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MerCo Publishing Inc.
525 Route 73 N, Suite 104
Marlton, NJ 08053

Maintained by Lytleworks

How nonprofits can save on solar installations

By Todd Bluechel

When nonprofits do a Google search on solar for nonprofits, not very many solar installers appear in the results, and the reason is simple. Most solar installers don't think nonprofit solar projects will pencil out or get funded, so they don't even list nonprofits on their websites as being a category they service, in addition to commercial and residential.

This oversight is staggering because it means solar installers are missing out on an enormous market opportunity serving over 1.5 million nonprofits in the U.S. who are eager to embrace clean, renewable energy.

CollectiveSun (www.CollectiveSun.com) is a solar financing company that works exclusively with nonprofits nationwide to solve two problems. First, we are able to utilize tax credits that are otherwise lost by the nonprofit. This reduces the installer's cost by 15 percent. Next, we provide a series of funding options for the remaining 85 percent of the system cost. CollectiveSun has only two requirements: the solar project has to be 20 kW or greater, and the utility servicing the nonprofit must allow third party ownership models such as power purchase agreements (PPAs).

There are basically only five options a nonprofit can use, alone or in combination, to pay for the remaining 85 percent.

They can:

  1. Go to a bank or specialty nonprofit lender (CollectiveSun works with several)
  2. Ask for donations
  3. Utilize reserves
  4. Apply for a PACE (Property Assessed Clean Energy) loan
  5. Use CollectiveSun's proprietary CrowdLending platform

The CrowdLending platform is a direct loan to the nonprofit from the nonprofit's supporters. Because it's a direct loan between the nonprofit and its supporters, the term (number of years) as well as the interest rate (0 to10 percent) can be set at the discretion of the nonprofit. Another way to look at it is if a nonprofit replaces a $50,000 per year utility bill with a $40,000 per year loan, the loan eventually goes away and the nonprofit enjoys free power for decades.

Communities of faith, such as churches, synagogues, and mosques currently make up the largest percentage of projects CollectiveSun is working on, and their partnership with Interfaith Power and Light (www.interfaithpowerandlight.org) is key to bringing awareness to faith-based organizations nationwide. Interfaith Power and Light is an organization whose mission is to support any faith-based organization in their religious response to climate change.

CollectiveSun also has the support of influential leaders in the nonprofit, environmental, and renewable energy industry who want to promote solar nationwide.

"We partnered with CollectiveSun to finance our solar project because of their unique skills and expertise in working with nonprofits," said Craig Schiller, Rocky Mountain Institute (www.rmi.org).

Case Study: A church in New York wanted to go solar. An installer gave them a bid of $1 million for a 400-kW system. The pastor didn't have enough money in reserves to pay for the system outright. Two banks told him his loan request was too risky, and the pastor didn't want to go to his supporters asking for another round of donations.

Instead, he decided to utilize CollectiveSun's CrowdLending platform. He informed his supporters the loan would be paid back with annual principal and interest payments over 10 years with a five percent return on their investment. The church would be the owner of the system at no additional out-of-pocket cost in just six years.

The prefunded PPA would allow the church to lock in a discounted energy rate 25 percent less than what they were currently paying for 25+ years, which protects them against any utility rate increases.

Best of all, the church only needed to raise $850,000 in loans because CollectiveSun was able to apply tax credits to reduce the cost by 15 percent (a $150,000 saving), which they could use to retrofit their AV system and build a new playground. At the end of the 25+ year life of the solar system, this church will end up saving $2 million or more.

Historically most nonprofits didn't consider solar because they knew IRS rules unfairly dictate that nonprofits are excluded from utilizing solar tax benefits as a result of their tax exempt status. As solar continues to rapidly expand nationwide, it's leaving those without solar questioning why they, too, aren't enjoying the lower costs and environmental benefits of solar.

Nonprofits are what I consider the sleeping giant in the solar world because while it's true their projects may have not penciled out in the past, word is spreading about how tax credits can be applied that allow nonprofit solar projects to be cost-effective today. Being able to save nonprofits money so they can use these funds to fulfill their missions instead of filling the pockets of a utility company, is a wonderful feeling.

Todd Bluechel is the vice president of marketing and sales for CollectiveSun. He can be reached at (858) 480-9342 and [email protected].