An increasing number of solar developers are realizing they can use sale-leaseback financing to take advantage of tax incentives for solar installations, and in turn, reduce costs, conserve cash, increase profitability and enhance their brands, write Doug Beebe and Luis Gutierrez, VPs of energy finance for Key Equipment Finance, in new article in Solar Builder.
"Reducing energy costs is a major consideration for many businesses and government entities because they know that lower energy costs translate into improved profitability and cash flow, and investments in sustainability can add significant value to assets.
"Developers such as Community Energy and Monolith Solar are using sale leasebacks to finance projects that include a power purchase agreement (PPA), allowing monetization of the tax benefits, inclusive of the investment tax credit and depreciation. In this structure, solar developers own and operate the system and sell the power to a third party.
The features of a smart sale-leaseback project include:
- Strong credit all around (developers, PPA offtakers, installers)
- Positive project cash flow
- Experienced engineering, procurement and construction management teams
- Tier 1 components
- Strong site control
- Solid PPA
- Strong incentives
- Quality operations and management plan/partner
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