In recent years, there has been a growing trend among churches, temples, and synagogues to embrace solar power as a way to reduce their carbon footprint and save money on energy bills. Many places of worship see this as an opportunity to align their values with their actions by reducing their impact on the environment while also practicing good stewardship of their resources.
The passage of the Inflation Reduction Act (IRA) last year marks a historic moment in the US battle to mitigate climate change with the single largest investment into clean energy and electrification ever seen in the country. With consumer rebates and tax credits available for solar energy and electric vehicles, there are more ways to take advantage of this funding than ever. And for the first time, faith-based, tax-exempt entities can directly take advantage of these incentives.
Prior to the passage of the IRA, places of worship and other tax-exempt entities were unable to directly take advantage of federal tax credits to support the installation of solar panels. Now, 30% of the cost of a solar project and installation can be covered by direct pay tax credits from the federal government through 2032.
How exactly does this work? In lieu of a typical tax credit, faith-based communities can receive a ‘direct pay’ tax credit. In simple terms, the IRS will treat the non-profit as if it did pay this tax, and will refund the owed amount for the solar project. To receive this credit, an election must be made on tax filing in the year in which the project is placed in service. Eligibility begins in 2023 and the solar project must be completed and capable of connecting to the grid before filing this election. The Internal Revenue Service is still working out a lot of the details, but those interested should contact their tax advisors about specifics in their own state and market.
Besides economic benefits, there are other – more divine benefits to churches going solar. First and foremost, solar power is a clean, renewable energy source that does not produce harmful emissions or contribute to climate change. By installing solar panels on their roofs or in their parking lots, churches can significantly reduce their reliance on traditional, fossil fuel-based power sources. By going solar, churches can also set an example for their communities and encourage others to adopt sustainable practices. Churches are often viewed as moral and ethical leaders, and by demonstrating their commitment to the environment, they can inspire others to do the same.
Overall, the trend of churches going solar is an exciting development that highlights the growing importance of sustainability and renewable energy in our communities. As more and more churches take the leap and invest in solar power, we can expect to see a ripple effect of positive change that extends far beyond their own walls.