Solar Energy – The Community Solution Using a Power Purchase Agreement

For many homeowners, purchasing a solar panel system for their home is simply not practical or does not make economic sense.

Even with payback periods as short as 4-6 years, they might not plan on living in their current home long enough to recoup the investment. Or, they might not have enough mostly south-facing roof space or room in their yards for pole-mounted arrays. 

The solution: participate in a community solar energy system as an investor in a Power Purchase Agreement with a facility in your neighborhood that can benefit from the environmental and economic benefits of a solar photovoltaic system. Here’s how it is working for a group of individuals in University Park, Maryland with a system they own atop a local church.

Primarily by word-of-mouth among friends and neighbors seeking to reduce their carbon footprints and research with solar experts in the greater Washington, DC area, David Brosch and Tom Eichbaum co-founded the  University Park Community Solar LLC.

This became the business entity that would activate an agreement to own a solar system and the electricity it generates. They surveyed a variety of area facilities including a library, retail shopping mall and neighborhood schools and ultimately decided their first solar energy system would go on the roof of the Church of the Brethren in their own neighborhood.

Church Pastor Kim McDowell warmed to the idea of not needing to pay a large amount upfront for the system’s installation and the ability to fix their electricity costs for 20 years under what became a Power Purchase Agreement. Brosch and Eichbaum networked together 36 participants who collectively put up about $130,000 to purchase a 22 kilowatt system (photo).

After much homework, they choose Standard Solar, Inc. and its Chief Technology Officer Lee Bristol to design and install it and work with the local utility to interconnect the system to the power grid.

Church of the Brethren uses most of its electricity on the weekends and a few nights each week. During the day, the system is capturing the sun’s radiation and generating electricity.

What electricity the church does not use – especially on weekdays – flows out on to the grid which the system owners can bank kilowatt-hour credits for. If they don’t use up those kilowatt hours, they can monetize the balance under a “net metering” law being updated in Maryland and inspired by their state Senator, Paul Pinsky, of Prince Georges County.

As owners, the LLC participants can claim their pro-rata share of the 30% federal investment tax credit, accelerated depreciation and a solar grant from Maryland. Each individual should earn back their pro-rata investment within seven years and can look forward to a 7% return thereafter.

Their commitment to sustainability earned University Park a $1.5 million grant from the U.S. Department of Energy to fund energy efficiency initiatives.

At a recent green-ribbon-tying ceremony at the Church, co-founder Tom Eichbaum walked attendees through his five pre-requisites to a community solar energy system.