As you investigate whether solar is the right fit for your organization, it is imperative to educate yourself on the financing options available.
For some of our non-profit clients with the funding to self-finance their solar investment, forgoing the federal 30% Investment Tax Credit is the most direct path. Because Massachusetts has some of the best incentives in the country, like SRECs, typical IRRs (internal rate of return) are 10%-15%, with a payback inside of 10 years.
For non-profits with strong credit, commercial loans can be attaractive. There is no upfront cost required, though a downpayment will reduce the loan term and/or payments. Typical loan term duration is 10 years, during which time SREC revenue can play a large role in offsetting those fixed monthly payments.
PPAs are the mosy common financing method for non-profit organizations. There is no upfront cost required, though a downpayment will reduce the energy purchase rate of the PPA. A typical PPA term duration is 15-20 years, during which time there is an annual escalator of 0-2% and monthly payments are variable based on monthly solar generation. This option offers buyout financing after 3-5 years and the option for system removal or buyout at the end of the PPA term. There a mandatory buyout at the end of the operating lease term, where you would pay the greater of Fair Market Value or 15% of original lease value. IRRs (internal rate of return) vary by system, but you can expect to be cash-flow positive from year 1 onward.
Leasing is another tool for some clients with strong credit but who are unable to take advantage of federal solar tax incentives. There is no upfront cost and a typical lease term duration is 7 years, during which time there is no annual escalator and monthly payments are fixed. This option offers buyout financing after 3 years and requires a mandatory buyout at the end of the operating lease term, where you would pay the greater of Fair Market Value or 15% of original lease value.
In Massachusetts, greenhouse gas emissions total about 22 million metric tons per year. This means that annually, the Bay State is responsible for 185,000 tons of polluting emissions, with a large portion coming from electricity generation. Renewable energy sources like solar can play a significant role in reducing the state's environmental impact.
Have SunBug Solar do a no-cost assessment of your organization. We'll do a complete analysis, factoring in the specifics of your site, the available state and federal incentives, projected energy savings, and financing options. Just fill out this simple form.
At SunBug we enjoy talking about solar, so if you have a question, just ask. If we can’t answer it immediately we’ll take the time to figure it out, because a well reasoned-answer is better than a quick, unconsidered one. And we’ll speak in language that makes sense to you. Not into kilowatts? Let’s talk dollars and cents.
