MetroWest495 Biz

14 MetroWest495 Biz | October 2015 As long as the sun shines, a solar array is pretty much guaranteed to produce electricity. Meanwhile, the federal government and the state of Massachusetts promise that they'll also generate valuable tax benefits and solar renewable energy credits. So, unlike most business projects— and certainly unlike almost any residen - tial improvements—there's a virtually certain, highly stable source of income to help the borrower pay off the loan. This is a dynamic that has drawn a range of lenders into the Massachusetts solar market—including both com - mercial and residential installations—in recent years. Zelman said MutualOne has financed about five commercial solar in - stallations over the past five years, most of them multi-million-dollar projects. Early on, the projects seeking financ- ing were mainly large investor-owned solar farms that produced power to sell to users. But Zelman noted the state has tweaked its incentives to encour - age more installations at businesses that will use much of the power they produce. That's a more efficient way of using solar power, and it requires less use of the electrical grid. Zelman said it made sense to encour - age investor-driven solar farms to begin with, but these days a wide range of businesses are recognizing the value of solar power, which allows state subsi - dies to be redirected. "Do you really want to subsidize an investor?" Zelman asked. "You want to subsidize the end user." Craig Huntley, partner and chief development officer for Solect Energy in Hopkinton, said that, as companies have become more comfortable getting in - volved in solar power, lenders have too. "Six years ago, when we started our company, I spent a lot of time at banks explaining that these are secure invest- ments," he said. "Now the comfort level with the safety of the investment is significantly greater than it was six years ago." Huntly said the majority of the 180 products in Solect's portfolio have involved traditional lenders, including community banks like MutualOne as well as larger institutions. But in some cases, other models make more sense. Federal tax credits are a big part of what makes many solar installations finan - cially viable, so nonprofits and compa- nies that don't anticipate a big tax bill may find that it's not worthwhile to buy their own solar systems. In these cases, Huntley said, an organization may want to enter some kind of lease or power purchase deal where another company essentially owns the array—and gets the tax benefits from it—while reciprocat - ing with cheap electricity and cash. Huntley said the percentage of Solect customers that are nonprofits has jumped from 15 or 20 percent in previ - ous years up to more than 50 percent A sk Andrew Zelman, senior vice president at MutualOne Bank in Framingham, why his bank does loans for commercial solar projects, and he says it's pretty simple. "As a bank, you want to do them because the cash flows that come from the projects are relatively known," he said. BY LIVIA GERSHON Special to MetroWest495Biz Growing money with sunlight Financial players see strong market in solar loans

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