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How do you finance your solar street lights or any other alternative energy development project?

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HBC Energy Capital

When considering a solar street or parking lot lighting project, despite the fantastic lifetime energy and cost savings available, organizations are often faced with a “first cost” barrier that can stop a project dead in its tracks. Introducing the right kind of financing to a project can eliminate first cost barriers to installing equipment, and even provide immediate cost savings in some cases.

Financing a project can provide the following benefits:

  • Eliminate objections based on lack of capital budget
  • Eliminate objections based on capital budget priorities (eg. “we’re focusing our spare cash on other projects this year”)
  • Allows the project developer to maintain control of the sale (by overcoming objections 1 and 2)
  • Allows the borrower to use their capital budget for core-business related expenses.

Often we hear, “I have a great bank- can’t I get financing from them?” The problem with using the local (or national bank) is that your options are the following:

  • Open a line of credit. This can be time consuming, and often times involves fees.
  • Apply for a business loan. A business loan is a generalized instrument, and is not specialized to meet the logistical and cash flow requirements of a cash-flow product clean energy upgrade. You will likely have to put 15-20% of the project cost down, and you’ll spend 3+ weeks in the application process.

So what is the right kind of financing? The answer depends on who the borrower is, and the size of the project. Let’s break borrowers down into 2 categories: commercial and municipal.

Commercial Finance Options:

Capital Lease: In many cases your best option will be a capital lease. In a capital lease, the financing can cover 100% of the project costs, rates typically range from 4 percent to 12 percent, and the application process can involve as little as a single page. Funds can be disbursed directly to the contractor installing the job.

Service Agreement: An energy service agreement is a contract in which a third party, typically an Energy Services Company (ESCO), provides energy savings to the “borrower” for a fee. These arrangements require no up-front costs and generally are considered off the balance sheet. Underwriting is based on the energy savings potential of the project vs. the creditworthiness of the tenant/borrower.

PACE: This is a financing instrument whereby the financing is paid back on the property tax bill. This makes the financing more secure and allows lenders to provide good rates for long terms, often as long as 20 years. Commercial rates may range form 6 percent to 8 percent, depending on the lender and project. Borrowers must live in a PACE Enabled Jurisdiction.

Municipal Finance Options:

Tax Exempt Municipal Lease Financing: This is a lease instrument used by government borrowers. The TEML is subject to annual appropriations during every budget year. TEML interest rates typically run between 2 percent and 4 percent, making this instrument an attractive product for eligible entities.



About HBC Energy Capital:

HBC Energy Capital provides customized financing solutions for all of your solar and energy efficiency projects. Decades of experience, low rates, and cutting edge financing projects from the best lenders in the industry to help you get your project installed. We work across multiple financing instruments and strong lender relationships to bring your project the best source of financing available.

About Solar Sphere, Inc.
Based in Denver, Colorado, Solar Sphere, Inc. is a leading distributor of alternative energy products with a special emphasis in solar lighting applications. Our outdoor solar lighting portfolio includes an extensive selection of options for solar street lights, solar parking lot lights, solar pathway lights and solar sign lights. Contact us today to discuss your next outdoor solar lighting project.

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