Written by Brian Lavinio, PEA intern and Williams College (2024)
Solarize Philly is your one-stop shop to go solar for your property.
This is the second addition in a two-part blog series focused on solar, storage, and other technologies highlighted in the Inflation Reduction Act (IRA). Part 1 is here. The IRA is a powerful tool with many incentives and sources of financing for solar projects; however, there are non-IRA solar financing measures that can provide additional benefits. Many of these can be combined with IRA benefits to reduce already lowered costs of solar projects.
THE BOTTOM LINE
There are dramatic cost savings available for installing solar!
IRA Investment Tax Credit reduces system costs by at least 30%: “Adders” for domestically-produced content, low income and energy communities can reduce costs even further
PECO incentive of $0.10 per kWh of energy generated in first year of operation, which PEA estimates will reduce total system cost by 5-10%.
Expect a reduction in the cost of solar by at least 35% and potentially much more!
What incentives are available?
In June of 2023, PECO launched a new solar energy incentive for commercial property owners. The incentive is for production of “behind-the-meter” solar energy and provides $0.10 per kWh of energy generated based on the property’s first year of annual solar production, minus any excess kWh that is greater than the kWh demand in the same period. Simply put, PECO will provide an incentive on the kWh that commercial properties produce and consume.
We estimate that this incentive will reimburse property owners between 5 -10% of a typical total solar system’s cost. This incentive, when combined with the IRA’s expanded Investment Tax Credit (or Elective Pay for non-tax paying entities) of at least 30%, brings the total cost of commercial solar projects down by 35-40% or more. See this blog post for more information.
What financing measures are available?
If commercial property owners are unable to generate the required capital for solar projects, there are financing measures available to reduce the gap in access to renewable energy projects.
Commercial Property Assessed Clean Energy (C-PACE)
C-PACE financing is available for commercial property owners to pay for energy efficiency, water conservation, clean energy, indoor air quality (IAQ), and resiliency projects. PEA administers the Philadelphia program. C-PACE terms can be as high as 30 years and interest rates in the second half of 2023 were between 7% and 8%.
C-PACE financing can be a great solution to pay for the full upfront cost of installing solar. When incentive payments are received (12-18 months after installation) they can go towards C-PACE payments or can be used for other capital investments.
What properties are eligible?
- Commercial properties including office, rental multifamily, retail, warehouse, medical, hospitality, agricultural, industrial, and vacant land, among others.
- Non-governmental, tax-exempt organizations that operate facilities such as community centers, medical facilities, theaters, schools, religious facilities, among others.
For more information about Philadelphia C-PACE and to determine if your property and project qualifies, check out the Philly C-PACE website or contact Lisa Shulock at lshulock@philaenergy.org.
Catalyst Term Loan, Philadelphia Green Capital Corp.
Financed through Philadelphia Green Capital Corp. (PGCC), an affiliate of PEA and the Philadelphia region’s green bank, this loan offers lightly secure financing for low-to-moderate income multifamily properties and non-profits. The Catalyst Term Loan primarily targets energy and resilience improvements through decarbonizing buildings, improving occupant health and safety, and complying with local building energy-efficiency requirements. Renovations and new construction are both eligible.
What properties are eligible?
- Affordable and market-rate residential properties with five or more units.
- Co-ops, condominiums, rental properties, and affordable housing (including mixed-use).
- Buildings owned by non-profits or municipalities, including community centers and houses of worship.
What are some eligible improvements?
Most energy performance improvements are eligible, as well as improvements to a building’s health, safety, or resiliency. Some examples include:
- Solar PV and other renewable energy systems
- Repairs needed for building electrification or solar, including roof replacement or electrical rewiring
- Energy storage solutions
- Work deemed necessary for achieving high-performance building standard certifications such as LEED
What are the loan terms and rates?
Loans can range from $50,000 to $2,000,000, with rates starting at 8.75% and terms ranging from 7-20 years. Higher loan amounts may be considered on a case-by-case basis by PGCC. Rates vary based on housing affordability status and/or owner’s nonprofit status.
For more information, check out the PGCC webpage. Questions can be directed to Rishika Ghosh, greenloans@phillygreencapital.org.
Sustainable Development Fund
The Sustainable Development Fund is part of the Reinvestment Fund of Philadelphia in conjunction with the Pennsylvania Public Utility Commission. This fund financially supports projects that promote energy conservation and efficiency, and clean energy technologies.
Who is eligible?
- For-profit companies
- Non-profit organizations
- Local government entities
Renovations and new construction are both eligible. All projects must be located in the Commonwealth of Pennsylvania.
What are some eligible improvements?
The Sustainable Development Fund provides financial support for projects promoting energy conservation and efficiency, renewable energy implementation, storage solutions, and construction of electricity-generating projects from clean energy sources. Examples include:
- Construction of solar, wind, hydro, or other renewable energy sources.
- Energy conservation and energy efficiency improvements in buildings, including gut rehab and energy retrofits.
- Energy-efficient production equipment.
- Electric storage solutions.
For more information, check out the Sustainable Development Fund webpage, or contact Bridget Wiedeman at the Reinvestment Fund, Bridget.Wiedeman@reinvestment.com.
YOUR ROADMAP TO GOING SOLAR
- Obtain quotes from Solarize Philly solar installers
- Secure Financing or capital for 100% of system cost
- Approximately 12-18 months after interconnection with PECO, receive payments from IRS and PECO for 30-40% or more of system cost
Financing options can include:
Reach out to Solarize Philly, your one-stop shop to go solar for your property.
Posted in Energy Campaign, Solarize Philly