Some local banks are planning to offer low-cost loan plans enabling individuals to finance home-based solar-energy systems, potentially exceeding limits to Caribbean Utility Company’s Consumer Owned Renewable Energy program.

First Caribbean Bank joined James Whittaker, president of solar systems provider Greentech and founder and chairman of the Cayman Renewable Energy Association, at the Green Building Center at A.L. Thompson’s Home Depot on Saturday, to discuss with potential customers the loan program and design of a home or business solar-power system.

Mr. Whittaker said at least one other bank was considering offering the loans.

“There has been a lot of talk about renewable energy and how it’s good for the country, and I have tried to show the banks they could make some money,” Mr. Whittaker said, by boosting credit and lowering costs.

He said the average homeowner requires a system generating approximately 5 kilowatt hours and costing $15,000 to install.

Previously, financing for a system was largely up to an individual, he said, which left most people unable to afford a solar system, “because most people don’t have $15,000 laying around.”

The new loan programs, which are still being developed by the banks, are expected to offer broadly flexible terms, designed to attract as many borrowers as possible.

Loans may be secured or unsecured, may require equity financing between 10 percent and 20 percent, and will be charged somewhere between 1 percent and 2 percent above prime, Mr. Whittaker said.

“We purposely will keep the financing broad because we want to have multiple options,” Mr. Whittaker said. “If you have a mortgage, you can fold all or part of the loan into that. And the more options available, the more consumers can qualify. There is not one single ‘cookie cutter’ choice.”

Financing periods may extend anywhere from five years to 20 years, depending on whether it is a loan or mortgage, largely financed by savings on electricity bills. “If you choose a longer financing period, your current electricity costs can drop dramatically and, ultimately your electricity is free when once your financing is paid off,” Mr. Whittaker said. “Currently, our electricity costs are historically low at around 25 cents per kWh, but all projections suggest this will continue to rise; however, by utilizing solar energy, that rise in price increases your savings significantly.”

CUC’s CORE program is built around homeowners and businesses that want to install their own solar generating systems. System owners sell CUC the power they generate, then buy it back from the company as needed.

CUC pays owners for the power they supply. Payments under the program, started in 2009, have been revised several times since a broad 2011 overhaul. Initially, CUC paid residential customers 38.5 cents per kilowatt hour and businesses 37.5 cents per kWh on a 20-year contract.

On April 1 last year, CUC and its Electricity Regulatory Authority overseer raised the cap on the amount of self-generated power allowed on the national grid, but extended contracts to 25 years while reducing payments to 32 cents per kWh for residential systems and 28 cents for businesses.

In late April, CUC and the Electricity Regulatory Authority again revised CORE’s terms, raising the 4 megawatt cap to 6MW, but further reduced payments according to the size of the generation system.

Today, CUC pays residential owners 30 cents per kWh for systems generating up to 5kW; 28 cents per kWh for systems generating between 5kW and 10 kW; 26 cents for systems generating between 10 kW and 20 kW; and 21 cents for systems generating between 20kW and 100kW.

CORE limits residential systems to 20kW and commercial systems to 100kW.

CUC and the Electricity Regulatory Authority said the changes encouraged proliferation of smaller systems and diversified their geographical distribution. Mr. Whittaker dissented, saying lower prices prolonged payback periods on solar systems, discouraged uptake of renewable energy and compromised Cayman’s nascent solar industry.

If the new loan program proves successful, he said, it could quickly exceed CORE’s 6MW cap.

Already, he said, the 100-or-more CORE customers had filled nearly 4.5MW of the limit, “and this is quickly going to eat up the rest,” particularly if CORE’s largest business consumers, such as Foster’s Food Fair, Camana Bay and The Ritz-Carlton, Grand Cayman expand their participation.

The Electricity Regulatory Authority’s managing director, Charles Farrington, reacted cautiously, saying the authority might raise the 6MW CORE cap “if the cheap financing produces a marked upswing in adoption that will reflect that CORE consumers have found a way to reduce their costs and thereby garner greater returns on their investments from the current CORE rates than hitherto.

“In the view of the ERA,” he said, CORE payments amounted to a subsidy to program members, giving them an unfair advantage over CUC’s nearly 28,000 non-CORE consumers. “At current CORE rates,” he said, “on-CORE consumers continue to pay more for their energy than they would pay if there were no CORE consumers.”

Before lifting the cap, he said, “the ERA will have to consider how to leverage the two variables that it can impact – the available capacity and the CORE tariff – with a view to achieving greater equity for non-CORE consumers whilst not stopping growth of the CORE program.

“The ERA could take the view that in order to treat the non-CORE consumers more equitably, the ERA should act in a manner that manages the growth of this subsidy such that it eventually disappears and reverses, leading to the non-CORE consumers actually seeing a reduction in their cost of electricity as well as everyone benefitting from the carbon emission reductions.”

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  1. The answer to your first question Ron Claire Ebanks is simply Yes. (Which negates it being a scam). Its just math, if your loan or mortgage financing for the solar results in less expenditure than your CUC bill (either in the short term, long term or both) then the solar provides a greater savings than not having it. As for your second question; that presumably would depend on several factors as in the case of any borrowing; things like system size/cost, borrowed amount, loan duration, type of loan, credit worthiness, etc. How are the banks going to secure their money? Same way they do for all sorts of home improvement borrowing, that itself is nothing new to the banks. I suggest you contact GreenTech Solar and find out more info if your interested, Im sure they can answer all these and more.

  2. Ron, good comments, and yes you would need to make sure that you are not financing your light bill with a long term loan! I’m guessing the income side will be known from the tariffs, and as long as the sun keeps shining for the number of predicted hours the total dollar number coming in each month should be known. What’s not certain is the loan cost if it’s a regular Prime based loan, but no doubt the loan is secured against your property, maybe as a second charge. There’s a formula or two that show the output, using one them it says you can generate about 25KwH per day for a 5KW system, that’s about $, or $225/month. A 10 year loan for $15k runs about $140/month, so as long as you can generate 25KwH/day and rates don’t go up you have a system paid for after 10 years, and a positive cash flow of about $85/month., if you wanted to pay it down quicker you could do it in 6 years and no cash left over, but at the end of 6 years you get paid $225/month.

  3. Mr Whittaker, if a person purchases a solar system for their home, they would have to take a mortgage or pay cash.
    Then if you take a mortgage, then you have interest and principal to pay for 10 years. What is the guarantee of these solar panels and the other expensive battery pack that have to go along with the panels? Those batteries are also expensive to replace every 10 years.

    For instance you sell 100 solar panels, now the bank is getting at least 9% or what the rate would be of those 100 panels, then you have a 100 × that interest rate that the bank would be collecting from each loan.
    But I think that it would be better if the bank loaned CUC the money to set up a solar farm that would be able to supply that 100 households at 1 × 9% interest.

    But I understand why Government and CUC wouldn’t agree to doing a solar farm, but would agree for each household to buy solar panels.

  4. Ron, our Solar panels are guaranteed for up to 25 years. The CORE program provides you a return on your investment for 25 years. If you choose to go with a battery system there are solutions that will last 10-20 years or more. Yes you can finance a system that reduces or eliminates your CUC bill and replaced it with a finance charge that is a net savings to the consumer. If you’d like more info feel free to contact Greentech Solar.