In April, Peninsula Clean Energy unveiled one of the country’s earliest large-scale implementations of the new direct-pay provision: 1.7 megawatts of solar projects it’s developing on the rooftops of public buildings across its territory of San Mateo County and the city of Los Banos in California’s Central Valley.
“Direct pay wasn’t on the table” when work on this project started several years ago, said Rafael Reyes, PCE’s director of energy programs. PCE had planned to take a standard approach: partnering with a third-party solar developer capable of bundling its project into a portfolio that could attract tax-equity financing.
But those deals involve a lot of costly legal and administrative work, he said. The aggregators and investors also need to earn money, cutting into the value of the tax credits that could be passed back to the public agencies hosting the solar systems.
Reyes estimated that the third-party structure PCE initially envisioned would have reduced the value of the incentive for the participating agencies by more than a third. “That’s a pretty big bite,” he added.
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