Renewvia Energy will identify, apply and track application for the available solar rebates and tax benefits for each project to be factored into a solar financing structure. Multiple solar-friendly geographies present a variety of options for attractive off- and on-balance sheet financings. The financial benefit for a solar array comes in various forms. The most common are utility rebates, solar renewable energy credits, grants, tax benefits and power purchase savings. In some cases, the payback for an end user directly financing a solar system can be instantaneous with aggressive availability of utility rebates and tax benefits.
Renewvia will utilize Power Purchase Agreements (PPA’s) for entities that wish to preserve their capital and/or who don’t have the specific tax appetite to digest the available financial benefit in the form of state and federal tax credits and depreciation. The overall return on investment and time required to recoup the capital expenditure is negatively affected without the ability to absorb the tax benefits as quickly as they become available per the tax code.
PPA’s provide the following benefits to the array host:
- Positive cash flow from day 1 through the end of the PPA term: 15 to 25 year PPA terms.
- Energy hedge for utility rate escalation: as utility rates increase, savings will increase.
- Marketing Differentiator: Promote the business sustainability and carbon footprint reduction efforts/results.
- No operating risk: The business is obligated to buy only the energy generated. Maintenance is an obligation of the PPA provider.
Commercial Solar Financing Case Study
Renewvia developed a financing structure to accommodate the owner of an agricultural entity that consumes a large amount of power. The owner was concerned about the fixed cost of power to run the business, but did not have the appropriate tax appetite to make the inclusion of solar into his business financially viable. The farm was located in a state that offers a tax credit for solar photovoltaic installations. Additionally, the IRS allowed 100% bonus depreciation on renewable equipment for the installation year of the project. Renewvia raised a geographically specific fund comprised of investors capable of realizing the full amount of all the available tax benefits to capitalize the solar system and own it for a predetermined period. At the end of the investment period, the host/farmer has the option to purchase the system at an attractive price with decades of useful life remaining on the array.