Crestmark signs Vermont solar leasing deals

Crestmark, an asset lending specialist headquartered in Michigan, has announced the funding of Alternative Energy Development Group (AEDG) and affiliated company SolarSense with a combination of sale and leaseback transactions for a suite of solar power projects.

The financing will be used to fund three 500kW (AC) solar projects to deliver clean, reliable and renewable energy to the State of Vermont on a Power Purchase Agreement (PPA) basis.

The first project, located at the State of Vermont Northeast Corrections Complex in St. Johnsbury, VT, closed and funded in the fourth quarter of 2014 for $2 million. The second project for the State’s Correctional Facility in Springfield and the State Office Complex closed June 30, 2015 for $1.7 million; a third project is scheduled to close in August.

All Earth Renewables, Inc., a Vermont-based manufacturer and a full-service engineering, procurement and construction firm, partnered with SolarSense on the projects.

“We’re excited about being able to help this company, and the growing alternative energy industry,” said Larry Pearce, Crestmark senior vice president, managing director of corporate joint ventures. “The AEDG team is solid with a great reputation, and we look forward to working with them as they move forward and develop future projects.”

“We’ve been impressed with Crestmark Bank, a team of bright, personable, creative and committed professionals who live their mission to help growing companies grow with lending solutions,” said Chris Fraga, founder and CEO of AEDG and SolarSense.

“We moved from relationship building through deal due diligence to the close of the first multi-million-dollar financing in the span of three months. What’s remarkable is the fact that Crestmark learned and mastered the Solar PV and Energy Project Finance space while performing deal due diligence as their first Solar PV financing transaction,” Fraga added.

Solar finance options
The economic options for companies when deciding how to finance commercial solar energy systems are the subject of a report from the US Energy Department’s National Renewable Energy Laboratory (NREL).

Its study, To Own or Lease Solar: Understanding Commercial Retailers’ Decisions to Use Alternative Financing Models, examined the tradeoffs between financing methods for businesses installing onsite PV systems by looking at the choices made by two large organisations. These were IKEA, which owns its PV, and Staples, which leases its PV through PPAs.

Overall, the study found that the levelized cost of energy (LCOE) for self-financed systems was approximately 30% lower than for the PPA-financed system, given a commercial customer’s pre-tax discount rate of 10%; however the LCOEs are equivalent when the discount rate rises to 23%,and in some circumstances the LCOE could be 14% lower using the PPA.

“The most appropriate PV financing option for a particular business depends on the characteristics and circumstances of that business,” said David Feldman, a senior financial analyst and lead author of the report. “A company must work across its different business groups to decide what is most appropriate for its situation. With that said, if a company has less expensive sources of financing and is comfortable with the risks, it can often save on its energy bills by owning a PV system.”