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How to Finance Solar for Non Profits

When a non-profit organization wants to install solar, they often lack the budget to buy directly.  As an installer, you will need to offer them a safe, easy way to finance the system if you want the job!

Say a non-profit asks you for a 20kW system and the estimated cost is $60,000 or $3 per watt.  Since most non-profits lack the tax liability to qualify for the Federal ITC or state tax credits, you will first need a 3rd party owner. 

One way is to form a for-profit LLC to buy and own this system as it's sole purpose. 

First, the LLC takes over the electrical service account of the non-profit. This way, the non-profit pays a reduced electrical bill to the LLC while investors (buyers) in the LLC distribute profits based on the operating agreement.  This includes the ~$20,000 ITC payment in this example.

Second, make sure to factor in the costs of setting this up, including legal.  For this example, we assume $10,000.  Take the total cost and projected earnings (contact a RENVU Sales Engineer for help with forecasting) to determine the amount of time before payback.  That is, when the net present value goes positive. 

In this case, the total cost is about $50,000 after the ITC.  If the system produces 29,000 kWh per year at $0.20 each, the payback period is about 8 years.  When that happens, the non-profit stops paying the LLC and the LLC votes to donate the system to the non-profit before dissolving.  Or, instead of dissolving, use the LLC for multiple projects of this nature and write off each donation!


Reference: https://blog.heatspring.com/non-profit-solar-financing-options/