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So You Want to Finance Your Solar Array? (Buyer...

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So You Want to Finance Your Solar Array?
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Page 1: So You Want to Finance Your Solar Array? (Buyer Beware)resource-solutions.org/images/events/rem/presentations/2016/... · •Because these are leases and not a loan, ... back solar

So You Want to Finance Your Solar Array?

Page 2: So You Want to Finance Your Solar Array? (Buyer Beware)resource-solutions.org/images/events/rem/presentations/2016/... · •Because these are leases and not a loan, ... back solar

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,

Page 3: So You Want to Finance Your Solar Array? (Buyer Beware)resource-solutions.org/images/events/rem/presentations/2016/... · •Because these are leases and not a loan, ... back solar

The Solar Patriot on the National Mall Earth Day, 2001

Financed our first Zero Energy Home solar system w/ Sun Trust Mortgage

Page 4: So You Want to Finance Your Solar Array? (Buyer Beware)resource-solutions.org/images/events/rem/presentations/2016/... · •Because these are leases and not a loan, ... back solar

Our Solar House at Williams Point, Georgia 2015

Financed our second Zero Energy Home solar system with our 401k

Page 5: So You Want to Finance Your Solar Array? (Buyer Beware)resource-solutions.org/images/events/rem/presentations/2016/... · •Because these are leases and not a loan, ... back solar

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?

Page 6: So You Want to Finance Your Solar Array? (Buyer Beware)resource-solutions.org/images/events/rem/presentations/2016/... · •Because these are leases and not a loan, ... back solar

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

Page 7: So You Want to Finance Your Solar Array? (Buyer Beware)resource-solutions.org/images/events/rem/presentations/2016/... · •Because these are leases and not a loan, ... back solar

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.

Page 8: So You Want to Finance Your Solar Array? (Buyer Beware)resource-solutions.org/images/events/rem/presentations/2016/... · •Because these are leases and not a loan, ... back solar

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.

Page 9: So You Want to Finance Your Solar Array? (Buyer Beware)resource-solutions.org/images/events/rem/presentations/2016/... · •Because these are leases and not a loan, ... back solar

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

Page 10: So You Want to Finance Your Solar Array? (Buyer Beware)resource-solutions.org/images/events/rem/presentations/2016/... · •Because these are leases and not a loan, ... back solar

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.

Page 11: So You Want to Finance Your Solar Array? (Buyer Beware)resource-solutions.org/images/events/rem/presentations/2016/... · •Because these are leases and not a loan, ... back solar

Alden Hathaway, P.E.SVP Business DevelopmentSterling Energy Assets

a Division of Sterling Planet, Inc.

[email protected]: 678-534-5827C: 540-207-3142


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