NYC Solar Summit 2012: Financing Options


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NYC Solar Summit 2012: Financing Options

  1. 1. SMART NY: Solar Financing NYC Solar Summit June 7, 2012 David Gilford, Assistant Director
  2. 2. SMART NY: Financing Options Working GroupNYCEDC and Mayor’s Office partnering to facilitate solar financing  Lack of financing slows solar adoption Why Does Financing  Removing barriers is both an environmental and Matter? economic opportunity  Understand and address financing barriers, including: What’s Our – Complexity Goal? – Lack of information – Regulatory or policy constraints 1. Evaluate financing best practices and barriers What Will 2. Analyze market needs and opportunities We Do? 3. Develop plan to facilitate financing 2
  3. 3. Why solar financing mattersUpfront costs are a major barrier to solar market growth  Building owners face high upfront costs for a long-term return  Incentives and funding can be complex and hard to access – Federal: Investment Tax Credit, Accelerated Depreciation – State: NYSERDA, other tax credits/exemptions – Local: property tax abatement – Utility: net metering tariffs, energy efficiency programs  No financing program or model has emerged as a “silver bullet” 3
  4. 4. Task 1: Evaluate Financing Best Practices and Barriers Working group will research and diagnose issues Research Identify Diagnose Research current  Identify best practices  Diagnose the primary status and survey solar for third-party financing barriers developers and ownership and other facing solar financial institutions: financing models:  Prioritize barriers – Customer – Locally based on their impact feedback – Regionally on market growth – NYC compared to – Nationally other markets – Impact of policies, regulations or tariffs 4
  5. 5. Task 2: Analyze Market Needs and Opportunities Gather data from Con Edison, NYSERDA, City agencies and the NYC Solar Map Analyze data to evaluate New York City’s building stock according to the economic feasibility of solar Segment the potential market according to likely financing needs and opportunities 5
  6. 6. Task 3: Develop Plan to Facilitate Financing Develop a detailed plan to address barriers and promote the highest- potential financing models Work with developers, financial institutions and other local stakeholders to facilitate piloting third-party ownership or other financing models in New York City 6
  7. 7. Initial focus is on third-party ownership modelsPPAs and leases offer solar with no (or low) upfront costsPower Purchase Agreement (PPA) Solar Leases“Pay by the kWh” “Pay by the month” Partial upfront pre-payment for  Typically no money down electricity (often optional)  Customer pays flat monthly fee to Customer pays for actual solar lease the solar PV system power generated  Monthly fee may increase at Fixed electricity rate or yearly predetermined rate percentage increase  Long-term, transferable agreement Long-term, transferable agreement  Potential advantages over direct bank loans: – Simplifies incentives, tax benefits and maintenance – Enables paying for electricity by the month, as usual – Mitigates reliability and performance concerns 7
  8. 8. Looking forward, other innovative models will be explored Crowdfunding: individuals invest small amounts of money directly in community solar projects – Startups like Solar Mosaic are bringing the “Kickstarter” model to solar On-bill financing: utility collects payments on behalf of third-party system owner, with generally no increase to customer’s monthly bill Property Assessed Clean Energy (PACE): municipality facilitates a low-interest loan that is repaid over time through customer’s property tax bills – Roadblocks remain for residential PACE, but Florida launched commercial solar PACE program in April 2012 8
  9. 9. Thank you “Generating reliable and affordable solar energy is both a public good and a national goal. A necessary component to achieve this vision is the availability of scalable, low-cost financing.” - US Department of Energy, SunShot Grand Challenge 9