Solar Lease Finance

• Capital Leases with $1 buyout or up to 37.5% residual (allows for lower payments)
• Operating Leases with 10-20% buyout (Fair Market Value)
• 100 percent equipment and installation financing and cash flow positive on day one
• Lower energy costs with lease payments lower than energy costs saved
• Offering competitive rates and flexible terms and locking interest rates
• Keeping capital available and protecting lines of credit
• Enhancing tax treatment, and in many instances improving ROI
• Covering capital costs during rebate, tax grant waiting period
• Minimum amount $100,000 – No Maximum

Capital Lease - Similar to a bank loan, the finance lease entitles the lessee to a 30% federal and state tax credits, and is typically fully amortized ($1 buyout). This is the best option for “for profit” companies.

Operating Lease - Similar to a rental agreement, the operating lease can provide “off-balance sheet” financing for GAAP accounting purposes. The lessor is entitled to depreciation and federal tax credits; However, the lessee receives lower interest rates to compensate for the tax benefits accruing to the lessor. This option is similar to a PPA, but there is risk of maintenance and operation. Most of this risk can be covered through proper maintenance and operation agreements with the EPC (installer). Insurance is also available to cover most of this risk. Terms are usually 5-15 years. The term also includes a fair market value purchase at the end of the lease (mandated by the IRS). The maximum amount is set by the lessor (10-20%), although FMV may be determined to be less than this. The FMV would be the value to the bank to take the equipment back and reinstall somewhere else (not the value to the customer).

Tax-Exempt Lease-Purchase (Municipal Lease) - The tax-exempt lease-purchase is intended to meet the special needs of state and local governments, non-profit organizations, and schools. It is offered at a much lower interest rate and longer terms compared to other lease options. These agreements usually do not constitute a long-term “debt” obligation because of non-appropriation language written into the agreement effectively permitting the lease payment to be funded through the current operating budget.

Power Purchase Agreements (PPA) - In addition to leasing and more traditional forms of financing our commercial, industrial, government and not-for-profit customers can purchase their power at a predetermined discounted rate through a Power Purchase Agreement (PPA). A 3rd party will own and maintain the system with no upfront or additional costs to you. Some municipal, corporate and non-profit customers have no interest in buying and maintaining a solar array over its 25 to 30 year lifetime. The PPA allows them to enjoy some of the benefits of solar energy without the upfront costs or other responsibilities of ownership by allowing them to purchase electricity at a pre-determined discounted rate effectively eliminating price volatility. Over the life of the system our customers can expect to pay from 5% to 30% below retail electric rates. The PPA is an ideal program for government and non-profit entities that can’t take advantage of depreciation or other tax based incentives. The cost to set up PPAs is a bit expensive and is has higher overall finance costs that are spread out over longer periods of time (15-25 years).