The Sunvestment Energy Group Blog

The Best Impact Investment? Solar.

Posted by Nicole Vahlkamp on Jan 25, 2016 11:36:39 AM

The trend of divesting from fossil fuels and turning to clean energy investments instead has certainly grown in recent years.  As these investments originated from concern for the environment rather than traditional financial return objectives, serious investors may wonder if these investments that are “benefitting society” still earn the same level of return on investment.

We can all see how solar is good for the site-host (because it helps them save money on their utility bill), and good for the environment (because it reduces fossil fuel emissions). But does funding solar projects provide a good return on investment for those who put up the funds?

Consider this—if solar wasn’t a good investment, would companies like Google, Costco, and Apple be investing in it? No. These companies seek primarily to earn a high return on their investment, and that’s just what they do when they invest in solar.

Unfortunately, these large corporations and banks tend to fund only large-scale solar development projects, because that’s where the returns are generally the highest. This is because investors charge premium prices to the site-hosts, who themselves are usually large companies with cash to spare.

Smaller businesses typically do not have the up-front capital to finance a solar array, while non-profit organizations cannot use the federal Investment Tax Credit (ITC). These are serious challenges to either of these groups going solar.  

That’s where you come in, and it’s also why we designed a unique community-oriented Power Purchase Agreement—what we call the Community PPA.

The Community PPA enables local accredited investors to help community organizations finance solar energy systems while earning attractive returns on their investment.  Through the Community PPA, community members participate in the purchase of the solar array by providing a portion of the upfront capital required.

In return, investors with passive income can take advantage of the federal ITC and can get 30% of their investment back immediately through tax credits. Community investors may also be able to participate by purchasing debt obligations.

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The graph above, from the Sunvestment Energy Group website offers a snapshot of the long-term benefits of putting money into solar relative to other investment vehicles.

The Community PPA enables smaller businesses, community organizations, and not-for-profits to “go solar”—installing solar arrays on their property that help them become less dependent on traditional forms of electricity, while community investors earn attractive returns for the level of risk they are taking. This is sound, impactful investing at its finest.

Bank of America Merrill Lynch is so convinced of the benefits of a solar investment that they recently announced a $200 million tax equity investment program for solar projects that allows community banks to also take part in tax equity credits.

Sunvestment Energy Group’s financing options go a step further, opening up the same option not only to banks, but also to small business owners and qualified, accredited investors.

If you are an accredited investor who wants to participate in a business initiative that’s socially, environmentally, and economically sound, read up on the nuances of the Community PPA arrangement on our website.

It’s also a good idea to familiarize yourself with the federal government’s ITC laws to make sure the credit applies to you. Feel free to contact us for further information. 

Topics: Renewable Investment Opportunities, community solar finance, Solar for Non-Profits, impact investment

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