Typical Commercial Challenges
As veterans of the small commercial solar market in this region, we are very familiar with the challenges of financing solar energy systems to this group of property owners. Small businesses want solar as much or more than any other market segment, but they are capital-constrained like no others so they need affordable financing.
Third party solar developers have been the answer for other markets. They can easily finance large systems because the cost of assessing the applicant’s credit is well worth the return. In the case of residential systems, they can use universal tools like credit scores to help manage their risk. For the small commercial and non-profit market, there hasn’t been a super-attractive way to finance solar, until now!
Commercial Solar Systems Now Recognized as Public Benefit
Washington DC and Maryland now have laws and programs in place for commercial (and nonprofit) property owners to utilize PACE. Property Assessed Clean Energy (PACE) is a vehicle that is used to finance energy improvements for buildings. It operates under the recognition that energy improvements are considered to be a public benefit. As such, PACE uses the property tax as a vehicle to structure the financing payments – much like we would finance a sewer extension, but in this case specific to one property.
PACE is very appealing to property owners because they can add significant value to their building on a cash-flow-positive basis without personal guarantees or the application of additional debt to the balance sheet. The financing payment must be less than the savings and it’s paid in the form of a special assessment on the property tax bill over the term of the financing arrangement (5-25 years at competitive rates). Multiple energy improvements (i.e. lighting, solar, new roof) can be bundled into one financing package.
The best thing about this approach to financing solar is that the property owner will own the system, not a third party. The property owner gets all of the benefits, including the energy savings, the substantial incentives, the marketing value, and the satisfaction. All it costs them is the interest on the financing which pales in comparison to the savings.
More info is available on your webpage on our PACE webpage but you may just want to pick up the phone and call us to see if your property is eligible.