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Company matches nonprofits with funding for solar projects

By , - Last modified: March 15, 2011 at 12:08 PM

A midstate man has launched a business specializing in finding alternative ways to pay for solar projects because nonprofits and local governments are not eligible for the same government solar subsidies as for-profit companies.

Douglas Berry worked 30 years at public accounting and business advisory services firms and specialized in managing projects for health care companies and senior living facilities.

During the last few years, he began working on financing and feasibility of building solar power projects at such facilities, many of which are run by nonprofits. Since nonprofits do not pay taxes, tax credits cannot be used as a direct funding source, for example, Berry said.

The solar division of the firm for which Berry worked, ParenteBeard, developed from this need. But last year, the regional firm with five offices in the midstate decided to exit the business, he said.

Seeing an opportunity, Berry purchased the practice from his former employer and launched it in December as Lower Allen Township-based Solar Renewable Energy LLC.

The firm can pull together a group of investors to buy and install a solar array, allowing a nonprofit such as a hospital to benefit from electricity savings through a power purchase agreement.

Under such a deal, the investors own the infrastructure and get a return from such mechanisms as tax write-offs and selling renewable energy credits the projects generate, Berry said, along with selling the electricity at below-market rates to the nonprofit.

Owners of qualifying renewable energy projects receive one credit for each 1,000 kilowatts of electricity produced by the project, he said. Those credits can be sold to Pennsylvania utilities to help them meet minimum alternative-energy generation standards, Berry said.

The young firm has more than 15 active projects, employs five people and considers itself a turnkey operation because it manages solar projects from the financing through construction and implementation phases using subcontractors, Berry said.

Because of growth potential, they are looking for three or four more associates for the company, Berry said.

There are options available for nonprofits to take advantage of federal tax credits available to encourage renewable energy and conservation in less direct ways, said Monique Hanis, spokeswoman for the Washington, D.C.-based Solar Energy Industries Association.

The groups can set up a for-profit subsidiary to manage their properties or can set up power purchase agreements with third-party companies that qualify for tax credits and can then act as intermediaries to pass along savings, she said.

The third-party market is expanding along with solar’s popularity, Hanis said. Eventually, the group would love to see solar financing entities and processes become as common as finance institutions for buying cars.

One of Solar Renewable Energy’s clients is Lancaster County-based independent living, personal care and skilled care firm Masonic Villages of Pennsylvania.

It has embarked on a multi-year project to save energy that has included installing microturbines for heat and power and an on-site solar farm, said Patrick Sampsell, chief environmental and facilities officer for Masonic Villages.

Throughout each part of Masonic Villages’s plan, the nonprofit has been disappointed at the limited funding opportunities for renewable energy projects compared with for-profit entities, Sampsell said.

Using intermediaries that can qualify for tax credits and other money has proved a successful tactic, he said.

For Masonic’s solar project, a third party is licensed to operate the solar facility on the nonprofit’s West Donegal Township property, he said.

Investors incur the costs of building the solar arrays, so the nonprofit does not need to invest money upfront. In return, the owners will sell the electricity to Masonic Villages at a cheaper rate than utilities would charge and can take advantage of other perks, he said.

The first 200 kilowatts of capacity are expected to go online at the end of this month, Sampsell said. The rest of the 1 megawatt facility will be fully operational by the end of April.

It will be enough to offset about 5 percent of the facility’s electricity needs and save at least $50,000 to $60,000 per year, Sampsell said.

“I think there is a market being missed out there for nonprofits,” Sampsell said.

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