Learn About Three New Finance Models for Non-Profits Wanting to Go Solar

non-profit solar

There have generally been two main financial challenges for non-profits interested in going solar. First is the lack of funds or credit availability for purchasing a solar system. The second issue is taxes—or rather their tax-exempt status. Because non-profits don’t pay income and property taxes, they’re often barred by legislation from taking advantage of local and federal tax incentives, such as solar’s 30% Investment Tax Credit (ITC).

Having dealt with these customer issues in the past, REC Solar has developed new solar financing partnerships that are tailored to the needs of non-profits, such as churches, hospitals, HOA’s, and charitable organizations. All three finance solutions address solar’s upfront costs and the ability to indirectly capture tax incentives, while each is also designed to significantly reduce a non-profit’s electricity bills.

Financing Option #1: Solar Power Purchase Agreements (Solar PPAs) for Non Profits

Solar Power Purchase Agreements (Solar PPAs) have become the most popular option chosen by homeowners who install solar and have been used by businesses and utilities on large scale projects for many years. While non-profits are ideal candidates to benefit from PPAs, the size of many non-profit solar projects often doesn’t meet the minimum size requirements of most PPA providers. However, now there’s a new solar PPA model that both removes the size barrier and meets specific finance needs for non-profits.

As with typical solar PPAs, there are no upfront costs to the non-profit and any local or federal tax benefits are incorporated into a discounted rate for energy. In addition, the installation’s solar energy production is precisely metered, so the organization only pays for the amount of power that the solar panels generate. More importantly, the solar PPA’s kilowatt-hour (kWh) rate is always designed to be lower than the utility’s rates, and all maintenance is included.

Among the innovations, this new non-profit solution has a shorter term, typically 15 years instead of 20 to 25 years. It also provides organizations with flexibility in annual rate escalation and early buy-out options. All in all, this new solar PPA model provides a simple, turnkey solution that will allow non-profits to go solar for $0 down and still reduce their operating costs.

Financing Option #2: Commercial PACE Tailored for Non-Profits

As with solar PPAs, PACE (Property Assessed Clean Energy) programs for commercial businesses have been available for some time. With traditional PACE programs, the upfront cost of the solar system is added to a property owner’s property taxes and paid over 20 years through a special tax assessment. Typically, annual energy savings from the solar system is far greater than annual PACE payments. However, churches and other non-profits don’t pay property taxes, so PACE financing is often assumed to be unavailable, which is actually not true.

In fact, non-profit organizations in California may ‘opt-in’ to a PACE program and fund their solar installations via a voluntary property tax assessment.

The organization can structure the payments over 20 years, dividing payments into small chunks, and then own the system at the end of the term. Additionally, third-party ownership options such as a PACE solar PPA or solar lease are also available, allowing non-profits to increase their savings by indirectly capturing available local and federal tax incentives and receiving the lower long-term energy payments and all-included maintenance benefits of a PPA.

Financing Option #3: Crowd Funding for Solar Projects

Churches, temples, and other religious organizations often fund building improvements with specific fund-raising campaigns that rely on donations. Now there’s an innovative financing option that allows members of these organizations to crowd-fund a solar installation—and receive a return on their investment.

With this finance solution, the finance company works directly with the organization’s leaders to facilitate the ‘heavy lifting’ of educating and engaging their member base. Then, they structure and execute an agreement in which the organization receives a $0-Down solar system and a lower monthly payment via a PPA-style agreement.

This win-win scenario allows the organization to go solar and reduce their energy costs and engage its members with a mutually-beneficial investment opportunity over the term of the solar agreement. The arrangement also helps all participants to feel great about reducing the organization’s operating expenses while demonstrating environmental stewardship of their local community and the earth.

In addition to these three no-money-down solar options, REC Solar can also offer non-profits other financially beneficial alternatives to cash solar purchases, including prepayment solutions and long term solar system monitoring and management.

The above is a simple overview of these new solar finance solutions for non-profits. If you have questions or would like more details, contact REC Solar. We’ll go over each option and help you to determine the best solution for your organization.

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Is the Solar Microgrid Future Already Here?

Yes, we live in a utility grid dominant world right now that is mainly powered by fossil fuels and nuclear power. And yet, more and more microgrids powered by solar and other renewable technologies are coming on line or are under development today. In fact, Navigant Research recently stated that the microgrid is moving into full-scale commercialization and that the global microgrid market will grow from $10 billion in 2013 to more than $40 billion annually by 2020.

As of the beginning of the second quarter 2014, Navigant has identified a total of 4,393 MW of total microgrid capacity throughout the world. As with the rise of solar PV installations in the United States, microgrids are heading into the mainstream, and both utilities and customers wanting more electricity independence and security will benefit.

What is a microgrid?

microgrid_Concept_optThere are many technical definitions for a microgrid, but let’s just keep it simple: A microgrid independently generates electric power, 24/7, to a small community—as well as plugs into the utility grid. So it has the ability to “island” and be completely off grid, or it can integrate itself into the wider grid, if needed.

Today’s microgrids don’t have to include solar energy, but they often do. In fact, microgrids typically combine different sources of renewable energy with fossil fuel based generators and energy storage (batteries). That may seem like a lot to manage, but these microgrids are smart—unlike older utility power management infrastructure.

Microgrids use modern “smart grid” technology to know when to distribute each microgrid energy source and when to store it. Its smart grid technology can even automatically feed in or turn off connected energy sources by the minute or even by the second. That kind of energy versatility stabilizes the local microgrid and it helps balance out any renewable energy surges feeding into the utility grid.

Who benefits from the microgrid?

First, the community that hosts the microgrid benefits. That community may be a rural area, such as Borego Springs, California, where it’s expensive and technically difficult to build power lines and transmit power without energy loss. Or it could be a Hawaiian island owned by billionaire Larry Ellison, who wants to significantly decrease importing expensive fossil fuels to his island. More commonly, a large university campus, such as UC San Diego, can benefit by protecting its important 24/7 buildings and research facilities from blackouts and by reducing utility expenses:

 

Moreover, entire states are now beginning to benefit from microgrids. The power outages caused by super storms Irene and Sandy have inspired the state of Connecticut government to implement a series of microgrids. Doing so will enable Connecticut cities to preserve essential services while downed power lines that are miles away are being repaired.

Similarly, military installations and other essential government facilities, such as the US Food and Drug Administration, benefit from the safety and security of an independent power source that is separate from an insecure and aging utility grid. And if you’re Google or Ebay with power hungry datacenters that need reliable power, rain or shine? They too will benefit from their own hands-on microgrid that includes non-fuel reliant wind and solar and batteries.

Although being an independent source of power may seem like a financial threat to the utilities, they can also benefit. Not only can utilities avoid building expensive infrastructure to support a rural community, they can also benefit from having an extra power source for peak times and for emergencies, such as hurricanes or other outages. Additionally, because microgrids often include renewable power sources like solar and wind, utilities can help meet their state mandated renewable energy portfolio standards.

Can microgrids save money?

As with all new technology, the initial price of microgrids is going to be expensive, but as they build to scale and the levelized cost of solar, wind, and other renewables continue to fall, microgrids will become increasingly cost-effective as well as efficient.

According to the above UC San Diego video, their microgrid has already saved the university “millions of dollars.” With island nations that rely on a constant supply of expensive imported oil, gas, and propane, solar and wind and its unlimited non-polluting clean power can easily see an ROI over the 20 to 30 year life of the microgrid.

In addition, it’s the costs of not having a microgrid during blackouts and natural disasters that is making Connecticut, universities, and government facilities invest in microgrid infrastructure. As microgrids are tested in the coming years, it’s inevitable that studies will show their true cost-benefit. That being said, the fact that microgrid projects are projected to grow exponentially within the next 10 years indicates that microgrid customers are already projecting an ROI.

Current microgrid challenges

While microgrids are expected to grow in the next decade, it won’t be without challenges. Its new energy dynamic has to adapt and integrate with the existing grid. In addition, while the microgrid technology may prove to be sound, local regulations may prevent microgrids from competing with utilities that have state-mandated monopolies.

Nevertheless, as utilities see the smart grid benefits and eventual cost savings of microgrids, they’re likely to get behind changing the regulations and adjusting their business models.

If you’d like to know how solar can be integrated with the new age of microgrids, contact REC Solar for a free consultation.

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How Solar Reduced a California Farm’s Electric Bill by 75%

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A solar system installed by REC Solar at a California vineyard.

Today’s farmers are increasingly using the sun’s energy to grow more than just fruits and vegetables. Solar power systems have become a new solution for reducing the energy costs of water pumps, refrigeration, vineyard wine processing, and many other energy-intensive agriculture applications.

According to a 2009 USDA survey, nearly 8,000 farms had installed solar electric systems for various agricultural uses, and that number has no doubt increased significantly over the last several years, since solar installation prices have fallen by 60%.

REC Solar alone has installed solar systems for more than two-dozen large and small growers, vineyards, and agricultural facilities, offsetting the growing electricity requirements for 21st century farming.

How Modern Agriculture Uses Electricity

Modern farms rely on electric power for many day-to-day energy intensive agricultural tasks, including:

  • Agriculture irrigation
  • Milking and dairy production
  • Vineyard restaurant and hospitality operations
  • Vineyard and microbrewery bottle processing
  • Running fans to heat and cool barns for dairy cows
  • Cold storage for milk, dairy products, grains, fruits, and vegetables
  • Security and task lighting
  • Electric fences, and much more.

Solar with Agriculture Case Study: Vignolo Farms, Delano, CA

One of the latest agricultural producers to go solar is Vignolo Farms, a family owned potato, pistachio, almond, and grape farmer based in California’s San Joaquin Valley, where 80% of California table grapes are grown.

The Vignolo farm’s annual electric bill was hundreds of thousands of dollars due to various aspects of operations. One of the biggest energy expenses came from the farm’s state-of-the art cold storage and packing facility, an essential building, but costly in terms of energy usage.

After REC Solar completed a comprehensive evaluation of Vignolo’s utility bill, solar potential, and financial options using a proprietary financial analysis tool, REC  designed, engineered, and installed a 1.07 MW ground mount solar PV system on a four acre field adjacent to the cold storage facility.

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Construction on part of Vignolo Farm’s 1 MW Solar Array

The Vignolo’s new solar array now offsets 75% of the storage facility’s electrical power usage. With local rebates, the 30% federal investment tax credit, and other tax incentives, the Vignolo family will see a payback in the 5th year. By choosing a capital purchase, the Vignolo family is expected to save millions of dollars over the solar system’s 30 year expected lifetime.

While saving on operating costs was important, the family also considers itself to be stewards of the land. They’re proud that their new solar system will substantially reduce their farm’s carbon footprint and contribute toward their goal of energy independence.

Solar Benefits for Rural Farms

Solar is also increasingly financially beneficial to rural farms that rely on expensive propane, oil, or other fossil fuel generators, or those that are considering paying for grid power lines to be extended.

With today’s new solar plus energy storage technologies, rural farms can now install a cost-effective off-grid solar energy solution that is quiet, sustainable, and not dependent on an expensive delivery of fuel that has fluctuating prices.

If the farm would rather preserve its capitol, today’s solar PPA financing can also eliminate up front costs for both solar and storage, while giving agricultural and dairy producers a lower-cost solution for bringing more electricity—and its many applications—to their land.

Get more information about solar energy solutions for farms and dairies by contacting REC Solar for a custom evaluation of your utility costs and solar potential.

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What’s a Utility Demand Charge and How Commercial Solar Can Help

If you’re an operations manager of a commercial building or industrial facility, then you probably know that a major portion of your monthly bill can come from so-called “demand charges.” The good news is that installing solar can bite a good chunk off those charges, and combining solar with new energy Solar.panel.with.dollar.sign2_optstorage technology can deliver even more savings.

What are Demand Charges?

In general, demand charges are billed to commercial and industrial electric customers who use a spike of energy at some point during peak times when utilities have to purchase or produce extra power to meet the extra demand of the entire grid.

For example, a large-scale retailer or grocery store may need to turn up their HVAC air conditioning at around noon, causing a spike in their energy usage. Or you may manage an industrial facility that switches on more machines at the start of a shift at 8am. Or perhaps you’re an amusement park that turns on all the rides at 10 am and then all of the park’s lights at dusk.

In all of these cases, the utility will likely bill you some type of demand charge. How much you’ll be charged will depend on your utility’s rate structure, the time of day, and sometimes the time of year.

A common demand rate structure will charge you a certain rate multiplied by your maximum kW used within a 15-minute time period during the monthly billing cycle. So, if you’re normally operating under 100kW throughout the day, but one day switched on your extra HVAC at 11am and spiking your usage to 250 kW within a 15 minute time frame, then regardless of whether you went above 100kW again, you might be charged between $2000-$3000 in demand charges that month. With some utilities, you may have that same extra charge for another 12 months, even if you don’t go above 100kW again!

And keep in mind that demand charges are always in addition to the cost of your total kilowatt-hour (kWH) usage for the month and that this kWh rate will often vary by the time of day and your utility. Bottom line, the more electricity that your operations use during peak times, the higher your utility bill will be.

The First Step: Get a Comprehensive Energy Analysis

Clearly, demand charges are complicated, so any quality solar installer must provide a comprehensive analysis of your bill. When a solar installer understands not only your rate structure, but also your usage and when it peaks into demand charge territory, only then can cost-saving solar and energy efficiency solutions be proposed.

Consequently, the first part of the solution is analyzing your daily electric usage and making sure that you’re in the most optimal utility rate. Often businesses have a choice for rate structures, and you may have unknowingly defaulted into a utility rate that is more expensive, given your total kWh usage and peak usage.

Another part of the solution may involve energy efficiency. Can a more efficient, smarter, HVAC system reduce those demand spikes? Will switching to LED or florescent lighting significantly decrease your overall needs? Simply painting your facility’s roof white can also lower your heat gain, reducing your HVAC needs.

Step Two: The Solar Solution

Once the efficiency measures and their benefits are analyzed with your bill, then the solar installer can propose an optimally sized solar system that matches your rate structure, your peak usage times, and your solar potential.

For those facilities generating peak demand charges during the heart of the day, a solar system may be the only solution needed, as your solar production will generally match daytime peaks and potentially eliminate them.

A cloudy or rainy day may inadvertently bring back the demand charges, but a comprehensive solar analysis and proposal should account for these when presenting your ROI and savings.

Smart Commercial Solar: The Solar + Energy Storage Solution

In some cases, solar alone may not be as effective. If your facility’s peak usage spikes at 8am before peak solar production, or in the evening at 5pm after peak solar production, then the demand charges will probably be unaffected, despite a reduction of your overall kWh usage due to the solar installation.

Fortunately, new cost-effective battery technology and energy management software combined with solar systems have created a new solution for greater reliability in offsetting demand charges.

With these new “smart” solar systems, the solar panels charge batteries for later usage, while sophisticated energy management software monitors your facility’s peak usage. When your facility’s electricity usage spikes, the energy management software is ready and draws energy from the batteries instead of the grid. When your solar panels aren’t charging the batteries, they’re offsetting your normal daytime power needs.

As for upfront costs, these new solar and storage systems can also be financed using solar power purchase agreements (solar PPA’s) or solar leases that minimize or eliminate any upfront costs while still providing significant utility and demand charge savings over the course of 15 to 20 years.

REC Solar is one of the leaders in commercial solar solutions for reducing demand charges. We not only have 17 years of solar experience, but also the comprehensive analytical tools to discover the most cost-effective stand alone solar or solar plus energy storage solutions for your facility.

Contact us, and we’ll start the process of analyzing your bill’s demand charges and presenting a detailed financial analysis of the costs and ROI of a solar solution or a solar with storage solution.

Get started here.

 

 

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REC Solar Is Now Focused Exclusively on Commercial Solar

We have some big news here at REC Solar. As of February 4th, 2014, we’re now focused exclusively on the commercial and large scale solar markets.

The change in focus comes as the commercial solar market is poised for major growth in 2014. As a commercial solar leader with more than 100 MW of solar projects for large-scale retailers like IKEA and federal government agencies like the Department of Veterans Affairs, as well as utilities, the REC Solar commercial team is excited to be building on our heritage of superior customer service for our commercial, industrial, and utility clients.

REC Solar also recently welcomed Paul Detering as our new CEO. Paul brings nearly a decade of expertise in the commercial solar market, previously serving as CEO of Tioga Energy, a solar electric system developer and provider of power purchase agreements (PPAs) for commercial, non-profit and governmental customers.

For more details on REC Solar’s new commercial focus, please read our full press release.

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