Municipal/Institutional:
Power Purchase Agreements, Operating Leases
Commercial:
SBA, Operating leases
Residential:
5 Year Leases, Refinance Loans, 2nd Loans / HELOCs
Power Purchase Agreements explained:
The provider of a PPA finances, installs, owns, and operates an RE system on the subject property with no capital investment from the customer. During the term of the agreement the installed system generates clean power and the customer is billed only for the actual electrical output at a discounted price per kWh: the owner “buys” electricity on a monthly basis from the PPA provider, not from the utility. Most PPA’s have points at which the customer may buy the system at a discount or elect to continue the agreement. PPA providers assume the operating risks—if the system is not generating electricity, they don’t get paid. Most agreements range from 12 to 20 years, so it’s in a provider’s best interest to use reliable components and contractors to ensure a system’s long-term reliability and optimal energy production.
Operating Leases explained:
Lease agreements, similar to PPAs, use rebates and/or tax incentives - including credits and depreciation expenses - to pay for the use of funds. Terms are typically seven to 20 years, and lease payments are matched at or below utility costs. Typically, this type of lease is not performance-based—the customer makes the lease payment regardless of system performance. At the end of the lease, the customer can renew the lease, purchase the equipment at fair market value, or meet other lease terms, such as the common “$1 Buyout”.
SBA 7(a) Loans:
7(a) loan proceeds may be used to assist in the operation, acquisition or expansion of an existing business. Funds usage may include:
To purchase land or buildings, to cover new construction as well as expansion or conversion of existing facilities. To
acquire equipment, machinery, furniture, fixtures, supplies, or materials
•Maximum loan amount is $2 million
•Maximum term is
25 years for real estate and equipment
•Interest rates are fixed or variable, pegged to Prime
SBA 504 Loans:
504 loan proceeds must be used for fixed asset projects. Funds usage may include, among other things:
The construction of new facilities, or modernizing, renovating, or converting existing facilities
the purchase of long-term machinery and equipment •Maximum loan amount varies with borrower type (i.e., small manufacturer vs. retail owner), purpose (public policy goals), and job creation. Commonly for energy-related borrowing, the max is $4 million.
•Maximum term is 20 years
•Interest rates are tied to 5-year and
10-year Treasuries
“Cash-Out” Refinance Loans, 2nd’s or HELOC’s:
Refers to the standard mortgage loan refinance, which may
be done to access equity in the property to use for a variety of purposes, one of which may be to complete energy efficiency improvements or purchase and install renewable energy equipment on the property.
Municipal/Institutional:
Government Buildings, School Districts, Hospitals, Faith-Based Buildings, Other Non-Profits
Commercial:
Office Buildings, Industrial Warehouse, Restaurants, 5+ Units & Multi-Family, Additional types considered
Residential:
Single Family, 1 to 4 Units, Townhomes, Planned Unit Developments, Condominiums, Additional types considered