Significant solar installations require the proper financial strategy: Fortunately, several versatile options have been created and formalized in the solar industry to help provide planning options for large commercial solar energy projects. Let’s take a look at the most popular solar energy financing models and the advantages they hold.
1. Lease-to-Own
A lease-to-own plan allows an organization to lease a solar installation for a monthly fee, with a built-in plan to contribute toward a full purchase after a set amount of time, typically around 10 years. That makes a lease-to-own option a popular decision for businesses that want to invest in solar energy for the long term, with few to no upfront costs for getting started. Coldwell Solar offers our own lease-to-own plans for those who are interested.
2. Traditional Leasing
A traditional lease plan is also an option for organizations that are not interested in directly owning solar systems but still want specific advantages of solar energy. For a traditional lease, it’s important to compare the savings from solar energy production (and related energy credits) with the monthly costs of the lease to see if it is an optimal arrangement – some leases may even be able to help save money overall.
3. PPAs (Solar Power Purchase Agreements)
A solar PPA (also called a Solar Service Agreement), is a unique option that allows the full installation and management of commercial solar installations by a third party at a designated location. The organization then signs a contract to purchase the electricity produced by this solar system for a set amount of time (usually 10 to 20 years) and a fixed rate. This is an excellent way to lock in a rate for renewable energy without the need to directly build and maintain a solar installation, but it’s important to find the right contract options for the current solar market and the organization’s long-term goals.
4. Solar Loans
There are a variety of loan options that are designed specifically for financing a solar power project. Since these loans focused on renewable energy, they may be available at friendlier terms than other types of commercial loans, although options can vary based on a number of factors.
Once an organization qualifies for a solar loan, they can realize several advantages. First, accelerated depreciation opens the door for tax savings based on accounting choices. Second, a solar loan can qualify for a variety of incentives to help make the project more affordable, notably the Federal Solar Tax Credit, a 26% tax credit applicable to commercial and residential solar systems.
If you are interested in a solar loan, talk to Coldwell Solar about lending partners, the current rates of solar loans, and if this financing option is the right fit.
5. Cash Purchase
While a cash purchase has a high upfront cost, it’s the most effective option for immediately realizing the ROI of a solar installation, an ideal choice for businesses that want to start saving immediately without adding new debt. Cash purchases can also qualify for a number of incentives, including the Federal Investment Tax Credit, making them more feasible for organizations that are working out their budgets and renewable energy goals. A cash purchase also means that an organization will not have to deal with third-party expenses or interest rates.
Remember, you can contact Coldwell Solar at any time to arrange a consultation to discuss your financing options and what choices work best for you and your timeline. Our experience as a solar energy company in California allows us to offer or recommend a wide variety of financing options, so let us know what you have in mind!
