How Power Purchase Agreements (PPAs) Allow Businesses And Homeowners To Go Solar.

A financing option known as a Power Purchase Agreement (PPA) is available to business and home owners who are looking to go solar but for a fraction of the cost. A Power Purchase Agreement (PPA) is a legal contract between an electricity generator (PPA Provider) and a host site owner/lessor (business/home owner). The business/home owner purchases energy from the PPA Provider at a contractual price (typically at current or discounted utility rates) for a negotiated number of years. This allows business/home owners to lock in current energy costs all the while going green. The biggest advantage to the business/home owner is a predictable monthly electricity payment not subject to utility price volatility. Although most PPA contracts will have an inflation escalator year to year (typically 3-5%), it is still below the historical utility increase of 7+% each year.

In addition to energy cost containment, under the terms of a PPA, the PPA provider assumes the risks and responsibilities of ownership such as the purchase, operation, and maintenance of the solar facility. However, because the PPA Provider is the owner of the solar system, all tax credits, grants, and utility rebates belong to the PPA Provider. If you are looking into a PPA you should weigh the advantages and disadvantages summarized below:

Advantages

• Current/discounted utility costs
• Hedge against energy costs
• Long-term predictable energy costs
• Use of Solar Energy For A Fraction of the solar system market value
• Customer only pays for energy produced
• Customer can advertise it's use of "clean energy"

Disadvantages

• Client not eligible for tax incentives, grants, and utility rebates
• Client does not own system
• Client pays for energy produced regardless of actual usage
• 15 to 25 Years of PPA payments depending on contract terms

For more information on whether or not a PPA is appropriate for you, contact us at:
info@djhconstruction.com or (949)233-1618.

Attention Business Owners - 30% Solar Grant Now Available

The Department of the Treasury has recently made available the instructions to apply for the Renewable Energy Grant. This grant is part of the Section 1603 of the American Recovery and Reinvestment Tax Act of 2009. It authorizes the US Department of the Treasury to make payments in the form of a cash grant to commercial, agricultural, and industrial properties that install a qualified renewable energy system such as a solar photovoltaic system.

Where previously the 30% Investment Tax Credit (ITC) allowed solar investors to reduce their tax liability by the amount of the tax credit, Section 1603 now allows investors the option to access a cash grant instead. This is advantageous to those who are looking to invest in solar but do not have the tax liability to take advantage of the 30% tax credit. Although the tax credit can be carried forward into the subsequent tax year, the full benefit of the 30% tax credit cannot be realized until taxes are filed. The grant provides a great alternative to the ITC. The solar grant allows investors to receive a cash grant within 60 days or less of the grant application or the date the solar system is placed in service, whichever is later.

If you are interested in taking advantage of the 30% grant, below is a list of eligibility and provisions for Section 1603:

o Only tax-paying entities are eligible for this grant.
o Applicable Sectors: Commercial, Industrial, Agricultural
o Grants are available to “eligible property* placed in service in 2009 or 2010
o Eligible solar-energy property includes equipment that uses solar energy to generate electricity (photovoltaics), to heat or cool (or provide hot water for use in) a structure, or to provide solar process heat. Passive solar systems and solar pool-heating systems are not eligible. Hybrid solar-lighting systems, which use solar energy to illuminate the inside of a structure using fiber-optic distributed sunlight, are eligible.
o Grant applications must be submitted by October 1, 2011
o The Treasury will make Section 1603 payments to qualified applicants equal to 30% of the basis of the solar photovoltaic property - this includes solar equipment, installation, and freight.

Contact us to learn more about this grant and other incentives for your solar installation at info@djhconstruction.com.

How To Use Property Tax Assessments to Finance Your Solar System.

California passed AB 811 in September 2008, giving all California cities and counties the ability to offer low-interest loans for renewable energy projects to homeowners and small businesses. The cities are able to finance the installation costs through either City internal funds or the issuance of a bond and the project is secured through a property lien. The cost of the bond is then recouped over a specific time frame and repayment is made through tax rolls. For example, in the City of Palm Desert, AB811 offers a low interest rate loan (so far at 7% amortized over 20 years) from the City and is repaid every six months along with the County property tax payment.

Some of the advantages to AB811 are:
• Transferability - Residents would pay back the loans through assessments on property tax bills; if they move, the outstanding loan balance is taken over by the new owner.
• Little to No Out of Pocket Money - The renewable energy property owner immediately enjoys a greatly reduced electric bill with no out-of-pocket expense.
• Access to Capital - It requires NO credit check and can pass to new owners of property without future credit checks through title transfer at escrow. Loans have a minimum of $5,000 and no maximum limits.
• Small Payments Over Longer Time - The interest rate is fixed and paid bi-annually through property taxes.

California cities currently offering this financial vehicle are:

- Berkeley - Financing Initiative for Renewable and Solar Technology (FIRST)
- Palm Desert - Energy Independence Program
- Santa Monica - Solar Santa Monica
- Sonoma County - Energy Independence Program

For more information on how you can access AB 811 or other solar financing options, contact us at info@djhconstruction.com. You can read this press release at:
http://www.prlog.org/10260739-how-to-use-property-tax-assessments-to-finance-your-solar-system.html