New York: Commercial Solar Financing + Government Incentives   0

New York state has some of the highest electricity rates in the US and because it’s a hub for many commercial and industrial activities, there’s a growing demand for sustainable energy solutions. Since the government in New York recognizes the potential of solar power, they’re offering a great mix of financing options and incentives to make C&I solar a financially attractive choice in addition to financing options from private companies.

We’ll cover the main C&I solar financing options businesses and organizations in New York can explore to significantly reduce upfront costs and accelerate the return on investment for their solar project.

Main Commercial Solar Financing Options in New York

Each of these financing options provides unique advantages depending on the specific needs and capabilities of the business. Choosing the right financing solution in New York can help commercial and industrial entities significantly reduce energy costs, benefit from tax incentives, and contribute to environmental sustainability.

Solar Power Purchase Agreement (PPA)

A Solar PPA is a financial arrangement where a third-party developer installs, owns, and maintains solar panels on a commercial property, and the property owner agrees to purchase the generated electricity at a predetermined rate. This rate is typically lower than the market rate from local utilities, and the agreement spans a fixed period, usually 15-25 years.

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

Solar PPAs are particularly effective for large-scale commercial operations such as manufacturing plants, data centers, or large office buildings that consume significant amounts of electricity and wish to reduce their energy costs without a significant initial capital expenditure.

Solar Lease

In a solar lease, a business agrees to pay a fixed monthly fee to lease solar panels from a third-party provider. This arrangement includes installation, maintenance, and repairs, which are handled by the provider, not the business. The lease terms generally range from 10 to 20 years.

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

Solar leases are ideal for medium-sized commercial entities like shopping malls, supermarkets, or medium-sized enterprises that prefer not to allocate upfront capital for solar installations but want to enjoy the benefits of solar energy.

Solar Loan

A solar loan enables commercial entities to finance the purchase and installation of a solar system through various lending options. The business owns the system outright and benefits from all associated tax credits and incentives.

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

Solar loans are suited for businesses that have the financial stability to handle periodic loan payments and are interested in long-term savings and benefits from owning a solar system. This includes schools, hospitals, or small to medium-sized enterprises with adequate credit ratings.

Commercial Property Assessed Clean Energy (C-PACE)

C-PACE is a financing mechanism that allows commercial property owners to finance improvements that enhance energy efficiency, water conservation, or renewable energy through a property tax assessment that is repaid over time.

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

C-PACE financing is particularly beneficial for projects involving extensive renovations or retrofits where the upfront cost can be prohibitive. It’s well-suited for hotels, office buildings, and other commercial properties looking to significantly reduce energy costs and increase property value through sustainable upgrades.

Energy Service Agreements (ESAs)

An Energy Service Agreement is an agreement where a service provider designs, installs, maintains, and operates energy infrastructure on a customer’s property at no upfront cost. Instead, the customer pays for the energy service provided, typically at a rate lower than the utility price.

Types of C&I Projects an ESA Is Good For

ESAs are ideal for energy-intensive industries such as chemical plants, paper mills, or any large facility with high and consistent energy consumption that seeks to reduce energy costs without capital expenditure, while also not having to manage the energy systems themselves.

What Tax Incentives Does NY State Provide for Going Solar? 

To accelerate commercial solar adoption, the state offers a great mix of incentives, including NY-Sun Incentive program. Businesses can benefit from rebates, tax credits, and even on-bill financing options, all designed to significantly reduce upfront costs and make solar a more financially attractive clean energy solution.

What Is the NY-Sun Incentive Program? 

New York State is making it easier and more affordable for businesses, communities, and homes to go solar through NY-Sun, a public-private partnership that brings together and expands existing programs administered by New York State Energy Research and Development Authority (NYSERDA), Long Island Power Authority (LIPA), PSEG Long Island, and the New York Power Authority (NYPA). 

NY-SUN offers several incentives and financing options for businesses that want to integrate solar:

Incentives

NY-Sun Commercial Solar Loan Options

Below are more details on each of these incentives.

Offset the Cost of Purchase and Installing a Solar Panel System

NY-Sun works with solar contractors and developers to offset the cost of buying and installing a solar panel system for your business. The incentives vary throughout the State. 

You will work with a participating contractor to see if you’re eligible for this NY-Sun incentive no matter what size of your business is and how much energy it consumes. 

The participating contractor will:

  1. Inspect your location to determine the best solar system size and panel placement
  2. Help with the incentive application paperwork, including other financing options
  3. Install the system and submit your paperwork to NY-Sun for you

See the participating solar contractors for: 

Inflation Reduction Tax Credits 

Your business may qualify for these tax credits and rebates for going solar. The Inflation Reduction Act (IRA) legislation helps lower the cost for businesses to invest in clean energy and energy efficiency. It helps small businesses, multifamily housing developers, and commercial entities get the latest clean energy technologies and equipment that will save energy for years.

Energy Storage Incentive Program

You could be eligible for an energy storage incentive in addition to the NY-Sun solar incentive when you pair energy storage and solar. 

New York State Tax Credits and Rebates 

New York State Real Property Tax Exemption

Form RP 487 is filled out with the local property assessor to apply for the New York State Real Property Tax Exemption. The form is from the New York State Department of Taxation and Finance. 

Some municipalities and school districts have opted out and will include the value of the solar installation in your property tax assessment without the exemption. 

NYC Real Property Tax Abatement Program

If your business is located in New York City, you can ask your participating contractor about the NYC Real Property Abatement Program, which is offered instead of the New York State Real Property Tax Exemption. You can contact your contractor to confirm the process of submitting and handling Form PTA4. Some contractors may do it on your behalf. 

NY-Sun Megawatt Block Program

The NY-Sun Megawatt Block Program offers a cash incentive per watt of solar capacity, which varies depending on where you live. The program is managed by the New York State Energy Research and Development Authority (NYSERDA). 

The incentive program is divided into these regions across the state and provides real-time information on the current incentive levels by sector and region on MW Block Dashboards: 

NY-Sun Commercial Solar Loan Options

NY-Sun partners with private sector financial institutions to offer solar loans for small and large businesses as well as for not-for-profit organizations. 

They offer these three solar loan options: 

  1. Small Business/Not-for Profit On-Bill Recovery Loans

On-Bill Recovery loans make it easy for organizations to pay and manage solar installation costs by adding them as a line item to the business’s monthly utility bill. If you decide to move your business to a new location, the unpaid balance of the loan can easily be transferred to the new property owners.

Small businesses and not-for-profits have access to loans up to $50,000 with a repayment period of up to 10 years. 

Learn more about On-Bill Recovery Loan for Small Businesses and Not-for-Profits

  1. Small Commercial Participation Loans

NYSERDA partners with lenders to help small businesses and not-for-profit organizations access up to $100,000 in financing at a below-market interest rate and with flexible repayment periods.

See how to apply for Small Commercial Participation Loans.

  1. Commercial/Industrial—Energy Improvement Corporation (EIC)

EIC is a New York State non-profit, local development corporation that operates EIC OPEN C-PACE for the benefit of its member municipalities. 

Learn more about EIC

Retail Storage Incentives (NYSERDA)

Retail Energy Storage Incentive commercial customers funding for standalone, grid-connected energy storage or systems paired with a new or existing clean on-site generation like solar, fuel cells, or combined heat and power. The incentives for all retail storage projects are provided through a network of participating contractors that are approved under the Retail Energy Storage Incentive program who contract with the customer directly. 

Click here to see the available incentive rates on the Retail Energy Storage Incentive Dashboards. 

Federal Commercial Solar Tax Credits and Incentives

Federal Tax Credits

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 were installed in 2022 or later and begin construction before 2033 qualify 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 system operation. This credit decreases federal income tax liability and is adjusted annually to reflect inflation. Solar systems that are installed in 2022 onwards 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: Owners of projects can’t use both the Investment Tax Credit (ITC) and the Production Tax Credit (PTC) for the same property. However, they do have the option to apply for distinct credits for co-located systems such as solar and storage. The eligibility criteria are determined by guidelines provided by the Internal Revenue Service (IRS).

Commercial Depreciation Allowance: Modified Accelerated Cost Recovery System

MACRS stands for Modified Accelerated Cost Recovery System, a system that the IRS uses to determine how much depreciation can be deducted for tax purposes on certain property, including solar energy property. This helps NY businesses significantly reduce the upfront costs and enjoy faster financial returns from their solar installations. 

To demonstrate how much a company could save using MACRS, here is an example with simple calculations: 

Let’s say a small warehouse in New York State installs a 50 kW commercial solar system for $100,000. New York State offers additional incentives, but for this example, let’s focus on federal MACRS.

MACRS Benefit:

  • Currently (as of May 2024), federal law allows 100% bonus depreciation for the first year on solar projects.
  • This means the business can deduct the entire $100,000 cost of the system in the first year it’s placed in service.

Tax Impact:

  • Assuming the business has a marginal tax rate of 30% in New York, deducting the full $100,000 system cost translates to tax savings of $100,000 * 30% = $30,000 in the first year.

This is a simplified example, and actual tax savings may vary depending on the specific tax situation of the business. It’s important to consult with a tax advisor for a more precise calculation. MACRS depreciation doesn’t reduce the actual cost of the system, but it accelerates the tax benefits, leading to a faster return on investment.

C-PACE (Property Assessed Clean Energy) Financing in New York State

C-PACE (Commercial Property Assessed Clean Energy) is a financing program available in certain municipalities in New York State. It allows commercial and non-profit property owners to spread the cost of clean energy improvements over an extended period (20-30 years). Repayment is secured through a special assessment added to the property tax bill, similar to a lien.

New York businesses can access C-PACE financing through two main channels:

  1. Energy Improvement Corporation (EIC): This non-profit organization administers C-PACE throughout New York State, excluding New York City.
  2. New York City Energy Efficiency Corporation (NYCEEC): This organization is the designated C-PACE administrator specifically for New York City, offering the NYC Accelerator PACE Financing program.

NY Green Bank (NYGB) is a state-funded program at NYSERDA dedicated to filling financing gaps in clean energy and sustainable infrastructure markets. Its investments help reduce greenhouse gas emissions, improve energy efficiency, and promote clean energy generation. Additionally, it encourages private sector investment in key areas of the clean energy market. 

Solar Power Purchase Agreement NY

Solar Power Purchase Agreements (PPAs) offer a compelling financing option for businesses and local government entities in New York looking to adopt solar energy without the high upfront costs typically associated with solar installations. 

In a PPA, a third-party developer installs, owns, and maintains the solar panels on a business’s property. The business then purchases the electricity generated at a rate that is often lower than the average utility price, which can stabilize energy costs and provide predictable billing.

Ideal Organizations for Solar PPAs in New York

Local Government Buildings

Government facilities such as city halls, libraries, and public schools are excellent candidates for solar PPAs. These entities often have large, underutilized roof spaces or land ideal for solar installations. Solar PPAs allow them to leverage these assets to reduce public spending on energy.

Manufacturing Companies

Manufacturing facilities typically have high energy usage with consistent patterns, making them ideal for solar PPAs. By switching to solar through a PPA, these companies can significantly cut operational costs and invest more in core business areas.

Hospitals and Healthcare Facilities

Hospitals operate 24/7 and thus consume large amounts of energy. A solar PPA can help stabilize and potentially reduce energy costs while supporting the healthcare sector’s growing focus on sustainability.

Retail Chains and Shopping Centers

These businesses can cover extensive rooftop spaces with solar panels under a PPA, reducing operating costs and passing savings on to tenants and customers.

UVcell Solar’s Innovative PPA Solution 

Our industry-changing solar PPA service includes the main solar equipment so that Engineering, Procurement, and Construction (EPC) firms and solar developers can use their mobilization funding on other key project areas like payroll and engineering.

Main solar equipment provided with the PPA

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

Contact us if you have any questions about our solar PPA. 

C&I Solar Financing Companies for New York Property Owners

Sustainable Capital Finance (US-Wide)

The company offers PPA and takeout solutions for commercial and non-profit solar projects that are 100 kW or more around the US. Think of takeout financing as a way to refinance your solar project. SCF helps businesses and organizations transition from short-term construction financing to a more permanent, long-term solution. They’ve empowered a diverse range of clients, including municipalities, schools, religious institutions, and even Native American tribes, to embrace clean energy through solar power.

Greentech Renewables (US-Wide)

Their team manages secure financing options for commercial solar projects across the country. They handle everything: lining up the best financing options, overseeing loan acquisition and management, and keeping you connected with your lending partners.

SunRenu (US-Wide)

SunRenu provides financing options for businesses that want to finance their solar energy systems, either partially or entirely. Their C&I solar financing options allow clients to get a solar energy system with minimal or no upfront expenses. SunRenu 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. 

Conclusion

Recognizing the environmental and economic benefits of solar energy, New York State demonstrates a strong commitment to solar adoption through an attractive mix of incentives and tax credits specifically designed to make solar power a financially attractive option for businesses and organizations. From the initial cost savings provided by federal tax credits and state-specific programs to the long-term benefits of reduced electricity bills, solar power offers a unique opportunity to enhance your company’s bottom line while promoting environmental responsibility.

Many New York solar installers can walk you through the financing process, helping you identify the most suitable options for your specific needs. With careful planning and the support of these programs, your business can unlock the power of the sun while reducing your environmental footprint. 

Melissa brings over 20 years of communications and marketing experience, consistently delivering impactful contributions that strengthen organizational relationships, optimize operational efficiency, and increase sales. With a deep-rooted interest in environmental solutions, she loves applying her skills to increase the adoption of solar technology globally.
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