Ways to finance solar energy in parking structures and places

Author: 
Paul Wessel
Published on: 
Friday, July 1, 2016

Solar energy is a clean, abundant and free alternative to fossil fuels. The diminishing cost of solar arrays, combined with innovative financing, is helping make photovoltaic installations both environmentally and economically smart.

Solar installations benefit parking facilities by providing an opportunity to generate clean power. Depending on location, solar production and consumption can drive energy costs down for facilities while providing a hedge against future increases in energy costs—not to mention that adding solar panels also bolsters an organization’s corporate responsibility program.

Three financing options are available to parking facilities interested in adopting a solar energy program: a cash purchase, a power purchase and a lease agreement. A facility owner’s ability to monetize tax benefits plays a critical role when deciding which financial option is a best fit.

1. Cash purchase

A cash purchase is the most simple of the three options. Under this process, there's an internal monetization of the tax benefits, and all of the risks and benefits of the solar system are absorbed directly by the property owner. 

2. Power purchase agreement

A power purchase agreement allows the facility owner to enter into a contract with a financier, who will install and maintain the system. Under this option, the property owner will only purchase the solar power generated by the solar system. The owner has no responsibility for the actual system.

3. Solar system lease

The lease option allows the tax benefits of installing a solar system to be monetized by a third party. The system will be purchased and installed by a third party, who will then enter into a long-term lease with the property owner, in effect giving the owner both the full upside and risks of a cash purchase. This is a great option for organizations that would opt for a cash purchase but are unable to monetize the tax benefits associated with solar installations.