take the S-RECs (particularly those that provide PPA or Lease);
• Without S-RECs – you are not solar powered. The claim of “Solar Powered” goes with the ownership of the S-REC;
• About the best thing one can say about their house with solar if the S-RECs go to the financing organization, is that the house is a solar host;
• If S-RECs taken, negotiate to have other RECs replace them.
The Best Financing Scenariosare when the homeowner owns the solar array
• Solar Loans – Banks, Mosaic, Dividend, etc;
• Home Equity Line of Credit
• Mortgage
• 401K Loan or Withdrawal
So How Did we Do?
• On our first home we put 10% down and made 22+% on our Investment, and our S-RECs supported our ZEH position – no ITC;
• On our Second Home, the ITC more than covered tax consequences and the energy savings and S-RECs support our ongoing ZEH position.
Alden Hathaway, P.E.SVP Business DevelopmentSterling Energy Assets
a Division of Sterling Planet, Inc.
[email protected]: 678-534-5827C: 540-207-3142