Creative Deal Structure Brings Solar to Tigard's Rolling Hills Community Church
Rolling Hills Community Church wanted to go green, and the flat roof on the 2,400-member church in Tigard provided a great opportunity for solar. But federal tax credits for solar were not available to the tax-exempt church, so the congregation turned to Lake Oswego's NW Photon Energy to find a workable business model.
Together, NW Photon Energy and the church developed a creative deal structure that took advantage of Oregon's successful volumetric incentive rate pilot program (often called Oregon's feed in tariff). Under the program, participants receive a fixed rate from the state's investor-owned utilities for each kWh of solar energy generated, up to the amount of electricity consumed on site. The Oregon Public Utilities Commission sets rates every six months. Contracts are for a fixed term of 15 years. Projects participating in the program are not eligible for several other state renewable energy incentives, but can still qualify for federal tax credits.
In the early days of the pilot program, supply far exceeded demand and allocations often filled within minutes. Applications dwindled as the rates were lowered, but it still took Rolling Hills Church three tries before it was selected in spring 2012 for a project with PGE. Then the church brought in NW Photon Energy to design and install the system, and its sister company 3CSolar to own and operate it. That way, 3CSolar could qualify for the federal tax incentives that were unavailable to the church.
The 1,000 kW system was installed in October, and generates energy equal to roughly 25% of the electricity the church consumes. But rather than collecting payments for that energy from PGE, the church instead collects rent payments from 3CSolar for the use of its rooftop, while 3CSolar earns the federal tax benefits and collects the feed in tariff payments. Also, once the feed in tariff contract with PGE ends in 15 years, 3CSolar's lease gives the church the option of either buying the solar system at a depreciated rate, or continuing to lease the rooftop to 3CSolar and buying the energy generated at 50% of its market value.
This creative deal structure works to everyone's benefit. Rolling Hills gets the intangible benefits of going green and turns its rooftop into a profit center. Plus, it has an option on the solar system or the energy from it in 15 years' time. NW Photon Energy designed and installed another great solar project in Oregon, and 3CSolar has a profitable operating asset. PGE makes progress towards its renewable portfolio targets, and the state gets another 1,000 kilowatts of solar.
And we at Solar Oregon hope that the success of the Rolling Hills model inspires other Oregon non-profits to go solar.