Our HOA is paying $4000 a year for electricity. I’m volunteering for the solar power committee to investigate whether installing solar power is advantageous for the HOA.
I just purchased (outright) rooftop solar for my townhome so I’m a little familiar with the process but I expect it be different for the HOA. The HOA pays no income tax, so it can’t take advantage of governmental solar rebates. Our HOA may also be less inclined to spend a lot of money upfront to purchase the solar power system.
So:
What should I be aware of regarding solar power for the HOA?
What differences are there in getting solar for an HOA rather than a private residence?
Do you think leasing, a PPA (Power Purchase Agreement), or direct purchase (either outright or with a solar loan) is the best option?
Does anyone have experience installing solar in their HOA that they can relate? How did it go for you?
Are there any reasons AGAINST installing solar on the HOA clubhouse?
I think alot depends upon your area and how much sun you would get. Then where would they be located? Some homes have roofs where they work well and some dont. Some are installed in the yard.
plus you will still need a backup source.
What I cant figure out is why your HOA buys the electricity? Its usually just the homeowners or renters.
Our fire department doesn’t pay income tax as they are a 401C corp. We did solar and yes it was worth it for us. Our electric bill got a additional commercial demand charge that penalized you in theory for your highest usage period, but in practice they would just charge more for your highest usage whatever it may have been (high peak or not so high), either way we got nailed with a doubling of our bill. The only 2 ways we could get out of that is to ask the state to pass a law to exempt fire companies or to get usage below a certain threshold over IIRC a year. We went with solar and during the winter where solar was not enough, ran the generator instead of grid power for events to ensure we were off that charge from hell. After a year we were clear of that and our power bill fell to $0/month and even after winter we have carryover in excess (carryover would not help in getting off demand, but will keep us from getting back on it. Because our bills were doubled we quickly paid back the cost of solar install, I think it was less than 4 years.
Now we have additionally installed electric heat pumps instead of oil heat, it does cut into some of our surplus and we have to watch it a bit, but now a lot of our heat is free also, instead of the oil burners we used to run. On occasion we may have to fire up the propane backup to the heat pump if we start using more, but for now all is good with solar for us.
We are in sunny northern Arizona, so there is a lot of sun.
As to why the HOA buys electricity, we have a community pool and a community clubhouse. The pool pump, and lighting, heating, and AC for the clubhouse are paid for by the HOA.
I think you’ve identified the biggest reason not to: the difficulty of arranging things to take advantage of tax credits (and possibly renewable energy generation credits, if applicable in AZ, but I’m sure that’s easier than the income tax issue). It may be that (especially in Arizona), an installation would be profitable even without tax credits, and I’m not sure the tax issue is an insurmountable problem anyway, but you should probably find an Arizona expert.
I’d ask a few local solar installation companies; they’ll almost certainly give you (as a free consultation/proposal) an idea of the economics of an installation, and may have experience with the HOA issue.
The advantages are that you are using clean, free, unlimited power!
The only disadvantages I see is that you are depriving rich people of even more money and the earth a chance to start recovering from the complete mess we are trying to make of it.
I have installed a few solar off grid systems and know quite a bit about them. I also live off the grid on an island in Georgian Bay every summer.
You need to decide what your demand would be and budget.
Due to LED bulbs, lighting with solar power is a no brainer.
You could run 12V or 24V pump off a small solar system to the pool. You could also have solar water panels installed in the loop to heat the pool.
The bad news is, you cannot run electric heat or AC off a solar power system as the wattage is way too high and would drain your batteries in a few minutes.
Geothermal is the way to go for heating/cooling solutions.
Similarly, with electric stoves, microwaves, electric kettles, coffee makers, toasters, hair dryers, etc… Their wattage is just too high on peak or prolonged use.
Of course, there’s also the option of generating solar electricity and selling to your electric company to offset your electric bill.
That’s why my first, naive idea is that a Power Purchase Agreement (PPA) or even possibly a lease may be a better deal for our HOA. The solar company can take the credits and return some of that benefit to us in the form of lower rates.
This is not the only disadvantage. The larger one is solar causes a lot of power into the grid when the sun shines only, this causes the grid’s other power sources to run less efficiently and also needs energy storage solution all that cost money, however the people who are causing this problem and higher expense are paying zero into the system, leaving the fewer rest of us to foot their bill. So it’s depriving poor people as they can’t afford solar and has to pay for more of the middle class paying nothing.
I forget how the deal was structured and I understand there are different ways to do it. The club might technically own or lease the panels and pay financing costs to the installer. It would then sell the electricity back to the utility under a net metering arrangement, which in their case, exceeds their electricity costs, so they get a check back from the electric company. Or the installer might technically own the panels and rent the club’s rooftops on which the panels are installed. The amount of rent would depend on the amount of electricity produced by the panels. The installer would then also be a power generating utility which sells clean energy to other electric utilities that distribute the power. The club would still buy electricity from the distributing utility but it pays less for this than the rent it collects from the installer. In any event, its cost for electricity is zero and it gets checks based on the net amount of power the panels produce. Good luck figuring out what’s best for you.
*Okay, technically I’m a member too and I volunteer in their Treasury sometimes, but I live hundreds of miles away and I’m not very active in the club. I still think of it as my dad’s club. I had nothing to do with the decision to install solar panels and I’m just repeating what I heard.
Except that it isn’t entirely clean, it certainly isn’t free, and it isn’t unlimited.
This. Maybe it is a good deal in your particular circumstance. But it’s not necessarily a slam-dunk. How much will it cost to install and maintain the equipment, how long is the equipment expected to last, how much electricity will it generate in an average year - you gotta do the math.
Yes, my HOA is pretty progressive. Another factor is that our Southwest-style units have flat, parapet roofs, so the solar panels themselves aren’t visible.
Additionally, it may be illegal now for HOAs to prohibit solar panels on roofs. (Could be wrong, don’t have a cite.)
That’s not really currently an issue in Arizona. The peak electric demand is there is certainly hot sunny days, so solar power in AZ mostly reduces the peak demand, so the least-efficient peak-loading power plants are run less. Win-win! There’s a relatively minor issue about who pays for the cost of building and maintaining the grid if there are customers using the grid but not net buying much power, but most electrical utilities have already lobbied successfully for extra charges to cover that.
It all depends on the exact numbers. Generally I think owning the panels is better financially, but it may be close enough that the hassle of dealing with HOA issues tips the scale towards lease options. So get some quotes, from local own-it-yourself installers (maybe you can find one that has dealt with the HOA issues in AZ and understands a good legal solution), and from a couple lease companies. These days they probably don’t even need to do a site visit to give a good quote, since they can see roof area and orientation from satellite photos. When I bought panels the local companies understood very well the state and federal incentives and were able to list those right in the proposal quotes.
The only major issue, which you probably understand already since you have panels yourself, is that you don’t want to install panels on a roof that’s old or even getting old and going to be replaced in the next half-decade. Other than that, since maintenance is almost zero, they’re kind of a perfect project for a HOA.
This part didn’t work out so well for me, actually. The first contact quoted an 8 kW system without looking at the roof. When they came to site visit, they found all kinds of obstructions, and they were only able to fit a 4kW system.
Since you are a non-profit, you won’t get the 26% ITC for solar, but a for profit solar financing company would if they owned the array and you had a PPA.
State incentives (if any) are critical to the calculations, so find several vendors who have put arrays on non profits and have them give you proposals.
The PPA will typically be a 20 year contract to buy all the power produced by your array at a set rate per KwH, usually with a 2 or 3 percent per year inflator.
Then you do a fair market buy out of the array. The value of the array will be low. If you don’t agree with the price offered by the PPA folks, you can always just tell them to come get it off your roof.
You need your roof to have at least 20 years of life or they won’t put an array on it.
You would not want to run the risk that roof replacement would require the array to be removed and then re-installed.
It might not be now, but assuming that trends continue, it likely will be within the lifetime of a solar installation. Even sunny Arizona with all its air conditioning is likely to end up overproducing power during the daytime, which will likely lead to some policy changes. Depending on what you think those policy changes might be, this could point to “install ASAP so you can get grandfathered in” or “Just wait and reap the lower rates that you’ll get anyway when power is overproduced.”
I would be reluctant to enter into a 20-year lease period when the whole electrical generation landscape is likely to change pretty dramatically in the next 10. I’d also be reluctant to have the HOA do and own the install if the expected payoff is more than five years. Make sure you budget for maintenance in the self-install case. I don’t think it’s a lot, but it’s not 0.