American Solar Project Financing Services

Some businesses and government entities finance their large-scale solar energy installations using tried-and-true financing vehicles such as capital budgets, long-term debt, municipal bonds, bank loans, etc. Other entities choose to 'go solar' through a recent financing innovation known as an "energy purchase agreement." In the solar electric market, these financing structures are called "power purchase agreements" or PPAs. In the solar thermal business, they are known as Thermal Energy Purchase Agreements (TEPA's)

In a Thermal Energy Purchase Agreement (TEPA), a separate company finances and owns the solar heating system and then sells the heat to you, the end user. This enables you to manage your organization without the hassles or up-front costs of ownership or long term operations and maintenance, while enjoying all the advantages of going solar, including predictable long-term heating costs.

TEPAs are useful for nonprofit and government organizations, which cannot take advantage of federal renewable energy investment tax credits (ITCs). The TEPA approach gives the solar equipment owner the full benefit of the tax credits and depreciation allowances. This lowers the equipment owner's costs, and the savings can be passed on to the building owner in the form of lower energy payments.

How it Works

American Solar creates a Solar Investment Trust a ( SEIT) to own the solar energy system, which can include the new solar roof. The individual owners of the SEIT can take the tax credit and charge the nonprofit or government entity for the heat delivered from the solar heating roof system as well as a small financing and maintenance fee

The nonprofit gets a new roof without incurring a capital expense and receives solar heat at a lower predictable cost than it would from traditional heating sources.

In addition, the non-profit gets a SEIT contractor to monitor and maintain the solar heating system to ensure steady energy delivery. As the developer, owner, and manager of the solar heating system, the SEIT assumes the risks and responsibilities of ownership and operation to deliver weather-tight roofing and solar heat delivery.

Once a heating system comes on line, American Solar monitors it through its internal asset management division. Its on-staff engineers monitor the systems and oversee long-term maintenance with either the installing company, if they have maintenance capacity, or through other types of contractors.

At the end of the TEPA term, the non profit has three options: They may renew the TEPA and continue buying the heat from the solar owner under new terms; purchase the system at fair market value, estimated at around 10% of the original value; or dissolve the agreement, and ask American Solar to remove the heating components.

Commercial Customer Solar Project Financing Options

Commercial customers can use our installations to lower the cost of their heating bill and to lower taxes. Of the three main financing options - self-financing, lease terms, and TEPA - the best return on investment (ROI) comes from self-financed systems.

Commercial owners get a first year, 30% federal tax credit and five-year accelerated depreciation for a solar heating roof. The payback for some systems can be as low as six years. In many cases, the installation will be lower cost to the owner at startup than installing a conventional, non-solar roof.

One disadvantage of self-financing is that the customer must come up with the cash to pay for the project. If the company does not have the capital and cannot get financing, a TEPA may be a good alternative.

Quick project payback

With an energy purchase agreement, your solar thermal project can realize a one-year payback.