Energy Project Financing Options
With the right financing options, an energy project can be affordable to businesses of all sizes
Our financial analysts provide you with the best energy funding sources available to finance your project
Our financial analyst team prepares several financing options for our customers allowing for flexibility in the project. We provide a variety of options, several involving no out-of-pocket expense, each offering different terms and rates. Here is a list of several options we work with:
Financing options available to your organization
Provides 100% funding for energy efficient and renewable energy improvements. PACE funding is an off-balance sheet funding tool that adds an annual assessment to your property taxes and doesn’t utilize any of your existing lines of credit. PACE is designed to help businesses and property owners make improvements that result in positive annual cash-flows.
Managed Energy Service Agreements
MESAs are contracts under which a third-party energy efficiency contractor assumes the energy management of a client’s facility, including the installation of energy efficiency upgrades and responsibility for utility bills, in exchange for a series of payments based on the customer’s historic energy use; these periodic payments are usually lower than previous utility expenditures.
Energy Service Performance Contract
ESPCs are offered by certified Energy Service Companies (ESCOs). They essentially use future energy savings to pay for facility upgrades. Under these agreements, your ESCO is required to provide a contracted amount of energy savings in return for a monthly premium, thus ensuring security in your energy project investment. Energy savings are guaranteed, and if the savings do not occur naturally, the ESCO will pay the savings out of pocket. ESPC contracts can easily be combined with or a replacement for MESAs.
If businesses want to avoid debt or would prefer to not directly own the energy assets from an energy project, a PPA is a great option. PPAs offer the benefits of reduced utility expenditures while only requiring a simple monthly or yearly payment.
PPAs do not disturb any existing mortgage or property lien and so are appropriate for customers whose properties are otherwise encumbered.
For nonprofits who are unable to take advantage of the investment tax credits, we have PPA contracts available with tax equity investors who will offtake the tax credits in exchange for an equity investment that decreases the cost to the customer.
Various government departments and utility providers across the United States offer substantial rebates which can provide an instant financial incentive for starting an energy project. These typically subsidize costs for: building automation systems, lighting retrofits, HVAC upgrades, solar panels, energy efficient water heaters, and more. Rebates can help reduce system costs by 10-20%. Learn more about rebate programs your company could qualify for.
Federal tax credits
The Investment Tax Credit, which covers 30% of project costs for renewable energy, was recently extended until 2020. After that, tax credits will not remain the same and will change beginning in 2020:
- 2020: 26% tax credit
- 2021: 22% tax credit
- 2022 onward: new commercial solar energy systems can deduct 10%. No federal credit for residential solar
State tax credits
Some states offer an additional state tax credit that varies by state, but is typically about 15% of project costs. With a state solar tax credit, managers can deduct a portion of their solar system’s cost from their state tax bill.
USDA REAP grants & loans
The USDA Rural Development Office offers a grant of up to 25% of total project costs and a loan of up to 75% of total project costs which can be used for eligible projects. This is a great financing option for those looking to save money on their energy consumption.
- Terms: For a renewable energy grant, the grant will apply to projects in the $2,500-$500,000 threshold. For energy efficiency grants, the threshold is $1,500-$250,000.
- Click here to view USDA REAP eligible towns and cities.
- Click here for more information on how to contact local USDA Rural Development Offices.
Traditional Bank Loans
Bank loans offer 20-25 year financing options for building upgrades. Energy savings produced from building upgrades generate positive cash flows, decreasing investment risk, and hasten the payback period for projects.
Let EnergyLink set up financing for your energy project
We know how to get the best financial setup for your organization without creating any hassles on your end.