Solar

What is required to go ahead with this project?

The Congregation must vote to approve the budget for the installation of the solar system. At this time the meeting for this vote is expected to be scheduled for November 24, 2024. Prior to this, we will:

• Secure commitments for the entire amount needed (through gifts already in hand, pledges for future donations, and signed loan agreements).
• Obtain a final quote for the installation of the system through competitive bidding (the initial RFP will be sent out [date].
• Obtain an updated estimate of the amount of power that the solar equipment will produce.

How many years will it take for the loans to be paid off?

We won’t know that for sure until the project progresses a little further. The loan payoff term is set so that it is as fast as possible without having an undue effect on the budget while the loan is being paid.

How will the project save us money?

The project savings come from electricity cost savings, the Federal tax credit for renewable energy expenditures which will be paid to the church, and the New Jersey incentives which are based on the electricity produced and are paid out over a 15-year period. Even accounting for the payback of the loans, the project will have a significant positive value.

How will the interest rate be set?

The rate will be based on the Consumer Price Index at the time that the loan agreements are signed. If the CPI drops below the 2% target of the Federal Reserve at that point, we will use 2%. These loans can be considered social responsibility loans as they are below market rates.

Will the interest earned by the lenders be taxable?

Lenders should consult their financial advisor for this tax advice. The Fellowship will provide IRS form 1099-int each year to the lenders.

How will the loans be repaid?

The loans will be repaid with a combination of the money from the Federal tax credit, the New Jersey incentive program, and through savings in electricity costs. These three funding sources significantly exceed the cost of the solar energy system although the NJ incentives and electricity savings accrue over time, so the rate of payback will be set so that the budgetary impact is manageable. These social responsibility type loans will be unsecured obligations, and subordinate to the Providence construction loan for the capital project.

When will the funds be needed?

Funds amounting to around 10% of the contract cost will be needed when the contractor begins the engineering in November a􏰁er the congregational approval has been secured. We plan to use some of the gifted funds for this part. The remainder of the funds including all the loaned funds, will be required before the installation begins, planned for January of 2025.

When will the project begin producing electricity?

Assuming funding is secured, April or May of 2025.

Will the solar project supply the entire electricity demand for the combined facilities?

No. We expect the demand to exceed that produced by the solar panels. We are limited by the amount of available roof space.

Will the solar project funding cover the costs that have already been spent to prepare the building to accommodate the solar equipment?

Yes, the Capital Campaign Project Budget will be reimbursed for those costs with funds from the solar project. Most if not all those costs (e.g. conduits) will be eligible for the Federal Tax Credit.

How long will the solar panels last?

25 – 30 years or more.

Solar panel output drops off at about 0.5% per year. Several other institutions who installed panels reported good experience with equipment reliability. Because of advances in solar technology, panel efficiency has increased every year. A􏰁er about 25 years, it may make sense for us to replace some or all our panels with new, more efficient ones. By then, we hope the newer panels will enable us to supply our entire electrical demand with solar energy!

How does the solar tax credit work?

The Fellowship will apply for the Federal tax credit in the tax year following the year the array begins producing electricity. The Inflation Reduction Act allows for a direct payment of the tax credit amount to non-profits. Lenders will receive interest payments covering the portion of the project cost that will be covered by the tax credit. When the credit is received, the amount will be apportioned to the lenders to retire (pay down the principle of) that portion of the debt.

Will my gift to the solar project be tax deductible?

Yes, gifts to the solar project, as gifts to the Fellowship, will be tax deductible.

What if wind shear, lightning, vandalism or some other event damages the solar system?

The Fellowship will have insurance to cover such damage.

What if the lender passes away before the loan is fully repaid?

The loan would then be payable to the lender’s estate.

We recommend that documentation about the solar loan be stored along with documentation about financial accounts so that your executor will be easily aware of its presence and how to contact the Fellowship. We are looking into the possibility of utilizing the “transfer on death” provision of NJ estate law to see whether it would allow lenders to designate beneficiaries (including the Fellowship) to the account and may include that later if possible.

Wasn’t the original plan to form an LLC to finance the solar project?

Yes, but due to changes under the Inflation Reduction Act, non-profit organizations can now collect the tax credit as a direct payment. We therefore switched to the simpler approach of funding with gifts and loans.

What happens when the JCP&L grid goes down?

The solar system will detect such an outage and stop putting power onto the grid. The Fellowship would also lose power until the grid comes back on-line. The national electrical code requires this to protect electrical workers. It is possible to use battery storage, and special controls that would isolate our system during an outage, to supply all or some of our needs from the solar panels, but we are not planning to install such a system at this time.

Will we sometimes supply excess electricity onto the grid?

Yes, on sunny days there will be times when our production of power exceeds our demand, and the excess will go out onto the grid. The utility meter will “bank” those excess kilowatt hours and credit them back to us when we need them (in the evening, or at another time of year when our demand exceeds our production).

One of the checks to be performed before we are allowed to install solar is to make sure that our local power lines have sufficient capacity to handle the amount of power going back onto the grid (from ours and other nearby solar installations). A recent check confirmed sufficient capacity exists in the supply lines feeding our area.

Will the solar project need to install battery storage?

No. The New Jersey Net metering program allows us to send our excess kilowatt hours (KWH) onto the grid when we are producing more electricity than we are using. Those KWH are “banked” and can be drawn upon when our demand exceeds our production. See also the question above.

Will we still have to pay some electricity costs to JCP&L?

Yes. Over the course of a year, our demand for power will exceed the capacity of the solar system to generate power. Also, even when we are net producers, we will still need to pay demand charges and customer monthly fees for connection to the utility.