Elon Community Church followed the LLC model of financing our solar panels. This is the model developed by the Appalachian Institute for Renewable Energy (AIRE) in Boone and utilized by the Asheville UCC. What follows are learnings and suggestions gleaned from our experience of putting this model into action. Refer to Joe Hoffman’s article to see the original example.
Perspective: This is a creative and complex model that allows a non-profit (for example, a church) to take advantage of tax credits in order to maximize capital investment in solar panels. Its structure and process allow “benevolent investors” (in an LLC) to recoup most or all of their investments over the course of about six years. This means that a church will most likely be able to put up a larger array of solar panels than would normally be possible, because investors would get their money back, whereas contributors would only get a charitable contribution credit on their taxes.
1) The process, from information gathering to educating the congregation to site assessment to fund raising to trustee approval to panel installation to final connection and activation, took over two years. All along the way there were many details to learn and obstacles to overcome. Patience, perseverance, and faith are needed.
2) It seems important to involve not only a core group of solar panel promoters, but also as many people in the congregation as possible. This project needs dedicated people with skills in technology, church politics and functioning, construction, fund raising/investing, marketing. That bears much fruit when it comes time for approving the project and raising the funds.
3) Think big. Put up as large an array of panels as possible, even if you have to wait a little longer to accumulate the necessary capital. The costs of solar panels is steadily decreasing. The LLC paperwork involved in financing a large system is not much more than that for financing a small one. AIRE is now focusing on assisting the non-profits who organize to finance at least 20 kW systems (80 panels), and they actually much prefer larger systems. The only down side to a large system is that NC Green Power will not buy Renewable Energy Credits from systems larger than 5kW. Thus that source of revenue for investors will not be available.
4) In forming the LLC, consider expanding the possible pool of investors beyond just church members. While it is important for the church to have a strong sense of ownership for the project, there may be people in the community who would also like to invest in a renewable energy project. This can strengthen community ties and be a good advertisement for a congregation that does earth stewardship.
5) We contracted with AIRE to teach us the LLC financing model and to guide us through its implementation. We could not have done this project without them.
6) You will need the help of a lawyer and a tax accountant who are familiar enough with the LLC financing model to ably facilitate it. AIRE can recommend such professionals if you do not already have them available.
7) Due to the fact that our church was erecting a new Community Life Center, we had some complications. First of all, our members were already financially pledged to the new building. This made for unfortunate timing for fund-raising for solar panels. Investor-financing was helpful here, but still limited in potential.
8) Secondly, the new building was determined to be the best site for the solar panels, but it has insulated roof panels. This was good for energy efficiency, but problematic for attaching frames for solar panels. Our trustees raised this issue with much concern. We had to pay the architect to engineer the attachment process.
9) You have to have liability insurance for your solar panels. Although the church’s own insurance did provide that coverage, the insurance company itself would not name our LLC as an insured party. Thus Duke Energy required that the LLC buy separate liability insurance before they would contract with us.
10) We sell our generated electricity to Duke Energy. In order to do that, we had to sign contracts and have them run through their inspection and connection procedures. That all took several weeks. Now we are producing and selling, but be forewarned that Duke’s purchase price for renewable energy is significantly below what they charge customers for electricity. Progress Energy pays more than Duke does, but now they are merging with Duke and that could change.
Was it worth the effort and aggravation? Yes, definitely. We are subtracting some carbon that would normally be put into our atmosphere. We are educating our congregation about climate change, we will be saving the church money on utility bills. We are witnessing to our community about earth stewardship. We hope, in the future, to add to our solar panel array and to produce more renewable, clean energy.
-David Andes, Chair Elon Community Church Green Church Committee