NYC Solar SummitJune 7, 2012

David Gilford, Assistant Director

SMART NY: Solar Financing

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SMART NY: Financing Options Working GroupNYCEDC and Mayor’s Office partnering to facilitate solar financing

1. Evaluate financing best practices and barriers2. Analyze market needs and opportunities3. Develop plan to facilitate financing

Why Does Financing Matter?

What’s Our Goal?

What Will We Do?

Understand and address financing barriers, including:– Complexity– Lack of information– Regulatory or policy constraints

Lack of financing slows solar adoption Removing barriers is both an environmental and

economic opportunity

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Why solar financing mattersUpfront costs are a major barrier to solar market growth

Building owners face high upfront costs for a long-term return

Incentives and funding can be complex and hard to access– Federal: Investment Tax Credit,

Accelerated Depreciation– State: NYSERDA, other tax

credits/exemptions– Local: property tax abatement– Utility: net metering tariffs,

energy efficiency programs

No financing program or model has emerged as a “silver bullet”

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Task 1: Evaluate Financing Best Practices and BarriersWorking group will research and diagnose issues

Research Identify Diagnose

Research current status and survey solar developers and financial institutions:– Customer

feedback– NYC compared to

other markets– Impact of policies,

regulations or tariffs

Identify best practices for third-party ownership and other financing models:– Locally– Regionally– Nationally

Diagnose the primary financing barriers facing solar

Prioritize barriers based on their impact on market growth

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Task 2: Analyze Market Needs and Opportunities

Gather data from Con Edison, NYSERDA, City agencies and the NYC Solar Map

Analyze data to evaluate New York City’s building stock according to the economic feasibility of solar

Segment the potential market according to likely financing needs and opportunities

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Task 3: Develop Plan to Facilitate Financing

Develop a detailed plan to address barriers and promote the highest-potential financing models

Work with developers, financial institutions and other local stakeholders to facilitate piloting third-party ownership or other financing models in New York City

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Initial focus is on third-party ownership modelsPPAs and leases offer solar with no (or low) upfront costs

Power Purchase Agreement (PPA)“Pay by the kWh”

Solar Leases“Pay by the month”

Partial upfront pre-payment for electricity (often optional)

Customer pays for actual solar power generated

Fixed electricity rate or yearly percentage increase

Long-term, transferable agreement

Typically no money down Customer pays flat monthly fee to

lease the solar PV system Monthly fee may increase at

predetermined rate Long-term, transferable agreement

Potential advantages over direct bank loans:– Simplifies incentives, tax benefits and maintenance– Enables paying for electricity by the month, as usual– Mitigates reliability and performance concerns

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Looking forward, other innovative models will be explored

Crowdfunding: individuals invest small amounts of money directly in community solar projects– Startups like Solar Mosaic are bringing the

“Kickstarter” model to solar

On-bill financing: utility collects payments on behalf of third-party system owner, with generally no increase to customer’s monthly bill

Property Assessed Clean Energy (PACE): municipality facilitates a low-interest loan that is repaid over time through customer’s property tax bills– Roadblocks remain for residential PACE, but

Florida launched commercial solar PACE program in April 2012

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Thank you

“Generating reliable and affordable solar energy is both a public good and a national goal.

A necessary component to achieve this vision is the availability of scalable, low-cost financing.”

- US Department of Energy, SunShot Grand Challenge