WHAT IS WW-FREE ANYWAY?
WW-FREE is a Washington state non-profit organization that administrates community solar projects. Community solar projects are privately owned renewable energy systems placed on local government property that qualify for increased monetary production incentives from the state of Washington. WW-FREE charges no fees for our work. Our officers take no compensation and have volunteered their efforts. Our goals are:
To raise environmental efficiency in public buildings which lowers the cost for our local municipalities to operate (your tax bill);
To raise money for scholarship endowments dedicated to lowering the cost for local children to go to college;
To enrich our community by investing and keeping money locally that otherwise would flow out of our area; and finally
To foster job training in tomorrow’s energy and building technologies for our children.
To do this, we will operate a community solar project on your behalf. Your money will go to buy solar panels and inverters that turn sunlight into electrical power to be used by your local government. You will retain ownership of that equipment, and have a right to it or its fair value at the end of the project. In the meantime, you also will also have right to the Washington State production incentives for renewable energy, and to federal incentives for installing renewable energy. We hope that you will donate part or all of that money to provide scholarships for Walla Walla area students to attend college. We’ll make it easy for you, and in return you’ll receive greater tax advantages for your donations than otherwise possible; enough to return almost your entire donation.
WHAT IS COMMUNITY SOLAR?
Community Solar projects are private organizations that are set up under parameters established by law in the state of Washington. You can find the legal definitions and rules at RCW Ch. 82.16.110, et seq (http://apps.leg.wa.gov/rcw/default.aspx?cite=82.16.110) and WAC 248-20-273 (http://apps.leg.wa.gov/wac/default.aspx?cite=458-20-273 ). WW-FREE acts as a community solar administrator under these statutes.
The purpose of a community solar project is to allow private individuals and businesses to collectively participate in obtaining renewable energy systems. Often individual properties are not well suited for renewable energy, and costs and other barriers for complete systems can be prohibitive.
The community installations are placed on property devoted to the public good – particularly local government facilities. This benefits the state by encouraging growth in renewable energy industries and by reducing the demand for new power generation plants. Local governments benefit from the value of the electricity produced; utilities benefit from greater renewable generation. Participants in return benefit from yearly state production incentives which currently are set at $1.08 per kW-H produced. If the participant purchases a complete system, they may also qualify for federal tax incentives including the 30% business renewable energy investment tax credit and accelerated depreciation.
NWSEED is a Pacific Northwest group that publishes a guide to community solar programs. The guide includes summaries of different business models for community solar projects, as well as summaries of the state and federal incentives available to participants and expected cash flows (yearly sunlight varies widely from Seattle to Walla Walla!). A link to the guide can be found here: http://www.nwseed.org/documents/NW%20Community%20Solar%20Guide.pdf
Another guide is available through the Department of Energy’s National Renewable Energy Lab (NREL). It is found at http://www.nrel.gov/docs/fy11osti/49930.pdf.
HOW DOES COMMUNITY SOLAR WORK?
The operation of our community solar project is illustrated in the figure. The key steps are:
- Participants provide money which is used solely for the purchase of solar electric equipment held in their name and installed on local government property.
- At the time of sign-up, we will:
- Check that you are eligible to receive Washington state production incentives ($1.08 for every kW-h of electricity produced with their equipment) up to $5000 per individual or $10,000 per family (two adult individuals).
- Allow you to sign-up to donate your desired portion of your state production incentives to one of the area schools to endow scholarships for Walla Walla area children.
- WW-FREE will purchase the equipment, install and maintain it for you. We will also do all necessary work to obtain the state incentive money for you.
- Once each year during the summer, WW-FREE will submit paperwork to the state for that year. The state issues a credit to the utility (Pacific Power or Columbia REA), and they issue WW-FREE one check for the total incentive payments. WW-FREE then distributes the money in your name according to each participant’s enrollment.
- You will receive a receipt from the school(s) you chose for any charitable donations.
WHAT’S SPECIAL ABOUT WW-FREE’S COMMUNITY SOLAR PROJECT?
There are several community solar projects in Washington state – mostly on the western side.
A list of the installations through 2011 is available through the state legislature at http://www.leg.wa.gov/Senate/Committees/ENV/Documents/CommunitySolarProjects.pdf.
Awareness of the program has been slow to grow in Eastern Washington even though we receive nearly 50% more sunlight in the average year.
WW-FREE’s projects are unique because they are the only community solar projects in the state set up to maximally benefit charity – in our case by endowing scholarships to help send our children to Washington state colleges. We are also setting one up in Jefferson Park for the benefit of the senior center.
In most community solar projects the participants benefit entirely from the state production incentives – the amount of the incentive, like a construction bond, is set to pay for the installation over several years (hopefully with a small profit). WW-FREE participants may also benefit in this manner. However, participants opting for charitable work benefit in an additional way. They are leveraging their charitable deductions in the same way that a business leverages its strategic investments – doing them in a way that provides the most tax advantage.
Over the course of 8 years, WW-FREE estimates that every $3 used in a community solar project in Walla Walla will generate $4 in state production incentives – a return that is considered tax-free by the IRS. When you donate those funds to the scholarship endowments, they are tax deductions. So you get an extra third of your tax deduction while the charity also gets more funds. In addition, after the project is over, you will be entitled to the market value of the equipment you bought – which we may negotiate for you as a tax deductible donation to the charity as well. Finally, if you buy a complete system (panels plus an inverter), then you may be eligible for the 30% federal business tax credit and accelerated depreciation. We believe it is possible, over 8 years, to recover more than 2 or three times the tax benefits of doing a single donation – but be sure to consult with your own tax expert.
So how is WW-FREE unique? We have
- More sun than other installation sites (up to 50% more than sites on the western half see a map of national photovoltaic resources http://www.nrel.gov/gis/images/map_pv_national_hi-res_200.jpg ), meaning you get more production and hence more incentive returns than other areas of the state.
- WW-FREE charges no fees for work done by WW-FREE personnel, and it makes no profit. Only actual costs are included in the cost.
- A way to help area charities that leverages your donations for the greatest tax benefit – while helping the environment and reducing your tax burden.
WHO’S BEHIND IT?
Our Board consists of employees of each of Walla Walla’s utilities as well as each of the area colleges. You can find their identity as well as short bios here.
Jeff Burkhart of the law firm of Burkhart & Burkhart LLC has provided pro bono legal services. (http://www.burkhartandburkhart.com/ )
Contracting services are supplied by Walla Walla Electric (http://www.wwelectric.com/ ), Ketelsen Construction (http://www.facebook.com/pages/Ketelsen-Construction/126026727450536 ), and Integrity Metal Fab (http://www.facebook.com/pages/Integrity-Metal-Fab/154466297923641 ).
HOW DOES THE CHARITY PORTION WORK?
We make it simple. When you sign up to participate in a WW-FREE solar project, you have the option of participating in raising endowments for scholarships at the school of your choice (Whitman, WWCC, WWU or Wa-Hi). You can elect to donate any portion of your proceeds. Then, once each year, WW-FREE will direct that portion of your state incentive payments to the institution you chose. The school will then issue you a receipt for your donation. You need do nothing more.
The schools receive increased benefit because the donations from 2013 to 2020 (the life of the program) will total more than the initial cost of the renewable energy equipment. That means you also benefit more, because you get greater tax deductions than you would otherwise. Plus, you still have the value of your solar equipment at the end of the project – which at a minimum can once again be donated to a non-profit institution. Purchasers of complete systems may also benefit from other tax advantages such as the federal 30% renewable energy investment business tax credit and accelerated depreciation.
In essence, WW-FREE attempts to leverage your charitable donations to provide you the greatest tax benefits. But be sure to consult with your own tax expert – we do our best to be accurate, but we can’t make any guarantees for your specific tax circumstances.
HOW DO I FIND OUT MORE ABOUT THE TAX BENEFITS OF THE PROJECT?
First, check with your own tax expert.
The taxability of state production incentives is treated in the IRS sections of federal code, specifically 26 USC Section 136 (IRC § 136. Energy conservation subsidies provided by public utilities). A link to the law is here. http://us-code.vlex.com/vid/energy-subsidies-provided-utilities-19210850 The Washington state production incentive is paid by our local utilities in return for a credit on their state taxes.
Guides to solar energy federal tax credits including the business tax credit can be found at dsire usa’s web site: http://www.dsireusa.org/solar/incentives/incentive.cfm?Incentive_Code=US02F&re=1&ee=1
The site also includes links to the IRS forms and guides.
DO I HAVE TO PARTICIPATE IN CHARITY?
No. In fact you can choose to donate any percentage from 0% to 100% to the scholarship endowments.
But we hope you do participate. And you choose which local school your donations go to.
WHAT DO I GET FOR MY MONEY?
With your monetary participation you are:
- Buying all or part of a solar electric system (photovoltaic panels that convert sunlight into direct current, and an inverter that converts direct current into alternating current as provided by a utility). You are not buying stock in WW-FREE or any ownership in any company;
- Empowering WW-FREE to act as your agent in
- Purchasing and installing the solar electric system on local municipal property,
- Maintaining its operation,
- Filing all necessary forms yearly with state and federal governments to obtain production incentives and grants, and seeking to obtain any other returns on your behalf,
- Distributing your portion of returns yearly as per your written instructions below, and
- Transferring the solar equipment to your physical possession or negotiating its sale or donation at a fair market price at the end of the incentive program.
You also acknowledge that the electricity produced by the system, as a lease payment of the placement of the system, belongs to the local municipality on which the system is placed. The value of that electricity is intended to reduce the tax burden on people and businesses within the municipality.
In return, WW-FREE will:
- Act within its power to both maximize total production and individual Participant return;
- Install, maintain and operate solar or other renewable energy systems for your benefit;
- Use any funds given by Participants only for the purchase, installation and operation of renewable energy equipment. As a 501(c)(3) nonprofit corporation, no officer of WW-FREE receives compensation for these services.
- Use any remaining funds from the operation of the non-profit at the end of the incentive program as an endowment for scholarships for area children.
Participants who provide funds sufficient for purchase and installation of complete renewable energy systems ($26,665 + tax) are expected to earn approximately the maximum state production incentive of $5000 per year and may also be eligible for a first year federal investment tax credit of thirty percent (30%) of the investment, or approximately $8690, as defined under 26 USC § 48 and Form 3468 (Investment Credit) of the Department of Treasury, Internal Revenue Service and may also be eligible for accelerated amortization (depreciation). WW-FREE will track ownership of individual systems and supply all documentation to facilitate this, but makes no guarantees as to state or federal law or individual eligibility. Interested participants should consult with their own tax expert.
HOW MUCH DOES IT COST TO PARTICIPATE?
WHEN DO I GET SOMETHING BACK?
Forms are filed with the state during July of each year. Given time for processing by the state, we anticipate checks go out to participants during the fall months of each year.
Peak production, of course, occurs during the spring, summer and fall of each year. So to maximize your return, invest in early spring or in winter.
WHAT HAPPENS AT THE END OF THE PROJECT?
You own the equipment bought with your money.
That means you can choose to reclaim it for your own possession. You would have to pay the additional costs for dismantling that portion of the installation, but WW-FREE will do it for you at cost. We anticipate that’s probably not your first choice.
Alternatively, WW-FREE will negotiate an advantageous disposition of the equipment for you. Options include any combination of:
- A cash payment from the local municipality to obtain ownership of the equipment from you, and/or
- A donation to the municipality for the remaining fair market value of the equipment, which we believe should again provide you a final – and substantial — tax deduction.