You Don’t Have To Be a Wizard to Understand the Private Financing of Solar Projects

APRIL 3-6, 2013, LONG BEACH, CA

These materials have been prepared for the CASBO CBO Professional Council. They have not been reviewed by State CASBO for approval, so therefore are not an official statement of CASBO.

YOU DON'T HAVE TO BE A WIZARD TO UNDERSTAND THE PRIVATE

FINANCING OF SOLAR PROJECTS

CASBO 2013

Presented by:Devon B. Lincoln, Esq.

Trevin Sims, Esq.Adam S. Bauer

THE MAN BEHIND THE THE MAN BEHIND THE CURTAINCURTAIN

• Are there real savings from solar?

• Who’s really investing in yourproject?

PULLING BACK THE CURTAIN

Annual Savings = ((Solar Electricity

Produced x AvoidedUtility Rate) + (Credits and

Incentives)) – Financing Costs

SOLAR ELECTRICITY PRODUCED Variables Include:• Locations: Number and

Insolation• Technology: Guarantee?

Maintenance? Security?• Usage and Energy Efficiency

AVOIDED UTILITY RATE

Usually assumes annual escalation factor

• 3%? 5%? ?%• Who knows where utility rates will

go?

PULLING BACK THE CURTAIN

Annual Savings = ((Solar Electricity Produced x

Avoided Utility Rate) + (Credits and Incentives)) – Financing Costs

CREDITS AND INCENTIVES

• California Solar Initiative (CSI) • Renewable Energy Credits

(RECs)• Prop 39?• Tax equity?

PULLING BACK THE CURTAIN

Annual Savings = ((Solar Electricity Produced x

Avoided Utility Rate) + (Credits and Incentives))– Financing Costs

FINANCING OPTIONS

• Power purchase agreements• Local bond funding• Lease-Purchase• Municipal finance/JPA

PULLING BACK THE CURTAIN ON

Power Purchase Agreements • No Cash Down• Private Entity Is System Owner• Tax Equity Investment• 20-25 Year Term• Limited Termination, Purchase

and Re-Location Rights

PULLING BACK THE CURTAIN ON

Local Bond Funded Project • Community support for project• Project delivery method (Who’s

building it?)• Compare system costs to

“Avoided utility rate”• General fund savings?

PULLING BACK THE CURTAIN ON

Lease-Purchase Financing• Institutional lender• 7 Year term typical• Compare interest rate to

“Avoided utility rate”• Future refi likely

PULLING BACK THE CURTAIN ON

Municipal Partnerships/JPAs• Pooling resources to achieve a

project• Project delivery method: Who’s

building it?• Managing long term

maintenance, ownership issues

PULLING BACK THE CURTAIN ON

Annual Savings = ((Solar Electricity Produced x

Avoided Utility Rate) + (Credits and Incentives)) – Financing Costs

“PAY NO ATTENTION TO THAT MAN BEHIND THE CURTAIN”

Ask the Hard Questions:

• What’s the technology?• Who’s building It? What are the

warranties?• What’s behind the savings

projections?• Can we get credits and

incentives?

“PAY NO ATTENTION TO THAT MAN BEHIND THE CURTAIN”

• Do we have local support?• Who’s profiting from our

project?• Who’s partnering in our

project?

PLEASE NOTE

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