At GERC, EB-5 investments account for no more than 20% of all funding for a given solar power project. The remaining capital comes from highly reputable banks, private-equity investors, or corporations. These entities conduct their own due diligence to verify the safety of each investment opportunity, separate from the investigations conducted by GERC and Clean Focus.
Clean Focus solar-power projects enter into long-term contracts, known as Power Purchase Agreements (PPAs), with electric utilities, government entities, or corporations with high credit quality. Through these contracts, these entities commit to purchase the solar electricity produced at a fixed price for a period of 15 to 25 years. These contracts, in effect, constitute a source of guaranteed revenues for the solar-power projects.
The U.S. federal government provides a very large investment tax credit, which returns 30% of the solar-power project’s cost in the first year of operation. In addition, special tax rules allow a solar-power project to be depreciated in just six years, resulting in additional tax savings for equity investors.
In California where GERC operates, another large source of project revenue comes from the state. For projects that sell electricity to government entities or corporations, a Performance Based Incentive pays a substantial subsidy for electricity produced in the first five years. These payments often double the revenue of the solar-power project in the first five years. Note that this timeframe matches perfectly with the EB-5 investment period.