Financing Strategies for solar power

Even with considerable subsidies available for commercial solar power, most PV buyers still finance their projects. The primary benefit of non-cash purchasing is the potential for immediate positive cash flow with little or no out-of-pocket expense. Sunlight Electric offers a broad array of financing options through our class-leading finance partnerships.

Below are the five options to finance commercial solar power systems along with some perspective on the pros and cons for each option.

	Cash	Personal Loan	Commercial Loan	Operating Lease	Power Purchase Agreement
Description	Pay for investment from cash/ retained earnings	Home equity loan on personal property used to fund business purchase	Commercial loan secured by company assets to fund purchase	3rd party owns system; customer makes lease payments for term of lease. Purchase option at end of term.	3rd party owns system; sells you power at close to utility rates for term of agreement. Purchase option at end of term.
Pros	The highest NPV of all options Most simple payment mechanism	Usually the second highest NPV Longer terms and lower rates available Federal deductibility of mortgage interest	Usually the third highest NPV Frequently can achieve positive cash flow in Year One	Off-balance sheet financing option Immediate savings Get tax benefits even though not paying taxes	Off-balance sheet financing option Possibility of savings Get tax benefits even though not paying taxes
Cons	Opportunity cost	Lack of appeal to some of mixing business and personal finances	Adds to debt load, potentially limiting extent of future borrowing	No ownership of PV system	No ownership of PV system Usually modest per-kWh savings, if any
Best Suited For	Those with aversion to debt and high cash balance	Family-owned businesses that easily mix business and personal expenses	Most businesses	Subsidiaries of large corporations Those paying little/no taxes Those with strong aversion to debt Businesses with limited borrowing capacity