Third party solar ownership

In a third-party ownership arrangement an entity hosts the system on one or more of its buildings, but the system is owned by a separate entity. Third-party ownership is used by entities that cannot take advantage of the considerable federal or state tax incentives available for solar installations. Third-party ownership may also be used by private sector entities which have tax, budgeting, or operational limits to owning a solar system outright. The investor utilizes the various tax incentives benefits available for the solar system (e.g., federal investment tax credit, accelerated cost depreciation) and sells the power produced by the system to the host entity. These arrangements enable the third-party investor and the host to help each other. Governments, schools, and non-profits usually have roof space and the desire to generate solar power, but lack sufficient funding and credits to purchase a solar system outright. Investors have capital available for investment and the ability and desire to use tax credits, but lack roof space. By working together in a third party ownership arrangement both parties can meet their needs—resulting in more solar installations in our communities.

Parties

Host
Under a third party arrangement, the host enters into a twenty-year agreement to purchase electricity from the system owner at a rate that is set at, or near, retail rates. The host has no capital outlays and will enjoy clean, renewable energy at a predictable price. The host must provide the owner with facility access to construct and maintain the system. After six years, the host will have the option to purchase the system at a substantial discount to the system’s original cost.

Project Developer
As a third party developer, Hybrid Energy Group is responsible for designing, financing, constructing and maintaining the system. Hybrid Energy Group receives development and maintenance fees for these services.

Investor
The investor provides the equity financing for the system. The investor receives a return on investment through a combination of tax incentives, electricity sale revenues, and utility rebates and incentives.