Direct ownership: Institutions, municipalities, foundations, endowments, and non-profits, and commercial enterprise can purchase their solar systems using cash. In this case, they are eligible to receive 100% of the electricity savings, all available rebates and incentives, and can claim greenhouse gas emission reductions for the system.
Debt Financing: Debt Financing uses debt to enable entities to purchase a solar system outright and enjoy all the benefits of solar directly; however, some of the initial capital cost is offset by borrowing money in exchange for long term payments. A wide variety of loan or bond offerings are available with different monthly payment amounts, interest rates, lengths, credit requirements, and security mechanisms.
Power Purchase Agreement: In a Power Purchase Agreement (PPA), entities enter into an agreement to purchase electricity from a third party investor who owns and operates the solar installation. The investor is responsible for all operations and risks of the system for a term between 15-25 years. Usually, the PPA rate paid by the customer is less than the current electricity cost ($/kWh).
Operating Lease: The Operating Lease is a third-party-owned financing structure for taxable entities where the investor leases the equipment to the customer. The customer pays scheduled lease payments to the investor for 7-10 years, after which the system is bought out at fair market value.
SEIA Third Party Financing Overview
Clean Energy States Alliance Financing Overview