How do I compare financing options for a clean energy project?
The right financing structure depends on your organization's capital availability, tax appetite, and risk tolerance — and you don't have to choose one before getting proposals.
Choosing between a cash purchase, lease, and power purchase agreement (PPA) can feel overwhelming, especially if you're evaluating clean energy for the first time. The good news is you don't need to commit to a single financing type before exploring your options.
A cash purchase gives you full ownership of the system, the highest long-term returns, and the ability to claim tax incentives directly — but it requires significant upfront capital and means your organization takes on maintenance responsibility. A lease provides predictable monthly payments with no upfront cost, though the total cost over the lease term is typically higher than a cash purchase. A PPA lets a third party own and maintain the system while you buy the electricity it produces at a contracted rate, usually below your current utility rate — but your long-term savings are lower because the developer keeps the tax benefits and a margin.
The best approach is to solicit proposals for multiple financing structures simultaneously. Many solar providers can quote the same project under different structures, giving you an apples-to-apples comparison. This also lets your finance and legal teams evaluate the options against your organization's specific capital allocation priorities, tax position, and risk tolerance.
Key questions to ask when comparing: What are the total costs over the contract lifetime? Who owns the system and the tax credits? What happens at the end of the term? What are the maintenance responsibilities? And how does each option affect your balance sheet?