Nonprofit community-based organizations, such as affordable housing developers and faith-based institutions, face many obstacles to funding solar projects, but innovative financing tools can help them overcome these hurdles. A new discussion paper released by The Solar Foundation, Urban Ingenuity, and Clean Energy Solutions outlines a path forward for nonprofits using a combination of power purchase agreements (PPAs) and Property Assessed Clean Energy (PACE) financing.
Community-based nonprofit organizations face unique challenges to solar energy development compared to institutions in the private sector, this paper notes. For example, investors can be hesitant to fund these projects due to perceived credit risk, small project size, and complex ownership structures. The report says this means nonprofits lose out on the benefits of going solar, and the solar industry is unable to tap into a large potential market.
The paper describes these challenges in detail and outlines a solution known as a “PACE-secured PPA.” PACE is a project finance mechanism that enables long-term funding for renewable energy and energy efficiency, repaid through a special tax assessment. Meanwhile, a PPA allows customers to enjoy the advantages of solar energy with little or no upfront cost. By combining these two approaches, nonprofits can benefit from the efficiency of a PPA along with the security and transparency of PACE financing.
“Going solar allows community-based nonprofits to save money on utility bills while improving energy resilience,” says Ed Gilliland, senior director at The Solar Foundation. “However, the unique structure of many nonprofits can make financing solar projects a challenge. We believe that the approach we provide will make it easier for nonprofits to fund installations and enjoy the many benefits of solar.”
The discussion paper was released as part of the CivicPACE program to research how PACE financing can bring the benefits of solar energy more effectively to nonprofit organizations that cannot access existing federal tax incentives.
“With CivicPACE approaches, nonprofit community-based organizations like houses of worship, affordable housing developers, schools, and hospitals can finally reap the economic benefits of solar energy that too often are hard for them to access,” says Bracken Hendricks, CEO of Urban Ingenuity. “The PACE-secured power purchase agreement is a powerful tool for realizing the promise of clean energy to help build stronger, more prosperous, and more resilient communities.”
“We have witnessed, over the years we’ve been working on validation and promotion of PACE financing, a sweeping change in its availability to nonprofit organizations,” adds David Dayton, chairman of Clean Energy Solutions. “We’ve been pleased to support this extension of the reach and benefit of PACE programs, enhancing charitable missions with solar energy.”
The full discussion paper can be viewed here.