What Is Third-Party Ownership In Solar Financing?

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Solar energy has become increasingly accessible to many over the years with falling solar panel costs and lucrative tax incentives playing a major part. However, not everyone has sufficient tax appetite to monetize the tax incentives. In response to this challenge, third-party ownership structures have developed to monetize these tax incentives, making solar systems affordable to more property owners

There are a few different third-party ownership structures, but some of the most common are: power purchase agreements (PPAs), operating leases, and energy service agreements (ESAs).

Power Purchase Agreement (PPA)

A PPA is an option that allows the property owner to purchase power generated by the solar system over a certain price over a set number of years. The PPA provider owns the system and covers the costs of installing the solar system on the customer’s property. The PPA provider is also responsible for the system’s maintenance throughout the PPA term. PPA terms typically range from 15-25 years.

Operating Lease & Energy Service Agreement (ESA)

An operating lease is another common third-party financing structure. Although similar to a PPA, under an operating lease the property owner rents the solar energy generating equipment rather than purchasing the actual power produced at a per kWh price. Unlike a PPA, the property owner is responsible for operations and maintenance of the system throughout the term.

An ESA is very similar to an operating lease although legally distinct. Instead of renting the solar equipment, the property owner pays for the “service” of energy-saving solar power. In both cases, the financing is off-balance sheet.

Third-party ownership has become quite common in the solar energy industry. By giving property owners access to renewable energy through affordable financing, many are able to save money from utility bills even if they cannot monetize the tax incentives. 

BlueFlame offers third-party ownership financing structures to business owners, as well as other financing options for renewable energy projects. Schedule a free consultation with us to learn more.


What Do Financiers Consider When Qualifying Commercial Solar Projects?

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Not sure if you qualify for financing for your solar project? In this article, we go over what financiers look at when a business applies for financing. Here are some important factors financiers consider when evaluating commercial solar projects.

Offtaker Credit

When evaluating financing, the first thing lenders consider is the offtaker’s credit. With terms often extending up to 15-25 years, lenders want assurance that the business will still be in good financial standing throughout the term

For large corporations and public entities that are considered investment grade, credit is known to be strong and financing is significantly easier to secure and on better terms. 

However, most small and medium-sized businesses and non-profits are not considered investment grade, making financing options more sparse and expensive, leaving these entities often underserved. 

Some of the factors that determine the credit of a business are the history of the business, current debt obligations, debt payment history, and the level and stability of profitability over time.

Debt Service Coverage Ratio (DSCR)

Another factor lenders take a look at is the Debt Service Coverage Ratio, or DSCR. The DSCR refers to how much cash flow is available to service the debt payments in the given quarter or year

A DSCR of 1 means that all available cash flow is being used to make debt payments, which severely stifles the business’s ability to grow. This is very risky for the lender. The lowest DSCR lenders typically consider is 1.2 and to be on the safe side, lenders often prefer a DSCR of 1.4 or greater.

Project Economics

Intuitively, it is very risky for lenders when the solar project results in the business losing money. The more savings from solar, the more the business will be able to repay the loan. There are many factors that dictate these savings such as the current utility rate, installation cost, system quality, available incentives, and net energy metering policies.

Type of Business

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The type of business impacts the risk profile of financing a solar project. Some industries are riskier and less stable than others. For instance, hospitality properties (hotels and motels) are considered riskier since leases are not involved and performance is highly correlated with the business cycle. 

In addition, financiers are often reluctant or unwilling to provide financing to gas stations because they face significant environmental risks relative to other types of businesses.

Financiers are also reluctant to lend to non-profits. Non-profits by their very nature may have less capacity to repay the financing and tend to have worse financial metrics such as the DSCR. 

Not only that, but lenders face greater headline risk or negative news coverage in the event that the non-profit defaults on the loan.

Take for example a secured loan on a local church where the property serves as collateral. If the church defaults and the lender moves to recover its losses by repossessing the property, there may be a backlash in the local community and negative press that may reduce the lender’s future revenue.

Luckily, BlueFlame is much more flexible than traditional finance companies. In fact, we offer financing to a wide range of commercial customers including hotels, gas stations, and non-profits. If you are interested in speaking with us about solar financing, please schedule a free appointment here.


5 Ways BlueFlame Benefits Solar Installers

5 Ways BlueFlame Benefits Solar Installers. (1) Close more deals. (2) Streamline the financing process. (3) Leverage our seasoned solar financing expertise. (4) No more dealer fees! (5) Never pay out-of-pocket for equipment & construction!

SBA Loan Package Case Study

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We have recently worked with a hi-tech aviation parts maker in Cameron Park, CA to close an SBA Loan Package deal. In addition to financing their new rooftop solar PV system, we were able to refinance their mortgage as well. With a Stabilized LTV of 75.2% compared to an Initial LTV of 60.5%, the property owner was able to have more room financially to improve their business.

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BlueFlame PPA Solar Project Case Study

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BlueFlame recently closed a levered PPA on a 383 kW DC solar project for a Hotel in southern New Jersey. Under the PPA, this customer is paying $0.1190 per kWh escalating at 0.90% annually, which is 32% lower than the utility rate of $0.1750 per kWh. With the money the hotel saves each year, they can invest  more in growing their business.


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Are There Any Solar Incentives For Businesses in Wisconsin?

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What Kind Of Solar Incentives Available For Businesses In Wisconsin?

Are you a business in Wisconsin looking into installing solar system? If your answer is yes, then you should be aware of any sort of incentives that increase your savings. As of June 2019, there are 5 primary incentives to go solar. The 5 of them are:

Renewable Energy Competitive Incentive Program (RECIP)

RECIP serves as an incentive that rewards applicants additional financial support for the amount of energy produced by their system in a year. Applicants may request up to $0.50 per kWh produced and caps the total incentive amount to $400,000 per applicant. 
It is a great incentive since you can add this to the other benefits in order to save more money, and pile on the savings! There is a budget of $5.5 million dollars for RECIP applicants throughout 2019 - 2022. So, make sure to apply early to not miss out on any of the savings!

Solar Tax Breaks

Wisconsin gives you a break when it comes to paying taxes whenever you buy a solar system. Since, solar systems can be a bit costly, the taxes can be quite high. Not having to pay taxes when you buy a solar system is certainly a plus!
The sales tax is not the only exemption available. Solar systems increase your property value, which means you’ll be paying higher taxes. However, Wisconsin tax breaks exclude that extra value added by your solar system, allowing you to increase the value of your property without paying extra!

Net Energy Metering

Net Energy Metering (NEM) allows you to sell extra energy generated by your system back to the grid for credit. You can then use that credit to lower your energy bills during the times you use more energy than generated by your system. The best thing about NEM is that you can save those credits, which means that you won’t be wasting credits if you don’t use it.

Guaranteed Solar Access

The state of Wisconsin protects property owners’ access to the sun. This restricts neighboring structures from blocking solar access by your solar panels, maximizing the energy you can get from your solar system

Solar Federal Investment Tax Credit

Perhaps the biggest and most important is the Solar Federal Investment Tax Credit (ITC). The ITC takes 30% of the project cost and awards it to you in tax credits
Unfortunately, the 30% offer only applies for solar projects that started construction on or before December 31, 2019. After 2019, the offer will become 26% in 2020, 22% in 2021, and 10% anytime after 2021. So, if you’re thinking about going solar, it is better to do it soon! If you have any questions about financing options available for you, please feel free to schedule a conversation with us here.

In addition to incentives, different financing options can make solar systems even more affordable. Each option is designed to maximize the savings of businesses in different ways. You can learn more about the different financing options here. In addition, if you’re an agricultural business or a business, non-profit, or a school in a USDA rural designated area, you can qualify for our Rural Financing Program for even more savings.

What Can Solar Energy Give To Your Business?

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In the past, people have been a  bit hesitant when it comes to getting a solar system. Today, as more people are going solar, the many benefits of solar energy are increasingly understood. Here are just some of the benefits from solar power:

  • Lower utility bills - By generating electricity with solar panels, you purchase less electricity from the grid, which can result in tens of thousands of dollars- if not more- in savings during the 25+ year life of solar panels.

  • Little to no upfront cost required - Finance companies that specialize in solar finance, like BlueFlame Energy Finance, make it easy and affordable to install solar systems on their property with little or no upfront cost.

  • Increased property value - It’s not a secret that a solar system adds value to your property. Solar systems enhance the cash flow on a property by reducing energy costs, which in turn increases the value of the property.

  • Being able to sell extra energy generated back to the grid - in some states, Net Energy Metering (NEM) exists empowering you to sell extra energy back to the grid for additional revenue.

  • Less reliance on the grid - Being less reliant on the grid means that you are less affected by power outages. Since you are producing your own energy, this means that when power outages happen, you can relax and rely on the solar energy you produce.

  • Plenty of government incentives - The Solar Investment Tax Credit (ITC) offers 30% of the solar project cost as a tax credit. There is also the USDA REAP Guarantee Program, which guarantees loan for any agricultural businesses, or any businesses in USDA rural designated areas. Ask us if there are other incentives you can qualify for based on your location.

  • Better for the environment - With increased environmental awareness in recent years, going green is great PR that may even help bring recognition and differentiation to your business for its contribution to the environment.

BlueFlame Energy Finance has years of experience to confidently bring you financing terms that is sure to leave you satisfied! We don’t only inform you about the different programs you can qualify for to increase your savings but we also work with you to tailor the terms to your needs. This gives you room financially and less problems.

Schedule a free consultation with us today to see how we can help you!

What Kind Of Financing Options Are Available For Solar Projects?

There are many different financing options available for solar financing. We will go over all the possible options and along with the many benefits that comes with them.

How Can BlueFlame Help You Finance A Solar Project Today?

Finance Your Solar Projects Today!

Is your business thinking about installing solar panels but afraid of the cost? Are you worried about the expensive maintenance cost after installation? These are just some of the common fears when it comes to going solar that prevents businesses from experiencing the many benefits of solar energy. The common misunderstanding about solar panels being too expensive to even consider installing is unfortunate, since there are many financing options available to help businesses afford going solar.

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What Are The Different Financing Options For Solar Projects?

Still on the fence about going solar? There are different finance options that can help you afford a solar system and reap the benefits that come with them. If a cash purchase is not possible at this moment, you can try these financing options:

  • Loan

    • You own the system and keep all the solar tax incentives and rebates.

  • Operating Lease

    • Great option for those who cannot take advantage of the tax incentives, since highly qualified 3rd parties monetize the tax benefits and pass the savings on to you through lower lease payments.

    • You can own the system at a very low price (almost free) at the end of the term.

    • Little or no upfront costs.

    • Fixed monthly payments.

  • Power Purchase Agreement (PPA)

    • Similar to operating lease,  a PPA monetizes the tax incentives and passes this on to you through lower electricity rates.

    • No upfront costs.

    • You can buy the system at the end of the term.

BlueFlame Energy Finance is a specialty B2B energy finance company offering flexible, low friction & non-recourse financing solutions tailored to the specific needs of our customers. We are committed to making renewable energy, energy efficiency & water improvements accessible and affordable to a wide range of customers nationwide. Our financing is a smart alternative to traditional financing. Our experienced team works tirelessly to bring flexible financing terms and structures tailored to our customer’s specific needs. Learn more about our financing solutions here.



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