To finance a solar project the best option for a property owner is to fund it themselves. Failing that, there are some other avenues available.
Environmental Upgrade Agreement Program
This is available for rate-paying properties used for non-residential businesses.,
Mitchell Shire Council has signed up to this program, which is administered by Sustainable Melbourne under its Better Building Finance brand. It is an agreement between a property owner, a bank, and a local council to facilitate a loan for building upgrades to improve energy, water, or waste efficiency, or to increase renewable energy.
EUA finance offers 100% project finance at very competitive, fixed interest rates and long-term loans of 10 years or more. The role of the local council is to declare an Environmental Upgrade Charge, collect it through the rates system, and remit it to the lender.
If the property is tenanted, any reduction in electricity charges due to a renewable energy installation would usually benefit the tenant. The EUAs allow tenants to contribute to loan repayments via agreements that correlate the contributions with the savings.
Investment
A host may have the installation of solar panels financed by an investor, which may be an individual, a trust, a private company, a public company, or a co-operative. There are precedents for all of these.
An investor may loan the funds in return for interest payments over the term of the loan, typically 7 or 10 years. The host owns the installation. Repayment of the principal may be by regular instalments or by one payment at the end of the term (balloon payment).
Or the investor may retain ownership of the installation and sell the power at an agreed rate to the host under a power purchase agreement. Host payments to the investor would include repayment of the principal.
Potential Local Investors
Mitchell Community Energy. When MCE set out to marshall community funds to finance the solar panels at the SSAC it had to set up a Special Purpose Vehicle to manage the project. We chose that this should be a co-operative for the following reasons:
Indigo Power. This is a community retailer set up by communities in northeast Victoria. MCE has been involved in this. Its model is to use community funds to set up a solar power system on a customers site. It will own and operate the solar power system for 10 years, selling the electricity generated by the panels back to the customer at a reduced rate. During this time the community investors receive interest on their investment and progressive repayment of the principal. At the end of the 10-year contract Indigo Power will transfer ownership to the customer at no cost. Their first project is a 17kW system on the Broadford office of DELWP, the funds for which were invested by Taungurung Land & Waters Council.
Environmental Upgrade Agreement Program
This is available for rate-paying properties used for non-residential businesses.,
Mitchell Shire Council has signed up to this program, which is administered by Sustainable Melbourne under its Better Building Finance brand. It is an agreement between a property owner, a bank, and a local council to facilitate a loan for building upgrades to improve energy, water, or waste efficiency, or to increase renewable energy.
EUA finance offers 100% project finance at very competitive, fixed interest rates and long-term loans of 10 years or more. The role of the local council is to declare an Environmental Upgrade Charge, collect it through the rates system, and remit it to the lender.
If the property is tenanted, any reduction in electricity charges due to a renewable energy installation would usually benefit the tenant. The EUAs allow tenants to contribute to loan repayments via agreements that correlate the contributions with the savings.
Investment
A host may have the installation of solar panels financed by an investor, which may be an individual, a trust, a private company, a public company, or a co-operative. There are precedents for all of these.
An investor may loan the funds in return for interest payments over the term of the loan, typically 7 or 10 years. The host owns the installation. Repayment of the principal may be by regular instalments or by one payment at the end of the term (balloon payment).
Or the investor may retain ownership of the installation and sell the power at an agreed rate to the host under a power purchase agreement. Host payments to the investor would include repayment of the principal.
Potential Local Investors
Mitchell Community Energy. When MCE set out to marshall community funds to finance the solar panels at the SSAC it had to set up a Special Purpose Vehicle to manage the project. We chose that this should be a co-operative for the following reasons:
- The number of shareholders is unlimited. This is consistent with our aim to share the benefits of climate change action as far as possible.
- The number of projects that can be financed is also unlimited.
- It is easy to set up.
- Costs are minimal.
- A co-operative pays tax, but the payments to the shareholders are deductible so there being no profit, tax is effectively zero.
Indigo Power. This is a community retailer set up by communities in northeast Victoria. MCE has been involved in this. Its model is to use community funds to set up a solar power system on a customers site. It will own and operate the solar power system for 10 years, selling the electricity generated by the panels back to the customer at a reduced rate. During this time the community investors receive interest on their investment and progressive repayment of the principal. At the end of the 10-year contract Indigo Power will transfer ownership to the customer at no cost. Their first project is a 17kW system on the Broadford office of DELWP, the funds for which were invested by Taungurung Land & Waters Council.