Commercial processing facility with rooftop solar
FINANCING & INCENTIVES

The Same Asset Can Produce Very Different Economics

Ownership, lease, and PPA shift capital requirements, contract obligations, incentive treatment, and long-term upside. We compare them on the same operating assumptions so the structure—not the sales pitch—drives the decision.

STRUCTURE 01

Power Purchase Agreement (PPA)

A PPA separates energy procurement from asset ownership. A third party typically finances, owns, and maintains the system while the customer purchases the electricity under a long-term agreement.

  • No upfront asset purchase required
  • Contracted, predictable electricity pricing
  • Third-party ownership and maintenance
  • Contract term, pricing, and escalator structure
  • Credit, counterparty, and assignment requirements
  • Buyout, termination, and end-of-term options
  • Preserving capital is a priority
  • Reducing utility exposure is a primary objective
  • Predictable long-term electricity pricing matters

STRUCTURE 02

Lease

A lease spreads the cost of the asset across a defined term, reducing upfront capital while preserving a potential path to ownership depending on the agreement.

Economic Profile

A lease can spread the cost of using the solar asset over a defined term, reducing the need for a full upfront purchase.

Key Obligations

Lease economics depend on payment structure, tax treatment, maintenance responsibility, early-exit terms, and what happens to the asset at the end of the term.

Best Fit

A lease may fit when the business wants defined payments and potential asset ownership without committing the full purchase price on day one.

  • Lower upfront capital requirement
  • Fixed, predictable payment schedule
  • Potential ownership at end of term
  • Total cost over the lease term
  • Accounting treatment and balance sheet impact
  • End-of-term ownership conditions
  • Capital is better deployed elsewhere
  • Cash flow stability is a priority
  • When ownership at the end of term is important

STRUCTURE 03

Direct Ownership

Direct ownership places the asset, capital requirement, operating responsibility, and eligible owner-level tax benefits with the business.

Economic Profile

Direct ownership offers the greatest control over the asset, operating strategy, and available owner-level economic benefits.

Key Obligations

Ownership requires capital, tax capacity, asset oversight, and a long-term view of maintenance, equipment performance, and residual value.

Best Fit

Ownership may fit when the business can deploy capital efficiently, use available tax benefits, and values long-term control more than near-term balance-sheet flexibility.

  • Potential access to available owner-level tax credits and depreciation
  • No third-party contract pricing
  • Complete operational control
  • Initial capital deployment
  • Tax capacity to realize available incentives
  • Maintenance and performance oversight
  • When tax credits and depreciation can be fully utilized
  • When capital is available for infrastructure investment
  • When long-term cost reduction is the priority

INCENTIVE TREATMENT

Incentives Follow Ownership, Eligibility, and Timing

The economic value of an incentive depends on who owns the asset, whether the project qualifies, and whether the owner can use the benefit. We treat incentives as part of the analysis—not as a substitute for sound base economics.

Under a PPA

  • Available owner-level tax incentives generally remain with the project owner
  • You benefit through contracted pricing

Under a Lease

  • Tax treatment varies by structure
  • May include ownership transition

Under Direct Ownership

  • Eligible owners may capture available federal tax incentives and depreciation benefits
  • REAP eligibility depends on the applicant, project, program requirements, and funding availability
  • Tax capacity determines real value

Treat Incentives as an Input, Not the Investment Thesis

INCENTIVES & TAX CREDITS

USDA REAP: Eligibility and Funding Must Be Confirmed

For qualifying applicants and projects, REAP may improve project economics when funding is available. We do not assume grant value until current program availability, eligibility, timing, and requirements are confirmed.

INCENTIVES & TAX CREDITS

Federal Tax Incentives & Depreciation

Available federal tax benefits can materially affect after-tax economics, but their value depends on current law, project eligibility, ownership structure, timing, and the owner's tax position. We model them project by project.

Choose the Structure That Survives Scrutiny

Compare capital requirements, contract obligations, incentive assumptions, and long-term economics before you commit.

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