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New ‘Game-Changing’ Incentives Open Way for More Churches to Fill Gaps in Community Solar

The country has come a long way since the first community solar project went online in 2006. That 304-kilowatt shared renewable energy program is now among more than 2,000 nationwide solar projects meant to remove financial and residential barriers to going solar. But the low-income communities these programs are supposed to help remain underserved. Could a boost in federal funding and a slew of new tax incentives compel more churches to help close community solar gaps?

When churches do solar installations, the energy generated primarily serves on-site activities. However, churches that include solar storage in their off-grid systems also develop the capacity to serve as resilience hubs for residents — meaning when there is a grid outage or disaster, the church is a beacon of support and safety. Then there are churches, like Sargent Memorial Presbyterian Church in Washington, D.C., that share their solar-generated energy directly with residents, empowering them to reduce their carbon footprint and energy costs and make their community a little cleaner.

Sargent Memorial Presbyterian Church, a historically African American congregation once noted for its social activism, is located in D.C.’s Ward 7. The ward’s 81,000 residents are predominantly Black, and more than a quarter of the population live below the poverty line.

In June, the church began hosting a 230-kilowatt community solar program comprised of rooftop and parking lot canopy panel installations. In addition to meeting the church’s energy needs, the program serves 73 low- and moderate-income (LMI) households.

“This project started out as a selfish endeavor, meaning that we wanted to have solar for ourselves,” Sargent Memorial Presbyterian Church pastor Juan Guthrie told The Washington Informer. Then he learned how the church’s transition to solar could also benefit others in the community. He realized a shared solar program was an opportunity to “expand our ministry and our mission beyond ourselves.”

solar panels

Cedar Ridge Community Church hosts the first faith-based community solar project launched in Maryland, which is also perhaps one of the largest. Its 2-megawatt solar farm takes up just eight acres of its 63-acre property and can supply 350 families with electricity. The church ensures that 30 percent of subscribers are LMI earners, who also receive a discount on their subscriptions.

The church reports that the yearly generated energy from the solar farm “will replace non-renewable energy sources that produce carbon dioxide emissions equivalent to [five] million miles driven by an average gasoline-powered passenger vehicle, 6,000 barrels of oils being consumed, and 1,500 tons of coal being burned.”

Sargent Memorial Presbyterian Church’s and Cedar Ridge Community Church’s community solar programs are not unique. However, their embrace of low-income subscribers is rare.

Solar installations placed at more than 2,500 houses of worship nationwide “are disproportionately located in relatively wealthy, White, and educated census tracts, compared to the overall population,” according to an analysis by the Department of Energy’s Lawrence Berkeley National Laboratory.

The trend reflects the shortcomings of broader efforts in community solar.

The DOE’s National Renewable Energy Laboratory reports that just 10% of the nation’s 2,028 community solar projects listed through January 2022 serve LMI subscribers. Less than two dozen states among the 41 and Washington, D.C., that do community solar have policies and incentives for creating such shared renewable energy projects.

“Approximately 75 percent of individuals across the country do not have access to solar energy solutions, whether because they don’t have suitable roof space, don’t own their home, or face certain financial barriers to going solar,” according to the Low-Income Solar Policy Guide.

Shared solar energy programs are supposed to be the great equalizer — a means of access and equity for those locked out of traditional solar. However, the transition to solar has favored those who own their homes, with census figures showing that most homeowners are White (72%), while the country’s more than 44 million renters are disproportionately Black and Hispanic or Latino. LMI earners, about 43% of the population, also tend to be people of color, who also disproportionately experience challenges in meeting their basic energy needs.

President Joe Biden’s Investing in America agenda, which earmarked over $100 billion for clean energy initiatives, provides targeted funding for “community solar projects and programs that increase equitable access.” His subsequent Inflation Reduction Act, signed into law last summer, also changes the game entirely for tax-exempt entities, such as churches, wanting to do community solar.

While the overall solar industry experienced its best first quarter for the first time this year, community solar did not fare as well. Community solar “faced interconnection and siting challenges in several key state markets,” according to the Solar Energy Industries Association (SEIA), a national trade association for the solar industry.

However, SEIA expects community solar to overcome those challenges. The association projects that nationally, it will add at least 6 gigawatts to its current 5.8-gigawatt capacity in the next five years.

tax refund

A ‘Game-Changer’

Although churches and other congregations have long been going solar, they were not eligible for the kind of tax credits available to homeowners and for-profit businesses that transitioned to renewable energy technologies. That barrier has been removed for the first time with the IRA.

The IRA’s most significant tax credit, locked in for the next 10 years, comes as a direct cash payment to congregations that build qualifying clean energy projects. For example, if a church were to install a $100,000 solar array on its building or land, it could then claim the 30% clean energy tax credit and receive a $30,000 direct payment, according to the IRS. Bonus credits could potentially boost the direct payment to a 50% refund if the church installs the solar array at a site contaminated by pollution and ensures that at least half of the electricity produced serves low-income households.

Lee Barken, chief community officer at CollectiveSun, told Faithfully Magazine that the direct-pay provision is “probably the most important topic for houses of worship in the solar space right now.”

Located at the Christ United Methodist Church in San Diego, California, CollectiveSun has helped dozens of churches finance solar panel installations and is currently working with houses of worship in Oregon on several solar projects, including community solar.

Interfaith Power and Light, a nonprofit that claims a network of more than 22,000 congregations, described the IRA as “the most significant climate bill in history.” The nonprofit, which mobilizes people of faith for clean energy solutions, lists nearly 1,300 houses of worship in its Congregational Solar Directory. However, it does not designate which ones host community solar programs.

The IRA, and other funding sources, provide “every opportunity for churches to take the lead in their community, everywhere,” Groundswell CEO Michelle Moore told FM.

Groundswell, a D.C.-based nonprofit active in five states, works with local groups to develop community solar projects and resilience centers. The nonprofit helped Sargent Memorial Presbyterian Church secure financing for its community solar installation.

Although solar has “become much more accessible, affordable, and easier to install,” the IRA’s elective pay, or direct pay provision, is a “game-changer,” according to Moore.

“The Inflation Reduction Act has definitely opened up new opportunities,” she said.

Among those opportunities is for more churches to own their solar energy systems instead of leasing them from installers, as is common and often more costly.

Uniquely Positioned

The Department of Homeland Security used IRS data to determine that there were nearly 255,000 places of worship in the U.S. through July 2020 — about 100,000 less than the National Congregation Study’s 2020 list of religious congregations. Although these numbers omit COVID-19’s impact on congregations, they still suggest that places of worship have an immense potential to help expand community solar.

Analysis by the National Renewable Energy Laboratory (NREL) supports that view.

The NREL explored the potential of rooftop solar to meet LMI households’ needs based on five building types (public sites, public housing, K–12 public schools, homeless shelters, and places of worship) in Chicago, Illinois; San Bernardino/Riverside, California; and Washington, D.C.

“Schools, followed by places of worship, had the greatest opportunity to export generation to the community,” the NREL concluded. The lab designated places of worship as “favorable” due to their lower year-round energy consumption and “moderately favorable roof characteristics.”

More notably, the NREL emphasized that churches, as anchor institutions, have an advantage in reaching LMI communities. Because LMI earners tend to use the services of nonprofits, it increased the likelihood that churches, predominantly in residential areas, are leading candidates as hosts for community solar or solar co-ops.

Moore, Groundswell’s CEO, is one person that does not need convincing of the present opportunities for churches and community solar.

“My hopes aside, the Inflation Reduction Act supports so many programs that can make it easier and more affordable than it’s ever been for churches everywhere to build solar and resilience projects,” Moore said.

She said Groundswell and its partners are working to “get the word out” among denominations about “how to make the most of these unprecedented opportunities in service to the mission.”

FM asked Moore if megachurches — reportedly experiencing rapid growth as other congregations decline — should bear more responsibility for pursuing clean energy programs like community solar. In response, she recalled a religious leader’s reference to what Jesus described as the second greatest “commandment.”

“While we were finishing construction on our first community solar project at the Monastery of Our Lady Mt. Carmel in Washington, D.C., Friar Salvatore Sciurba of the Discalced Carmelite Friars wrote something that has stuck with me and has defined how I think about what community solar can mean for the faith community,” Moore said. “He described the monastery’s decision to become a community solar host site as a way to ‘love your neighbor as yourself.'”

“Hosting an energy system that demonstrates love for our neighbors” is a “beautiful idea that we can all embrace!” she said.

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