Solar financing is heating up at 1st Source Bank. The South Bend-based organization has invested in 10 solar projects in six states in a little more than a year, including two in Indiana and one in Michigan.
Commercial solar energy projects entered the company’s orbit a few years ago when the bank was considering areas with profitable growth potential that would capitalize on its previous experience in specialized fields, relates Russ Cramer, vice president of solar financing at 1st Source Bank.
“Approximately half of the bank’s nearly $6 billion in assets is made up of specialty finance loans focused on niche markets across the nation and also in a few international markets,” Cramer points out. Other examples include corporate and personal aircraft, truck and auto rental and leasing, and construction equipment.
The bank’s first solar foray, in late 2016, transformed a brownfield in Kokomo into an environmental asset with Duke Energy as the off-taker, or energy buyer. A recent partnership with Warsaw Community Schools will finance $9.3 million in solar energy equipment – enough for six schools. That adds to a growing number of school projects, including a 45-acre solar carport (about the size of 34 football fields) at Michigan State University in East Lansing.
“There’s quite a demand for projects that are in the smaller market. We saw that as an underserved area,” Cramer adds, noting that in this case “smaller” means under 20 megawatts, or roughly $40 million in construction costs.
In addition to utility and school projects in Indiana and Michigan, 1st Source Bank has funded solar development in Massachusetts, Minnesota, Montana and Rhode Island. Some of these include commercial customers and community projects, where more than one entity purchases the energy.
The bank offers what Cramer calls its “all-in-one approach” for commercial solar developers, combining tax equity investment with construction and permanent loan financing.
“We receive positive feedback from the developers that this is a good way for them to come to one source for the majority of the capital they need to finance a project,” he notes. “A lot of our developers really like the efficiency and some of the cost savings that come from that.”
Cramer says a federal investment tax credit of 30% for solar was extended through 2019. It will decrease during the following years, leveling off at 10% in 2022. However, he believes solar energy investment will continue.
“With costs coming down, we think there’s a persistent, consistent effort to make solar a priority in the United States, and we’re excited to be part of that movement.”
RESOURCE: Russ Cramer, 1st Source Bank, at www.1stsource.com/solar-financing