Sun Towards High Noon: Solar Power Transforming Our Energy Future by Peter F. Varadi

Author:Peter F. Varadi [Varadi, Peter F.]
Language: eng
Format: azw3
Publisher: Pan Stanford Publishing
Published: 2017-03-27T04:00:00+00:00

3.4.4.2 Inverted lease

This is similar in some ways to the PPA model in that there are three parties involved: the homeowner, the installer, and a third-party tax-equity investor. In this model, however, the homeowner simply leases the PV system for a fixed monthly payment and allows the PV-generated electricity to reduce the utility bill due to net energy metering. These leases are highly complex in nature because of the tax rules for leasing.

For third-party financing and use of the ITC, blocks of capital (i.e., $50 million, $100 million, even $250 million) are awarded to the installation companies by tax equity investors of which there are only about 20 in the United States. These include major banks such as BAML, CS, JPMC, Citi, and others, plus several high-tech firms that want to invest in clean energy and can use the tax credits such as Google.

The typical approach, called the inverted lease, is a mind-bogglingly complex financing and legal structure that seems “simple” to the homeowner, that was invented by Marshal Salant and Jason Cavalier when they were at Morgan Stanley in 2008. It was a great contribution to the financing of solar energy.

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