Installer's Guide to Solar Financing

Installer’s Guide to Solar Financing

Seven Things to Know … about financing residential solar systems

DECEMBER 2016

eBooks

Table of Contents ______

Introduction: How to use this eBook ...... 3 1) A History of Solar Financing ...... 4 2) The Competition ...... 7 3) The Solar ROI ...... 13 4) Understanding Customer Needs and Preferences ...... 19 5) Solar Financing Options ...... 25 6) Selecting a Financing Partner ...... 38 7) Peace of Mind for Customers ...... 41 Conclusion ...... 44 Appendix: Solar Financing Providers ...... 45

Introduction

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As the leading solar equipment distributor servicing independent solar installers throughout the U.S., we are proud to support thousands of contractors building solar PV installation businesses by providing them with technical, product, and design related information and services. Since 2009, we have seen the world of solar financing evolve in many ways and remain a critical area where we have received many questions and requests. Our goal with this guide is to provide you the necessary knowledge about the rapidly developing solar project financing options for your business and customers. This is by no means an exhaustive guide, but covers the basics of evaluating and offering various solar financing solutions with the goal of helping you increase your success rate when selling solar solutions. Please note, we love feedback! If you have any suggestions for improvement to the next edition of this eBook, please email us at [email protected].

01 A History of Solar Financing

A History of Solar Financing

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2010 National, vertically integrated solar developers (e.g. SolarCity, SunPower, Vivint, SunEdison, SunRun, Sungevity, etc.) rapidly increased their market shares. This was a result of a new type of financial product: the Third-Party-Owned (TPO) solar model, or, as they are known to home and property owners, solar leases and solar Power Purchase Agreements (PPAs). While these TPO solutions provided the average home and property owner a worry-free way of investing in solar, they failed to provide full transparency (for home and property owners) or the level playing field necessary for the thousands of independent competing installers to succeed. As a result, independent installers who did not have access to TPO solutions were forced to contend by selling customer-owned solar solutions for which there were limited financing solutions. 2012 Customer-owned financing solutions, such as solar specific loan products and TPO solutions for independent installers, began entering the market and leveling the field for competition. Soon after, innovative financing solutions such as Property Assessed Clean Energy (PACE) entered the market and provided an increased number of choices for property owners. 2015 - 2016 For the first time in years, TPO solutions began losing market share to customer-owned solutions. This shift was

caused by the entry of structured capital into the market along with increased consumer knowledge of the benefits of investing in solar. Now, as we prepare for 2017, we agree with industry analysts who expect a continued decrease in the share of TPO solutions as customer-owned solutions become more competitive (seen in the graph below). In this environment, it is critical for independent solar installers to understand and be able to communicate the pros and cons of each type of solar financing solution to potential customers.

In the next chapter we will discuss the competition in more detail and show you how to offer potential solar customers financing options that provide them with full confidence in their investment.

02 The Competition

The Competition

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Choosing to own in a lease dominated market

In today’s digital world, customers have access to more information than ever before. This means, they will often conduct independent research online before consulting a solar professional. For this reason, it is critical to:

 understand what competitors are offering  be comfortable leading with the appropriate financing solution and  be able to clearly explain the advantages of the solution being offered versus larger, more-established competition.

We categorize the various solar players into three major classes:

1. National, vertically integrated solar developers. There are less than a dozen of such companies, but they make up close to 40% of the market today. Examples include: SolarCity, SunPower, Vivint, SunRun, etc. 2. Independent local and regional dealers who offer both the TPO solutions from the class one national companies along with their own cash or financed solutions. 3. Independent local and regional installers with no allegiance.

If you belong to group 3, and find yourself competing with a company from group 1, it is fair to assume that your competition is offering at least one standard lease or PPA option. Though this is how the large public companies (i.e. SolarCity, SunRun, SunPower) are generating the majority of their sales, it has the worst long-term ROI for solar customers.

Though ownership is not the best fit for everyone, many potential customers simply don’t know their options when it comes to making this large of an investment. Being able to articulate these benefits will not only support your customers in making the decision that is best for them but will allow you to become even more of an expert on the market.

A. The Benefits of Ownership

Usually, investing in a solar system provides a much higher return on investment than any leasing program could provide. Here are seven reasons customers will benefit from investing in a solar system that can be used to start the financing conversation.

1) Lease or PPA solutions may save up to 30% of a customer’s electric bill over the next 20 years. Purchasing the system can provide the customer savings up to 80%. 2) Leasing forces the solar customer to forfeit the 30% Federal Investment Tax Credit (and other incentives they might qualify for) to the lease company.

3) Annual payments increase over time with a lease or PPA based solution, while they will not change if the system is owned. 4) With a lease or PPA solution, customers are forced to either buy the system at market price, extend their lease contract or return the system at the end of the contract. 5) Ownership of a solar system immediately increases the value of a home. A solar lease does not. Moreover, transferring can be a hassle if the home is sold. 6) Similar to the lease, solar-specific loans allow customers to go solar with zero down and start saving money on day one. Plus, annual payments will not go up. 7) Solar systems have no moving parts and last for a long time with no maintenance. Most systems today are sold with a full 25-year warranty on equipment. Lease companies often try to scare customers into leasing a system by saying that they will be there to fix the system if it breaks, even though the likelihood of a system breaking is very low.

Shifting the conversation from leasing options towards customer- owned options requires a much larger commitment on behalf of the customer. They will likely need to consider all of their options and reevaluate their financial security before making their decision. As an expert on all financing options you will be able to ensure your customers find the best solution for their needs, while you earn their trust and, most likely, their business.

B. Determining if Ownership is the Right Fit

Part of gaining the trust of customers is being honest and realistic about their assets. Though a cash purchase often results in the highest ROI for customers, the level of investment required may not always be feasible. Here are three reasons that a cash investment would not be the best choice for your customer and the alternatives that can be offered:

Problem: The customer simply does not have cash to invest upfront.

Solution: A loan or PACE product.

Problem: The customer has the cash but does not have enough of a tax obligation to use the 30% Federal Investment Tax Credit (ITC) and/or other rebates and incentives.

Solution: Pre-paid PPA/lease product.

Problem: The customer does not have the cash and does not want to undertake the risk of owning and maintaining a system.

Solution: A regular lease or PPA product.

Once you understand the unique needs of your customers, you can present them with a financing solution that will give them the highest return on their investment (ROI). In the next chapter, we will discuss exactly what an ROI is in terms of investing in solar

and how you can ensure your customers receive the highest one possible.

03 The Solar ROI

The Solar ROI

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We have found that the most productive residential solar sales professionals all have one thing in common; they separate the “cost of solar” conversation from the “financing of solar” conversation. Simultaneously, installers who can clearly communicate the ROI of their solar solutions outperform their competitors. This is why we decided to dedicate a section to explaining the concept of the Solar ROI.

Return on Investment (ROI): The “return” over your “investment” or the gain or loss generated on an investment relative to the amount of money that was invested.

For example, $400,000 is invested in a home that will be rented out on a monthly basis. After expenses, $2,500 is earned in monthly income. Meaning that the investment (I) is $400,000 and the first year return (R) is $2,500 a month for 12 months, totaling $30,000. To calculate the ROI, divide the return (R) by the Investment (I) and multiply by 100 to find the percentage increase or decrease.

ROI = Return / Investment => ($30,000 / $400,000)*100 = 7.5%

An Example of Solar ROI Let’s look at ROI in the context of a solar PV system. As seen in the graph below, the average size of a solar system in the U.S. is 5,000 Watts (approximately 20 250-watt panels), at a cost of about $3.50 per watt. This is just an average, however, and the graph below shows just how much this price ranges across the U.S.

Assuming that the cost per watt is $3.50, your customer’s “investment” will be: $3.50 per watt x 5,000 watts = $17,500.

Next, we include the “30% Federal Investment Tax Credit” deduction which can be applied to all solar PV investments until 2020. 30% * $17,500 = $5,250 Technically this would adjust your customer’s investment amount from $17,500 down to $12,250. Next, calculate the “return.” The return is the value that the solar system provides to your customer. In most states, net metering policies allow solar system owners to receive credit for the full retail value of the electricity they generate and feed back into the grid. To calculate the value of this generated electricity, we need to know two things: 1) How much electricity does the solar system create? 2) How much is the electricity worth? The ROI is calculated by multiplying (1) with (2). Here is how to answer these questions to find the ROI. 1) How much electricity will your customer’s solar system generate? This depends on the location of the project. Since this number can vary so much, we recommend partnering with your CivicSolar account manager to use a location-specific design tool to give you the most accurate calculation. We do know however that the average U.S. solar system generates about 1,450 kWh per kW in a year so we will use this number in our practice equations.

2) How much is your customer’s electricity worth? The average value of electricity for U.S. homeowners is 12 cents per kWh. However, this number can be as high as 50 cents in some parts of the country and as low as 6 cents in others. For our calculations, we will assume consumers are paying an average of 25 cents per kWh for electricity when they make the decision to invest in solar for their home. ... Now let’s apply these estimates using the ROI formula. Assuming the value of electricity generated is 25 cents, and the system generates 1450 kWh per kW, the year one return will be: 5 kW x 1450 kwh / kw / yr x $0.25 = $1,813. This means, the customer’s return on investment equation will be:

Solar ROI = Return / Investment => $1,813 / $12,250 = 14.8%

The year one return of 14.8% equals a payback period of approximately 6.75 years. In today’s market, this is a high quality investment! When it comes to investing in solar, an ROI of 10% or higher is one that should provide confidence to you and your customers. Any lower and it may be necessary to look into alternative financing options such as community solar or energy efficiency improvements only.

Once your customer understands the specific investment amount required and the return it will generate, it will become much easier to explore their options. However, the concept of ROI does not take into account the unique circumstances and concerns presented by each customer. In the next chapter, we will discuss some of these details that need to be taken into account when investing in solar.

04 Understanding Customer Needs and Preferences

Understanding Customer Needs and Preferences

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When selling solar solutions, it is important to understand the specific needs and preferences of each customer. This is because the best solution for a customer with limited income, a decent credit score and no tax obligation will differ dramatically from a customer who has plenty of cash and a high tax obligation.

Similarly, the solution for a customer who enjoys doing things himself and wants to understand and maintain their solar system will be quite different from the one for a single parent who has limited time, cash, and willingness to own and maintain a system.

For these reasons, we think it is important to explore the following needs and preferences of customers before deciding which investment approach will be best for them:

1) System Maintenance

Unlike investing in the stock market, a solar system is a hardware purchase that may require maintenance over its lifetime. When designing systems for your customers, it is important to ensure they understand that a typical solar PV system consists of non- moving parts that are expected to last for over 20 years. Up-front requirements such as a quality roof are necessary for a

successful project while long-term needs such as changing an inverter might also be required. You can help your customers achieve peace of mind by understanding their ability to maintain the system over its lifetime and finding the best financing solutions for their unique needs.

Leasing/PPA solutions inherently offer that peace of mind by removing the homeowner from all ongoing PV system responsibilities and securing a long-term electricity price agreement. However, Lease/PPA solutions are not always the most economical for customers because of the 20-year long recurring interest payments. An alternative solution may be a warranty from the vendor which we will discuss more in Chapter 7.

2. Access to the 30% ITC and other tax deductions

In order for a customer to take advantage of these tax benefits, they must have a tax obligation that is equal to or greater than the tax benefits derived from the solar system. Many unsecured solar loan products are designed to capture the homeowner’s ITC payment and pay down the solar loan. However, if the homeowner chooses not to use the ITC to pay down 30% of their loan within 18 months, they may be charged higher interest rates. A secured or PACE loan will allow for additional tax deductions from the interest payments (and in some cases, even the principal payments) over the tenor of the loan.

3. Credit Score

If a customer has applied for an unsecured loan or a lease/PPA solution, a credit (FICO) score of 650 or higher will most likely be required for them to qualify. If this is not something your customer can achieve, a PACE loan, which is based on their property value, may be a better fit and provide a lower interest rate. We will discuss PACE loans in detail in Chapter 5.

4. Ability and willingness to refinance mortgage or home equity lines

In many cases, financing the solar system within a mortgage or a home equity loan is the most economical. This solution makes sense when the customer is already planning to refinance. However, refinancing or getting a new home equity line can require a substantial time investment and extra upfront costs which can impact the long-term return on investment.

5. Using their home as loan collateral

Home mortgages, equity lines and FHA Title 1 Loans are secured loans where the collateral is the equity of the home. Secured loans typically have lower interest rates compared to unsecured loans but risk losing the home if the loan defaults. In the case of an unsecured loan however, the lender would only be able to

claim the solar system. Taking out a secured loan is worth the risk when the homeowner is confident in their ability to make the payments in the future. However, customers should always consider worst case scenarios when making this kind of decision.

6. Likelihood of Moving

If a solar homeowner moves, they may be required to pay-down the remaining portion of their solar loan/lease. This requires hiring an expensive third party certifier to assess the value of the solar system. Due to the lack of data about solar system transferability, it is impossible to make a definitive valuation. Homeowners should discuss this issue with their bank and/or realtors. If they have serious reservations about the transferability of their system, a PACE loan may be their best option.

7. Future Financial Obligations

Investing in a solar system is a significant and long-term decision. If the customer is planning to take on other large liabilities in the future - such as student loans, a second home, starting a business, etc. - a PACE loan may be the best option. This is because it will not affect their personal credit and will offer lower interest rates. In the case that the homeowner has a low credit score, PACE loans may also be their only financing option.

8. Cash on hand

Generally, secured loans and home equity lines have much lower interest rates than unsecured loans and PACE loans. However, they may require a significant down-payment. If the homeowner wants to finance 100% of the system, unsecured loans and PACE loans are generally the best option.

Understanding customer preferences around these topics will bring you one step closer to choosing the solar investment option that is best for your customers. In the next chapter, we will outline these options in more detail.

05 Solar Financing Options

Solar Financing Options ______

There are two primary approaches customers can use when investing in a solar system 1. upfront investment or 2. leasing.

Each has advantages and disadvantages that change according to your customer’s unique needs. In this chapter, we will outline when it makes the most sense to use each approach and what you can expect during the process. Solar Financing Map for Residential Solar Systems

Source: CivicSolar, Inc.

The solar financing map above is a great resource when making these decisions. Taking into account the unique needs addressed in the previous chapter, you can assess which financing option you think is best for each customer. In this chapter, we will explore these options in more detail.

1) OWNERSHIP-BASED SOLUTIONS

As discussed in earlier chapters, making the decision to own, rather than lease, a solar system will produce the highest ROI. However, this level of investment will not be a good fit for everyone. We suggest ownership-based solutions when the customer:

 Wants to maximize their ROI over the long term  Wants to leverage the various rebates and incentives associated with the solar system  Is confident in their ability to own and maintain the system

If ownership is determined to be a good fit, there are four ways to finance the purchase:

1) Cash 2) Secured Loans 3) Unsecured Loans 4) PACE Loans

1) Cash

As with many things in life, paying cash to outright purchase the system is the most economical way of owning solar PV. Plus, paying cash allows a system owner to avoid paying interest and other financing fees.

2) Secured Loans

The most common secured loans are Home Equity Loans, FHA Title 1 Loans, and Mortgage Loans. Industry insiders often say that one of the best ways to finance solar is within your mortgage (or home equity line). These types of loans are attractive for customers because they have low interest rates and the interest payments are tax deductible.

The key advantage of these types of loans is that they allow your customers to pay a lower interest rate compared to unsecured loans. That being said, there are still some disadvantages of these loans.

Disadvantages of Secured Loans

First, because they are secured loans, if one fails to pay their monthly payments the bank would have the right to foreclose on their home. Second, these types of loans usually require more paperwork and time for approval compared to unsecured loans.

It is also worthwhile to note that not all mortgage underwriters and secured lenders offer solar financing. This is because it is still a new industry and uncertainty still exists. Since solar financing would likely make up a small percentage of the lender’s portfolio, there is not a significant demand for lenders to efficiently finance solar projects.

3) Unsecured Loans

Unsecured loans are also a common way of financing solar solutions. They have recently become more accessible because of the increased demand in solar ownership. These types of loans are popular because they are fast, easy to get approved and do not require any cash up-front. In fact, the leading unsecured lending providers have technology platforms that allow the homeowner to be approved and receive funding almost instantly. If done through one of these providers, the entire approval and funding process can be paperless and supported by a dedicated customer service team who can answer all homeowner and contractor questions. The homeowner's approval and interest for an unsecured loan will depend on factors such as their FICO and Debt to Income ratio.

Something important to consider when deciding which loan is best for your customer is the risk of losing their home. If unsecured solar loans are defaulted on, there is not the risk of losing their

home. There is however the risk of losing the solar system. The main disadvantages to unsecured solar loans are as follows:

 Higher interest rates than secured loans  High origination fees (A.K.A. dealer or merchant fees)  Interest payments are not tax deductible

4 Things to Consider when Comparing Unsecured Loans

When comparing unsecured loan products, the solar contractors should compare and factor in the following:

i) APR

The APR is the total, including all fees and annual interest rate. FICO scores and the terms determine the APR and solar APRs generally range from 3% to 9%. A longer term and lower FICO score indicate higher risk which will raise the APR. An 18 Month Interest Only product is very popular, but the homeowner must be able to exercise the 30% ITC within the first 18 months to maintain a low APR.

In states like California and New York, where the utility rates are high, this loan product allows for homeowners to start saving on their solar projects from day one.

ii) Dealer Fees

This is the processing fee for the loan that the contractor burdens and is similar to a car loan or mortgage. The dealer fee will depend on the APR, the customer’s FICO score and the individual provider’s terms. The lower the FICO score and APR, the higher the dealer fee. Dealer fees range from 15% to 20% of the cost of the solar system for most solar loans. The dealer fee can be financed with the loan, so the installer can pass the cost on to the customer.

iii) Terms

The terms are the duration for a solar loan, or how many years until the principal is paid off. Common offerings are 5, 10, 12, 15, and 20 years. The longer the terms, the higher the interest rate. A 20 year loan can almost double the interest rate compared to a 5 year loan, but the annual payments will be lower because of the longer duration of the loan.

iv) Prepayment Penalties

Unsecured solar loans will not usually have a prepayment penalty, but this will need to be verified.

Some of the leading providers of unsecured solar loans are: GreenSky, Mosaic, Admirals Bank, and Dividend Solar. Authorized contractors are only allowed to offer unsecured loans as homeowners are not able to be approved for this type of financing directly from the provider. Contractor approval criteria varies.

At a minimum, these businesses need to have operated for 2 years and be in good standing. Some financing providers will require North American Board of Certified Energy Professionals (NABCEP) certified installers and have an approved equipment list. Generally, the total loan approval for an unsecured loan will be around $50,000 (some go as high as $100,000), but this should be sufficient for most residential projects ($3.50/W install cost).

4) PACE Loans

PACE is an innovative way of financing energy efficiency and renewable energy projects. To have access to PACE financing, the local county or municipal government must have established a PACE program in their district.

What makes the PACE loan unique is that it is taken by the home (or property) rather than the individual (i.e. the property owner). The payments for PACE loans are secured against the property

and paid via the tax bill of the property (one payment per year rather).

Similar to taxes, if they are not paid, the local government would have recourse on the customer’s home, preventing them from selling it.

To qualify for a PACE loan, the homeowner must be up-to-date on their mortgage and tax payments. Leading PACE providers like Ygrene have online tools to see if a property qualifies for a PACE loan and can estimate the total loan amount the homeowner could be issued.

Like Unsecured Loans, PACE providers have fast and paperless approval and funding processes. Homeowners must have a pre- approved contractor install their solar system. The total loan amount is usually limited to 15% of the property’s value.

Pros of PACE

One key advantage of the PACE loan is that it is an off-balance sheet item or tax lien. This means the solar loan will not affect the homeowner’s credit, ability to borrow, or mortgage. This is very important because getting a PACE loan will not only lower a customer’s energy bills but also have no effect on current or future personal financing decisions. Since the PACE loan is a tax lien on the property, transferring the solar loan is easy because it is not necessary for the homeowner to pay-down the loan’s

remaining balance. What’s more, the PACE loan is not tied to the homeowner.

While the process for transferring leased or financed solar systems is still ambiguous, PACE removes such concerns. PACE loans are not just for solar projects but also for energy efficiency upgrades and/or other clean energy projects.

Like unsecured loans, PACE loans can finance 100% of the project (no down-payment necessary). PACE loan terms will range from 5-20 years and the interest rate will depend on the term (5% to 8%). The longer the term, the higher the interest rate. The interest rates on PACE loans are generally higher (and there are prepayment penalties) than unsecured loans, but the origination fee is lower and is tax deductible.

Leading providers of PACE Loans are: Ygrene, Hero, CaliforniaFirst, and mPower. You can see a complete list of all PACE providers for all U.S. states here.

Below is a table that summarizes the attributes of secured, unsecured and PACE loans:

Solar Ownership Products

Financing APR Dealer Terms Prepayment Technology / Tax Off- Type Fee (Years) Penalty Support Deductible Balance Interest Sheet

Secured <5% <2% 5-30 Yes Minimal Yes No Loan resources

Unsecured 3- 10- 5-20 No Sales Tools; No No Loan 10% 15% Approval and Funding tools; Paperless Process; Excellent customer support

PACE 5- 3-7% 5-20 Yes Sales Tools; Yes Yes Loan 8% Approval and Funding tools; Paperless Process; Excellent customer support

2) THIRD-PARTY-OWNED (TPO) SOLUTIONS:

When paying cash upfront for a solar system is not an option, lease and PPA solutions are the next best solution. TPO solutions (Leases / PPAs) make sense for customers who:

 Do not want to own and maintain the system

 Are interested in going solar mostly for the environmental reasons  Are interested in saving money immediately with zero down and are OK with not maximizing their ROI in the long term  Cannot use the 30% Federal Investment Tax Credit

When considering leasing a system or signing a PPA, it is important to understand the differences between a lease and a PPA.

When leasing a system, contracts are usually written for 20-years and covered by monthly fees that typically come out to be 10-30% less than their average monthly electric bill. The lease provider will often provide a minimum production guarantee in terms of kWh production and be responsible for maintaining the solar system.

1) Power Purchase Agreements

PPAs are slightly different from leases because the customer agrees to purchase the electricity that the system generates at a predetermined price, on a take or pay basis rather than month to month. This often means that the customer’s monthly payments vary slightly based on the production of the system.

2) PrePaid PPAs and Leases

There is also a class of PPAs and Leases called Prepaid PPAs and leases. These offerings make sense for customers who have

the upfront cash but do not want to own and maintain a system and are not interested in the tax rebates and benefits. Just like in the case of regular leases and PPAs, when your customer signs a Prepaid Lease or a Prepaid PPA the financing company benefits from the tax incentives. These financing companies also have the ability to take advantage of accelerated depreciation benefits (something that homeowners cannot do).

For example, providers can still offer the customer a 20-year lease deal at a price that equals the cash price of the system minus 15-30%. At the end of the 20-year period, the customer has the option to acquire the asset at the current market value. Pre- paid PPAs and Leases also make a lot of sense when a customer is a non-profit entity such as a church, YMCA, United Way or an animal shelter.

As we have covered in this chapter, there are numerous options to consider when looking to finance solar systems. Depending on the specific situation of your customer, some solutions may be better than others. As always, you can refer to the graph on page 26 as a decision making guide for specific customer cases, but your account manager is also a good resource!

Once you make a decision, it will be time to include a finance professional in the conversation. The next chapter outlines some questions that will give both you and your customers peace of mind when selecting a financial partner.

06 Selecting a Financing Partner

Selecting a Financing Partner

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With more than 150 financing offerings on the market today, finding the right partner is a critical step in offering a comprehensive financing proposal. Don’t be afraid to vet companies against each other when presenting options to customers as their business should be as dependent on your happiness and yours is dependent on the happiness of your customers. Here are the 14 most important questions to have answered when selecting your financing partners: 1) What is the reputation of the company? 2) How long have they been in business? 3) How stringent are their installer qualification criteria? 4) How efficient are their on-boarding and training processes? 5) How responsive are their account managers? 6) How competitive are their pricing and interest rates? 7) What are their payment schedules like? 8) How long are the tenors of their loans and leases/PPAs? 9) Do they have a technology platform that facilitates customer application and loan approval process?

10) How quickly do they approve or deny a customer’s loan application? 11) What are their requirements for contractors to become authorized dealers? 12) What restrictions are there for projects (either equipment or homeowner qualifications)? 13) How does their funding process work? How quickly do they fund projects, do they allow staged funding, and what do they require to complete projects (and make final disbursement)? 14) Do they market to homeowners? How much marketing collateral or sales support do they offer? Answering these questions will give you a better idea of whether or not the partnership will be mutually beneficial and ensures that you, and your customers, can be confident in the investment.

07 Achieving Peace of Mind

Achieving Peace of Mind ______The Importance of Warranties

Regardless of which financing option you choose, customers may have remaining concerns about the long-term commitment of investing in a solar system.

Some common questions we hear from home and property owners include:

“What if my solar PV system does not work as it is supposed to?”

“What if my panels or inverters break after a few years?”

“How do I know that my installer is not going to drill holes on my roof that will cause leakage when it rains?”

Warranties can appease some of this uneasiness.

If you are purchasing your equipment through CivicSolar, it will likely already include 20+ years of manufacturer warranties. The challenge however, is guaranteeing the integrity of the entire system over its lifetime. This can include ensuring how much energy the system will produce or issues such as roof leaks, electrical tripping, etc.

One solution we recommend is to offer your own warranty contracts along with the standard engineering, procurement and construction (EPC) contracts. If you are uncomfortable writing your own warranty contracts, CivicSolar offers a comprehensive “Solar Customer Warranty Management Service” for our partners. If this sounds like a good fit for you, your Account Manager can provide more information.

Conclusion

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Thank you for taking the time to read this eBook! We hope it has answered some of the difficult questions surrounding solar financing. The bottom line is that there is not one perfect financing solution, but many. By working to understand each of them, you will be able to confidently answer the questions presented by your customers and stay on the cutting edge of the increasingly competitive solar industry.

We hope that you feel even more prepared to evaluate various financing solutions for your solar business. If you have any additional questions, we are here to help and look forward to being a part of your continued success!

- The CivicSolar Team

Appendix: Solar Financing Providers ______

Unsecured Solar Loan Providers Admiral’s Bank* All 50 States Bank Five MA, RI Banner Bank WA BGE Home MD Center for Energy and The Environment MN City and County of Honolulu HI City of Milwaukee WI City of Plano TX City of Richland WA City of Tallahassee Utilities FL Clark Public Utilities WA CT Green Bank CT Dividend Solar All 50 States Educational Employees Credit Union CA Elevations Credit Union CO EnerBank USA All 50 States First Associates All 50 States First Citizens’ Federal Credit Union MA First New York Federal Credit Union NY Fort Collins Utilities CO GreenSky Credit* All 50 States Greenworks Lending CT, DC, MD Hamilton County OH Home Loan Investment Bank All 50 States LightStream – SunTrust All 50 States

Idaho Governor’s OER Energy Loan Program ID Iowa Energy Center IA Matador’s Community Credit Union CA Michigan Saves MI Montana Dept. of Environmental Quality MT Mosaic* CA National Bank of Arizona AZ Nebraska Energy Office NE North Brookfield Savings Bank MA Oregon Dept. of Energy OR PSE&G Solar Loan Program NJ Piedmont Electric Membership Corporation NC Provident Credit Union All 50 States Puget Sound Cooperative Credit Union WA Redwood Credit Union CA SF Fire Credit Union CA San Antonio Credit Union TX San Diego Metropolitan Credit Union CA Santee Cooper SC Shrewsburry Federal Credit Union MA Spruce Finance All 50 States St. Lucie County Florida FL Summit Credit Union All 50 States Sun West All 50 States Sungage CA, CO, CT, FT, MD, MA, NH, NJ, NY, TX, VT UmassFive College Federal Credit Union MA Umpqa Banku NV, OR University of Virginia Credit Union VA Velocity Credit Union TX Weymouth Bank MA

Secured Loan Providers Admiral’s Bank* All 50 States AmeriFirst All 50 States Bank Five MA, RI Bank of Colorado CO, NM BayCoast Bank MA, RI City and County of Honolulu HI City of Milwaukee WI City of Plano TX City of Richland WA City of Tallahassee Utilities FL Clark Public Utilities WA Educational Employees Credit Union CA Elevations Credit Union CO Energy Loan Network CA First Associates All 50 States First New York Federal Credit Union NY Fort Collins Utilities CO GreenSky Credit* All 50 States Greenworks Lending CT, DC, MD Hamilton County OH Home Loan Investment Bank All 50 States Idaho Governor’s OER Energy Loan Program ID Iowa Energy Center IA Matador’s Community Credit Union CA Medallion Bank All 50 States Michigan Saves MI Montana Dept. of Environmental Quality MT National Bank of Arizona AZ

Nebraska Energy Office NE Oregon Dept. of Energy OR Piedmont Electric Membership Corporation NC Provident Credit Union All 50 States Puget Sound Cooperative Credit Union WA Redwood Credit Union CA San Antonio Credit Union TX San Diego Metropolitan Credit Union CA Santee Cooper SC Spruce Finance All 50 States St. Lucie County Florida FL State Treasurer of Ohio OH Summit Credit Union All 50 States Sun West All 50 States Umpqa Banku NV, OR University of Virginia Credit Union VA Velocity Credit Union TX

PACE Loan Providers Arkansas Advanced Energy Equity Program AR AllianceNRG Program CA CaliforniaFIRST CA Energy Efficient Equity CA Figtree PACE Financing CA Green Finance San Francisco CA HERO Program CA Los Angeles County Commercial PACE Program CA mPOWER CA

PACE Funding CA Renew Financial Sonoma County Energy Independence Program CA Ygrene* CA, CO, FL, MO Colorado C-PACE CO Connecticut Energy Finance and Investment Authority (CEFIA) CT D.C. PACE Commercial DC Clean Energy Green Corridor, Miami-Dade FL Florida PACE Funding Agency Program FL Green Energy Works Program FL Leon County Commercial PACE Program FL St. Lucie County’s Commercial PACE Program FL Clean Energy Atlanta Program GA KY-PACE KY MD-PACE MD Ann Arbor’s PACE Program MI Lean and Green Michigan MI Minnesota Edina Emerald Energy Program MN Southwest Regional Development Commission MN Minnesota PACE Program MN Missouri Clean Energy District Program MO Set the PACE St. Louis MO Show Me PACE MO NJ PACE NJ Energize New York Finance NY New York Long Island Green Homes NY Greater Cincinnati Energy Alliance OH

Ohio Northeast Ohio Advanced Energy District OH Toledo-Lucas County Port Authority/Better Buildings Challenge OH UTAH C-PACE UT Texas PACE Authority Program TX Wisconsin Milwaukee Energy Efficiency (ME2) WI

Solar Lease / PPA Providers OneRoof CA Real Goods Solar CA Spruce Finance AZ, CA, CO, HI, MA, NJ, OR, PA Sungevity AZ, CA, CO, CT, DC, DE, MA, MD, NJ, NM, NY, VT Sunnova AZ, CA, CO, CT, DE, HI, LA, MA, MD, MO, NJ, NM, NV, NY, OR, PA, TX

(*): CivicSolar recommended vendor. Based on rate structure, pricing, regional reach, quality of service and reputation.