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.
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