Solar PV Installation: Doing Business with Non-Profits

Question:

My company has been installing PV solar systems on residential roof tops for several years. Recently, a large church approached us and asked us to install a solar system on their rooftop and then have us lease the system to them over a few years.

As the economy begins to pick up again, we would love to expand our business into this growing market, but are concerned that doing business with non-profit organizations, or even leasing systems to them, may exempt us from enjoying the 30% grant opportunity (under Section 1603) from the federal government.

Could you please clarify if we are eligible for the 1603 grant if we lease a solar system to a non-profit organization?

Thanks,
Solar Installer

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Answer:

Dear Solar installer,

Generally, a non-profit organization is specifically excluded from the 30% grant opportunity offered under Section 1603 of the American Reconstruction and Recovery Act (ARRA). However, if you lease the system to the non-profit organization, and maintain legal ownership of the panels for at least 5 years after activation, then you are still eligible for the 1603 grant.

However, there are a few issues that you should keep in mind when applying for the 1603 grant under this type of leasing arrangement: First, make sure that the application is in your company’s name, and not the name of the non-profit organization. Until the non-profit owns the system, your company is still the legal owner. Second, you must wait until after the system is activated (i.e., generating electricity) before applying for the grant. If you apply sooner, then your application will be rejected and your grant money delayed. Third, the amount of funding requested should based on the total cost of the system, which includes anything needed to get the system up on the roof and operational.

It takes about 60 days for an application to be reviewed and a check issued by the Department of Treasury. Any errors or omissions in the application will result in significant delays in the approval process. To avoid frustrating delays, make sure that your application is 100% complete when you submit it, and includes all supporting documentation (like a copy of the signed lease agreement).

If you’d like to speak more about this issue, or others that may arise along the way, please feel free to be in touch anytime: questions@cleantechlawpartners.com

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