Key Equipment Finance supports new PV at Rutgers

Key Equipment Finance supports new PV at RutgersNew Jersey’s Rutgers University is going solar this year thanks to an agreement with Key Equipment Finance. The subsidiary of KeyCorp is installing and leasing a 32-acre system on Rutgers’ campus, which will allow the university to save roughly $28 million in energy costs over 20 years.

It’s not the only deal Key is making with higher education institutions.


“We’ve done a similar financing structure with Princeton University. That system is also a little farther along under construction,” said David ten Kroode, senior vice president of Key Equipment Finance's energy finance business.


Construction on that 5.3-megawatt solar installation is slated for completion this summer.


“We are looking at doing more with higher education institutions; they’re a great fit, from an economic and educational perspective,” Ten Kroode said.


However, Key is looking at how best to move forward with such projects. Both the Princeton and Rutgers projects were eligible for the 1603 Treasury Grant Program, which expired at the end of 2011.


“We’d love to do more but are considering other structures,” he said.


The company consulted with Troutman Sanders LLP on both installations.


The company has to look at other structures because without the 1603 program, it’s not likely it can use the Investment Tax Credit to support projects at non-profits.


“We’re in contact with several universities to finance their solar projects and are working to structure these to work under the Investment Tax Credit,” Ten Kroode said.

Under the deal with Rutgers, Key is planning on qualifying for 1603.


“In a direct lease and an operating or tax lease, we are the tax owner,” he said. “We take the depreciation, and we apply for the 30 percent grant.”


Rutgers will retain the Solar Renewable Energy Credits (SRECs) that the system generates.


“That’s one of the differences between a power-purchase agreement and a lease. In a PPA, the environmental attributes will go to the off-taker and the special purpose entity, and the special purpose entity is owned sometimes by a single tax investor or sometimes a tax investor and the loan,” Kroode said.


In a direct loan, those benefits can be accrued to the lessee.