Solar power to the people: Not-for-profit? No problem - the benefits of solar energy - by James Dumas

James Dumas, Solect
Energy Development, LLC

All over New England, schools, churches, charitable organizations and other non-profits are reaping the benefits of solar energy. While non-profit organizations aren’t eligible to take advantage of the tax benefits associated with solar, and many do not have the capital resources to own a system, there’s still opportunity to benefit from solar.

I’ve talked previously about Power Purchase Agreements (PPAs) and how those are structured, and here’s a quick refresher: In a PPA, the owner of the solar array leases the roof of the facility that is owned or occupied by the non-profit. The array owner builds the system and reaps the tax benefits and state and federal financial incentives associated with solar, including Solar Renewable Energy Credits (SRECs) in Mass. SRECs are financial incentives based on the amount of solar energy the system generates. In turn, the third party owner sells the electricity generated by the system back to the nonprofit organization at a fixed, reduced rate for an extended period of time – usually 15-20 years.

PPAs allow non-profits to cut their operating electrical expenses significantly and apply that saved expense towards their programs and mission, ultimately benefiting their stakeholders. In addition, non-profits are able to better budget their expenditures for the year because their electricity costs are typically fixed. In today’s volatile electricity market, the certainty of leveled costs over a long period is very attractive to many non-profits.

PPAs can be entered into with the solar developer themselves or with a third-party investor that sees the benefit of solar overall and wants to help make a difference. A local college in Mass., for example, installed a 2.7 megawatt system in partnership with a third party investor who owns and operates the system. The system is expected to save the college up to $185,000 a year in electricity costs.

In another example, NuPath Inc., a Woburn, Mass.-based non-profit organization that provides people with disabilities the support needed to live, work, learn, grow and to participate to their fullest potential in their community, partnered with a solar developer (Solect) to install a 72 kW solar PV system, and is expected to save $5,000 in annual electricity costs.

Some non-profits may not own the building in which they run their operations. However, this does not prevent them from taking advantage of solar. There are a growing number of commercial real estate owners that are installing solar arrays on their building and offering the electricity to their tenants. In this scenario, non-profits receive the same benefits—reduced, fixed-cost electricity rates and the ability to divert these savings to their programs and missions—and the commercial building owner benefits as well. The building owner would receive the tax benefits and financial incentives, including SREC revenue. At the same time, the commercial building becomes more environmentally-friendly and attractive to tenants who are looking to make their own businesses and operations more sustainable.

Using solar electricity to power schools, churches, charitable organizations and other non-profits is a growing trend, and one that will pay dividends to the organizations–and the partners that support them–for years to come.

James Dumas is principal of Solect Energy Development, LLC of Hopkinton, Mass.