Solar Energy for Utility and Co-Ops
Learn how to enjoy both the financial benefits of solar energy and the clean power return to our community.
A key component to the financial feasibility of a solar project is the IRS investment tax credit, which is a 30% tax credit. While a great shot in the arm for cash flow in for-profit entities, it’s a missed opportunity for non-profits, such as rural electric cooperatives. Learn how Telamon Energy Solutions can provide solar energy for utility and co-ops affordably, using a tax equity flip model.
No-Hassle Power Purchase Agreements to Meet Your Solar Energy Needs
For the non-profit solar consumer, a tax equity flip reduces your cost of solar by approximately 10%, compared to the full cash price quoted by the EPC. For example, a project quoted at $2,000,000 would only cost $1,800,000. A suitable third-party investor will buy the project and takes ownership for the first 6 years to utilize the ITC and to depreciate the array, while selling the energy to you the off taker. At the end of the 6 years the co-op has the option to buy the asset back at a discount of 7% of the net present value. One of the best parts is that the non-profit has zero ongoing maintenance costs or production risk for 6 years, which would fall to the investor.
Solar Tax Equity Case Study for Utility and Co-Op Industry
Telamon Energy Solutions has a customer that is a rural electrical association and the role it plays is to broker a tax equity partner that has a tax appetite to buy and hold the solar asset for up to 5.5 years and then sell it back to the client by year six. By doing so the rural co-op client gets to utilize the tax credit and decrease the final cost of the project up to 10%.
For the tax equity partner they get a tax credit worth 30% of the cost of the array, are able to take the full depreciation of the asset, receive up to a 2.7% annuity for five years and at the end of the day they are receiving up to a 15% internal rate of return (IRR).