What Kind Of Financing Options Are Available For Solar Projects?


Financing For Solar Energy Projects

One of the biggest hurdles to overcome in getting a solar system is its cost. Solar Financing can be a scary thing even for people who are familiar with the solar industry. The truth is that there is really nothing to fear. In fact, there are a variety financing options available for people who are looking to finance their solar projects.

What Benefits Comes With A Solar System?

Here are just some of the benefits you can receive from your solar system right after installing it:

  • Lower utility bills - solar systems help you save on utility bills by producing your own electricity. With financing, you can start saving from Day 1!

  • Increased property value - solar systems add to the value of your property by enhancing cash flow, which makes solar power a great investment for property owners.

  • Low-maintenance cost - solar systems have little to no moving parts, which means, parts don’t break easily. Since solar systems are typically low-maintenance, there is less for you to worry about.

  • Self-sufficient - going solar allows you to be less reliant on power grids, so you’re more protected against power outages and potentially allowing you to continue on your day without any troubles.

Why Finance A Solar System?

Learning about solar financing can bring an affordable solar system to you with little to no upfront cost. A solar system can increase your business’s operating cash flow by saving big on energy bills.


What Type of Finance Is Available For You?

When choosing a financial option, choosing the right one for you is important. The options available are:

  • Loan

    • Allows you to own the system and take advantage of the tax benefits. Tax Benefits include the 30% Solar Investment Tax Credit (ITC) as well as Modified Accelerated Cost Recovery System (MACRs), and can account for more than 50% of the cost of installing solar power. This is a great option for those who have sufficient tax appetite fully take advantage of these tax benefits.

    • There are two types of loans:

      • Secured Loan

        • The property owner pledges their own property as collateral.

        • Secured loans offer lower interest rates than unsecured loans, fewer fees, flexible terms, and easier qualification.

      • Unsecured Loan

        • Unsecured loans do not require any collateral.

        • Since the property is not pledged as collateral, the rates are typically higher than secured loans. This usually has more stringent qualification requirements, such as, higher annual revenue requirements and overall better financial standing.

  • Lease

    • There are two different types of leases.

      • Capital Lease

        • This option is very similar to a loan. A capital Lease allows you to own the system and take advantage of the tax benefit.

      • Operating Lease

        • Operating lease is intended for businesses that can’t take advantage of the tax benefits, but still want lower utility bills.

        • With an operating lease, the finance company owns the solar system, monetize the tax benefits and then pass these benefits on to you through lower lease payments.

        • At the end of the term, you can buy the system at fair value.

  • Power Purchase Agreement (PPA)

    • a PPA is also intended for businesses & non-profits who cannot monetize the tax benefits.

    • a PPA allows you to purchase the power generated by the solar system at a fixed rate for 20 to 25 years, hedging against the risk of future utility rate increases.

    • At the end of the term, you can buy the system at fair value.

  • Property Assessed Clean Energy (PACE)

    • If you’re unsure if you’re going to stay in a place for too long, then PACE might be the right option.

    • Through PACE, financing terms can extend up to 25 years. PACE is repaid as an assessment on the property’s regular tax bill and is processed the same way as other local public benefit assessments have been for decades.

The best way to determine which financing option is ideal for your business is to consult a company that specializes in commercial solar financing in order to help you maximize the benefits from solar energy. A firm specializing in commercial solar financing can often offer more diverse options and programs that suits your business.

Choosing a financial option can be challenging and it is understandable if you feel unsure which option is right for you. Luckily, BlueFlame has a team of experts that can help you determine which one suits you the best. If you’re a business and have any questions, schedule a phone call with us and we will be more than happy to answer your questions.

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