Solar Discovery

Benefits

• No upfront cost for solar



• No capital investment, balance sheet debt, operating responsibilities



• Pre-determined electricity rates for contract terms of 15-25 years



• Places emphasis on ensuring maximum productivity of solar purchase



• Customer purchases only what they need



• Continued system monitoring and maintenance by solar professionals



• Option to purchase the system at fair market value after set time period

Challenges

• Complex negotiations and possibly higher transaction costs than buying system outright



• Ongoing administrative costs of paying separate electricity invoice and allowing access to equipment by maintenance personnel



• Customer may be contractually prohibited from making changes to property that could affect the solar production

PPA Structure
Determined in advance, the host customer does not own the solar system, but by the PPA provider, who as a utility, sells electricity at a negotiated rate matrix. This rate can be fixed for the duration of the contract; it may have a known escalator; or it can vary as keyed to the local utility or another benchmark. There are a number of other factors that will drive this model, including available incentives, rebates, REC programs, but like all structures, it needs to react to the needs of the individual customer.

Basic Parameters to a PPA project

• Commercial, Municipal, Industrial customers using large amounts of electricity, generally more than 150,000kWh annually



• Control of property



• Demonstrate credit-worthiness



• Offer a minimum of 10,000 square feet of usable space, preferably flat



• Located in an area with pro-solar policies and incentives

Learn More
PPAs offers a wide range of customers the opportunity to buy only the solar power they use, and at a known rate for a set period of time. To learn more about PPAs and possible options for your customers, please contact us at 866-208-5041 or solar@gosunsolar.com.

Q: What’s the difference between a loan and a lease?
A: Generally, the equipment being financed is the only collateral on a lease. That may notbe the case with a loan, where the lender, say the customer’s bank, may put a lien onsome or many of the borrower’s other assets. Sometimes a bank will even put a “blanket” lien on all the customer’s assets—cash, accounts receivable, inventory, other equipment, etc. Also, a lease will have fixed payments over a fixed term of so many months or years. A loan can be either fixed-term or could be “revolving” like a line of credit, and may have “floating” rates or adjustable payments.

Q: What’s the difference between a Non-Tax/Capital Lease and a Tax/True Lease? A: The difference lies in the ownership of the system, and the tax and accounting treatments that result.

In the Non-Tax/Capital Lease, the customer (lessee) owns the equipment and uses the tax credit, accelerated depreciation and write off of interest paid.

In the Tax/True Lease, the Lender (lessor) owns the equipment and receives the tax benefits. In this case, the customer will indirectly get those benefits through lease payments that are much lower than those in a loan or Non-Tax Lease.

Q: Which lease works best for most customers?
A: Overwhelming, the Tax/True Lease works best for most “for-profit” enterprises because many businesses, even though profitable, can’t make full use of the tax benefits! With the Tax/True Lease, they can still get the benefit—indirectly, through lower payments. Also, the Tax/True Lease can be used for those customers who can use the tax benefits, but may prefer the True Lease because it’s simpler to predict resulting cash flow and savings.

• Control Your Business
  With leasing, only the equipment is used as collateral. This allows your business to avoid liens on property and the financial restrictions that banks might require.


• Preserve Working Capital
  With conventional borrowing, more upfront money, plus a significant down payment may be required. This constrains your working capital and prevents the flexibility offered by leasing.
  
• Provides Fixed Payment
  With commercial leasing, you will know your payment over the lease term, allowing for more accurate forecasting and easier budgeting for monthly expenses.
  
• Hedge Against Inflation
  When you lease equipment, you pay for it as you use it. When you purchase with cash, you pay in current dollars for future use of the equipment


• Tax Advantages
  Leasing can lessen the burden that taxes have on your company’s wallet. Depending on how the lease is structured, you may be able to fully deduct lease payments as business expenses, as opposed to depreciating the value of the equipment as if it were an asset.

Sun Solar recommends you consult with your financial adviser to determine what the best arrangement is for your company’s unique financial position. If your interested in leasing your solar electric system, give us a call at 866-208-5041 or 847-810-0136.