A new financing product supported by the U.S. Department of Energy SunShot Program, improves upon traditional solar financing for places of worship.
On-site solar installations allow customers to reduce their annual utility bills while promoting environmental stewardship. And yet despite widespread support for solar energy within congregations across the United States, the number of solar installations at religious facilities have thus far been limited. This is because of a previous lack of consistent solar financing for places of worship within the broader solar market that meets the needs of the religious entities, financiers and installers. Solar installations can be purchased instead of financed, but most places of worship lack the necessary funding to do so. In addition, they are structured as non-profits, which precludes them from taking advantage of the tax benefits afforded to solar installation owners.
The biggest barrier to financing solar for places of worship has historically been finding some type of security for financiers to assume the risk of a long-term power purchase contract. Without a predictable source of income, or a guarantee from a place of worship’s parent denomination, the only type of security they can offer is their physical property. However, financiers have been understandably hesitant in using religiously affiliated property as collateral for a variety of ethical, moral and structural reasons.
New Solar Financing Solution for Houses of Worship
While solar projects for places of worship have been financed in the past, many congregations have gone down the road of solar exploration only to find out that the financing mechanism proposed simply does not work for their situation. Now, with support from the Department of Energy (DOE), Fellowship Energy was formed to address this specific gap in the market.
With a new and proven financing approach, Fellowship Energy was accepted into the Solar in Your Community Challenge under the DOE SunShot Initiative in 2017. The SunShot Initiative supports solar energy adoption and makes solar energy more affordable for all Americans. The program supports innovative and replicable community-based solar business models addressing underserved populations, like faith-based communities.
Under the challenge, Fellowship has committed to complete a minimum of 40 solar installations for places of worship and parochial schools over the next 18 months. Fellowship Energy can finance a wide range of project sizes and, importantly, does not rely on traditional fundraising efforts, in which congregants are asked to donate to fund a portion of these projects. This makes Fellowship Energy an ideal partner for more disadvantaged communities as well.
How Fellowship Energy’s Financing Solution Works
Fellowship Energy bridges the financing gap by connecting a third-party investor with the denomination’s church authority via their Church Extension Fund (CEF).
The CEF is separate from the religious denomination it serves and has the unique purpose of raising and managing funds to make loans to affiliated churches to finance building projects. CEFs have been underwriting churches since the late 1800s. Fellowship Energy leverages long-term, low-interest church construction loans from a CEF to maximize the economic impact and improve the credit worthiness of a place of worship for a private investor to provide solar financing for houses of worship.
This structure allows Fellowship to offer solar financing for places of worship that may have traditionally been unfinanceable due to poor credit. Fellowship’s financing product is structured like any other power purchase agreement (PPA) in that there are no out-of-pocket expenses for the place of worship and a third party will own the system and sell power to the place of worship for a period of 20-25 years.
Types of Solar Projects
In partnership with Fellowship Energy, Borrego Solar is now offering this solar financing product to places of worship across the United States. Borrego Solar offers a wide range of solar installation options including on a roof, on an adjacent plot of land, or as solar carports. This flexibility in system design ensures that a wide variety of locations, from urban to rural, can support an appropriately sized solar system.
Based on current marking pricing, the ideal place of worship has at least 30,000 square feet of rooftop space, 1-2 acres of excess land or at least 200 parking spaces. As the solar industry has matured, solar carports have become an increasingly viable economic choice as compared to traditional roof-mounted or ground-mounted options. These carports are virtually identical to traditional carports in that they allow for parking underneath but have the added benefit of producing power.
On-site solar installations are a great way for places of worship to reduce their operating expenses and lead the charge to a more environmentally friendly future. With a 100% financed option, many places of worship will be able to capture significant savings on their energy bills with no out of pocket expenses and use that excess capital for other facility improvements or to give back to communities.