Solar energy is this decade's buzzword for businesses who are looking toward implementing forward-thinking policies that will save them money while reducing their carbon footprint with renewable, clean, safe energy from the sun. Solar energy protects your bottom line by reducing your monthly electric bill. In addition, our government offers monetary incentives to businesses in the form of federal investment tax credits (which can cover up to 30% of the installed cost of your system) coupled with tax advantages such as modified accelerated depreciation. State and local governments also provide some incentives, usually in the form of financial assistance.
Solar Financing Option #1 - Operating Lease
One of the greatest advantages of the operating lease is the reduction in paperwork usually generated in a federally taxed situation. In this type of lease, you don't have to make any initial investment; instead, a finance company purchases the solar power system and leases it back to you on a monthly basis. These leases function much like automobile leases in that at the end of the term (usually five to twelve years) you have the option to purchase your system outright at fair market value, which usually amounts to 10-20% of the system's total cost. In the meantime, the finance company realizes any tax incentives and benefits, but they do pass these along to you in the form of lower monthly payments.
Solar Financing Option #2 - Capital Lease
Do you operate a for-profit business that generates taxable income? Then you might be interested in achieving your dream of constructing a solar power project without outlaying a large amount of capital through a loan structured as a capital lease. This type of loan is generally five to ten years in length and is similar in nature to a home mortgage. Your company receives any tax incentives, there is no money down, and you can buy out the loan at the lease's end.
Solar Financing Option #3 - Municipal Lease
A municipal lease is most appropriate for those government or non-profit agencies that want to take advantage of the benefits of solar power. These leases are generally longer in duration, ten to twenty-five years, and offer the lowest interest rates of all possible options. In addition, you can buy out your solar power project at the end of the lease just as with the other options.
Solar Financing Option #4 - Power Purchase Agreement
A PPA offers the longest possible loan term at twenty to twenty-five years. In this arrangement, the financing company sells you energy from your solar power system at a contracted rate. Although you pay only for power generated, tax benefits are passed on to you as lowered payments. In this arrangement, maintenance of your system is included. You may still opt to buy your system for fair market value at the end of your lease.
Whatever type of financing you choose, most businesses would agree that a solar power project can provide many benefits, both financial and environmental.
Solar Financing Option #1 - Operating Lease
One of the greatest advantages of the operating lease is the reduction in paperwork usually generated in a federally taxed situation. In this type of lease, you don't have to make any initial investment; instead, a finance company purchases the solar power system and leases it back to you on a monthly basis. These leases function much like automobile leases in that at the end of the term (usually five to twelve years) you have the option to purchase your system outright at fair market value, which usually amounts to 10-20% of the system's total cost. In the meantime, the finance company realizes any tax incentives and benefits, but they do pass these along to you in the form of lower monthly payments.
Solar Financing Option #2 - Capital Lease
Do you operate a for-profit business that generates taxable income? Then you might be interested in achieving your dream of constructing a solar power project without outlaying a large amount of capital through a loan structured as a capital lease. This type of loan is generally five to ten years in length and is similar in nature to a home mortgage. Your company receives any tax incentives, there is no money down, and you can buy out the loan at the lease's end.
Solar Financing Option #3 - Municipal Lease
A municipal lease is most appropriate for those government or non-profit agencies that want to take advantage of the benefits of solar power. These leases are generally longer in duration, ten to twenty-five years, and offer the lowest interest rates of all possible options. In addition, you can buy out your solar power project at the end of the lease just as with the other options.
Solar Financing Option #4 - Power Purchase Agreement
A PPA offers the longest possible loan term at twenty to twenty-five years. In this arrangement, the financing company sells you energy from your solar power system at a contracted rate. Although you pay only for power generated, tax benefits are passed on to you as lowered payments. In this arrangement, maintenance of your system is included. You may still opt to buy your system for fair market value at the end of your lease.
Whatever type of financing you choose, most businesses would agree that a solar power project can provide many benefits, both financial and environmental.
Borrego Solar has worked on hundreds of solar power projects for commercial and government agencies throughout the United States.
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