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As the solar energy revolution continues to gain momentum, it’s not just homeowners and businesses leading the charge – nonprofits and low-income families are also embracing the power of the sun. With innovative financig options and supportive initiatives, solar energy is becoming more accessible than ever, offering a host of benefits to those who need it most.
Benefits of Solar Energy for Nonprofits
For nonprofits, going solar isn’t just about cutting costs – it’s about maximizing resources to further their missions. By harnessing solar power, nonprofits can get:
Financial Benefits
Installing solar panels offers numerous financial advantages for nonprofit organizations:
- Cost Savings: Solar panels reduce operational costs by generating free electricity. Over the lifetime of a system—typically 30 years or more—nonprofits can save tens of thousands of dollars. Without solar, these funds would go to paying utility bills.
- Protection from Volatile Rates: Solar power mitigates the impact of fluctuating electricity prices. With traditional electricity rates rising by about 3% annually, solar provides a stable, fixed-cost alternative, simplifying future budgeting.
Social and Economic Benefits
- Economic Contribution: Solar energy reduces reliance on foreign energy sources and boosts local economies by creating jobs. The solar industry employs more people in the U.S. than the oil, gas, and coal industries combined.
- Community Impact: By adopting solar energy, nonprofits contribute to reducing overall energy demand and support local job growth in the renewable energy sector.
Environmental Benefits
- Reduced Carbon Footprint: Many nonprofits are committed to environmental sustainability. Solar power, being emissions-free, helps reduce the carbon footprint compared to electricity generated from fossil fuels, aligning with the mission of many environmentally-focused organizations.
How Nonprofits Can Benefit from the Inflation Reduction Act (IRA)
The IRA has made it possible for nonprofits to benefit from solar tax incentives that were previously inaccessible to tax-exempt entities.
- Elective Pay Option: For the first time, nonprofits can receive a payment equivalent to the full value of tax credits for qualifying clean energy projects. This direct pay provision allows nonprofits to claim up to 30% of the installation cost of solar panels, wind projects, battery storage, and more, as a direct payment from the government.
- Registration and Approval: To receive this benefit, nonprofits must register their solar projects with the IRS and obtain approval. The process can take from four to 18 months, and payment is typically received within 45 days after filing taxes.
Alternative Financing Options for Nonprofits
Before the IRA, nonprofits often financed solar installations through leases or power purchase agreements (PPAs), where the tax credits benefited the solar installer rather than the nonprofit.
Leases and PPAs
- Solar Leases: These arrangements involve renting solar panels for a fixed monthly fee. While this option may not require an upfront payment, the leasing company benefits from tax credits and incentives. Solar leases usually last between 10 to 20 years and can reduce electricity bills by 10% to 30%.
- Power Purchase Agreements (PPAs): With a PPA, the nonprofit buys the electricity generated by the solar panels at a fixed rate. This option also typically involves no upfront costs but may be more expensive over time compared to outright ownership.
CollectiveSun Solar Financing
- Prepaid PPAs: CollectiveSun offers a unique financing model where nonprofits can pay for the entire term of a PPA upfront. This allows CollectiveSun to use the 30% solar tax credit and pass on 15% of the savings to the nonprofit. Ownership of the system transfers to the nonprofit after six years, with ongoing free electricity.
- Financial Assistance: CollectiveSun provides various funding options, including donations, Property-Assessed Clean Energy (PACE) financing, and crowd-lending to help nonprofits with the upfront costs.
RE-volv
- Solar Seed Fund: RE-volv’s Solar Seed Fund supports nonprofits by offering discounted solar PPAs or leases. Payments made by nonprofits are reinvested into the fund to finance solar projects for other organizations, creating a pay-it-forward model that helps expand solar access nationwide.
How to Facilitate Solar Adoption for Your Nonprofit
- Get Multiple Bids: Use platforms like SolarWiki to receive competitive bids from solar installers.
- Assess Your Needs: Gather historical electric bills and usage data to determine the appropriate system size.
- Explore Financing Options: Discuss financing options with potential installers and consider reaching out to organizations like CollectiveSun and RE-volv for additional support.
By taking advantage of these opportunities, nonprofits can reduce operational costs, contribute to a cleaner environment, and support their missions more effectively.
