A solar power lease is a lease agreement between the borrower (i.e., the investor) and a property owner to create a generation facility to generate renewable electricity at a predetermined price per kilowatt hour of power sold into the net metering program. The borrower pays for the entire cost of the lease. The property owner profits because the more solar power produced by the facility, the less the monthly payment required by the program.
Using a solar power lease as a tax credit property is a great way to mitigate the effect of a project’s tax rate change. Also, it is often possible to take advantage of interest rate reduction provisions when paying off the loan. As a tax credit property, you’ll need to pay interest only on the net contract