Our customers are usually surprised to learn that solar is not only affordable, but frequently generates positive cash flow immediately, which can be used to fuel growth or drop to the bottom line. Solar cash flows have four components:
- Savings on electricity no longer purchased (positive)
- State and Federal subsidies (positive)
- Financing costs (negative)
- Tax affects (positive and negative)
Through financing, the net of these cash flow impacts are an initial cash flow improvement, and frequently a positive cumulative cash flow for the next 20+ years, with no cash outlay.
Example, here's an actual pro forma cash flow for a bank-financed project we completed in 2008.
Here's how the cash flows compare: Doing Nothing, Paying Cash, or Loan
In this case, the doing nothing over the next 20 years – continuing to pay utility electric bills – would be a cash flow of nearly -$5,000,000, while funding solar with a loan generates a positive cash flow of over $1,500,000.
There are a variety of financing mechanisms that can be used and the right choice depends on profitability, tax appetite, ownership structure, and other factors. Your Sunlight Electric Account Director is well versed in these issues and can counsel you and your tax professionals to conduct your own assessment as to the best financing approach.