Image credit: CollectiveSun
The solar industry and the approximately 1.5 million U.S. nonprofit organizations have been hindered in their efforts to work together, but a new pathway has emerged that will make the process of going solar for tax-exempt entities more affordable and user friendly.
CollectiveSun, the only U.S. solar company that works exclusively with nonprofits, and EnergySage, the online solar comparison-shopping place, this week said they have formed a partnership that allows nonprofits to locate trusted installers and secure financing all on the EnergySage website.
Solar development on properties owned by tax-exempt organizations is a sector that has been challenged in the solar industry because, as entities that don’t pay taxes, nonprofits can’t take advantage of the 30 percent federal investment tax credit.
Todd Bluechel, VP of Marketing and Sales for CollectiveSun, says that nonprofits may not seek out solar financing because they have to pay for 100 percent of a solar project, and that’s not an affordable option. Or, Bluechel adds, those organizations may seek out an installer, only to be told that the installer will not work with them because they recognize that without the federal subsidy, projects “just won’t pencil out.”
CollectiveSun’s business strategy, however, is based on solving the tax credit conundrum for nonprofits.
“What's beneficial about CollectiveSun's approach is, we buy the solar system, monetize the full tax credits, then we give half of those to the nonprofits,” Bluechel told Renewable Energy World. “The nonprofit only has to pay 85 percent for the solar system instead of 100 percent.”
Bluechel said that hundreds of nonprofits submitted inquiries to EnergySage last year. Now, when those organizations visit the EnergySage site, they can search for qualified installers, and access information about financing from CollectiveSun that fits their unique needs.
“I'm extremely optimistic about how many nonprofits we'll be able to help now that this partnership is in place,” Bluechel said.
More Financing Solutions for More Regions
According to Bluechel, CollectiveSun has launched a new solution for nonprofits that will help the company support nonprofits throughout the U.S.
The company’s services are based on the ability to secure a power purchase agreement (PPA) with nonprofit organizations. Under that financial arrangement, CollectiveSun is positioned as a third-party owner of a solar power system that is hosted on a nonprofit customer’s property. The customer then purchases the solar system’s output from CollectiveSun under the PPA.
Unfortunately, there are legal restrictions to, or statutes are ambiguous for, third-party PPAs in many parts of the U.S. According to the U.S. Department of Energy, as of 2015, third-party PPAs were not allowed in five states.
CollectiveSun created a new solar power agreement (SPA) to comply with legal issues of third-party PPAs, so now, Bluechel said, the company can work with any nonprofit anywhere in the U.S., as long as the solar project size is at least 50 kW.
According to Bluechel, the SPA is a performance-based lease with a deposit feature. That means that the nonprofit is leasing equipment from CollectiveSun, but instead of making a fixed monthly lease payment, the amount of the monthly lease is deducted from the deposit and is variable based on the performance of the solar equipment.