No Tax Bill? Your Church, School or Nonprofit Can Still Get the Solar Credit
Your organization pays no federal income tax. Through elective pay, the IRS can still send you the commercial solar credit as a payment. The catch is the clock: your system must be running by December 31, 2027.
Can a church, school or nonprofit get the solar tax credit in California?
Yes. Tax-exempt organizations can receive the federal commercial solar credit as a direct payment from the IRS, through a program called elective pay. Your organization must own the system, and it must be running by December 31, 2027.
Solar With Watts and the Mars commercial team design and install systems 50 kW and up for churches, schools and nonprofits near you, anywhere in PG&E, SCE, SDG&E or SMUD territory. The rules come from the IRS elective pay program; your CPA handles the filing.
What do churches, schools and nonprofits ask first about solar?
Short, straight answers to the three questions boards and finance committees ask before anything else.
Can churches get the solar tax credit in California?
Yes. Through elective pay, the IRS sends tax-exempt groups the commercial solar credit as a payment. Your church must own the system and have it running by December 31, 2027.
Do schools and nonprofits have to pay for solar upfront?
Not always. A power purchase agreement can mean no upfront cost, but its owner keeps the credit. Owning with cash or a loan puts the IRS payment in your hands.
Who installs commercial solar for churches and schools near me in California?
Solar With Watts and the Mars commercial team. We design and install systems 50 kW and up for churches, schools and nonprofits across PG&E, SCE, SDG&E and SMUD territory.
Why are church, school and nonprofit electric bills so hard to cut?
Your building runs on a business rate, not a home rate. Business rates charge the most from 4 to 9 p.m., when evening services, youth programs and after-school activities fill your building. Many also add a demand charge for your biggest spike of the month. That is why a solar system has to be designed around how your building actually uses power. Panels sized from a home-style estimate miss the money.
The expensive hours
On PG&E's business rates, the on-peak window runs 4 to 9 p.m. every day of the year. That is exactly when choir practice, Bible study, board meetings and gym nights happen.
Demand charges
Many business rates bill your highest burst of power in the month, not just total use. The air conditioning kicking on before a packed Sunday service can set that charge for the whole month.
What exports earn
Under California's net billing rules, power you send to the grid earns far less than power you buy. A school that sits empty in July sends its best solar hours out at a discount.
When does each type of building use the most power?
| Building | When it uses the most | What solar alone misses | What the design adds |
|---|---|---|---|
| Church or house of worship | Weekend services, weekday evenings, holiday events | Peak-hour use after sunset; big HVAC spikes before services | Sizing to the real load; battery storage to cover evenings and trim spikes |
| K-12 school | Weekday mornings and afternoons during the school year | Summer break, when production is highest and the campus is quiet | Sizing to the school-year load; carports over parking lots |
| Nonprofit office or community center | Business hours, plus evening classes and events | Evening programs that run into the 4–9 p.m. window | A rooftop or carport system matched to daytime use, with storage where evenings matter |
| Shelter, food bank or clinic | Around the clock, with refrigeration and cold storage | Overnight use and outage risk during shutoffs | Battery storage for backup on the circuits that can't go down |
Export rules: CPUC Net Billing Tariff. Demand charges: SCE TOU-GS-2 rate fact sheet. Your design is modeled on your own 12 months of bills, not on averages.
Which utility serves your building?
Business B-rates with a 4–9 p.m. on-peak window, seven days a week.
TOU-GS rates. Buildings drawing 20 to 200 kW are typically on TOU-GS-2, which adds demand charges.
Time-of-use business rates with a 4–9 p.m. on-peak period set by the CPUC.
Commercial time-of-day rates sized by load, with a 4–9 p.m. summer weekday peak. SMUD sets its own solar export rules.
What kind of solar system fits a church, school or nonprofit campus?
Most campuses have more than one place to put solar. The Mars commercial team designs rooftop, carport and ground-mount systems, with battery storage where evening use or backup power matters. Many projects combine two of them to reach the right size without overloading one roof.
| Option | Best for | What to know | Common on |
|---|---|---|---|
| Rooftop | Large, sound roofs with good sun exposure | Roof age matters. If the roof needs replacing in the next few years, plan it before the panels go up. | Sanctuaries, fellowship halls, gyms, classroom wings, office buildings |
| Solar carport | Campuses with big parking lots and limited roof space | Leaves the roof alone and shades cars and walkways for families, students and staff. | Church parking lots, school lots, community center lots |
| Ground mount | Properties with open, unshaded land | Easy to size and maintain, with no roof work. Needs land you won't build on later. | Rural churches, camps and retreat centers, schools with open acreage |
| Battery storage | Buildings busy from 4 to 9 p.m. or that need backup | Stores daytime solar for evening peak hours and can trim demand spikes. Can keep key circuits on in an outage. | Churches with evening programs, shelters, food banks, cooling centers |
Send 12 months of bills and a rough idea of your roof, parking and land. The Mars commercial team will lay out which combination fits your building and your utility's rate, before anyone asks your board for a vote.
What uses the most electricity in a church, school or nonprofit building?
Cooling big rooms is usually the largest load, followed by kitchens, lighting and sound, and anything that runs all night. Knowing which of these drives your bill tells the design team where solar helps and where a battery earns its place.
Cooling large rooms
Sanctuaries, gyms and multipurpose rooms have high ceilings and fill with people at once. Air conditioning that starts before a service or assembly often sets the month's highest spike.
Sanctuaries · Gyms · AuditoriumsKitchens and fellowship halls
Commercial refrigerators, ovens and dishwashers run for meal programs, potlucks and school lunch. Refrigeration runs around the clock, sun or no sun.
Fellowship halls · Cafeterias · Meal programsLighting, sound and video
Stage lighting, sound systems, projectors and livestream gear are heavy in the evening, right inside the 4–9 p.m. peak window.
Worship centers · Theaters · Event spacesClassrooms and offices
Computers, lighting and cooling during the school day or office hours. This is the load solar matches best, because it peaks while the sun is up.
Schools · Admin offices · Community centersCold storage and 24-hour care
Walk-in coolers, freezers, medical equipment and shelter beds never shut off. These are the circuits that most need battery backup during a shutoff.
Food banks · Shelters · ClinicsEV charging
Electric school buses, ministry vans and staff chargers add a new load, usually charged overnight or midday. Planning for them now avoids an undersized system later.
School districts · Church vans · Staff parkingIs your building adding loads in the next few years?
Tell the design team now. A system sized only for last year's bills can come up short once new equipment arrives, and adding panels later costs more than planning for them today.
- New HVAC or heat pumps replacing gas heating
- EV chargers for buses, vans or staff
- A new building or wing, such as a gym, classroom or hall
- Kitchen upgrades or expanded meal programs
- Backup needs for shelter, cooling center or emergency use
Who has to own the system, approve it and file for the solar credit?
Three decisions decide whether your organization collects the credit. Who owns the system, who approves the contract, and who files with the IRS on time. Get these right before anyone signs, and the payment follows the project. Get one wrong, and the credit can go to someone else or be lost.
1Should your organization own the system or sign a PPA?
Only the owner of the system can claim the credit. If your organization owns it, the IRS pays you through elective pay. Under a power purchase agreement (PPA), a third party owns the panels and claims the credit instead.
| Own it (cash or bank financing) | Power purchase agreement | |
|---|---|---|
| Who owns the system | Your organization | A third-party owner |
| Who gets the credit | Your organization, as a payment from the IRS | The PPA owner |
| Upfront cost | Paid in cash or financed through a bank | Little or none |
| What you pay over time | Loan payments, if financed | A set rate for the power the system produces |
| Paperwork on your side | IRS registration and a timely tax filing | A long-term contract; no IRS filing for the credit |
| Best fit | Organizations with reserves, a capital campaign or access to financing | Organizations that need to avoid any upfront cost |
Mars handles commercial financing case by case, including cash, bank financing and select PPAs. Ownership rules: IRS elective pay FAQ.
2Who has to approve a solar project at a church, school or nonprofit?
Every organization has its own approval path. Knowing yours up front keeps the project inside the deadline.
Churches and houses of worship
Usually a vote of your board, council, session or vestry. Some denominations or dioceses also approve property projects.
You get a written proposal built to hand to the people who vote.
Nonprofits and private schools
Usually a board resolution approving the contract and the financing.
If you lease your building, the property owner has to agree, and ownership of the system needs to be settled in writing.
Public school districts
Most use California's energy service contract law, Government Code 4217.12.
The board holds a public hearing at a regular meeting, with at least two weeks' notice, and finds that the project's cost is offset by energy savings.
3How does a tax-exempt organization file for the payment?
Your CPA handles the filing. These are the steps to put on the calendar so nothing slips.
- Confirm eligibility before you sign. Have your CPA confirm your tax-exempt status and that your organization will own the system.
- Get the system running in time. For projects that start construction after July 4, 2026, the system must be placed in service by December 31, 2027, under the One Big Beautiful Bill Act.
- Register with the IRS first. Complete the IRS pre-filing registration online and get a registration number. The IRS says to register early enough to have the number when you file (IRS Publication 5817).
- File on time. Your CPA claims the credit on Form 990-T, with the registration number, by the return's due date. Extensions count. A late return loses the payment.
- Keep the records. Save the contract, invoices and proof of payment in case the IRS asks.
Elective pay systems of 1 MW (AC) or more that start construction in 2026 or later must meet US-made content rules or qualify for an exception. Most church and nonprofit systems are well under that size. Large school districts should raise it early.
Ask your CPA how grants or designated gifts for the project affect the credit. Ask for written confirmation in your proposal that the equipment meets current federal sourcing rules.
Solar With Watts and Mars are not tax advisors. This section explains how the program works; your CPA or tax counsel confirms how it applies to your organization.
When does a church, school or nonprofit solar system have to be running to get the credit?
For projects that start construction after July 4, 2026, the system must be placed in service by December 31, 2027. That date is set by the One Big Beautiful Bill Act. Miss it, and the federal credit is gone for that project. There is no payment to file for.
The placed-in-service deadline for new solar projects claiming the federal commercial credit, including through elective pay. Your approvals, design, permits and utility hookup all have to fit before it.
What has to happen before December 31, 2027?
- Bill review12 months of bills and a look at your roof, parking and land
- Design proposalSystem layout and options from the Mars commercial team
- ApprovalBoard, council or district vote, including any public hearing
- PermitsEngineering, building permits and the utility interconnection application
- InstallationRooftop, carport or ground-mount construction on site
- In serviceInspection and utility approval to turn the system on
Commercial permits and utility interconnection can take months on their own. Board calendars and public-hearing notice add more. Organizations that start the conversation in the next few months leave room for all of it.
Which incentives can a California church, school or nonprofit still use?
| Incentive | Who it's for | What it does | Status |
|---|---|---|---|
| Federal commercial solar credit, through elective pay | Tax-exempt organizations and public agencies that own the system | Paid to your organization by the IRS after your CPA files on time | Open In service by December 31, 2027. IRS FAQ |
| Energy community bonus | Projects located in a federally designated energy community | Can raise the credit amount on top of the base credit | Depends on location Check the federal energy community map; your CPA confirms |
| California solar property tax exclusion | New solar systems on taxable property | Keeps the solar system out of a property tax reassessment | Ending Only covers systems finished before January 1, 2027 (BOE). Property with a religious or welfare exemption may stay exempt; confirm with your county assessor. |
| Bill credits for exported power | Solar customers of PG&E, SCE and SDG&E | Credits power you send to the grid at export value under net billing | Ongoing Rules from the CPUC. SMUD sets its own export rules. |
Status as of November 2026. Rules can change; your proposal and your CPA confirm what applies to your project.
How can a church, school or nonprofit pay for commercial solar?
Mars offers three ways to pay on commercial projects: cash, bank financing and select power purchase agreements. Each one is set up case by case. The right choice depends on your reserves, your board's appetite for debt, and whether collecting the credit yourself matters to you.
Cash
Your organization pays for the system and owns it from day one. After your CPA files, the IRS sends the credit to your organization.
- Simplest contract and approval
- No loan payments or interest
- Every dollar saved on the bill stays with your mission
Bank financing
A lender funds the system and your organization owns it. You make loan payments, and the IRS payment still comes to you after filing.
- Keeps reserves in place
- Ownership, so elective pay applies
- Terms depend on the lender and your finances
Power purchase agreement
A third party owns the system on your property. You pay an agreed rate for the power it produces. Available on select projects.
- Little or no upfront cost
- The owner typically maintains the system
- The credit goes to the owner, not your organization
Where do organizations find the money to own their system?
The IRS payment arrives after your tax filing for the year the system goes into service, not at signing. Organizations that own their systems usually cover the cost up front from one of these sources.
Find out which way to pay fits your organization, before your board meets.
How does a church, school or nonprofit get a free solar review?
Fill out the short form with your building details. There's no cost, and you don't need your bills to start.
What happens next
- Share a few basicsYour building, utility and timing. We pass them straight to the Mars commercial design team.
- The design team checks the fitThey look at whether a system of 50 kW or more makes sense, and may ask for 12 months of bills to size it.
- They lay out your optionsYour site, your loads and the ways to pay, designed around your building.
- You take a proposal to your boardWith the deadline, ownership and filing steps spelled out for the people who vote.
Your organization's legal name, who owns the building, your utility, and when your board or district meets next.
What else do churches, schools and nonprofits ask about solar?
Can a church get the federal solar tax credit if it doesn't pay taxes?
Yes. Elective pay lets tax-exempt organizations receive the commercial solar credit as a payment from the IRS. The church must own the system and file Form 990-T on time, with its IRS registration number.
What is the deadline for nonprofits to get the solar credit?
December 31, 2027, for projects that start construction after July 4, 2026. That placed-in-service date comes from the One Big Beautiful Bill Act. Approvals, permits and the utility hookup all have to fit before it.
Does a nonprofit get the solar credit with a power purchase agreement?
No. Under a power purchase agreement, the third-party owner claims the credit. Your organization pays an agreed rate for the power instead, usually with little or no upfront cost.
When does the IRS pay the elective pay credit?
After your organization files its tax return for the year the system goes into service. It is not paid at signing, so most organizations cover the cost first with reserves, a capital campaign or financing.
Do California school districts need a public hearing to install solar?
Usually, yes, when they use the energy service contract law. Under Government Code 4217.12, the board holds a hearing with at least two weeks' notice and finds the cost is offset by energy savings.
How big does a church or school solar system have to be?
At least 50 kW for a project with the Mars commercial team. That usually means a large sanctuary, gym, campus or several buildings on one site. Smaller buildings may fit a home-size system instead.
Will solar raise property taxes for a church or nonprofit?
Not usually. Property with a religious or welfare exemption may stay exempt, but confirm with your county assessor. California's separate solar exclusion only covers systems finished before January 1, 2027.
Can a church add battery storage for power outages?
Yes. Battery storage can keep key circuits running during a shutoff and shift solar power into the 4 to 9 p.m. peak. The design team sizes it to the loads that matter most, like refrigeration or a cooling center.
Can a nonprofit go solar if it leases its building?
Yes, but the property owner has to agree. Ownership of the system needs to be settled in writing, because only the owner of the system can claim the credit.
Which California utilities do you serve for church and nonprofit solar?
PG&E, SCE, SDG&E and SMUD. Each utility has its own business rates and export rules, so every design is modeled on your own 12 months of bills.
Not a church, school or nonprofit?
This page is for tax-exempt organizations with buildings large enough for 50 kW or more. If that's not you, one of these is a better fit.
Your building can still collect the solar credit. The clock says start now.
Systems must be running by December 31, 2027. Share a few basics, and the Mars commercial design team will tell you whether your building fits and how to pay for it.