Solar Energy for Houses of Worship
Thanks to federal incentives, congregations in Arizona have new tools to make it easier to power their facilities with cheaper, cleaner solar energy. Now, many congregational leaders are asking how they can take that step with their own houses of worship. We compiled all the resources your congregation needs to get the conversation started.
Why Now?
The Inflation Reduction Act (IRA) of 2022 expanded renewable energy tax credits to non-profits and houses of worship. Even though these entities do not normally file tax returns, they are eligible to receive a direct cash payment from the IRS in lieu of traditional tax credit. This can be equivalent to 30% of the cost of solar, with an additional benefit available for facilities located in low-income communities or those facing hardship in an energy transition.
Why faith communities?
People of faith are considering solar not only to save money. Many say that reducing carbon emissions is a way to live out their call to care for creation, or a way to care for others by protecting the climate.
AZIPL is committed to informing congregations about adopting solar energy. The information here will help congregational leaders discern whether it is right for their situation and offer a guide to navigating the process.
Is solar right for your congregation?
Before committing to solar, it is important to evaluate the congregation’s energy needs, financing options and whether the site is appropriate for solar panels. Local utility policies for solar billing will also affect the financial outlook for solar. A reputable solar company can help answer those questions.
Make sure to get estimates from at least three companies that specialize in commercial solar. The bids should not only include the system design, but also electricity output. The installer should obtain a detailed analysis of past energy use from your electricity provider, so they can calculate the most accurate estimate of future savings. The Arizona Solar Energy Industries Association has a code of ethics for member vendors. Potential installers may be found in their member list.
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How will we pay for it?
Buying the system outright allows the congregation to claim the IRS Elective Pay incentive. The funds can be raised by the members through a capital campaign, or by taking out a loan. Many denominations have finance arms that will make loans for energy projects.
Other methods of financing include leases and Power Purchase Agreements, where another entity owns the company and either receives lease payments or sells power to the user. However, these finance methods transfer the tax savings to the owner of the system, and may not be ideal now that houses of worship qualify for a payment equal to 30% of the system cost with Elective Pay.
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What is Elective Pay?
With the IRA, non-profits and houses of worship can now receive an incentive equal to 30% of the cost of installing solar (battery storage and EV charging projects also qualify). The program is also known as “Direct Pay.”
An additional payment applies to facilities located in low-income communities and energy communities. The program is available until 2034.
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