Solar Power Purchase Agreement
The Solar Power Purchase Agreement (PPA) allows building owners to experience the benefits of solar energy without the responsibility of owning or maintaining a solar PV system. With Connecticut Green Bank’s Solar PPA program, you buy the energy you need with no monthly fee.
- The freedom and independence of producing energy to power your property, instead of buying electricity solely from the utility.
- Significant savings on electricity costs. Under a Solar PPA, your electricity rate is immediately less than your existing utility bills, so you begin saving money on day one.
- Peace of mind knowing the solar system is installed, insured and maintained as part of your PPA contract.
- Multifamily properties (5+ units, income eligible and market rate)
- Private and non-profit owners, public housing authorities, senior/assisted living communities, condominium/co-op associations, etc.
- Working with your selected installer, we will help you identify the right size solar system for your energy needs
- Instead of paying the utility company for all of your energy, you can buy more affordable electricity from your solar system through your PPA
- 20-year term; Fixed and escalating rates available
- Connecticut Green Bank prescreens installers, and owns, maintains and insures the system for the full 20 years.
- Connecticut Green Bank provides full warranty management on all equipment.
- Multifamily property owners have the option to purchase their installation after 5 years.
- When your agreement term ends, you have the option to extend your PPA, purchase the system, or have it removed at no cost.
Solar lease arrangements are also available. Contact us to find out more.
Solar upgrades are best accomplished with the help of an experienced partner. Connecticut Green Bank’s Multifamily team is here to help you source a qualified contractor and find the financing you need to get the job done. While the information below will provide some helpful background, we look forward to speaking to interested property owners about their specific solar needs. For more information, please email [email protected] or call (860) 257-2333.
Q: I am interested in installing solar on my multifamily property, what factors should I consider?
A: There are several factors to consider, including:
- What is the condition of my property’s roof? Does any part of my roof (shingles, beams trusses, etc.) need repair/replacement in the next 5-10 years before a solar PV system is installed?
- How appropriate is my property for solar? This is determined by a roof’s available surface area and its ability to receive continuous sunlight without obstruction (for example, from shadows caused by buildings, foliage or other impediments).
- Would I prefer to own the PV system and receive the associated tax credits, or sign a contract with a third-party owner (TPO) via a lease or power purchase agreement (PPA)? Note: non-profit owners should nearly always choose the PPA route, allowing the non-profit to take advantage of the tax credits indirectly, unless an investment syndicate is established for other purposes.
In a direct purchase scenario, the customer owns the right to the project’s federal investment tax credit (ITC), and warranties are provided by the original equipment manufacturer. In third-party owned projects, the third-party owners receive the project’s tax credits, and the customer is typically provided with an insurance and warranty package to handle customer issues with the PV system.
Third-party owned project types include:
- Power Purchase Agreements – PV-system is installed and owned by a third-party. Customer pays a variable amount each month based on the amount of electricity the installed system produces.
- Solar Leases – PV-system is installed and owned by a third-party. Customer makes a regular lease payment each month.
Who pays my tenants’ electric bills if I install a solar system?
For properties where the owner pays for tenants’ electricity (referred to as master metered properties), the owner can place the solar system behind a single electric meter and directly benefit from cost savings. Projects where tenants pay their own electric bills requires taking advantage of Connecticut’s new sub-metering rules, which allow owners to pass on the costs and savings of solar to their tenants on their electric bills.
Q: What incentives are available for multifamily solar installations in Connecticut?
A: The federal government provides a 30% investment tax credit (ITC) for projects commencing construction through 2019, stepping down to 26% in 2020, 22% in 2021 and expiring on December 31, 2021, in addition to accelerated depreciation that is available to commercial owners. The State of Connecticut provides incentives for multifamily projects in the form of zero-emissions renewable energy credit (“ZREC”) contracts between approved projects and the state’s two electric utilities (Eversource and United Illuminating).
What are ZRECs?
ZRECs are contracts between utilities and renewable energy project owners that provide long-term compensation to those owners for the clean electricity the projects generate. Projects must meet eligibility requirements, and are selected in different ways, depending on the size of the project and the type of generation. One renewable energy credit is yielded for each megawatt hour of energy generated by an approved renewable generation unit. For more information, please view the LREC/ZREC FAQ document at: https://www.eversource.com/Content/docs/default-source/ct—pdfs/lrec_zrec_qa.pdf?sfvrsn=8, or consult with an experienced solar developer or the Green Bank.
Q: How do I obtain ZRECs for my project?
A: ZRECs are allocated annually via reverse auction (lowest bids are accepted first, with successively higher bids accepted until the total pool of ZREC contracts are allocated) for larger systems, and via lottery for smaller systems. An announcement that describes important auction / lottery dates, policies, and procedures is made at the beginning of each calendar year. To learn more, visit:
- For Eversource customers: https://www.eversource.com/Content/ct-e/business/save-money-energy/renewable-energy-credits
- For United Illuminating customers:
A Connecticut Green Bank-approved solar developer can handle this process for interested property owners.
Q: When does the auction for each size ZREC occur?
A: There is no set schedule for the opening or closing of the ZREC Program procurement rounds. The Year 5 Small ZREC Program auction opened at 1 p.m. EST on February 15, 2017, and is scheduled to close at 1 p.m. EST on March 1, 2017 at 1 p.m. EST. The Year 4 Medium and Large ZREC program auctions opened on April 28, 2016.
Q: How do I select a multifamily solar contractor? What sorts of qualifications should I consider?
A: Background questions to ask or consider when evaluating potential solar contractors include:
- How long has the solar developer and/or installer been in business?
- Does the developer/installer have extensive experience with multifamily and/or commercial solar projects?
- Does the solar installer have the proper state certifications and licenses, if required?
- What is the solar developer/installer’s reputation and financial standing?
- Do you know anyone who has used this solar developer/installer before? Has the developer/installer provided you with/have you reviewed the developer/installer’s references?
Connecticut Green Bank is happy to provide a list of solar developers who have extensive experience serving multifamily properties.
Q: Are there solar contractors operating in the Connecticut multifamily housing market who do not utilize Connecticut Green Bank Programs and/or are not on the Connecticut Green Bank approved list?
A: Yes. Contractors are able to access ZRECs for such projects and sell solar directly to an owner.
Q: What is the range of the initial capital costs of solar installations through Connecticut and/or Connecticut Green Bank/CHFA Programs for multifamily housing?
A: In general, because most multifamily owners will be leasing their solar system or entering into a PPA, upfront costs are not the relevant metric; rather, you should be looking at how much you pay for every kilowatt-hour (kWh) of electricity now, and then get a quote from a solar contractor that lays out how much you would pay per kWh under a solar lease or PPA each year for the term of the contract.
As of mid-2016, average installed costs for solar are about $3.00 per Watt (or $3,000 per kilowatt (kW)). This is equivalent to a turnkey project cost of $21,000 for a typical 7kW system installed on single-family home in Connecticut. (This cost does not include available incentives, so the net cost would, likely, be lower.)
For more information and a list of pre-screened solar installers, contact us at [email protected] or call (860) 257-2333
1 Some questions taken from the Clean Energy States Alliance’s “A Homeowner’s Guide to Solar Financing: Leases, Loans and PPAs,” May 2015.