How to build zero-cost on-site solar and storage projects
Download our guide to leveraging financing and incentives to access energy solutions that cut energy costs, generate revenue, and meet decarbonization goals.
As demand for renewable energy and battery storage grows, organizations seek affordable financing options to access these valuable projects. Discover how partnering with an experienced energy solutions provider who offers a benefit share structure unlocks access to clean energy projects, maximizing asset value and minimizing risk while requiring no upfront costs.
The current energy trends are reshaping how organizations approach their energy and sustainability strategies. This shift has led to a growing demand for renewables and battery storage. It’s no surprise – on-site solar and battery storage systems are highly valuable. They help organizations save on energy costs and reduce carbon emissions by optimizing electricity usage. They also enable organizations to generate new revenue by leveraging available demand response programs in their region.
While many organizations aim to harness the potential of these technologies to benefit their own energy infrastructure, some worry that they do not have the capital for such an investment. Fortunately, there are mechanisms making energy solutions, such as on-site solar and storage, affordable. The Inflation Reduction Act’s tax credits and incentives significantly reduce upfront costs. In addition, smart financing options are available, unlocking access to zero-capital projects that offer reliable returns.
What’s the secret sauce to deploying a zero-capital energy project, maximizing value from the project, and minimizing financial risk? Leveraging available incentives and partnering with an energy solutions provider that offers financing with a benefit share structure. Here is how to do it:
To get started, focus on incentives that are available to organizations interested in renewable energy solutions and battery storage. Thanks to the Inflation Reduction Act of 2022, we’ve witnessed the emergence of new market opportunities spurred by these incentives.
The Inflation Reduction Act allocates nearly $400 billion in federal incentives for the advancement of clean energy and energy technologies. One of the incentives within the Inflation Reduction Act is the Investment Tax Credit (ITC), which reduces upfront investment costs for a solar PV system or battery storage system that is installed during the tax year.
The ITC is structured as a tiered credit system. At the minimum, project owners are eligible for a base rate of 6%. But if they meet additional requirements, they unlock the full credit of 30%. Bonus adders are also available that, when stacked, means that a project could achieve a maximum 70% ITC.
While they reduce upfront costs drastically, the Inflation Reduction Act incentives won’t fund the whole system. By doing due diligence, your organization can decide how to fund the remaining balance of the system. There are three primary options that we typically see in the market:
Choosing a developer financing option and ensuring your energy solutions provider offers a benefit share structure allow your organization to maximize asset value and minimize risk. The benefit share structure creates a partnership where both parties’ interests are firmly aligned though shared incentives. It motivates your energy solutions provider to actively seek out new market opportunities and new ways to extract additional value from the storage assets.
For example, Enel proactively collaborates with our partners to capitalize on new opportunities as market dynamics evolve and new demand response programs emerge, expanding the pool of value to its fullest potential. In doing so, we also shape these opportunities by collaborating with regulators to ensure market reliability, safeguarding long-term asset investments.
Opting for a developer financing option with an experienced and reputable energy solutions provider eliminates upfront costs and financial risks for your organization. Enel, for instance, wraps all project costs within our zero-CapEx financing mechanisms so that organizations do not have to put up any capital. Instead, Enel puts up the capital.
The benefit share rate (e.g., a 50:50 split) should remain stable throughout the agreement, though the actual benefits can fluctuate based on performance and market dynamics. In this model, you consistently receive your share of generated revenue without upfront costs, ensuring reliable, positive returns. For example:
Enel North America offers three main financing mechanisms when evaluating the economics of solar and battery storage projects. However, only two of these mechanisms include a benefit share option.
Red flag: We’ve seen developer financing models where there is no benefit share arrangement – in which case, your organization would assume all risk. Be sure to request proposals from several energy partners and compare offerings.
For real-world examples demonstrating these three energy solutions financing mechanisms in action, refer to pages 15–17 in our guide, “How to build zero-cost on-site solar and storage projects.”
The potential of solar and storage technologies to deliver extensive financial, sustainability, and resilience benefits is both promising and exciting. Leveraging investment tax credits provided by the Inflation Reduction Act makes these energy solutions more attractive. What’s even more exciting is that choosing the right financing can make on-site energy projects accessible without initial investment or additional financial risk for your organization, while also helping maximize your returns.
As one of the world’s largest renewable energy developers and innovators, Enel has the right expertise, experience, and suite of integrated energy solutions to help you maximize opportunity. We’ll help you take advantage of available incentives and tailor financing that opens the door to zero-CapEx energy projects that offer reliable, positive returns. Read our guide, “How to build zero-cost on-site solar and storage projects,” to learn more about how your organization can leverage financing and incentives to access energy solutions that cut energy costs, generate revenue, and meet decarbonization goals.