Financing Methods

Methods to Finance Solar

Current federal tax credit: 26% in 2022 for both residential and commercial (decreases to 22% in 2023, 10% for commercial in 2024, 0% for residential)

Commerial businesses can also take depreciation, which means a business installing solar should be able to completely pay it off in 4-5 years depending on install cost

Homeowners should see it pay off with their tax credits and electricity savings in 9-10 years

Below is a table describing the different financing methods available for businesses, non-profits and municipal organizations (for schools, see also our solar on schools page)

Method Institution Description
LLC of investors (or single investor) Non-profits

Individual or LLC of investors installs and owns the solar

Takes federal tax credit and 100% depreciation (equivalent to >31% deduction) first year (split between investors)

Institution pays LLC for solar via PPA

Payoff time 7-10 years depending on desired profit

LLC sells/gives solar system to institution at end

Investors must have passive income (or be active in LLC)

Tax credits can feed forward 20 years

Qualified Opportunity Zone Fund In QOZ

Same as above, plus:

Investor gets 7-yr deferral of capital gains taxes, 15% step-up in basis (i.e. elimination of 15% of tax)

Most useful for investors with capital gain & passive income

Map of OZs is on-line

Norfolk Solar Qualified Opportunity Zone Fund is example

Commercial business Business

Commercial business installs and owns their own solar — normally pays off in 4-5 years

Takes federal tax credit and 100% depreciation (equivalent to >31% deduction) first year

Business must have sufficient income to soak up tax credits, but credits can feed forward 20 years

Can get loan for install (payback rate greater than loan rate)

Taxable entity with non-profit Non-profits

A non-profit with associated taxable entity (e.g., real estate firm that owns building), that business can install and own the panels as above.  Must have enough tax burden to use credits

Loan to installer or business Any

Loan can be made to installer or commercial business, which installs and owns panels, takes tax credits, paid via a PPA, can achieve 8-15 year payback depending on desired profit

RFP to solar financer/ installers Any

Commercial solar business installs solar for institution

Companies like Suntribe, Solar City, Standard Solar, Secure Futures or Convert Solar can quote solar installation at no cost, payoff times 12-20 year time frame; paid via a PPA

Many Virginia municipal school systems have used this

Make sure installer is reputable (get multiple quotes)

C-PACE Commercial property owners and developers

Commercial Property Assessed Clean Energy financing

Enabling legislation enacted in Virginia; local government must enact ordinance to use

Commercial customers (and non-profits) can access 100% financing for solar PV (e.g., no down payment), pay back using savings on electricity

Crowd-funding Any


Mission Energy Catholic churches

Catholic church network helps with financing:

Community Solar

Example in Harrisonburg


When approaching an institution, bring everyone relevant to the table (leadership, development, finance, facilities, sustainability)

Motivate any interested groups (students, alumni, parents, faculty, congregation, members)

Lay out financial plan in detail, address details such as maintenance & insurance

Be patient but persistent



Federal tax credit: 26% in 2022 (current schedule is 22% in 2023, 10% for commercial in 2024)

Virginia limits that may be removed by VA legislature:
PPAs with commercial entities limited to > 50 kW (non-profits any size, residential only with ­low income)

Roofs should be <5 years old (or renovated recently), not slate, flat or south-facing (within 45°), minimal shade 11 am – 3 pm.

Panel roof weight 2-3 lb/sq ft.  Installs rated to 150 mph wind.

Can include battery backup for power to critical systems in a power outage.

Solar Renewable Energy Credit (SREC) market in Virginia makes solar payoff time much faster

Currently in VA 1 SREC = 1 MWh = ~$35

PPA = Power Purchase Agreement.  Agreement by entity with solar installed to pay owner of solar system for power generated.  Can be simple (1 page) to complex (50 pages).

LLC = Limited Liability Corporation.  A way for a group of people to fund something together.  Can be simple to start, and $50 per year to maintain.

Template LLC and PPA documents at


Benefits from installation of solar:

Lower utility costs

Extend roof lifetime

Lower air conditioning costs

Lower carbon footprint

Mitigation of climate change / sea level rise

Example to others

Independence from utilities

Creation of high-paying, high tech local jobs


Potential barriers you may encounter that institutions worry about:



Future disposal


Damage to roof

Investor motives

Many of these barriers can be overcome by educating the customer using the Solar Resources page