FAQ

National Energy Incentive Programs

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Frequently Asked Questions

 

 

1) Solar seems like a big project. Why should I spend time and money on solar?

1. Solar is supported with tax incentives, so this needs to be factored into the financing decision. If you can take advantage of the tax benefits and have cash to invest in the solar system, then ownership with a cash purchase is most often the best choice since it will likely provide the greatest financial return over the long run. If tax benefits have little value or you prefer to reserve your capital for other things, then there are better alternatives to going solar.

2) What is a solar power purchase agreement (PPA)?

2. A PPA is a financing arrangement that allows businesses, government agencies and educational institutions to purchase solar energy electricity without buying the solar equipment. With a PPA, organization pays for the energy produced by a solar system produces, and a third-party installs the solar system on your facilities (or offsite), and owns and operates it.

You simply enter into an agreement to purchase the electricity produced by the system at a predetermined rate per kilowatt-hour (kWh) which is typically lower than your current rate from your utility. And if the solar system doesn’t generate electricity (due to an outage) you don’t pay anything – the system owner bears the operating risk.

3) What should I look for in a solar financing partner?

3. Although solar financing is mainstream, it can still be complicated. It’s imperative your solar partner have deep experience in financial modeling and can negotiate financial agreements (PPA or lease) that deliver on expectations for both the off-taker (your organization) and the investor or financier. A partner’s proven track record will provide peace-of-mind that the pricing and terms are reasonable and that a financier will invest in your solar project. Finding a solar partner that understands the technical features of the solar energy system is also a big advantage.

4) What should I watch out for when negotiating solar financing?

4. Watch out for low pricing that seems to be below market-value. You want the best financial terms for your solar projects, but sometimes a solar proposal may seem too good to be true. Unfortunately, when a proposal doesn’t come from SunPower, it is often too good to be true, leading to delayed or failed projects because reputable financiers see the project as too risky. Many solar developers that were active three years, and even one year ago, are no longer in business.

5) How can running my business on solar increase my bottom line?

6. For any business, finding new sources of capital to reinvest in the company can be difficult. Solar saves your business money that would otherwise be spent on utility bills. The bottom-line benefits are undeniable. According to a recent SunPower survey, 87% of business respondents cite saving money as one of the primary reasons for funding solar projects—with some projected to save hundreds of thousands of dollars (or more) in electricity costs over the life of their commercial solar panel system.* That’s money that directly impacts your bottom line.

6) How can a focus on sustainability help my business grow?

6. Choosing to go solar isn’t just a financial decision. It’s an environmental choice. Businesses that cultivate a focus on sustainability are experiencing powerful brand effects. A solar panel system on your business makes a strong statement to your customers. Their relationship with your brand grows. Employees walk just a little bit taller knowing the business they work for is running on clean energy. Study after study shows that sustainability isn’t just go

7) If solar is so great, why isn’t everyone doing it?

7. The truth is, more people are going solar now than ever have before. Over the last ten years, solar has grown at an average annual rate of 68%, and the trend shows no signs of reversing.* Fortune 500 companies have installed solar at nearly 2,000 individual project sites nationwide.* Top corporate brands like Target, Walmart and Apple are adding solar at an impressive rate, and the influence these brands wield on consumer lives means more people are opting for clean energy of all kinds

8) Why should our business go solar now?

8. The longer you wait to think about solar, the more it costs your business. Commercial prices for solar have decreased 58% since 2012.* However, recent policy decisions suggest we may be nearing the bottom of that downward trajectory. The federal investment tax credit (ITC) for solar is equal to 30% of the amount invested in an eligible installation (e.g., if you invest $100,000 in solar, you could receive a $30,000 tax credit). However, the ITC rate will decrease to 26% in 2020, 22% in 2021, and 10% after 2021. Meantime, electricity prices continue to increase year over year. The sooner you decide to go solar, the more you can save.

9) Which ownership or financing option should I choose?

Cash: When you own your solar project, you have control over the equipment and can provide greater financial ROI in the long run, but you need to account for ongoing operations and maintenance (“O&M”) costs. SunPower provides ongoing O&M services for its systems that can also be supplemented with a long-term Performance Guarantee (“PeGu”).

Lease: With a leased solar system, you, and third-party provider, or SunPower takes care of maintenance and repairs, but the lease rentals are payable whether the equipment is optimally producing electricity or not.

PPA: Instead of renting the equipment, with a PPA you’re buying electricity. Instead of buying electricity from your utility, you are buying from the PPA financier. The PPA provides a locked-in price that protects you from volatile energy price changes, and if the system doesn’t produce energy, you don’t pay for it. But if the system doesn’t produce the expected output, you must purchase remaining electricity needs from the grid.

A high-quality system from a provider like SunPower with a history of strong performance results is important for realizing the projected value of the system, even though the customer only pays for delivered energy.