Introduction to the solar process

Here are the next steps to help you get started!

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Step 1: Choose your Solar Business Name

Let us know your desired solar business name, phone number, email address, mailing address & the name of the solar business owner/manager. Be sure to check your state’s business website to ensure the name you want is available. (No Need to structure your business entity until you are ready to purchase your first solar asset.)

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Step 2: Intro to Preferred Solar Dealer(s)

We will introduce you to our preferred Solar dealer(s). You will learn their unique value proposition and also what to expect if/ when you purchase solar assets from them. 

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Step 3: Get Started on your Material Participation

It is important to start this process immediately. Even before you purchase your first solar asset. We will shepherd you along and help you reach the 100+ hour requirement. There are a variety of tasks to complete throughout the year within your portal and they are tracked for you.  You will have access to a detail oriented time log at anytime during the year.

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Step 4: Solar Deal Flow Expectations

You’ll receive projects from the portfolio managers of our solar dealers. You should begin to receive purchase opportunities within 2-4 weeks of the intial introducation.  We will also  prompt you when projects have been shared and will review them with you to help you in your decision making process.

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Step 5: Understanding Offer Sheets and CAMs

We'll teach you how to review the offer sheets you receive for each project, along with the supporting Credit Approval Memorandums (CAM’s). CAM’s include detail oriented underwriting documents for the projects available for purchase.

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Step 6: Securing and Purchasing Projects

When it comes to securing and purchasing projects, you will either fund an independent escrow account or make an initial deposit, depending on the solar provider used.  Final distribution of funds is required when teh project is completed and placed in service.

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Step 7: Sign a P1 Packet or Construction Agreement

Once you've identified a solar project you like, you'll either sign a P1 packet or a construction agreement. (This depends on the solar vendor utilized) Signing a P1 agreement reserves the project for future purchase, removing it from the open market.  Funds will be placed in escrow and released upon completion to finalize the purchase transaction.  Signing a construction agreement initiates the build out of a solar project you choose.  A 50% deposit is required to start the build and the final 50% is due upon completion. 

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Step 8: Signing a P2 Packet and closing the transaction

When the solar project is complete and placed in service, the P2 document is released and finalizes the purchase transaction.  This also secures your tax benefits for that calendar year. Funds move from escrow to the solar vendor only after you sign the P2 packet. If you decide against purchasing the project prior to signing a P2 agreement, you can release it back into the open market.  Alternatively, if you signed a construction agreement you will make the final payment upon project completion.

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Step 9: Understanding P3 Status or the Lease.

Finally, P3 status is the last stage. It's when the utility company provides permission to operate (PTO) and approves energy production into the grid.  This is when cash flow begins. Remember, P3 status isn't necessary for tax benefits.  When a project reaches P2 status and is placed in service, it becomes eligible for tax benefits.  


Alternatively, some projects are not required to connect to utility.  In these instances the offtaker makes lease payments and may use the energy as they desire.

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Step 10: Reinforcing Active Participation Requirements

We'll continue to remind you about the 100-hour participation requirement to ensure you stay on track to exceed this important milestone.  If you do not need to use the tax credit and depreciation against w-2 or other active business income, it is not necessary, however if you do, it is essential to document your active/material participation annually and save it for your records. 

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Step 11: Cash Flow Distributions

Lastly, it’s important for you to open a bank account for your solar business to receive future positive cash flow payments. They will begin quarterly after the utility company provides permission to operate (PTO) from the utility company, which is identified as P3 status.   Alternatively, if there is no need to connect the project to utility,  your lease payments begin on the date agreed upon in the fleet lease agreement.

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Step 12: Tax Prep & Filing

You will receive data needed to produce an income statement or P&L specific to your solar project(s) from either your O&M provider or Taxwise Partners each year. Give this to your tax professional to ensure you properly file for tax credit and depreciation benefits. You will also receive the information needed to complete IRS form 3468. We have tutorials for your CPA and are available to speak with him or her for additional guidance if needed. 

RINSE & REPEAT

Great news! Solar benefits are currently available within the Inflation Reduction act through 2032. Each year we will help you acquire new projects for your unique and powerful solar business.  We recommend you adjust your withholdings to improve liquidity throughout the year and make purchasing solar assets easier.