In God's Economy: We might benefit if we don't optimize for ownership, cash and short-term ROI

We might advance the Kingdom most by considering complex contracts!

In this special Earth Day installment, we might consider some win-win ways to advance the cause of climate as well as our own non-profit institutions. Indeed, there are many new ways to overcome misconceptions and general risk aversion in our institutions —not to mention cultural biases — which obstruct meaningful renewable energy initiatives.

Let’s get down to brass tacks: Many non-profits are hard-pressed justify solar installations due to ineligibility: if they don’t pay taxes, they can’t get tax credits. Some responsible utilities and others have developed terrific ways for these institutions to leverage these incredible savings through “third parties.”

If you’re a college/church/nonProfit considering solar, the hardest part may not be financing—it’s vocabulary.

There’s a quiet problem in campus energy conversations: we use the same words to describe very different deals. “PPA” gets stretched to cover leases. “Ownership” gets implied where it doesn’t exist. Even sophisticated counterparties sometimes blur distinctions.

This matters. Because in solar, words determine who owns the asset, who takes the risk, who gets the environmental credit—and who actually benefits.

This guide is meant to fix that.

First Principles: Three Questions That Define Any Solar Deal

Before terminology, anchor on structure. Every solar arrangement answers three questions:

1. Who owns the equipment?

2. Who buys the electricity (and at what price)?

3. Who owns the environmental attributes (RECs)?

Everything else—tax benefits, maintenance, accounting—flows from these.

Core Definitions (Strict, Not Marketing Versions)

1. Power Purchase Agreement (PPA) — The Real Definition

A Power Purchase Agreement (PPA) is a contract where:

• A third party owns, installs, and operates the solar system on your property

• You agree to buy the electricity it produces at a defined price (often per kWh)

• Term: typically 15–30 years

Key implications:

• You do not own the system

• You pay only for energy produced (performance risk is largely on the developer)

• Pricing may escalate annually (e.g., 1–3%)

Where confusion creeps in:

Some utilities describe site-hosting or lease payments as “PPA-like.” That’s imprecise. If you are not purchasing energy, it is not a PPA.

2. Solar Lease — Fixed Payment, Not Energy Purchase

A solar lease means:

• A third party owns the system

• You pay a fixed monthly or annual fee to use it

• Your payment is not directly tied to energy production

Key implications:

• You carry more performance risk than in a PPA

• Simpler budgeting (fixed payment)

• Often less common in institutional settings than PPAs

3. Site Lease / Land Lease (Utility-Owned Generation)

This is often what gets mislabeled:

• You lease your land or rooftop to a utility or developer

• They install a system and sell power to the grid—not to you

• You receive lease payments, not energy savings

Key implication:

You are a landlord, not an energy customer

This is structurally closer to real estate than energy procurement.

4. Direct Ownership (Capital Purchase)

You (or your institution) buy the system outright:

• Upfront capital expense (or financed via debt)

• You own all production, savings, and risks

• You control operations (or contract O&M separately)

Key implications:

• Lowest long-term cost (no developer margin)

• Requires capital and operational sophistication

• Tax-exempt entities must navigate incentives carefully (often via “direct pay” under current law)

5. Hybrid / Prepaid PPA / Flip Structures

More complex structures exist:

• Prepaid PPA: large upfront payment for lower long-term energy price

• Partnership flip: tax equity investor owns majority early, then ownership “flips” to host

These are common in large institutional deals but require legal and tax expertise.

RECs (Renewable Energy Certificates): The Most Misunderstood Asset

A REC represents the environmental attribute of 1 MWh of renewable electricity.

• In most PPAs, the developer owns the RECs unless explicitly transferred

• If you don’t own the RECs, you generally cannot claim to be “using solar” in a formal sustainability sense

This is not a moral issue—it’s a definitional one.

But institutions should be precise in public claims (e.g., AASHE reporting, sustainability pledges).

Why Colleges Choose Each Option

PPA (Most common for colleges)

• No upfront capital

• Immediate (though partial) energy savings

• Outsources performance and maintenance risk

Direct Ownership

• Best lifetime economics

• Full control over assets and messaging

• Requires capital allocation discipline

Site Lease (Utility model)

• Easiest administratively

• No impact on campus energy costs

• Purely a revenue play

Lease

• Middle ground, but often less favored than PPAs in higher ed

What Gets Confused in the Market

Even experienced actors sometimes blur:

• Calling a site lease a “PPA”

• Implying solar usage when RECs are sold elsewhere

• Treating price stability and cost savings as the same thing

When evaluating proposals, insist on explicit answers:

One caution: if there is no discounted energy flowing to the host, it is not functioning as a PPA in the economic sense—it is a site lease dressed up in energy language.

Bottom Line…Solar is almost always a positive move for institutions—and always for the Earth — but not all “solar deals” are the same.

Clarity on structure leads to clarity on outcomes:

• financial

• operational

• reputational

If this post does one thing, it should make it harder for anyone—vendor, utility, or advisor—to hide behind vague language.