Published on March 28th, 2014 | by David Baldwin0
Nonprofits: a New Frontier for Solar
March 28th, 2014 by David Baldwin
The nonprofit sector would seem to represent a natural fit for the solar revolution. Nonprofits exist primarily to do good. A community center, a food bank, a nationwide health-related charity: all these try to give a helping hand to needy people in a particular geographic area, or to a specific group, or to the sick in general. While they’re fulfilling their missions, why shouldn’t they help the environment, too, by going green – not to mention giving a boost, by cutting energy costs, to their own bottom lines?
But naturally, it’s not that simple. Perhaps the biggest drawback, ironically, is one of the most crucial stimulants to the rise of solar elsewhere in the economy: tax incentives. Because of the tax-exempt status of nonprofits in general, these simply do not apply to them. And because most of a nonprofits’ donors (and usually its board as well) are looking over management’s shoulder to see where every donated dollar is spent, the initially high investment to install a solar array can seem a prohibitive indulgence.
At least three means of getting around this problem have so far evolved: a) outright donations of funds by groups and/or organizations to purchase solar arrays for nonprofits; b) crowdfunding as a means of generating the money to finance the installation of arrays; and c) the use of PPA’s (Power Purchase Agreements) as solar investments.
Earlier in December, the San Angelo Museum of Fine Arts in Texas went solar with a 16.5kW array over its carport. The money to create the array was donated by the Sun Club, an organization created by Green Mountain Energy, which calls itself “the nation’s longest serving renewable energy retailer.” Through the Sun Club, Green Mountain invites its customers and employees to contribute to a fund through which donations are made to worthy nonprofits to install solar arrays – over 600 kW of power to over 50 companies so far.
Crowdfunding has also become a popular way to help nonprofits go solar. San Francisco-based Everybody Solar, which is itself a nonprofit, is one organization using this method. Its mission is to help organizations go solar, “thereby benefiting not only the environment but also the nonprofit’s budget.” Although donations are solicited from the Internet, the organization’s crowdfunding model tends to focus on the communities that will most benefit from a nonprofit’s work. And because Everybody Solar partners with a nonprofit installer, SunWork, it can provide solar panels at a cost more economical than many commercial providers.
RE-volv, also based in San Francisco, has an even more ambitious crowdfunding plan. According to the organization’s YouTube video, it seeks to establish what it calls a “solar seed fund.” Intended to finance a few small scale projects at first, the fund would generate profits from these projects, which would then be continually reinvested in a greater and greater number of projects, creating a multiplier effect.
Finally, there is the Power Purchase Agreement (PPA), a financial mechanism creating third-party owners that can claim tax benefits while providing solar power as a service to worthy nonprofits. Note that contributors under this method, often community members, are not donors to the nonprofit, but investors to the third-party owner that provides power to the nonprofit, with such investments, plus interest, eventually paid back over time. An important provider of PPAs is San Diego-based CollectiveSun, which helps nonprofits organize their communities to finance solar projects as investments.
Perhaps the biggest reason to be encouraged by these trends is that nonprofits are often considered leaders in their communities. When small businesses and homeowners see their local charities and civic organizations with panels on their roofs, it makes the idea of going solar seem that much more acceptable. The proliferation of solar arrays for nonprofit organizations may be one of many tipping points in the coming acceptance of solar as the dominant source of 21st Century power.