Faraday Financing
You’re not buying a microgrid. You’re locking in lower energy costs.
Commercial customers aren‘t trying to find a cap-ex project. They are trying to find a predictable, lower energy bill with backup as a bonus. Faraday closes that gap with financing options.
Whether it is a PPA, an equipment lease, or an outright cash sale, our business models serve a single purpose: reduce energy expenses with no impact on operations.
What you’re actually buying isn’t equipment. It’s an energy-cost structure.
When evaluating a microgrid, most businesses care less about the equipment itself and more about what it delivers: lower and more predictable energy costs, reliable backup power, and greater operational resilience.
The solar panels, batteries, controls, and switchgear are simply the tools that make those outcomes possible. Most commercial facilities aren’t looking to own and manage energy infrastructure; they’re looking for a better energy solution.
That’s why Faraday offers multiple financing options, including Power Purchase Agreements (PPAs), equipment leases, and direct purchases. Each approach delivers the same end result while allowing you to choose the structure that best fits your budget, tax strategy, balance sheet, and risk preferences. No matter which path you choose, Faraday helps simplify the process so you can focus on the benefits, not the complexities of equipment ownership.
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STATUS QUO
(YOUR BILL TODAY) |
WITH FARADAY + PPA
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Utility bill: full amount, monthly
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Utility bill: lower (you keep paying the utility, but for less energy)
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Capex required: separate, for any backup or resilience investment
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Faraday payment: operating expense, monthly.
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Demand-charge exposure: full
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Demand-charge exposure: reduced.
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Outage exposure: full
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Outage exposure: 4–12 hours of selected critical loads covered
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Energy cost trajectory: rising at 4–7% per year
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Energy cost trajectory: rising at 4–7% per year
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Net effect: —
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Net effect: a piece of your utility bill replaced with a more predictable monthly expense
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Financing paths at a glance.
Same project. Different financing structures.
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Attribute
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FARADAY PPA
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EQUIPMENT LEASE
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CASH PURCHASE
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Capex required from host
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$0
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$0 (FMV operating lease) to ~10–20% (capital lease, varies)
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Full project cost
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Monthly cost structure
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$/kWh × actual generation, or fixed $/month
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Fixed monthly lease payment
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Capital outlay year 1; no monthly payment after
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Counterparty
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Faraday (PPA financier)
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Equipment lessor (tax-equity or bank partner)
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Host owns equipment
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Accounting treatment
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Operating expense; off-balance-sheet for most commercial structures
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Operating lease (ASC 842 ROU asset + liability) or capital/finance lease
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Capex; depreciable asset on balance sheet
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Tax treatment
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ITC monetized at Faraday-side financing entity; pass-through pricing reflects monetization
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ITC monetized by lessor; pass-through pricing reflects monetization
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Host claims ITC directly (if tax appetite exists); MACRS depreciation
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Term length
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Typically 15–25 years
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Typically 10–15 years
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Ownership in perpetuity
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End-of-term options
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Renew, buy out (FMV), or remove
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Renew, buy out ($1 or FMV per structure), or return
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N/A
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Resilience / backup scope
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Included in Faraday system per tier
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Included in Faraday system per tier
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Included in Faraday system per tier
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Site relocation / acquisition
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Assignment with Faraday consent
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Assignment with lessor consent
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Asset moves with sale or relocation
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Best fit for
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Buyers prioritizing zero capex, off-balance-sheet treatment, no tax appetite
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Buyers wanting operating-lease treatment, balance-sheet flexibility, eventual ownership
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Buyers with ITC monetization capacity, asset-ownership strategy, internal IRR target
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Path 1 Power Purchase Agreement (PPA)
With a Faraday Power Purchase Agreement (PPA), Faraday designs, builds, owns, and operates the microgrid at your facility. Instead of purchasing the equipment, you simply pay for the energy the system produces through a per-kWh rate or a predictable monthly payment.
The result is lower energy costs, built-in resilience, and no upfront capital investment. Because it turns a major capital project into a manageable operating expense, the PPA is the most popular financing option among Faraday customers.
How it works
Faraday designs, engineers, constructs, and funds the entire project through a Power Purchase Agreement. You sign a deal with Faraday. You pay Faraday for the electricity generated. Faraday acts as an integrator and operator within the same Power Purchase Agreement. One partner throughout the lifetime of the project.
Term and rate structure
Term length ranges from 15 to 25 years (with the 20-year middle point being most common). Pricing Structure: Either a per unit cost per kWh plus an annual escalator capped at no more than utility rate inflation (1.5-2.5% compared to utilities that increase at a rate of 4-7%), or a fixed monthly payment. Effect throughout the term: Some portion of your electric utility costs replaced by a Faraday charge that grows less rapidly than the electric utility charge it is replacing.
Counterparty and credit
Faraday is the counter-party on the energy transaction. Credit approval process for host site. The host site credit approval process is an easy process for typical commercial-credit customers in California.
End-of-term options
When the PPA ends, you will generally have three choices: (1) renew the PPA at the renewal rate; (2) purchase the equipment at fair market value; (3) take the equipment down at Faraday costs, possibly along with some host cost-sharing based on the structure. The details are all part of the deal.
Best fit for
Buyers seeking to maximize zero capex, off-balance-sheet financing, and no tax benefit from ITC monetization and a transition from capital project thinking to operational expense thinking.
Path 2 Equipment Lease
With equipment leasing, the leasing entity (usually tax equity companies or commercial equipment financiers) purchases the microgrid equipment for your site and then leases it to you. You will make monthly payments to the leasing company until the end of the period.
How it works
Faraday builds. The lessor invests in the construction, owns the equipment, captures the ITC and depreciation benefit, and then leases the equipment to you. You pay a set amount every month for the lease. Faraday is still the integrator and operator through a separate O&M contract.
Term and structure
Term: usually 10 to 15 years. Structure is an either operating lease (asset right and lease liability as per ASC 842), or capital/finance lease (host’s books from day one). Buyout structure differs between companies, but can be a $1 buy-out which appears to be similar to ownership, or an FMV buy-out.
Tax and accounting
ITC & MACRS depreciation are claimed by the lessor, and the pricing takes this into consideration. In accordance with ASC 842, the balance sheet for host facilities in most cases would contain a ROU asset and a lease obligation resulting from a fair market value buy-out operating lease, with expenses recognized on a straight-line basis in the income statement.
Best fit for
Those buyers who wish to ultimately own the asset, lease accounting, balance sheet flexibility, or pass-through tax equity monetization without taking on ITC monetization.
Path 3 Cash Purchase (and when it makes sense)
The average commercial buyer in California is not in the business of owning equipment. A microgrid does not represent the kind of strategic asset that a manufacturing line or even real estate does; it represents an energy cost structure investment. The power purchase agreement and the lease allow for converting that investment into an operational expense without altering the fundamental economics of the arrangement. That is how most commercial buyers see the equation. But there are some who want to own the equipment itself.
How it works
With cash purchase, your facility pays for the project, owns the equipment, takes the ITC credit claimable directly by the company according to the company’s tax appetite, claims depreciation using MACRS, and uses the asset through your company’s own balance sheet. Faraday will engineer, build, install, and provide operations and maintenance separately.
When cash purchase is the right answer
Three patterns.
First — internal IRR target and tax appetite. Your organization can fully monetize the ITC and you target internal-IRR projects above your hurdle rate. The cash IRR on a California commercial microgrid project commonly clears 10–15% on direct-ownership economics, depending on project sizing, rate schedule, and useful-life assumptions.
Second — asset-ownership strategy. Your real-estate posture is owner-occupied long-hold, and on-site energy infrastructure increases site valuation under your hold model.
Third — avoidance of long-term contract counterparty. Your CFO posture is to minimize long-term off-take agreements and contractual energy commitments. Direct ownership keeps the energy decision inside the firm.
What you give up
Cash purchase replaces the cost of doing business via PPA and leasing with direct capital risk and asset ownership. The financial risk associated with ITC monetization is your own. The choice of what to do at end-of-life for the equipment is your choice.
The same project, three financing paths.
Facility profile. Cold storage/ refrigerated warehouse, size approx. 50,000 sq ft, PG&E tariff B-20 Primary Voltage customer. Annual peak demand approx. 1,200 kW. Annual energy consumption approx. 7,000,000 kWh. Status quo annual utility cost approx. $1.78MM, including demand charges of approximately $650K (approx. 36% of bill).
System concept. Faraday Endurance with approximately 2,000 kW DC solar PV (rooftop primary plus carport secondary), approximately 3,000 kW / 12,000 kWh battery, automatic islanding on selected critical loads (approximately 800 kW critical-load envelope), 4–12 hours of battery support. Pre-engineered, configurable, right-sized to the facility.
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OUTCOME (YEAR 1)
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FARADAY PPA
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EQUIPMENT LEASE
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CASH PURCHASE
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Capex from host
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$0
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$0
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$20,000,000
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First-year P&L impact
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Operating Expense
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Lease Expense
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Depreciation + Interest
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Who own/reg. savings (est.)
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$1,150,000
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$1,050,000
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$1,300,000 - $1,500,000
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10-year net savings (est.)
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$11.5M+
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$10.5M+
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$13M - $1M+
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Balance sheet impact
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Off balance sheet
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ASC 842 (ROU asset + liability)
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Asset on balance sheet
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End of term
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Renew / Buy out (FMV) / Remove
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Renew / Buy out ($1 FMV) / Return
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Own in perpetuity
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The numbers used herein have been arbitrarily chosen based on the Feasibility Study Sample Report developed by Faraday for an energy storage system located within the cold-storage facility on the PG&E B-20 tariff. Your own numbers will vary depending on the specifics of your load profile, rate schedule, critical load envelope, tax status, and the financing offered during the engagement phase.
How Faraday structures financing.
The part played by Faraday in all three structures is always identical; namely, designing, engineering, constructing, and operating. It is merely the party responsible for funding that varies.
PPA Structure
Faraday-provided PPA financing. You sign the PPA with Faraday; Faraday holds the customer relationship and is the counterparty for the energy agreement. One contract, one counterparty, across the life of the system.
Equipment Lease Structure
Faraday works with equipment leasing companies (tax equity or specialty finance companies). Equipment lease company owns the project but leases to Faraday to manage EPC and O&M services. Selected for tax advantages or future ownership.
Cash Purchase Structure
No financing counterparty. The host facility funds and owns the equipment. Faraday delivers under direct EPC and O&M contracts with the host.
Common questions about financing
A cash purchase is above board for the appropriate purchaser – the sophisticated purchaser who can monetize the ITCs, meet the IRR requirements, and is taking an asset ownership approach to the strategy posture. The operating expense approach of PPA or lease for most California commercial buyers provides the same result (energy savings, predictability of costs, backup power) without loading capex onto the balance sheet. We start by presenting PPA because that’s the right solution for most purchasers.
In the case of the PPA contract, you are paying for the energy supplied – this can be either in the form of $ per kWh depending upon the energy produced, or fixed monthly payments associated with guaranteed output. In the case of the leasing agreement, you make a fixed monthly payment irrespective of the amount of energy supplied to you. Thus, the PPA contract becomes an output-based contract whereas the lease agreement becomes a fixed obligation. The PPA arrangement would normally be off-balance-sheet for the customer, while lease obligations are on the balance sheet under ASC 842.
The financing associated with Faraday’s side owns the equipment. You do not own the equipment in question using a power purchase agreement (PPA). Faraday runs the machinery on your site, makes use of the available tax credits, and contracts with you through the energy services agreement. You have three options when the term of the contract ends.
The PPA project financing company captures the ITC and MACRS depreciation on its books. The pricing of your PPA from Faraday has been structured to include the tax benefit arbitrage. The host facility does not directly capture the ITC; it’s already factored into your price.
California-based business entities, with some exception in terms of procurement compatibility, may. Power purchase agreements are normal business transactions complete with contractual assignment, default, and remedy provisions for a long-term off-take agreement. Certain entities have procurement requirements for contractual compatibility, which will be addressed upon engagement.
Yes. Faraday does a host-credit analysis during the engagement phase. Usually, it poses no issues for commercial-credit buyers in California. The credit review includes an assessment of the buyer’s credit profile, financial stability, occupancy and lease position (in case of non-owner-occupied sites), and counterparty diversification within the financing entity. We’ll walk you through the credit conversation process.
Ready to see your specific numbers?
Start with a free 30-minute screening call, or go straight to the Faraday Feasibility Study to see PPA, lease, and cash-purchase economics calculated for your specific facility.