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
- 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
- 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
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.
today to discuss your next outdoor solar lighting project.