California: Commercial Solar Financing + Government Incentives 0

Many solar projects are often stagnated because they can’t get the right financing. Fortunately now, there are more commercial and industrial (C&I) solar financing options available for Engineering, Procurement, and Construction (EPC) firms and organizations in California. Whether you’re involved with projects on hold or you’re just planning your next steps, we’ll provide the various financing options you can choose from. 

We’ll cover all of the key options, from both private and public sources, including solar Power Purchase Agreements (PPAs), solar leases, and Commercial Property Assessed Clean Energy (C-PACE) that can help turn your stalled solar projects into successful, energy-producing assets, pushing forward California’s renewable energy goals.

Main Commercial Solar Financing Options in California

Power Purchase Agreement (PPA)

A power purchase agreement is a financial arrangement where a third-party developer installs, owns, and maintains a solar energy system on a commercial property, and the property owner buys the power generated at a predetermined, often reduced rate. This setup allows businesses to benefit from solar energy with no upfront capital expenditure and minimal risk.

Types of C&I Projects a Solar PPA Is Good For

Ideal for large-scale projects such as manufacturing plants or large office complexes in California, a Solar PPA allows organizations to avoid upfront costs while benefiting from lower energy rates. This is particularly attractive for businesses looking to mitigate financial risks associated with solar investments.

Solar Lease

Similar to renting a property, a solar lease allows businesses to use a solar energy system installed by a third-party provider for a fixed monthly payment. This payment remains consistent regardless of how much power the system produces, and all maintenance is the responsibility of the provider, not the business.

Types of C&I Projects a Solar Lease Is Good For

Solar leases are well-suited for medium-sized commercial properties, such as retail stores, small manufacturing units, or multi-tenant buildings. These businesses can benefit from solar energy without the need to invest capital in purchasing systems, while also avoiding maintenance responsibilities.

Solar Loan

A solar loan is a traditional financing option where a business borrows money specifically to pay for the purchase and installation of a solar energy system. The business owns the system outright and benefits from all tax credits and incentives. Loans are paid back over time, typically with interest.

Types of C&I Projects a Solar Loan Is Good For

Solar loans are perfect for businesses that prefer ownership to take advantage of the tax benefits, such as the Investment Tax Credit (ITC). They are ideal for commercial entities with good credit facilities and include operations such as corporate offices, hotels, or hospitals that plan to use the property over a long period.

Commercial Property Assessed Clean Energy (C-PACE)

C-PACE is a unique financing tool that allows commercial property owners to finance qualifying energy efficiency and clean energy improvements through a voluntary property tax assessment. The financing is provided by the state or local governments and repaid over a long-term schedule, typically 10-20 years, which often aligns with the useful life of the installed system.

Types of C&I Projects C-PACE Is Good For

C-PACE financing works best for commercial properties undergoing significant renovation or retrofitting projects that include sustainability upgrades. This can include shopping malls, older office buildings, or hospitality venues looking to enhance energy efficiency and increase property values through sustainable improvements.

Energy Service Agreements (ESA)

In an energy service agreement, a service provider installs and maintains an energy system on a property at no upfront cost to the property owner. Instead, the property owner pays for the energy used at a rate typically lower than the local utility. This agreement can often include performance guarantees where the payment is linked to the amount of energy saved compared to a predetermined baseline.

Types of C&I Projects an ESA Is Good For

ESAs are a great option for energy-intensive businesses like data centers, large supermarkets, or industrial facilities that want to reduce energy costs without upfront expenditure or ongoing maintenance hassles. These agreements provide a way to stabilize energy expenses while focusing on core business operations.

Does California Have a Solar Tax Credit?

As of May 2024, there is no statewide solar tax credit. However, businesses, non-profits, and other entities that own solar facilities can benefit from two federal solar tax credit options: 

  1. Investment Tax Credit (ITC)
  2. Production Tax Credit (PTC)

We’ll go more into these details later in the article. 

C&I Solar Financing Companies in California

Below are a few of the well-known commercial solar financing companies. Each company has varying levels of financing options.

Coldwell Solar 

Established in 1986, Coldwell Solar specializes in durable solar installations that deliver high energy efficiency. 

Their financing options for agricultural, commercial, and industrial business include: 

  • Lease-to-Own: No upfront payment required, with an option for businesses to achieve ownership within 10 years.
  • Power Purchase Agreement (PPA): The company handles installation and maintenance of the solar system free of charge, providing electricity at a discounted rate with a price lock for up to 20 years.
  • Financed Purchase: Enables businesses to benefit from solar incentives immediately, without having to pay for the upfront costs.

Tenco Solar  

With over two decades of experience, Tenco Solar offers expert guidance in selecting the most suitable financing options for commercial properties.  

  • C-PACE: Available to all industries
  • Path-to-Ownership: Requires a check with their experts to see if your industry qualifies for this option
  • Fannie-Mae DUS: For multi-family property management only 
  • PPA: Available to all industries
  • Solar loan: Available to all industries

West Coast Solar (Northern California)

West Coast Solar, renowned for its excellent service in Northern California, serves businesses of various sizes and types. They guide organizations through various financing options, helping them decide between purchasing systems outright or using special solar incentive programs.

Sustainable Capital Finance (US-Wide)

Sustainable Capital Finance offers PPA and takeout solutions for commercial and non-profit solar projects that are 100 kW or more across the country. The company has provided solar systems for municipalities, tribes, non-profits, religious institutions, and schools. 

A “takeout solution” describes a financial strategy in which long-term financing is used to replace or “take out” earlier short-term financing arrangements. This financing option offers crucial long-term stability to the project, making it more cost-effective by replacing any short-term bridge loans that may have been used to accelerate the start of a project. 

Greentech Renewables (US-Wide)

Their group manages reliable funding solutions for commercial solar initiatives nationwide. They arrange purchases of products and materials, supervise loan procurement and upkeep, and facilitate communication with lending collaborators.

SunRenu (US-Wide)

SunRenu provides financing solutions for businesses seeking to finance their solar energy systems, whether partially or entirely. Their commercial solar financing choices enable clients to incorporate solar energy systems with minimal or no upfront expenses. 

The company is offering commercial customers a non-recourse solar loan up to 20 years that is fully amortized and no prepayment penalty in all 50 states. 

Commercial Solar Loan Rates

Several factors influence commercial solar loan rates in California:

Creditworthiness: As with any loan, the borrower’s creditworthiness plays a significant role in determining the interest rate. Businesses with strong credit profiles are likely to qualify for lower rates, reflecting a lower perceived risk for the lender.

Loan Term: The term of the loan, or the duration over which it will be repaid, can impact the interest rate. In general, shorter loan terms tend to have lower interest rates, while longer terms may incur slightly higher rates to compensate for the extended repayment period.

Down Payment: While many commercial solar loans offer financing for the entire project cost, businesses that are able to provide a down payment upfront may qualify for more favorable rates, as this reduces the lender’s risk.

Market Conditions: The overall economic environment, including factors such as prevailing interest rates and market competition among lenders, can influence commercial solar loan rates. In times of economic uncertainty, rates may fluctuate accordingly.

Solar Power Purchase Agreement California

California has long been a leader in promoting renewable energy adoption, with robust policies and incentives to support solar development. The state’s Renewable Portfolio Standard (RPS) requires utilities to procure a certain percentage of their electricity from renewable sources, creating a favorable market for solar PPAs.

Choosing the Right PPA Provider

When selecting a Solar Power Purchase Agreement provider in California, it’s crucial to conduct thorough research and consider various factors to ensure you’re partnering with a reputable and reliable company. 

Here’s a detailed breakdown of key considerations:

1. Track Record and Experience

Look for a PPA provider with a proven track record and extensive experience in solar energy project development and management. Research the company’s portfolio of completed projects, customer testimonials, and industry certifications to gauge their expertise and reliability.

2. Transparent Pricing and Terms

Transparency is essential when evaluating PPA providers. Ensure that the pricing structure, including the rate per kilowatt-hour (kWh) and any escalator clauses, is clearly outlined in the agreement. Beware of hidden fees or ambiguous terms that could impact your long-term financial projections.

3. Customer Service and Support

Assess the level of customer service and support offered by the PPA provider. Choose a company that prioritizes client communication, responsiveness, and accessibility. A dedicated account manager or customer support team can help address any concerns or issues promptly, ensuring a smooth and positive experience throughout the PPA term.

4. Flexibility and Customization

Seek out PPA providers that offer flexibility and customization options to accommodate your specific needs and preferences. Consider factors such as the length of the PPA term, buyout options, and the ability to tailor the agreement to align with your business objectives and financial goals.

5. Financial Stability and Reputation

Evaluate the financial stability and reputation of the PPA provider to ensure they have the resources and expertise to fulfill their contractual obligations over the duration of the agreement. Look for companies with strong financial backing, positive industry reputation, and a history of successful project delivery.

6. Regulatory Compliance and Legal Expertise

Verify that the PPA provider is well-versed in California’s regulatory landscape and legal requirements governing solar energy projects. Working with a knowledgeable and experienced team can help navigate complex regulatory frameworks, ensure compliance with state and local laws, and minimize potential legal risks or liabilities.

7. Sustainability and Corporate Values

Consider the PPA provider’s commitment to sustainability and corporate values. Choose a company that shares your environmental and social responsibility goals and prioritizes sustainable business practices, such as utilizing renewable energy sources and minimizing environmental impact throughout the project lifecycle.

8. References and Recommendations

Don’t hesitate to ask for references or recommendations from past clients or industry partners. Hearing firsthand experiences and insights can provide valuable perspective and help you make an informed decision when selecting a PPA provider.

✅ Benefits of Solar PPAs

  • Cost Savings: Solar PPAs offer immediate savings on electricity costs compared to utility rates, with the potential for even greater savings over time as utility rates continue to rise.
  • No Upfront Costs: With no upfront costs for equipment and installation, solar PPAs allow businesses to go solar without tapping into capital reserves or taking on debt.
  • Maintenance Included: The third-party developer is responsible for system maintenance, ensuring optimal performance and minimizing downtime for the customer.
  • Environmental Impact: By adopting solar energy through PPAs, businesses can significantly reduce their carbon footprint and demonstrate a commitment to sustainability.

UVcell Solar’s Unique PPA Solution for California’s C&I Projects

Unlike many PPA firms, UVcell Solar’s solar PPA includes the main solar equipment so that EPC firms can use their mobilization funding on other key project areas such as engineering and payroll. 

Solar equipment provided: 

  • Tariff-free, high quality Tier 1 solar panels
  • Inverter
  • Battery energy storage system

Contact us if you have any questions about the service. 

Other California Solar Incentives and Federal Solar Tax Credits

Federal Solar Tax Credit 

Businesses, non-profits, and other entities that own solar facilities can benefit from these two federal solar tax credits

  1. Investment Tax Credit (ITC): Reduces the federal income tax liability for a percentage of the cost of a solar system that is installed during the tax year.  Solar systems that are installed in 2022 or later and begin construction before 2033 are eligible for a 30% ITC.  
  2. Production Tax Credit (PTC): A per kilowatt-hour (kWh) tax credit for electricity generated by solar and other qualifying technologies for the first 10 years of a system’s operation. It reduces the federal income tax liability and is adjusted annually for inflation. Solar systems that are installed in 2022 or later and begin construction before 2033 are eligible for a 2.75 c/kWh PTC if they meet labor requirements issued by the Treasury Department or under 1 megawatt (MW) in size. 

Note that project owners can’t claim both ITC and PTC for the same property. But they can, however, claim different credits for co-located systems like solar and storage. The criteria depends on the guidelines issued by the Internal Revenue Services (IRS). 

C-PACE Financing in California

C-PACE financing provides a flexible and cost-effective solution for commercial property owners looking to implement energy-efficient and renewable energy projects. With its long-term financing options and favorable repayment terms, C-PACE is empowering property owners to invest in a greener future while enhancing the value and sustainability of their properties.

The California Statewide Communities Development Authority (CSCDA) was created in 1988, under California’s Joint Exercise of Powers Act, to provide California’s local governments with timely financing of community-based public benefit projects. CSCDA’s Open PACE program is a resource for commercial property owners to finance energy efficiency, renewable energy, water conservation and seismic improvements.

Commercial Open PACE Providers include: 

How Does C-Pace Work? 

Commercial Property Assessed Clean Energy (C-PACE) financing is revolutionizing the way commercial property owners fund energy-efficient and renewable energy projects. 

Here’s how C-PACE works and why it’s becoming a popular choice for sustainable property upgrades:

1. Assessment and Financing

C-PACE allows commercial property owners to finance qualifying energy improvements through a voluntary special assessment on their property tax bill. This assessment is used to repay the financing obtained for the project.

2. Eligible Projects

C-PACE financing can be used for a wide range of energy efficiency, renewable energy, and water conservation projects, including HVAC upgrades, lighting retrofits, solar panel installations, and more.

3. Long-Term Financing

One of the key benefits of C-PACE is its long-term financing options. Property owners can secure financing for up to 20-30 years, which aligns well with the lifespan of many energy efficiency and renewable energy upgrades.

4. Property Assessment

Once a property owner decides to pursue C-PACE financing, the local government assesses the property’s value and determines the additional property tax assessment needed to repay the financing.

5. Repayment Mechanism

The C-PACE assessment is collected along with property taxes and is typically senior to other liens on the property, providing security for lenders. This means that if the property is sold, the C-PACE assessment transfers to the new owner, ensuring continuity of repayment.


Organizations in California have several C&I solar financing options to get their solar projects moving forward so that they can effectively reduce their energy costs, enhance their sustainability, and contribute positively to the state’s environmental goals. It’s essential for EPCs and businesses to closely evaluate their specific needs, financial capabilities, and long-term objectives when selecting a solar financing option. The right choice can significantly impact a project’s success and profitability. 

As the solar industry continues to evolve and expand, staying informed about the latest financing innovations and state-specific incentives will be crucial. Embracing these opportunities not only drives business growth but also supports California’s leadership in renewable energy initiatives.

The Editorial Team at SolarFeeds is made up of knowledgeable solar industry insiders and experts who have a passion to share valuable, helpful and educational information. Aiming at becoming the best place to learn solar, the publication partners with industry thought leaders, journalists and influencers. If you want to publish your articles on SolarFeeds Magazine, click here.
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