Co-ops Find Ways to Jump on the Solar Bandwagon
Solar power has become an increasingly popular form of alternative energy. The cost of solar technology has reached a level that is attractive to a broad spectrum of residential and business consumers, especially given prevailing Federal (and sometimes State) tax incentives. Rooftop units have become relatively commonplace; community solar gardens have sprouted to provide solar energy to those for whom rooftop orientation falls short of the solar photovoltaic qualification.
Electric companies and cooperatives have plenty of reason to jump on the solar bandwagon. In addition to satisfying customer demand, solar power presents an opportunity to meet regulatory mandates to bolster their renewable energy portfolios and reduce greenhouse gas emissions.
Most cooperatives desire to make solar power accessible to all consumers, not just the folks who have the means to install their own systems. They have a few key requirements to attain this goal.
Co-ops need an affordable means to acquire and install solar technology.
The NRECA, National Rural Utilities Cooperative Finance Corporation (CFC), and a group of 14 electric cooperatives created the Solar Utility Network Deployment Acceleration (SUNDA), funded in part by the U.S. Department of Energy. As described on the NRECA website, SUNDA offers “a PV system package consisting of engineering designs; business models, financing and insurance options; and optimized procurement that will drastically reduce soft-costs, including engineering design costs (by 25%), procurement costs (by 10%), and insurance costs (by 25%).”
Co-ops such as Anza Electric of California claim that this set of tools made all the difference in their ability to embrace the solar opportunity.
Co-ops need a way to monetize tax incentives.
The good news: Federal and State tax incentives can reduce the costs of instituting solar power by 30% or more. The bad news: These incentives are granted in the form of tax credits. Since co-ops do not make profits on which they pay taxes, they need to look outside their organizational boundaries to reap these benefits.
Fortunately, there are a number of ways to address solar project financing to take advantage of tax incentives. Your Aldrich tax advisor can review your options and discuss the associated pros and cons. They can show you how your decisions affect the underlying economics and highlight any operational considerations that come with them.
Co-ops need to understand the underlying economic of solar provisioning to apportion shared costs equitably.
Any new technology can present “interesting” accounting and billing issues that impact pricing models for service delivery. Our accounting professionals can help you structure your recordkeeping in advance to ensure that your ability to capture solar energy costs aligns with your needs to price services fairly.
So, with a little help from your co-op friends – and some expert advice from Aldrich – your solar energy program can come off your “wish list” and become a shining example of a market-driven initiative that is as friendly to your bottom line and consumers as it is to the environment.