Ann Arbor is well within its power to have a million solar panels up and running, according to Prasad Gullapalli, founder and president of Srinergy. This week Gullapalli discusses how to manage and finance this solar target.
Financing Options for Going Solar
Posted By: Prasad Gullapalli
Posted: 4/5/2012
I hope I have sparked your interest and that you Ann Arborites are encouraged to "Go Solar" after reading my first blog! Well, now onto the interesting stuff… how to go about financing solar projects.
There are several options available including conventional loans, leasing, fund raising and incentive programs. With an average cost of installing a single solar panel at $1,000 each, we are looking at financing $10,000 for a solar system with 10 panels. The good news is that as a homeowner or business owner, you can get a federal tax incentive of 30% of the total cost of the solar system if the system is financed through a loan, and you end up owning the system. After deducting the federal incentive credit, the final cost of this example solar system is $7,000. Other loan options available for home owners include home equity loans, as well as unsecured loans, like the ones offered through Srinergy with GE Capital.
For business and non-profit organizations, financing options include business loans or raising money through fund raising campaigns. In today's market, getting qualified for a loan can be difficult; therefore, the best option is to go for lease financing. In the market today, most solar companies offer lease options with 0% down. This leasing option is actually one of the best for businesses, as the monthly lease payments are less than the energy savings realized by going solar, so there is a positive cash flow already from Day 1! Non-profit organizations can take advantage of this lease financing option as well. Non-profits have an added advantage of campaigning through "Go Solar" fund raising campaigns, where donors can take advantage of tax benefits through their contributions and at the same time, help non-profits in reducing their energy costs and promoting sustainability in the community.
I believe the best way to "Solarize" Ann Arbor is through a community based sustainability model, which represents a win-win scenario for everyone involved and helps create socially responsible individuals (SRIs) within the community. Non-profit organizations in Ann Arbor could certainly take a lead in this "Million Solar Panels" initiative for all their buildings and facilities within each community that they are serving through a combination of donations, leasing and incentive programs.
One such incentive program unique to Ann Arbor is the Property Assessed Clean Energy (PACE) program. Click on the link to learn more about this wonderful and unique program. Ann Arbor is the first city in Michigan that has launched this program, which provides loans based on a percentage of appraised property value against which commercial or non-profit organizations can borrow money for energy efficiency and renewable energy generation projects, including solar. Projects can range from $10,000 to $350,000. The loan amount is simply added to their current tax bill, and is paid back within 10 years. Commercial and non-profit organizations in Ann Arbor can "Go Solar" through this PACE program, where the energy savings that can be realized through projects such as a Solar PV system will be greater than the additional tax bill. So with the variety of financing options and federal incentives available, non-profit organizations could very easily lead the "Go Solar" initiative in Ann Arbor!
So, how do we get Ann Arbor to reach the "Million Solar Panel" target? Through creative financing and forming community-based strategic partnerships with solar companies to help share the cost and spread the benefits of solar throughout Ann Arbor. Combining these partnerships with community initiatives such as PACE, along with people who want to be environmentally friendly and have a positive contribution to the environment, we can make it happen.