By Bernie Pelletier & David Desiderato
Background:
Many houses of worship (HOWs) have found that going solar is a wise economic strategy. It also serves as a visible testament to their care of the environment. This document presents a step by step approach to evaluate going solar. If solar doesn’t make sense on your building other options to make your energy supply “green” are presented.
The process of acquiring solar should be thought of in terms of “layers”. Thinking in these terms will allow the HOW (House of Worship) to make steady progress within an organized acquisition process.
Layer 1 – Evaluate Energy Use/ Reduce Consumption
When considering solar energy for your House of Worship it is important to first examine how your House of Worship uses energy, how much it uses, and what steps can be taken that will reduce energy demand. Virtually all older buildings are inefficient in many ways.
If your load is driven by inefficient lighting, heating, cooling, and appliances – it may be most cost effective to FIRST – reduce your load and THEN acquire solar. The “mantra” is “reduce – then produce”.
This is also an appropriate time to consider whether some non-electrical loads should be electrified. For example, if your HOW has an older air conditioning system it may be possible to replace it with a very efficient heat pump – that can also heat your building. Efficient heat pumps will displace considerable amounts of fossil fuel used in your current heating system.
For the House of Worship to begin the process they should:
- Have 12 months of electricity bills and an understanding of how many accounts your organization has.
- Have 12 months of Natural Gas, Oil, and Water bills.
- Review your building shell (insulation, windows, doors)
- Conduct an inventory of your appliances.
- Determine the age of your furnace and heating system.
- Determine the age of your air conditioning system
There are programs that can help the House of Worship achieve energy reductions:
- For modest sized buildings the Small Business Energy Advantage program offers free energy audits: https://www.energizect.com/your-business/solutions-list/Small-Business-Energy-Advantage
- For all congregations there are programs that help upgrade HVAC and improve appliances: https://www.energizect.com/your-business/solutions-list/Energy-Opportunities
- Another resource is the Connecticut Green Bank’s CPACE program: https://ctgreenbank.com/programs/all-programs/ This program provides long term low cost financing for projects where the savings on energy costs are demonstrated to exceed the cost of the loan. That’s worth repeating – it is possible to spend money on energy saving equipment that will be so impactful that it offsets the cost of the loan’s principal and interest.
Layer 2 – Engineering/ Aesthetics:
Solar can be situated as panels on the roof, over a parking lot (solar canopy), or a ground mounted system. At this stage of the process reach out to 2 or 3 solar installers and ask for their assistance in assessing the options. The goal is to determine what physical options are possible. Not every option that is possible will be acceptable aesthetically and from a zoning point. It is best to understand what your zoning and aesthetic constraints are up – front.
The HOW needs to consider where the system is to be located. There are 4 possible locations:
- A rooftop setting requires a suitably oriented and sunny roof. Full unshaded sun from 10AM to 2PM is necessary to make a system economically justifiable. If your roof has obstructions, is oriented the wrong way, or shaded by trees that you want to preserve – then solar on the roof is likely not a good option. Also – it is important that your roof have 20 years of useful life remaining. Otherwise you may put a system up only to have to take it down for a re-roofing project. Remember also that there may be other buildings on the property (garages, schools, rectories, etc. – that would be suitable)
- A Solar canopy over a parking area is another candidate. The solar canopy is mounted on steel pillars and can be perfectly oriented. It has the side benefit of covering the parking lot. Some considerations:
- It is always more expensive to put in a parking canopy because of the structural work required
- Zoning is a consideration – check first with the zoning department of your town
- Covering the parking area yields benefits (protection from the elements) – but may complicate snow removal, and repaving projects)
- A ground mounted system has many advantages – if your HOW has sufficient property a solar system can be mounted on that property. Some considerations:
- Zoning must permit this sort of installation
- Trenching will be required to run the cables
- This sort of system is not as expensive as solar canopy systems
- If, after reviewing your buildings and property, you conclude no system is possible investigate buying into a shared solar facility or at least sourcing your electricity from green suppliers. In this case the solar is sited elsewhere but your congregation can receive financial credit for the electricity produced. These two options are discussed at the end of this document.
Layer 3 – Financing / Legal
Solar panel systems are long term assets. They have a useful life of over 20 years (with very little maintenance required). Thus, whether the asset is purchased outright or acquired through a long-term financing vehicle it is critical that the House of Worship be prepared to be a long-term partner. If your congregation is moving, or likely to undergo consolidation – physical acquisition is not a good choice.
There are three major financing modes to physically acquire solar for your HOW:
- Outright purchase
- Lease
- Power Purchase Agreement
Outright Purchase:
An outright purchase is the most straightforward – but may be the least practical – approach. It is straightforward because it is a simple buy and sell option. In general, it is not practical for House of Worship because, as a nonprofit, they cannot access the large tax incentives. There are two tax benefits – 1) the investment tax credit and 2) for businesses, accelerated depreciation. The investment tax credit (ITC) allows federal tax payers to deduct 30% of the cost of the system off of their taxes. The ITC will decrease to 26% in 2020 and will continue to decrease to 10% by 2022. The accelerated depreciation allows the business taxpayer to deduct the majority of the cost of the solar over a 5-year span. Thus, for a taxpayer the net -after tax cost is about 50% of the gross cost. If the HOW acquires solar through a purchase – it can’t take these deduction – because it is tax exempt.
Because the HOW itself is not a federal tax payer these credits don’t help the HOW. However, it is possible for a congregation to work with a taxable entity – either an individual or a corporation – that can use the tax credits and work with congregation to pass the system to the congregation after the tax benefits have been received. If a congregation is interested in pursuing this option, they should contact IREJN which will put the interested HOW in touch with congregations that have taken this approach.
Legally – the solar system if purchased is the property of the HOW – and therefore the HOW must maintain and insure the system.
Lease
When a solar system is acquired via lease the system is owned by a third party. The Lessee (in this case the House of Worship) agrees to pay the owner fixed lease payments and obtains the electricity generated in exchange. The following are the factors that a House of Worship should consider[1]:
- Term length:Commercial solar leases can be customized, and generally range from 7 to 20 years.
- Performance & maintenance:The leasing company will monitor the system’s performance to ensure that it is operating correctly for the duration of the lease. They are also responsible for maintaining and repairing it, although solar panels require little to no maintenance over their lifetime.
- Monitoring:Most solar leasing companies offer free online, smartphone, or tablet programs to track your solar panel system’s performance
- Buying the system:You can buy the solar panel system at any time during the lease term at the price defined in your contract or its fair market value, whichever is higher. So-called buyout clauses should be understood upfront.
- Selling your HOW:If you sell your property, you can transfer the remainder of your lease to the new owner or buy the system from your leasing company yourself and include it in the sale of your property. If the HOW believes it is going to sell the property during the useful life of the solar system it should pay close attention to relevant sections of the Lease (or PPA below)
- At the end of the term:When your agreement ends, you can either buy the system outright, have the leasing company remove it, or leave the system in place and renew the agreement with the owner.
Power Purchase Agreement (PPA)
A PPA is similar to a lease insofar as a third party owns the system. With a solar lease, you agree to pay a fixed monthly “rent” or lease payment, which is calculated using the estimated amount of electricity the system will produce, in exchange for the right to use the solar energy system. However, with a solar PPA, instead of paying to “rent” the solar panel system, you agree to purchase the power generated by the system at a set per-kWh price.
Layer 4 – Other Routes to Green Energy
As noted above it may be the case that the HOW can’t locate a system or can’t afford it. There are additional ways to green your energy supply.
First – and most simply – everyone has the right and ability to purchase power from a supplier that is partly or entirely green. This link https://www.energizect.com/compare-energy-suppliers will show a customer how to acquire green energy without buying a solar system. It is a financial transaction.
Second – Starting in 2020, Connecticut residents, businesses, non-profits and government entities will be able to participate in large solar arrays located anywhere in the territory of the utility (Eversource or United Illuminating) that serves them. Shared Solar power generated will be 100% renewable and cost at least 10% less than the utility’s standard rates.
HOWs can use the new Shared Solar Law to greatly expand renewables in several ways: 1) “subscribing” to the array for electricity to power their buildings; 2) encouraging
members to subscribe as individual residents or businesses; 3) reaching out to low- and moderate-income customers and organizations that serve them (the law requires each shared solar project to send at least half its power to these customers); and 4) identifying multi-acre ground sites or roofs, that the HOW may own or is aware of that can best be used for solar (solar developers usually have sites already, but HOWs may be able to help).
Here are several sources of information on the new shared solar program (details are being finalize as of this writing):
- CT Fund for the Environment (CFE) shared solar webpage, including a Toolkit for local groups:https://www.ctenvironment.org/what-we-do/protecting-climate-air/investing-in-renewable-energy/shared-solar-ct/
- CT Dept. of Energy and Environmental Protection (DEEP) shared solar page:https://www.ct.gov/deep/cwp/view.asp?a=4405&Q=608910&deepNav_GID=2121
- Clean Energy Collective information about Bloomfield Shared Solar, a pilot project that is fully subscribed:https://cleanenergyco.com/rooflesssolar/ct/
Conclusion
Almost all Houses of Worship can improve their efficiency and reduce their environmental impact. In all cases progress on efficiency and sustainable energy will increase the long term financial health of that House of Worship and can also serve as means for congregants to forge faith into practice.
For more info, contact Terri Eickel at terri@irejn.org
[1] Considerations /terms – these are summarized from the Energy Sage website: https://www.energysage.com/solar/financing/solar-leases-and-solar-ppas/
