Document Actions
University Park Community Solar LLC, Maryland
Background: The volunteer founders of University Park Community Solar LLC spent more than two years crafting the legal and financial aspects of their business model. With expert consultation, including help from a state Senator to change the Maryland net metering law, they formed a member-managed LLC that will return their investment in five to six years. Within the group, there are both active and passive investors.
A 22 kW system was installed on the roof of a local church in May 2010. The LLC and the Church have signed a 20-year agreement detailing the provision of electricity, access to the solar array, maintenance, insurance, and other issues. The host has an option to purchase the system before the 20-year term is up.
Project Financing: The volunteer group's capital financing was through their members. They received a 30% tax credit (federal ITC equivalent of $39,000) and the State of Maryland awarded the group $10,000 in grants. Over six years the cost will depreciate 85% (MACRS). The estimated annual income from power sales was $3,600 in the first year, rising 3.5% per year thereafter.
Costs: The cost of University Park's 22 kW Community Solar project completed was $5.90/watt installed. The founders noted that accounting and legal fees could overwhelm any return to members. To assist in establishing the LLC, the group received pro bono help from the Maryland Intellectual Property Legal Resource Center and paid approximately $12,000 for other legal and accounting expertise. Going forward, they plan to handle the accounting and tax paperwork in house as much as possible.
Shared-Ownership Mechanism: University Park Community Solar LLC has 36 members. The LLC will pass benefits to its members based on revenue from several sources: electricity sold to the church and grid, the auction of RECs, federal tax incentives, and depreciation. The LLC organizers were careful to obtain legal advice on how to gain an exemption from state and federal SEC filing requirements. They are not all "accredited" investors. In addition, they were required to create lengthy disclosure documents to ensure that investors were fully informed of the risks. Their attorneys advised them to pursue an exemption that restricted them in several aspects, including having fewer than 35 unaccredited investors, keeping the offering private, and limiting membership within the state of Maryland.
Project Highlights
- System Owner: University Park Community Solar LLC
- System Host: Church of the Brethren, University Park, MD
- Installed Capacity: 22 kW
- Participant Agreement: LLC passes net revenues (after expenses) and tax credits to members
- Electricity: LLC sells power to church below retail rate. Rate escalates approx 3.5%/yr. Host net meters. Annual net excess generation is compensated by the utility.
- RECs: LLC is currently negotiating the sale of RECs to the installer
- Number of Participants: 36 LLC Members
Financial Details
- Installed Cost: $5.90/watt
- Capital Financing: Member financed
- Tax Credits: 30% federal ITC equivalent to $39,000
- Grants: $10,000 from State of MD
- MACRS: Will depreciate 85% of cost over six years
- Estimated Annual Income from Power Sales: $3,600 in year 1, rising 3.5% per year
For More Information: David Brosch at (301) 779-3168, www.universityparksolar.com
