What are the best financing options for community solar projects?

2 Solar Leases

Another financing option for community solar projects is a solar lease. A solar lease is similar to a PPA, except that the customer pays a fixed monthly fee to the developer for the use of the project, rather than paying for the electricity generated. The developer still owns and operates the project, and the customer still benefits from lower electricity costs and environmental benefits. However, the customer does not receive any tax credits or incentives, and may have to pay additional fees for insurance, repairs, or upgrades.

3 Solar Loans

A third financing option for community solar projects is a solar loan. A solar loan is a type of debt financing, where the customer borrows money from a lender to pay for the upfront cost of the project. The customer then owns and operates the project, and pays back the loan with interest over time. The customer can also claim any tax credits or incentives that apply to the project, and may be able to sell excess electricity to the grid or other customers. However, the customer also bears the risk of performance, maintenance, and regulatory changes.

4 Community Shares

A fourth financing option for community solar projects is a community share. A community share is a type of equity financing, where the project is owned by a cooperative or a non-profit organization, and the customers are members or donors who contribute capital to the project. The members or donors receive a share of the profits or benefits from the project, such as dividends, discounts, or credits. The cooperative or non-profit organization manages and operates the project, and may also partner with other entities for technical or financial support. The community share model can foster social and environmental values, as well as local participation and ownership.

5 Hybrid Models

A fifth financing option for community solar projects is a hybrid model, where the project combines two or more of the above options. For example, a project may use a PPA or a lease for some of the customers, and a loan or a share for others. Or, a project may use a loan or a share to finance the initial construction, and then switch to a PPA or a lease for the operation. A hybrid model can offer more flexibility and diversity for the project, and cater to different customer needs and preferences.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?