Three takeaways from SEIA white paper on financing C&I solar with C-PACE

solar financing

The commercial and industrial (C&I) sector remains the biggest opportunity for solar, but also the most frustrating to finance. We looked at some boutique financing concepts in our Sept./Oct. issue, and last week the Solar Energy Industries Association (SEIA) and Alta Energy jointly released a white paper highlighting an underutilized financing tool: Commercial Property Assessed Clean Energy (C-PACE). With C-PACE , a property owner can finance 100 percent of the cost of solar and/or energy efficiency upgrades as a voluntary property tax assessment on a commercial building for 10-30 years and can be easily transferred to new owners, the paper notes.

Here are three key takeaways from the report.

C-PACE financing immediately opens up C&I markets to solar that were unreachable through more traditional methods. States such as Florida, Kentucky, Minnesota, Arkansas, Missouri, Nebraska and Wisconsin that do not allow power purchase agreements (PPAs) but have working C-PACE programs. And even in states with thriving PPA deals, C-PACE financing can be a more appealing deal, allowing an owner to take advantage of tax incentives immediately.

C-PACE allows for all-encompassing energy efficiency plans to be bundled right along with the solar system. An example in the white paper is a 500-kW system that would not be cumulatively cash flow positive throughout the term of the loan, but with a $100,000 lighting retrofit project bundled into the financing package, the project stays positive while total project savings increases by $150,000. Seen here:

SEIA PACE financing solar

This same strategy is useful in states where a solar+storage system would make a huge impact in cutting peak demand charges.

C-PACE financing can also make a solar system attractive in situations where it made no sense previously — like an owner who does not pay the energy bills. Because C-PACE financing is tied to the property taxes, owners can pass the cost of the array onto the energy-consuming tenant. Poor credit is also not a factor, as we dove into in this article.