Considering Solar Power for Your Ministry?
Ten things to do before flipping the switch
Some churches, schools, and colleges across the country are turning to solar power as a means to cut costs, generate income, and become more environmentally friendly.
Reap Rewards of Clean Energy
Benefits include lower electric bills, income from solar energy agreements, and the knowledge that you're practicing good environmental stewardship.
While producing clean energy creates many benefits, there are some potential downsides, too. They typically appear in the details of how solar panels are maintained, leased, and insured.
Minimize Potential Risks
Church and ministry leaders can minimize risks to the ministry by doing the following:
- Telling your insurance agent about your plans
- Examining long-term contracts carefully
- Reporting any taxable income you generate from solar energy production
Ten Steps to Take
If your ministry is considering solar power, be sure to understand the insurance, legal, and tax ramifications tied to your energy savings. Here are 10 recommendations:
- Contact your insurance agent. Your building’s insurance policy may need amending to protect solar panels against damage from fire, wind, hail, power surges, and a host of other risks, unless the company leasing the panels is responsible for providing insurance protection.
- Examine contracts carefully. Many solar energy agreements involve 20- to 25-year terms. An unfavorable contract could have long-lasting implications. At the end of the lease term the contract may give the ministry the option to own the panels or the ministry may become the owner automatically. Determine if the contract gives the ministry the choice of rejecting the panels, and if so, will the company remove them at its own expense at the end of the term?
You should also ensure that the contract includes a promise to “indemnify” the ministry for any damage or injury that occurs relating to installation and maintenance of the panels. Always ask a trusted attorney to review any contracts or lease agreements before signing them.
- Test roof stability. If solar panels are being installed on the church roof, make sure that the roof is structurally sound. An engineer should confirm that the roof can support the weight of the solar array under many conditions, including snow, ice, and wind.
- Investigate contractor’s qualifications. With solar energy such a hot trend today, some contractors may claim expertise in the field without the experience to back it up. Follow sound practices for hiring a contractor: Make sure the contractor is properly licensed, has at least five years of experience, is in good standing with the Better Business Bureau, and can provide references from projects similar in scope to yours.
- Confirm that the contractor is insured. If the contractor installing the solar panels doesn't carry proper insurance, you may have to pay for injuries or property damage caused by the contractor's negligence. Confirm that the contractor you've selected carries adequate insurance:
Require the general contractor and each subcontractor to furnish a certificate of insurance verifying that all workers are properly insured. In addition, ask that the ministry be named as an additional insured on the contractor’s policy before allowing work on your property to begin.
- Workers' compensation
- Builder’s risk
- Guard against solar panel theft. Individual solar panels can cost $1,000 or more, which make them an attractive target for thieves. The highest risk occurs when they’re on the ground, waiting for a contractor to install them. Be sure that the panels are kept securely locked, in a well-lit area, before installation.
The likelihood of theft decreases upon installation, but it remains a risk. Some thieves may use free online satellite imaging services to discover what buildings have solar panels on their roofs and parking canopies.
Fortunately, ministries can do some simple things to deter the theft of installed solar panels:
- Install motion detecting lights and security cameras around the solar panels or areas where the panels can be accessed.
- Buy an alarm that connects each solar panel in the array to a main security unit. If a panel is removed, the circuit is interrupted and the system alerts the police department.
- Link the panels together, using a heavy chain or a thick nylon-coated wire. This makes it tougher to carry away panels.
- Ask the contractor to use one-way screws when installing the solar panels to make removing the panels more difficult.
- Pay taxes on solar income. If your church earns money from selling clean-energy credits or providing excess power to a utility company, the proceeds must be reported to the Internal Revenue Service as unrelated business income. Non-profits may be required to pay taxes on income generated by business activities unrelated to their underlying mission, such as renting parking spaces during the week, selling coupon books, operating bookstores, or selling power to a utility company.
- Understand possible penalties. Arrangements vary, but some contracts carry a penalty if a solar energy producer doesn't deliver as much energy as promised. This penalty could fall onto the ministry or the solar energy company renting space atop your building, depending on the agreement.
Your standard building insurance policy doesn’t cover this type of contractual liability. Make sure you clearly understand any penalties that could be imposed if the ministry’s solar panels fail to generate as much power for the local utility company as predicted (due to weather conditions, equipment failure, or other issues). If possible, have your attorney remove such provisions from the contract.
- Enclose electrical equipment. Be sure that any equipment that gathers the solar power and transmits it to the local electric utility is properly enclosed, locked, and marked with appropriate warnings. If someone were injured by high-voltage equipment on church grounds, the ministry could be held liable for those injuries.
- Preserve solar panel efficiency through regular maintenance. Ministry leaders should be aware of whose responsibility it will be to maintain the solar panels, including cleaning. Dust from rain or wind, leaves, bird droppings, and snow that get on solar panels can limit the amount of sunlight the panels can receive, decreasing the power they produce.
If the ministry will be responsible for cleaning the panels, ministry workers should regularly inspect the panels for debris. Panels can generally be cleaned with mild soap and wiped off with a squeegee. Depending on where the panels are placed, an extended mop, squeegee, and water hose may get the job done. If ministry workers have to climb onto a roof to clean the panels, take appropriate safety measures to avoid falls.
Ministries that have installed solar power panels in recent years have seen dramatic energy savings and created new revenue streams. It may be a good choice for your ministry, too. Get your insurance agent and attorney involved in the exploratory process, and your ministry may be the next one going solar.