How Non-Profit Organizations Can Benefit from Solar Panels

Whether you operate a house of worship, affordable housing project, charter school, health care facility, or a public school, electricity is essential. Every month, you're spending money on your utility bill that could be spent on your important mission. But what if you could shrink that monthly payment and divert those funds to a better cause? This is where solar can help.

Nonprofit organizations have the most to gain from installing solar panels. With solar, you can hedge against energy costs rising 3-5% annually while freeing funds to further your mission. With most modern solar panels having a lifespan of 30 years or more, going solar equates to decades of diminished energy expenses.  

If you’re considering the switch to solar power for your nonprofit organization, let’s take a look at some ways you can benefit, available solar incentives for nonprofit organizations, and different ways to fund your solar project. 

Key takeaways: 

• Installing solar panels can help nonprofits save on monthly electricity bills and direct more funds towards their cause. 
• From 2024, nonprofit organizations are eligible for a direct payment of up to 40% of the solar energy system cost.
• Nonprofits can choose to own their solar panels outright and benefit from financial incentives, or opt for third-party ownership with little upfront investment. 

Benefits of solar for nonprofits

Nonprofit organizations can benefit from solar power in numerous ways. Firstly, you’ll be generating your own clean, renewable energy, allowing you to save money on electricity bills and allocate more funds towards your cause. Secondly, you’ll be supporting local economies and contributing towards a greener future. You’ll be adding a global mission to build a cleaner energy future to the important mission that your organization already champions.  

Finally, adopting solar energy can demonstrate your organization’s commitment to sustainable practices, helping enhance your public image and potentially garner more support from donors and volunteers. Let’s explore each of these benefits in more detail below. 

More money for your cause

As long as your organization exists, you’ll need electricity to run it. This essential cost is increasing by 3-5% annually in most areas. More alarmingly, the cost of electricity is bound to skyrocket as global warming and electric vehicles place higher demands on our aging national electric grid.

Investing in solar panels can help you hedge against those rising electricity costs while freeing up funds that can be redirected towards your organization’s core programs. To give you one example, our client Sacred Heart Church is estimated to have saved more than $1.3 million in its first 25 years of solar power production. Imagine the impact that kind of money could have on your mission?

If you choose primary ownership of your solar panels (more on this later), you could generate free electricity for decades after paying off the initial costs. With the average solar system lasting around 30 years, this leaves you with a substantial amount of time to enjoy free power. 

With third-party ownership, you won’t own your solar panels outright but you’ll be able to save money from day one with little to no upfront investment. Over time, the cost savings from solar energy can be substantial, allowing you to allocate more funds to impactful initiatives rather than operational expenses. 

See More: How Long Do Solar Panels Last?

Support local economies

According to the Department of Energy, the United States solar industry employs more people than the oil, gas, and coal industries combined. Switching to solar power reduces the U.S. economy’s reliance on foreign energy and helps support local economies by creating jobs. When choosing a solar provider, be sure to choose a local company so you can continue to support the economic growth and sustainability of your community. 

Contribute to a greener future

Many nonprofit organizations advocate for social and environmental causes, and installing solar panels can demonstrate your commitment to these causes by promoting sustainable practices and reducing your organization’s carbon footprint.

In one of our nonprofit solar projects, we were able to cover 90% of the CrossRoads Methodist Church’s electricity needs. This translated to avoiding CO2 emissions equivalent to burning 143,489 pounds of coal - that’s a massive step towards combating climate change and promoting a healthier planet for future generations. 

To learn more about our project with CrossRoads Methodist Church, you can download the case study here.

Stable energy prices

Installing solar panels can provide your organization with a stable source of renewable energy. The cost of electricity can be wildly unpredictable and prone to fluctuations, making it difficult to budget expenses accurately. Solar panels, on the other hand, provide a more stable and predictable source of energy. Most modern solar panels have an estimated lifespan of 30 years or more, allowing you to lock in predictable energy costs for decades. By adding a solar battery, you can also protect your organization from power outages or the aging electrical grid. 

Improve public image

Solar power has the potential to enhance your organization’s public image. When you make the switch to solar, people will notice. You’ll be positioning your organization as one that’s committed to sustainability and responsible environmental practices. Almost anyone can get behind solar, which will mobilize donors and improve your reputation within the community. 

In fact, you may even be able to attract positive media attention that increases your organization’s visibility and further aids you in achieving your mission. 

Solar incentives for nonprofit organizations

There's never been a better time for nonprofit organizations to go solar. The three biggest factors driving this change are the revamped incentive structure, reinstated 30% solar tax credit, and different funding options.

Below, we’ll explore some of the different ways you can offset the costs of installing solar panels to make the energy switch more affordable. 

Save up to 40% through the inflation reduction act

Historically, tax-exempt entities such as nonprofits were largely excluded from the benefits of installing solar because their tax status made them ineligible for the lucrative 30% solar tax credit. 

In August 2022, things changed dramatically when Congress passed the Inflation Reduction Act. Under this new legislation, nonprofits are now eligible for a direct payment of up to 40% of the solar energy system cost. This is broken down into a flat 30% rate with an additional 10% available if your property meets certain conditions. Most notably, this incentive is a guaranteed payment that’s not tied to a tax liability as it was in the past. 

This new incentive structure is the highest amount a nonprofit has ever been eligible to receive, making solar energy for nonprofits more feasible than ever before. 

How does this incentive work?

Through 2024, all solar power systems installed by tax-exempt organizations will receive a 30% direct payment based on the system’s total cost. 

Solar systems under 1 MW in size will receive the full 30% direct payment, regardless of equipment used. Solar systems larger than 1 MW will need to meet specific domestic manufacturing requirements after 2024 to be eligible for the full 30%. Those that don’t meet the requirements will only receive a portion, depending on the year: 

• 2024: 90% of the 30% direct pay.
• 2025: 85% of the 30% direct pay.
• 2026: 0% of the 30% direct pay.

Read More: How Many Solar Panels Do I Need?

You might also be eligible for 10% add-on savings if your nonprofit meets the following criteria: 

• System is installed in a low-income area or tribal land.
• System is installed on a brownfield site or community with coal plant closures.
• System uses domestic content.

For more guidance about these various tax incentives, don’t hesitate to reach out to the Sun Valley Solar Solutions team. We can guide you through the various opportunities available and help you determine how much you can save with these incentives.

30% solar tax credit reinstated

In other good news for nonprofits and other tax-exempt entities, the Inflation Reduction Act also reinstated and extended the 30% solar tax credit. Before the IRA, this lucrative incentive was at 26% in 2022, with a decrease to 22% scheduled to happen on January 1st, 2023. In 2024, it would drop again to a permanent 10% for commercial installations. 

Instead, thanks to the Inflation Reduction Act, the amount was reinstated to 30%, allowing nonprofit organizations to continue offsetting more of their solar energy system cost. When combined with the additional 10% available for low-income neighborhoods, the typical solar panel payback period has been dramatically reduced and can be as low as five years or less!

State or utility incentives

Depending on where your organization is located, you might also be eligible for more solar energy incentives or grants for nonprofits. To learn more about which incentives your nonprofit is eligible for, contact our team for a free, no-obligation consultation. 

Similar Reading: Are Solar Panels Worth It? A Complete Guide To Help You Decide

Solar panel funding options for nonprofits

So, you’ve been convinced that solar power has the potential to help your organization save money and contribute more towards its mission. The next question is usually about how to finance your solar installation. 

There are two main funding options when it comes to solar for nonprofits: primary ownership and third-party ownership. Let’s take a look at each of these options in detail. 

Primary ownership

With a primary ownership structure, the nonprofit pays for the complete upfront cost of the solar installation in full, whether that’s with out-of-pocket cash or through loans. This means that the nonprofit owns 100% of the solar energy system.

Nonprofit organizations who choose primary ownership are eligible for the lucrative federal tax credits we discussed earlier, like the direct payment from the IRS of up to 40% of the system cost and 100% of the electricity savings once the system has been paid for. On top of that, you’ll be investing in an asset that can increase your property’s resale value. 

Third-party ownership

With a third-party ownership model, an outside entity pays to install a solar energy system for your facility, and you buy back the electricity generated by the solar panels with fixed monthly payments. Since solar energy is far cheaper than electricity bought from the grid, this monthly payment is less than what you’d be paying your local utility, allowing you to still benefit from cost savings.

In this model, only the third party that owns the system can benefit from the lucrative tax benefits of installing solar. Before the Inflation Reduction Act, this method of financing was the most popular for nonprofit organizations as they couldn’t take advantage of any incentives in any case. 

Two different third-party ownership options are solar leases and power purchase agreements (PPAs). Some of these offer no-money-down options, which means you can start saving on energy immediately, and others will require an upfront investment. When you choose third-party ownership, you’ll be locked into a contract that can last anywhere between 20-25 years. This can make selling your property more complex as you’d need to find a buyer willing to take on the solar lease. 

Continue Reading: Leasing vs Buying Solar Panels – Which is Best For You?

Solar solutions for your nonprofit

If you’re ready to take advantage of this abundant energy source, save money on electricity, and allocate more funds towards your cause, the team at Sun Valley Solar Solutions is here to help. 

As a member of the Alliance of Arizona Nonprofits, we advocate and support nonprofits across the state. With over 17 years in the commercial solar industry, we've helped numerous non-profits go solar and save money on their electricity bills. We also have a fully in-house commercial operations & maintenance team to ensure your solar energy system continues operating at peak efficiency for decades. 

Remember, when choosing a solar provider to partner with your nonprofit, you’re choosing a company you’ll have a decades-long relationship with. Choosing wisely is critical to protecting your investment and ensuring it continues to generate maximum power for years to come. To take a look at the non-profits we’ve already helped and how much they’ve been able to save, read through our case studies on this page.

If your organization wants to take advantage of these new solar incentives, contact us today for a free, no-obligation commercial solar consultation. We’ll help you understand which incentives you’re eligible for and estimate how much you can save through solar power.