Ownership Questions

DOES SOLAR FAITHFUL OFFER OWNERSHIP OPTIONS?

Solar Faithful offers the following options:

Direct Purchase:

Your organization purchases the system with any combination of donations, budget, and borrowing. We can connect your organization with lenders. Once the array is installed, your electric bills will decrease. The savings you accumulate over time will essentially pay for the cost of the system. After the system is paid off, 100% of the system savings are realized. This option offers the best total savings and allows you to own the system immediately, but involves risk and operational responsibility.

Prepaid Solar Project: 5-Year Path to Ownership:

This financing option is a lease-to-purchase agreement that offers your organization a 20% discount on project costs. If your project qualifies for the Domestic Content federal incentives, you can receive a 30% discount. Your organization will put down 70% or 80% of the project cost, and Solar Faithful will own, operate, and maintain the system for the first 5 years. After the first 5 years, you will own the array. Additionally, Solar Faithful will apply for the federal incentives for you.

Energy Shared-Savings Agreement (ESSA):

An ESSA is an agreement between Solar Faithful and your organization where Solar Faithful owns, operates, maintains, and insures a solar system on your facility. Your organization signs a 25-year contract to purchase power generated by a solar array at an initial 10% lower rate than you currently pay your utility. You then own the system after that 25-year period. This enables organizations to purchase 100% clean, renewable power starting at a 10% discount. It requires no fundraising or borrowing. The host organization experiences the benefits of solar, like reduced electricity bills and positive environmental impact, without the upfront cost of buying the system. At the end of the 25-year contract, the host organization may:

  1. Take the title to the solar panels
  2. Remove the solar panels
  3. Continue the ESSA, which includes maintenance and a savings guarantee

There’s also an option for the host organization to buy out the ESSA anytime. (see below)

IS THERE AN OPPORTUNITY FOR AN ORGANIZATION TO INVEST IN THEIR SOLAR ARRAY UP-FRONT?

Yes. The organization can invest in the system with donations, capital budget, and/or borrowing. The incentives can be captured. The Inflation Reduction Act enables non-tax paying entities such as faith-based organizations the ability to receive tax benefits in the form of “Direct” or “Elective” pay rebate. This allows the organization to convert the tax credit to a rebate, making the economics very similar to that of large residential projects. Bridge financing for the incentives are also available.

Michigan Saves Bridge Loan Information. 

Elective Pay Process Graphic.

IF AN ORGANIZATION CHOOSES DIRECT PURCHASE AND SOMEONE STEALS THE SOLAR PANELS, WHO’S RESPONSIBLE FOR THE COST OF REPLACING THE PANELS?

If a church purchases the panels, they are responsible for Operations and Maintenance, which includes vandalism. We recommend that every owner of solar include a rider to cover the cost of replacement. This extra premium is usually very minimal as the solar array represents a very small increase in value of the building and the equipment that runs the building. We have not heard of much theft of panels in MI.

ENERGY SHARED-SAVINGS AGREEMENT (ESSA) QUESTIONS

HOW DOES AN ESSA WORK?

  • Solar Faithful borrows money to purchase the equipment, then monetizes the tax benefits, then owns and operates the equipment. Each month Solar Faithful calculates what the electric bill would have been if there were no solar. We then compare it with the actual electric bill. The difference between the two is the savings created by solar. These savings are shared with Solar Faithful to pay off the system.

IF AN ORGANIZATION HAS AN ESSA AND THE PANELS ARE COVERED IN SNOW, WHO REMOVES THE SNOW TO ENSURE THEY ARE OPERATIONAL? 

The cost to remove the snow is not worth the effort. Removing the snow costs about as much as the value of the power produced in 4 consecutive sunny days. There are not usually many sunny winter days, so it is not worthwhile. This is why we model for snow covering the panels during the winter, and accept that during the winter the panels will produce less than if the panels were cleaned off each day. We have factored in the loss and the host facility does not need to spend any time cleaning off the panels.

IN THE CASE OF AN ESSA, WHAT HAPPENS IF OUR ORGANIZATION CLOSES BEFORE THE 25-YEAR AGREEMENT IS OVER?

A: There are three options if your organization closes or your building changes ownership:

  1. The new owner of the building can continue the ESSA contract and realize the savings (The new building owner and Solar Faithful must accept this first)
  2. Your organization can pay off the system and sell your building with solar
  3. If either of the two options above do not work, Solar Faithful will take the solar array back

WHAT HAPPENS TO THE ESSA IF SOLAR FAITHFUL GOES OUT OF BUSINESS?

If Solar Faithful goes out of business during the first 10 years of the agreement, then the lender funding the array would take the title to the array. The lender would then sell the array for the remaining principal on the loan to the host facility or another investor. The new owner would continue following the terms of the agreement. If Solar Faithful goes out of business after 10 years into the agreement, then the host facility will own the array.

IS IT POSSIBLE TO END THE AGREEMENT OR PAY OFF THE SYSTEM BEFORE THE 25-YEAR PERIOD IS COMPLETE?

Yes. The host organization can terminate the contract or pay off the system at any time by paying the early termination fee. In the first 5 years of the contract, the termination fee is the full construction cost of the array. This is because the federal incentives need to be paid back to the IRS if the array transfers ownership in the first 5 years. After 5 years, the termination fee or price to own the system is the fair market value of the solar array. It starts at construction cost minus incentives, and decreases over time.

IF OTHER ENERGY EFFICIENCY GAINS ARE REALIZED IN MY BUILDING, HOW CAN WE DISTINGUISH THOSE UNDER THE ESSA AGREEMENT?

The ESSA is strictly looking at the kWhs generated by the solar panels. The host facility will realize a 10% savings based upon the electricity generated. If the host facility implements energy efficiency measures, it will realize 100% of those savings.