Helping Small Business to the Next Level

Renewable Energy Finance for Non Taxable Entities

By kevin • August 23, 2017 • Filed in: Uncategorized

Businesses are in a position to directly take advantage of financial incentives to drastically offset the cost of solar, wind, biomass and other technologies.  The use of Federal tax credits, state credits, grants, and other tax saving tools can drastically reduce the cost of a solar or other installation often by well over 50%.  This makes systems pay off in just a few years.

On the other hand many cities and villages, schools and other government and non taxable entities wish to incorporate renewable energy and can take advantage of financing structures that allow them the indirect benefit of tax savings.  Here’s how it works.  A private business with sufficient passive income acts as a tax credit investor and partners with a renewable energy developer.  This new entity or entities can provide the needed equity or stock investment to a project which allows them to then obtain a loan for the balance.  The government or other non taxable entity then enters a power purchase agreement with the developer entity and indirectly receives the tax benefit through lower per unit energy costs as they receive the energy output from the project.   The non taxable entity often has little or no initial out of pocket expense or risk and pays for their energy in monthly lease or other type of periodic payments.   There can be variations of this structure and often each case is a little different but it provides a workable model that achieves its objectives.

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