How Does the Inflation Reduction Act Make Going Solar Easier for Nonprofits?
Dec. 14, 2022
Nonprofits have just as much to gain by going solar as for-profit businesses. But up until recently, direct solar ownership was not an option for most nonprofit organizations due to limited funding, and because not-for-profits don’t have tax liability, they don’t qualify for the 30% federal solar tax credit. The tax credit has made solar energy for businesses more affordable, and many could not afford the upfront cost without it.
Because they don’t qualify for tax credits, going solar as a nonprofit has been challenging historically. In the past, organizations that could not raise enough funding for a solar panel installation had to settle for a solar lease or a Power Purchase Agreement (PPA). Leases and PPAs can save you money, but they do not have the same benefits as direct solar ownership.
The Inflation Reduction Act of 2022 (IRA) has changed the game for nonprofits by creating a direct pay version of the solar Investment Tax Credit (ITC).
Tax-Exempt Organizations Qualify for Direct Pay Through the ITC
The federal solar tax credit allows for-profit businesses to receive a tax credit worth 30% of their total installation costs when they install solar panels and/or battery storage. The new direct pay option allows not-for-profit organizations to benefit from this incentive even though they do not pay taxes. Non-profits can now receive a direct payment for 30% of their total solar energy system installation costs, making solar installation easier and more affordable.
Any organization that has tax-exempt status with the federal government is eligible for the nonprofit solar tax credit direct pay option. This includes:
- Public schools and universities
- Government buildings and organizations
- Charities and other non-profits
- Religious organizations
Benefits of Solar for Nonprofits
Nonprofits have a lot to gain by going solar:
Electric bill savings - Electricity is a major operating expense for most organizations. Solar panels let you produce your electricity for free, reducing operating costs so you can put more money back into your organization.
Enhanced public image - Installing solar panels can garner positive publicity thanks to the environmental benefits they provide, bringing attention (and potentially donations) to your organization.
Solar incentives - When you own your solar system directly, you qualify for incentives. Massachusetts offers many incentives for commercial solar installation, including net metering, SMART, and ConnectedSolutions. All of these can help your nonprofit save even more money with solar.
Blackout protection - Solar battery storage gives you a reliable backup power source and allows you to keep your solar panels on during a power outage.
Reduced carbon footprint - Powering your organization with clean, renewable solar energy will reduce your reliance on fossil fuel for energy and shrink your carbon footprint.
Talk to Boston Solar About Adding Solar to Your Nonprofit
The Inflation Reduction Act and solar panels can help your nonprofit save money so you can invest more into your organization. If you’re interested in adding solar to your nonprofit, Boston Solar can help. We are a leading local commercial solar installer near you and we work with not-for-profit businesses of all types and sizes, including schools, governments, churches, and more. We’ve been empowering Massachusetts for over a decade and have installed more than 5,000 solar energy systems. We can design a custom solar solution that works for your nonprofit and help you tax advantage of the Inflation Reduction Act’s solar tax credit direct pay option.
Find out if your nonprofit is eligible for direct pay through the ITC. Call 617-858-1645 or contact us to schedule a consultation.