When it comes to securing financing for FIT 1.0 or 2.0 solar projects, co-operatives face challenges that differ from other FIT contract holders, such as developers and corporations with similar projects.
Unlike corporations, members of community-based solar co-ops typically put up 51% of their own money towards their projects and then require financing for the remaining 49%.
It’s this community-based equity structure that often causes complications among institutional lenders because it’s considered to be a risky investment – the bank typically wants the majority of the equity holding.
This difficulty in securing debt and construction financing led to the demise of many co-op based solar projects approved under the first version of the Ontario Power Authority’s (OPA) Feed-In-Tariff Program (FIT 1.0). Fast-forward to today; contracts have already all been awarded for FIT 2.0 and contracts for FIT 3.0 will be awarded this year. Many of these contracts are for solar co-ops.
Some private lenders have recognized this as an opportunity to better service this segment of FIT contract holders. They have created unique funds to specifically address the challenges of financing a co-op/community-based project under the current OPA rules. These private funds have competitive rates and will negotiate the terms for construction, equity as well as debit loans. They are willing to be flexible and take the risk that banks won’t – and not at “loan shark” rates.
How do co-ops find these private lenders?
EfstonSolar can introduce co-ops – as well as any other FIT project owners – to such lenders. We have unique relationships with these funds, which are in the best interest of clients and their projects. Contact us and we’ll facilitate an introduction and help projects get the money they need to get built.