Nonprofit organizations have a wealth of new incentives to help in their adoption and immediate ownership of clean energy solutions, including solar arrays and energy-efficiency updates to LED Lighting and HVAC systems. We’re going to focus on solar since the incentives are incredibly motivating!
IRA Makes ITC Credit Available as Direct Payment to NonProfits
As noted in a previous blog post, “Building Owner Benefits of the Inflation Reduction Act,” nonprofits and the public sector can now receive Investment Tax Credits (ITC) as a one-time direct payment from the U.S Department of Treasury. Note: The Treasury Department has yet to publish official guidelines, expected within Q1 2023..
Solar Incentives for NonProfits cover year 1 cost by 30-100%
As noted in our previous post, “2023: A Great Year to Go Solar,“ the time is right to take a fresh look at a solar array. The combined incentives plus production savings can reduce the net cost of your solar investment by 30%-100% or more in year 1, with most typical payback well under 5 years, and positive cashflow thereafter for the life of the system. Solar can be incredibly lucrative for your organization, especially with the stack of incentives available to leverage.
With a solar array, nonprofits can receive the ITC tax incentive payment and additional bonus incentives for production and reduce electricity costs with their own production offsetting current consumption costs and associated demand charges, and locking in rates into the future..The financial bottom line enables nonprofits to allocate much-needed resources to other priorities..all while supporting sustainability and taking climate action. Here’s how a solar array cost can be covered in a couple of scenarios:
Sample Project:
Income-Qualified Nonprofit in a Minneapolis Green Zone
With this client, we have a mid-range level of available incentives. The ITC starts at 30%. With domestically-sourced equipment adding 10%, and the organization serving a low-income community adding 10%, the ITC goes up to 50%. As an income-qualified nonprofit qualifying for Xcel Solar*Rewards, the upfront utility payment of $1.00/Watt is paid in year 1, and $0.015/kWh is paid for production years 1-10. A city grant delivers an additional $0.35/kWh production incentive in Year 1 since the property is located in a Green Zone. Annual electric savings from generation, plus production incentives (years 2-10), reduce the payback timeframe to less than 1 year! This is an incredibly fast ROI for solar. It then creates a new revenue stream for the organization for years to come!
With these strong incentives comes strong demand sparking an influx of applications for the incentives. And, the utility interconnection applications level and queue are growing (dependent on specific location). So, it’s worth doing a quick assessment now and scoping a solar system to see how it “pencils out” for your organization so that you can get in front of these opportunities and emerging programs, and create a new revenue stream.