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Special Purpose Entity (SPE) Model
To take advantage of the tax incentives available to commercial solar projects, organizers may choose to structure a project as a business. In most states, there is a range of business entities that could be suitable for a participant-owned community solar project. (Please see Appendix A for more in-depth descriptions of these business entities.) The main challenges in adapting these commercial solar structures for community projects include:
- Fully utilizing available tax benefits when community investors have limited tax appetite, including a lack of passive income.
- Maintaining the community project identity when engaging non-community-based tax-motivated investors.
- Working within limits on the number of unaccredited investors if the project is to be exempt under securities laws.
University Park Community Solar LLC, Maryland and the Clean Energy Collective LLC, Colorado are examples of SPE models.
