In the age of clean energy and efficient building design, most if not all locations can benefit from solar energy, and holy buildings such as churches, mosques and synagogues are certainly one of them. In this article, we’ll explain why congregations of all faiths should consider installing on their community’s church.
One of the challenges Patrick faced was evaluating the competing quotes and determining which provided the best financial returns and fewest risks. He had to “normalize” the quotes so that he would be able to compare them apples to apples. He consulted with EnergySage to evaluate potential contract terms, analyze the financials, including upfront investment, savings and annual cash flow, quality of proposed solar panels, and the experience, responsiveness, and credibility of each installer. Based on his analysis, he was able to shortlist suitable options for presentation to the board.
Solar panels make sense for synagogues, mosques and churchesRecently, EnergySage was engaged to guide the Sudbury United Methodist Church (SUMC), a Massachusetts church through the evaluation and installation of a solar photovoltaic system, also referred to as solar panels and solar power systems. While SUMC is financially sound, like most not-for-profit organizations, its resources are constrained. There is a continual need for capital, which often results in some projects being delayed or not approved because of funding. With all of these factors in mind, two church members suggested the board consider investing in a solar energy system to save money and also move towards a sustainable source of energy. Both had personal experience with solar systems. One of them, Diane Hammond, previously had worked with EnergySage on her own home’s solar installation and the second, Patrick Helsingius, is a church board member who had prior experience evaluating the same decision at another church. Intrigued by their suggestions, the board issued a soft mandate to begin the research process, assigning Patrick as the project manager to lead the effort.Initially, the church board did not have a clear understanding of the financial benefits of a solar PV system. They also did not consider the environmental benefits to be the driving force. Some thought that a pure “environmental” motivation could be a polarizing issue within the congregation due to varying opinions regarding climate change. “Doing the right thing for the environment may not necessarily be the primary driving force, but it’s consistent with the mission of the church– being good stewards of the earth,” says the project manager. “The solar system could be a powerful statement to the community of what the church stands for and what our values are.”
Church solar financingWhile Patrick sees himself as an objective information gatherer, to some extent he also has become the project’s “internal champion.” As both a computer scientist and electrical engineer, he was further along in understanding the basics than most. Still, he spent a considerable amount of time familiarizing himself with solar photovoltaic technology. His earliest efforts were focused on getting his arms around most of the industry jargon and the many details related to the underlying economics, including:
- How much electricity would the church need and how much could a solar PV system generate?
- What were the church’s options for financing the system? Buy it outright? Lease it? Sign a power purchase agreement (PPA)?
- What rebates and incentives were available for a church?
- Was there an opportunity for the church to generate additional income in addition to free electricity by selling Solar Renewable Energy Certificates (SRECs)?
- How to secure the best financial deal for the church? How to select the best installers?
How EnergySage can offer research and assistance for churches, mosques and synagoguesHe began by collecting details about the church’s energy consumption and costs as well as information about the orientation and structural integrity of the roof.He then engaged EnergySage to assist with the research and evaluation process and began the process of selecting an installer. Like many of us, he asked for referrals from friends. He also received suggestions from EnergySage. He found not all installers were eager for the church’s business for several reasons:
- The size of the system the church would require was smaller than typical commercial installations.
- As a not-for-profit, many installers considered the church to be a higher financial risk.
- Some of the financing options were not suitable for a non-profit institution.
Exhibit 1: Electricity costs and solar financing breakdown for the MA churchThe church spends about $1,000 a month or $12,000 a year on electricity. While electricity costs have declined over last two years, they rose over 7% a year from 1990-2010. Depending on its size, a solar PV system not only could provide most or all of this electricity, but it also would provide the same environmental benefits as planting over 1,100 trees each year. Because the church would not qualify for most of the tax incentives available to a typical commercial property owner, purchasing the system outright was not an attractive option. The table below lists the details of some of the potential financing options that were presented to the church1.
|Option 1: Lease a solar system||Option 2: Pre-pay a 20-year Power-Purchase Agreement (PPA)||Option 3: Enter into a Power Purchase Agreement (PPA)|
While the project was quite attractive financially, a green-light was not necessarily guaranteed. Patrick needed to address a multitude of concerns before the project could proceed. Like most not-for-profit boards, the church’s board tended to be fiscally conservative and would need to have a complete understanding of the level and source of the risk involved. Concerns included:
THE INSTALLER SELECTION EXPERIENCE
- Discussing the project with several installers and comparing multiple options was helpful
- Patrick appreciated installers who were responsive and presented credible numbers based on conservative assumptions. Responsiveness, however, came at a price as the most responsive installers tended to be the most expensive.
- He did not appreciate installers who were unresponsive, were late delivering proposals, or those that made aggressive assumptions.
- He evaluated installers based on their credibility. Installers lost credibility when they stretched / overstated numbers (e.g., assume higher utility bill, inflation rate, production estimates, SREC pricing). or provide numbers that were not fact based.
- Evaluating project quotes and picking the best one is a difficult task.
- Ultimately, the best proposal / installer was the one that met the risk-reward objective of the church.
- How would other expenses such as insurance and taxes be impacted?
- How would the addition of solar panels affect the overall look of the church?
- What were the risks involved vis-à-vis the roof? What would be the impact on the life of the roof?
- How certain would the financial rewards be? How would the equation change if the SREC market were to change?
1. To expedite town and historic district commission approvals, the church opted for a smaller system that supplies most, but not all of the power the church consumes.