Question

Can you offer any insight into financing a solar energy plant in NC. Seems like sale of tax credits may be key to bringing in equity to make capital stack work. Do you know of lenders in this sector who understand solar plant construction financing

Cost is $7M. Federal govt grants 30% of this. State tax credits of another 30% but only usable by a large taxpayer in that state who can use them. Also, 100% depn this year. To get the loan to a size where the NOI can cover the debt service, it seems like developer must sell tax credits to free up equity towards the total cost.

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Answers

We did a solar installation 4 years ago. Could not make it cost justified without substantial support from state grants. net cost to us was about 50% of total cost. payback very long term. Can provide advice from our soon to be retired VP Manufacturing. Call Dean Nearst 203-330-2543
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Will do. Thanks very much Don.
1678

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That's great. thanks so much.
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Yes, selling the tax credits (Federal ITC at 30% of plant cost, plus any state credits) is critical to making the project work. In most instances for solar PV plants you just do the tax equity plus sponsor equity to finance the entire project (i.e., no debt). You monetize the credits plus depreciation deductions at a stated yield for the tax equity investor (historically 9-13%, but I haven't looked in some time). If you are bringing debt into the capital structure, likely a regional lender who has done solar deals. Easier in California (& Europe) due to market maturity and FIT in some cases. As far as lenders, Wells Fargo and Citi have both been active. But again, a lot of it is tax equity not straight debt.
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Very helpful. Thanks very much.
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Robert, I am a partner of a renewable energy investment banking and advisory firm in PA and I own a couple commerical solar systems. Give me a call at 610-293-2507 and we can discuss.
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  • Adam Stern, Senior Vice President - Finance at The Gemstone Group,

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Will do. I'll call you soon. Thanks.
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