How Non-profits and Municipalities Can Use Discounted Solar Electricity
Schools, libraries, community centers, municipal buildings, and non-profits are increasingly relying on solar energy to reduce operating costs. Often, these organizations have tight budgets, and using solar power is an excellent way to hedge against rising electricity costs. In addition, as concern about climate change increases, there is also pressure to reduce reliance on fossil fuels and find cleaner solutions.
One of the best ways to reduce the total cost of a solar energy system is by utilizing the federal tax credit. Systems installed in 2022 can qualify for a 26 percent tax credit. For example, if a photovoltaic (PV) project costs $100,000 before incentives, it can be eligible for a $26,000 federal solar tax credit.
However, governmental organizations and non-profits are not eligible for the solar tax credit because they have no tax liability. For this reason, Power Purchase Agreements (PPAs) are a good choice for municipalities and non-profits because they can indirectly benefit from the solar tax credit.
At Verde Solutions, a full-service renewable energy developer headquartered in Chicago, we often use PPAs to enable more organizations to consume and benefit from solar power. For example, we recently partnered with the Village of Minooka, IL, for a solar array on their wastewater treatment plant.
The village will benefit from discounted electricity compared to what they purchase from the utility grid, totaling an estimated $533,549 in savings over 20 years. The greater community benefits from saving more than 20,000 metric tons of carbon emissions over the lifespan of the solar project, which is equivalent to saving on the greenhouse gases from 4,390 passenger vehicles for one year.
At Verde Solutions, we understand the importance of bringing together the right stakeholders to ensure successful projects. For example, we secured a third-party investor for the Village of Minooka to monetize the tax credit. Thus, the Village of Minooka indirectly benefits from the tax credit because it enables lower electricity rates in the solar PPA.
Also, municipalities and nonprofits sometimes have difficulty paying the upfront cost of a solar installation. Another benefit of PPAs is that Verde Solutions can often arrange these projects for no money down. Therefore, these solar systems are cash flow positive for our clients from day one because their utility bills are significantly lower once the system is operational.
Despite a third party owning the solar system, the project is often installed on-site when possible. For example, Verde Solutions partnered with the College of Lake County to install solar panels on six building roofs and two acres of land through a PPA. Thus, the solar panels have become a symbol of the college’s dedication to renewable energy.
As an approved vendor of the Illinois Adjustable Block Program (ABP), Verde Solutions helps solar energy projects receive Solar Renewable Energy Credits (SRECS) for every megawatt of solar electricity produced. This solar incentive significantly increases the internal rate of return for PV projects.
In addition, the new clean energy bill in Illinois addresses renewable energy storage and provides rebates of $300 per kWh of storage capacity. This is a strategic action to help Illinoians take greater advantage of intermittent renewable energy sources. For example, solar batteries enable PV panels to store energy during sunny weather for use at night or on cloudy days.
Thus, energy storage capacity enables us to take greater advantage of solar energy resources. As solar panels become more widespread, we can power electric vehicles with the sun, reducing our reliance on oil.
As Illinois transitions to clean energy, Verde Solutions is here to help. We do it all in turnkey fashion, from assessment, design, financing, and engineering to construction and commissioning. As our name implies, we provide solutions for a greener world.