In September’s edition of Credit Matters, we gave you four reasons to lend to solar energy developers and solar projects:
1 – Long term growth of the clean and renewable energy sector;
2 – Economic benefits of solar to reduce expenses;
3 – Finance and investment sectors requiring companies to report on Environmental Social and Governance (ESG) indicators;
4- Evidence that ESG performance correlates to better crisis resiliency and reduced risk;
We have one more reason you should look at lending or, better yet, investing in solar energy projects: Solar Investment Tax Credit (ITC).
Solar Tax Credits – What They Are
Solar Investment Tax Credits (ITC) have been one of the most important federal policy mechanisms to support the growth of solar energy in the United States. Since 2006, the solar ITC has helped the US solar industry grow by more than 10,000% and helped create hundreds of thousands of jobs while encouraging the investment of billions of dollars into US infrastructure.
The Solar ITC credit for 2021 and 2022 is currently 26%. After 2022, the deduction will decrease to 22% of the cost of the system. From 2023 on, it will remain at 10%.
With the Solar Investment Tax Credit winding down, now is an excellent time for businesses and homeowners to act for the best economic return on their solar investment.
How Businesses Can Benefit Now
Businesses and homeowners can utilize a loan to pay for solar projects and simultaneously benefit from the Solar Investment Tax Credit.
Investing now allows businesses or homeowners to choose how to utilize their tax credit — either by paying down their loan or reducing their tax burden.
The Solar ITC is available for commercial and residential solar projects. The cost for an average commercial solar project can range from as little as $50,000 and can be as much as several million dollars depending on how much electricity the business uses.
AVANA + Extensia – A Powerful Combination
AVANA has the industry experience and expertise to partner with our credit union associates and wisely finance members’ solar projects.
In addition, the AVANA Fund can help developers and borrowers by monetizing their Solar ITC with qualified investors, including C-corporations, high net-worth individuals, and family offices.
AVANA / Extensia originates, structures, and funds senior debt lenders the construction and term financing for solar assets. By doing this, AVANA / Extensia assists borrowers in efficiently accessing the value of solar tax credits directly. We provide various loan products for strong, creditworthy solar projects with the following risk mitigation strategies:
– Long-Term Revenue Contracts and/or Predictable Revenue Streams
– Seasoned Development Partners
– High Credit Rated Off-Takers
AVANA ESG Fund
AVANA ESG Fund offers investors and lenders solid returns (8-14%).
Unlike large investment banks, we pass the value of the ITC directly to tax equity partners and project lenders.