Financing a solar energy project can be a fragmented process full of complex, tax-driven financial structures and multiple layers of development.
Traditional solar financing models require a new third-party vendor at each phase. From the start, facility directors, developers and sustainability officials must engage with one firm for concept, one for design, another for financing and the list goes on. This can lead solar projects to become disjointed and inefficient, resulting in cost increases, missed deadlines, and frustration.
It’s not just the residential segment which sees financing struggles. Financing and monetizing solar projects can be especially difficult for small organizations and businesses with short operating histories. Financial structures are complicated and many companies lack the greater understanding of monetizing tax credits and depreciation benefits needed in a post-Section 1603 Federal Grant Program environment. In addition, while Power Purchase Agreements (PPAs) have grown in popularity, the challenges associated with negotiating, structuring and financing these deals, particularly with numerous parties, can frustrate potential customers—and contractors—and make the transaction cost prohibitive. Contractors alone don’t always have the financial expertise to help guide these customers through.
A shoulder to lean on
There’s a new model taking hold to streamline the process of going solar, making it easier for all parties involved. Companies who may be experts in one area are partnering with solar businesses in multiple disciplines so together they can be a one-stop-shop for customers. This is the approach Panasonic is taking as it combines its expertise with partnerships to also offer project development, engineering, financing, construction and long-term service and maintenance services.
This integrated model can enable offering a variety of financing options that eliminate the need for upfront capital outlays and simplifies solar through a structured, standard set of contracts. It can also mitigate project delivery risk for a more efficient and cost-effective solution that ensures attractive and reliable benefits.
Considering teaming-up
These one-stop-shops are looking to partner with developers, EPCs, installers and other solar contractors. When considering joining forces with an end-to-end solution provider, contractors should look for companies that have years of strong experience, a global portfolio of projects and products, leading experts and financial strength. Each provider will have different terms and conditions to the partnership so it’s important to understand these before signing on as well. In turn, these providers are looking for reliable, dependable partners who have a strong project portfolio. They want to ensure the can deliver a quality project, on time and on budget.
Reaping the benefits
By joining this model, contractors are able to secure new customers that were previously hesitant to go solar due to the traditional, fragmented process of working with a different third party each step of the way. Joining forces helps streamline the project, ensuring it is efficient and cost-effective for everyone involved.
By Jamie Evans, Managing Director and Head of U.S. Eco Solutions for Panasonic Enterprise Solutions Company
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