Solar for nonprofits

• Save money – Installing solar panels can significantly reduce your organization’s electricity bill. By installing solar, you can offset your utility bills with the solar electricity you produce. In many places, the cost of solar electricity is the same or lower than utility electricity, translating into big savings over the lifetime of your system.
• Shield yourself from rising electricity costs – Going solar can reduce the electricity you purchase from your utility company. This insulates you from rising energy prices and lets you better predict your future energy costs.
• Show leadership – By going solar, your organization shows a commitment to distributed, renewable energy and becoming more energy independent.
• Build community – Going solar is a way to bring together donors, community members, customers, and supporters affiliated with your organization. People care about solar. Invite them to track the progress of your installation and celebrate with you once it’s installed.
• Become resilient – When paired with energy storage, solar energy can power your building even when the grid is down. By pursuing solar plus storage systems, organizations can provide critical power to their people during emergencies and natural disasters.

Regardless of the type of organization — from non-profit, for-profit, school, or religious institution — the steps to going solar are similar. The general steps follow:

1. Form a core group to lead the project.
You’ll need a core group dedicated to making this project happen. For a large organization, it can be hard to navigate bureaucracy and keep the project on track. Get key stakeholders involved throughout the process to ensure you cross the finish line.

2. Learn the solar basics.
Our FAQ covers everything you want to know about solar — from technology to financing and solar installation procedures.

3. Gather key information about your facility beforehand.

• Check if your organization’s roof and grounds are a good fit for solar. This involves ensuring your roof isn’t shaded, prohibitively old, or structurally unable to support panels. If you have enough land, you can also consider a ground-mounted system.
• Look at one year of your organization’s electric bills to determine how much power your facility uses annually. Learn how to read your electricity bill.
• Use PV Watts to estimate how much solar can fit on your roof. PV Watts will estimate how much power will be produced by a system given your geographic location. You can compare the solar power production estimate with your annual electricity consumption to get a sense of how much solar can offset your electricity needs.
  

4. Find a project model that works for your organization.
Different organizations have distinct needs and conditions when considering solar. Luckily, there are various models for going solar exist. Check out the different models below, broken out by organization type.

5. Solicit solar proposals.
For smaller projects, it’s easiest to call individual solar companies and ask for a custom proposal.

For larger projects, consider issuing a Request For Qualifications (RFQ) or a Request For Proposals (RFP) to solicit more detailed bids. See an example solar co-op RFP template and response template as a reference.

6. Compile bids and relevant information.
Once you’ve received proposals from at least three companies, compile the bids and background information on each solar company (include references, license numbers, and company history) to present to key stakeholders.

7. Review project bids and select a company.
Check out our tips for reviewing bids.

8. Get approval for the project.
Present the results of your feasibility assessments to key decision-makers to get approval for the project. Have all information handy, including estimated project cost, company details, and project timeframe.

9. Have your solar installed.
The company you choose to work with should manage all installation elements on your behalf — from equipment procurement to panel installation to permitting and utility interconnection.

10. Share your success!
Reporters are always looking for an awesome community story. As you complete your project, contact the local press and tell them about your successes. The more people hear about local solar projects, the more likely they are to pursue solar.

The primary solar incentive is the federal tax credit. It gives solar owners a 30% tax credit. Nonprofit organizations and government entities do not pay taxes. This meant that these groups could not benefit from this credit. Now, thanks to the Inflation Reduction Act (IRA) of 2022, eligible nonprofit organizations and other tax-exempt entities can benefit.

The law makes them eligible for Elective (or “Direct”) Pay. Direct pay allows your nonprofit organization to be paid for the value of the tax credit by the IRS. Your organization will need to file required tax forms after the project is complete to receive this payment.

The tax credit is 30% of the installed system cost. Systems using this tax credit must be installed by the end of 2029 and follow certain rules about Foreign Entities of Concern requirements and when to start construction. Your solar installer will be able to let you know if your system meets these requirements. Most of these requirements come into effect in 2026.

Organizations do not need to be approved to receive this benefit. You just need to qualify based on the specific rules of the tax credit for which you are applying. Some projects may be eligible for an increased credit if they meet certain requirements. These increases are called special adders.

Learn more about elective pay.

States, local jurisdictions, and some utilities may also offer incentives for nonprofit organizations going solar. These may come in the form of:

• Grants,
• Special financing, or
• technical assistance

Check with your local installer and your state’s energy office for more information.

With direct ownership, your organization will buy the system for your building or property. You will own all system components and all of its electrical output. Direct ownership of a system makes sense for your organization if you can:

• offer cash up front,
• raise funds to cover the cost of the project,
• arrange for loan financing, or
• get access to specific state incentives and grants.

Elective (“Direct”) Pay is available for directly owned projects. This allows your nonprofit to claim the federal tax credit.

Nonprofit organizations are uniquely positioned to go solar through direct ownership. This is because they often have dedicated members eager to help fundraise and donate. Crowdfunding campaigns can be a successful approach to raise money and rally your members around a solar project.

Solar financing options:

• Community Development Financing Institutions (CDFIs): See if there’s one in your area that offers loan products for nonprofits.
• Green Banks: Is there a Green Bank operating in your area? See if they have nonprofit loan products
• CollectiveSun: provides multiple financing options for nonprofit solar projects.
• Everybody Solar: helping nonprofits go solar through a combination of grant writing, sponsorships, crowd-sourcing and fundraising events
• RE-volv: a platform for crowdfunding for nonprofit solar projects.

Is there a financing option missing above? Let us know!

Under third-party ownership, a separate entity owns and operates the system on your behalf. Examples of entities that do this include a solar developer or a group of community investors.

There are two ways to go solar through third party ownership:

Power purchase agreement
Under a power purchase agreement you pay the third party for the monthly electricity produced by the system.

Third-party ownership is only available in certain states. Find out where.

Lease
With a lease, you pay a third party for the use of the system. You get the electricity savings the system generates.

The third-party directly claims all of the associated incentives for the system if you go solar via a Power Purchase Agreement, or via a lease. This includes any tax credits. The third party then passes some of the value of those incentives to you in the form of lower monthly payments. Many nonprofits prefer third-party ownership. Third-party ownership makes sense for nonprofits that lack the upfront cash and/or the financing abilities to purchase their system outright.