THE SMART ENERGY INITIATIVE HOSTS HOW TO FINANCE A SOLAR SYSTEM

The Smart Energy Initiative (SEI) hosted a breakfast seminar on June 29 at the Chester County Economic Development Council in Exton, Pa. The Smart Energy Initiative was established within the Chester County Economic Development Council to support economic growth and sustainability for the new energy economy.

The seminar was presented by David Welsh and Jason Ulshafer, Directors of the Smart Energy Initiative of SEPA. The Seminar walked the audience through the steps on how to finance a solar system. This included financing options, grant possibilities and example systems that have recently been completed. Among the attendees were lenders, bankers, other solar companies, and patrons interested in implementing solar.

There are three ways in which in finance a solar system in Pennsylvania. These options include cash, loans/leases and a power purchase agreement (PPA). The cash option is quick and easy and generates immediate cash flow from the system's production. However, it creates an opportunity cost for use of capital.

A second option is a loan or lease. Typically, this is through your bank or other financial provider. Currently, Pennsylvania offers incentives (in the form of loans) for those interested in implementing solar. Some of these loans are: Sustainable Energy Fund (SEF), Loan Program (PPL Territory) and PPL Electric Utilities – Solar & Geothermal Rebate Program. These loans can lower up front capital and can benefit those interested in larger solar systems.

The third financing option is a Power Purchase Agreement (PPA). A PPA is a legal agreement between the energy provider (usually a solar developer) and the energy host. The PPA has no capital outlay and is a good option for non-profit organizations or government. It also allows for a locked0in electricity rate for up to 25 years. Some cons about financing through a PPA is that it can be a complex transaction and takes a longer time to implement. It could also cause a loss of rebates and/or local incentives.

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