Pursuant to Pennsylvania's Alternate Energy Investment Act of 2008, $80 million was allocated by the Commonwealth Financing Authority (the "Authority") for grants and loans for alternative energy production projects related to solar energy.

Application Guidelines for the Solar Energy Program

Guidelines for applying to the Solar Energy Program (the "Program") for financial assistance were released in April 2009 by the Pennsylvania Department of Community and Economic Development. Financial assistance will be awarded by the Authority to applicants based upon the Authority's determination regarding the eligibility and competitiveness of their proposed solar projects. Eligible applicants include businesses, economic development organizations and political subdivisions.

For a downloadable copy of the Program Guidelines, go to http://newpa.com/index.aspx and click Find Incentives and Apply for Funding. The Solar Energy Program Guidelines will be found under the tab marked Alternative Energy Funding.

Eligible Solar Projects

Eligible projects under the Program include:

  • Solar projects, such as facilities to generate, distribute or store solar energy, as well as manufacturing or assembly facilities for solar panels or other solar equipment, provided that the solar project has a useful life of at least four years. Solar photovoltaic, as well as solar thermal, technologies are eligible.
  • The development or construction of facilities used for the research and development of technology related to solar energy also qualifies as an eligible solar project.

Eligible Use of Funds

The following project costs may be paid with the Program funds provided by the Authority:

  • Acquisition of land and buildings, rights-of-way, and easements necessary to construct an eligible project.
  • Clearing and preparation of land necessary to construct a project.
  • Construction or renovation of a building that will be used to manufacture equipment related to solar energy systems.
  • Purchase and installation of equipment used for the manufacture of equipment related to solar energy systems or solar thermal systems.
  • Purchase, installation and construction of facilities that generate, distribute or store solar energy, or that produce hot water using solar energy.
  • For certain applicants, the preparation of plans, specifications, studies, and surveys necessary to determine project feasibility or practicability.
  • Permit fees and certain administrative costs.

Financial Assistance Available to Eligible Projects: Loans, Grants and Guarantees

The Program provides financial assistance in the form of loans, grants and loan guarantees. Certain terms of the loans, grants or guarantees may vary with the type of solar project to be developed by the eligible applicant.

Standard Terms of Loans Available Under the Solar Energy Program

  • Maximum Amount of Loan Manufacturing or Assembly Facilities for Solar Equipment: $35,000 for every new job projected to be created by the new business within three years of the loan approval. If the manufacturer fails to create the projected number of jobs within three years, the interest rate may be increased by 3 percent for the remaining term.

Solar Energy Generation or Distribution Facilities: $5 million or $2.25 per watt, whichever is less. Loan requests for more than $5 million may be considered by the Authority if the project will significantly increase the amount of solar energy to be generated in Pennsylvania.

  • Solar Research and Development Facility or Solar Thermal Project: $5 million
  • Repayment Term Repayment over term not to exceed 10 years for equipment and 15 years for real estate.
  • Interest Rate Interest rate subject to change based on market conditions; rate to be fixed at time of loan approval.
  • Security Loans to be secured by a lien on the asset financed. Additional security may be required by the Authority.
  • Commitment Fee Applicant must pay a 1 percent commitment fee on all approved loans.  

Standard Terms of Grants Available Under the Solar Energy Program

  • Maximum Grant Amount Manufacturers of Solar Equipment: $5,000 for every job projected to be created by the business within three years after approval of the grant. If the manufacturer fails to create the projected number of jobs, the Authority may require the full amount of the grant to be repaid.

Solar Energy Generation or Distribution Facilities: $1 million or $2.25 per watt, whichever is less. Grant requests for more than $1 million may be considered by the Authority if the project will significantly increase the amount of solar energy to be generated in Pennsylvania.

Solar Research and Development Facility or Solar Thermal Project: $1 million

  • Eligible Project Costs Covered by Grants Grants may be used to pay for any eligible project costs (see above). The maximum amount of any grant to be used solely for planning and feasibility studies shall not exceed 50 percent of the total costs of the planning project or $175,000, whichever is less.

Standard Terms of Guarantees Available Under the Solar Energy Program

  • Form of Guarantee – Guarantee will be issued in the form of a standby letter of credit and issued directly to the company/ developer.
  • Equity Investment – Required Projects applying for a loan guarantee must invest a minimum of 105 in equity as part of the project financing.
  • Conditions to Drawdown – Guarantee funds may only be drawn upon in the event the company defaults on its financing and there is a deficiency in collateral upon which the lender can collect.
  • Amount of Guarantee – The guarantee will pay up to 75 percent of the deficiency upon the company's default.
  • Term – The term of the guarantee shall not exceed five years.
  • Maximum Amount – The amount of the guarantee shall not exceed $30 million.

Matching Funds Requirement

For each dollar ($1) of Program funds awarded to a solar project by the Authority, the eligible applicant must make a new matching investment of a dollar ($1) in such project.

Other Program Requirements

Contracts for works to be paid with Program assistance must include the Commonwealth's standard nondiscrimination clause. The provisions of the Pennsylvania Prevailing Wage Act may apply to all or a portion of the construction work funded by the Program. See the Program Guidelines, Section III, Program Requirements, for additional requirements for funding.

Federal Assistance for Solar Projects Available Under the 2009 Recovery Act

Businesses seeking to develop solar projects in the Commonwealth should inquire about additional financial assistance that was recently made available under the American Recovery and Reinvestment Act of 2009 (the "Recovery Act"). Under the Recovery Act, a federal loan guarantee program administered by the U.S. Department of Energy is now available to developers of renewable energy systems that general electricity and facilities that manufacture renewable equipment. Eighty million dollars has been allocated to this loan guarantee program to fund the full credit subsidy costs for such guarantees. In addition, under the Recovery Act, a 30 percent investment tax credit ("ITC") for investments in qualified property used in a qualified advanced energy manufacturing project may be claimed. Also, in lieu of the ITC, solar power developers may now elect to receive cash grants on specified, qualified energy property placed in service during 2009 or 2010. Other financial incentives and tax benefits may be available under the Recovery Act. .