Capital Lease or Long-Term Loans: Borrow the Capital, Own the System, Use the Energy
· Like a bank loan or mortgage, but pay no upfront costs
· Customer owns and maintains the system
· Owner uses the financial benefits of solar (state and federal tax credits, local incentives, and avoided energy costs) to pay down cost of system
· Stay cash-flow positive through the life of the system
Operating Lease: Lease the System, Use the Energy
· Third-party financier owns the system and takes advantage of the federal tax savings while leasing the system to the property owner
· Monthly lease payments to financier are reduced through energy savings
· At the end of the lease (~7-10 years) property owner can purchase the system at Fair Market Value (FMV), which is estimated to be 20% of the original system cost, renew the lease, or return the system to the bank
Power Purchase Agreement: Buy the Energy
· Third-party financier owns and maintains the system on your property
· Power produced is fed back into the customer’s electrical service to offset the utility bills
· Rate is pre-negotiated, so you know how much you will be paying over the lifetime of the agreement (~15-25 years)
Solar Services Agreement (SSA): Fixed payments based on monthly solar PV production, true up at the end of the year
· Financial arrangement in which a third-party developer owns, operates, and maintains the photovoltaic (PV) system, and a host customer agrees to site the system on its roof or elsewhere on its property and purchases the system's electric output from the solar services provider for a predetermined period.
· This financial arrangement allows the host customer to receive stable, and sometimes lower cost electricity plus local incentives, while the solar services provider or another party acquires valuable financial benefits such as tax credits and income generated from the sale of electricity to the host customer.
· With this business model, the host customer buys the services produced by the PV system rather than the PV system itself.
· SSA arrangements enable the host customer to avoid many of the traditional barriers to adoption for organizations looking to install solar systems: high up-front capital costs; system performance risk; and complex design and permitting processes. In addition, SPPA arrangements can be cash flow positive for the host customer from the day the system is commissioned.
· At the end of contract, agreement can be extended, system can be removed, or system can be purchased by property owner