Invest In Solar

Tax Equity

The Solar Investment Tax Credit Opportunity

Congress has set the Investment Tax Credit (“ITC”) for eligible solar projects at 30%. The ITC was renewed in December 2015, providing seven plus years of new runway.

Tax equity often comprises 40% – 50% of a project’s capital structure. Therefore, the tax equity investor monetizes the 30% ITC and receives other benefits and cash flows commensurate with its ownership stake.

The Tax Equity Investment

Generally, the term of the tax equity investment ranges from 6-8 years, and power purchase agreement (PPA) terms with utility off-takers range from 10-20 years.

There are four return drivers for tax equity investments in solar projects:

  1. The ITC
  2. Depreciation associated with the asset
  3. Operational cash flows over the life of the investment
  4. The exit payment to the investor when it divests its interests in the partnership and associated tax benefits.

The ITC is awarded to the investor once a project is placed into service, and due to this timing, approximately 85% of an investor’s capital outlay is returned to them in year one. This mechanic provides solar tax equity investors a great internal rate of return on their investment.

Investment returns for solar tax equity investors are often superior than other tax-advantaged investments such as LIHTC. Additionally, solar tax equity investors benefit from a shortage in the market, securing better rights and protections than comparable types of equity investments. Sol focuses on solar tax equity investments in distributed utility projects, providing our clients a diverse portfolio of projects backed by strong credit and proven performance.

How Sol Systems Can Help

Sol Systems acts as an asset manager for its institutional clients: Sol originates, underwrites, structures, funds and ultimately manages the developed portfolio of solar assets. Sol originates transactions based on criteria developed with its clients, and works collaboratively to structure transactions to achieve targets and hurdle rates.

Sol Systems has ten years of experience focusing 100% of our time and resources on distributed solar – we do only solar all of the time, and we:

  • Mitigate risks within the solar asset class, whether technical or financial
  • Deploy our expert teams of engineers, lawyers, and asset managers who work together to underwrite and manage each solar project
  • Aggregate portfolios across multiple states, utility territories, and/or offtakers to diversify risk

Contact Us to Access Informational Resources

Learn more about tax equity, or take a brief introductory call to explore how this asset class can fulfill your objectives: Contact Charity Sack at

The Solar Asset Class

The solar project asset class provides rich ground for investors seeking compelling risk-adjusted returns. With respect to real estate and other infrastructure, solar project investments compare favorably from both a risk and returns perspective. As a result, in the past 5 years, institutional investors seeking above-market returns without sacrificing on the quality of the asset, have invested tens of billions in these assets.

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Solar Equity Investments and Ownership

Sol Systems works to acquire projects on behalf of cash equity investors such as utilities and proprietary funds. To date, Sol Systems has delivered over $250 Million of solar projects with Power Purchase Agreements (PPAs) to strategic investment partners.

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Asset Management

Sol Systems’ asset management services began in 2008 when the firm started providing SREC monetization services to hundreds of solar installer partners. As the company grew its tax equity and project finance services, our asset management role has matured to provide investors with required third-party support to manage and monitor their assets, and ensure that financial and operational performance meet expectations.

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