Jewish Faith Leaders Go Solar Thanks to Federal Credits

Solar energy is increasingly popular among faith-based institutions. Recently, two synagogues, thousands of miles apart but with similar economic and environmental commitments, have installed solar arrays on their buildings. In California, the Valley Beth Shalom (VBS) synagogue installed 425 kilowatts’ (kW) worth of solar panels to lower energy costs, increase sustainability, and provide an educational opportunity to the community.¹ With similar purposes in mind, the Martha’s Vineyard Hebrew Center (MVHC) in Massachusetts installed 75 solar panels, providing 30 kW of energy, in 2023.

Both VBS and the MVHC took advantage of direct pay, the monetization of clean energy tax credits for nonprofits. Until 2022, only organizations with a tax liability could access clean energy tax credits; nonprofits and tax-exempt entities were locked out from claiming such credits when installing solar panels or other clean energy measures. Thanks to the elective pay (a.k.a. direct pay) option introduced by the Inflation Reduction Act of 2022 (IRA) (P.L. 117-169), these entities can claim tax incentives when investing in clean energy projects, such as solar energy, ground-source heat pumps, and battery storage devices. These small-scale renewable energy projects enable lower energy bills and increased resilience and can help create quality contractor and installation jobs, generating local wealth and spurring further demand for these distributed technologies.

Without direct pay, VBS and the MVHC would have struggled to install solar panels and reap their full benefits. Direct pay is a game-changer because it gives nonprofits access to the same financial incentives that for-profit companies have received for years when investing in renewable energy. As the monetization of a tax credit, direct pay is not a point-of-sale rebate or a federal grant.

Federal tax credits are handled by the U.S. Department of the Treasury and the Internal Revenue Service (IRS), so nonprofits seeking to claim direct pay must complete IRS Forms 3468 and 3800, along with their 990-T tax returns. They must file them the year after the eligible clean energy project is “put into service.” Depending on when the clean energy project was installed and placed into service and when the tax return was filed, the entire process can take anywhere between four and 18 months.

In March 2025, the MVHC received the base 30% direct pay payment for its solar array installation, which was put into service last year.² While most organizations can expect to claim between 30 and 50% of a project’s costs, if the law’s bonus credits are stacked, they can claim up to 70% of the total cost of domestically-sourced projects located in low-income communities. There is no limit to the number of eligible projects a nonprofit can claim direct pay for in a single tax year.

VBS and the MVHC are not alone in pursuing environmental and financial stability by installing solar panels on their buildings. According to a 2023 federal report, places of worship had installed more than 2,500 solar systems by the end of 2021, representing approximately 170 megawatts (MW) of capacity—enough to power more than 28,500 households for one year. With these solar installations, houses of worship collectively avoid 236,000 tons of CO2 emissions a year, equivalent to removing nearly 50,000 cars from the road. Now that houses of worship can benefit from the same tax credits afforded to commercial businesses, their solar installations are expected to accelerate considerably.

 

Solar panels on top of the Martha's Vineyard Hebrew Center building. 
Courtesy: Martha's Vineyard Hebrew Center.

 

Valley Beth Shalom Installs Solar Panels to “Repair the World”

Driven by sustainability, community, and financial considerations, Valley Beth Shalom completed the installation of 868 Q-Cell rooftop solar panels this month, making it the largest solar array installation in a California synagogue and one of the largest for a synagogue in the entire country. Informed by Jewish environmental values, VBS installed solar panels on almost every square foot of the 130,000-square-foot roof of the main building on its five-acre campus in Encino, California. Working with Sunistics Group, which designed the solar installation, VBS initiated construction of the solar array in December 2024.

The 425 kW solar array is expected to save the synagogue approximately 614,552 kWh annually, equivalent to $180,014. By generating clean energy locally, VBS will replace 80% of the energy it currently sources from the Los Angeles Department of Water and Power, VBS's local utility. While 43.4% of the utility’s energy mix comes from renewable sources (e.g., solar, wind, geothermal, and hydroelectric), 42.7% still comes from fossil fuels, such as natural gas and coal.

Installing solar panels is a financially viable investment for nonprofit organizations like VBS. Energy costs are the second-highest operational expense for many nonprofits, behind only salaries. The clean energy from solar panels offsets the relatively expensive energy from the power grid, resulting in long-term reductions in energy costs. At VBS, the savings will be invested in educational programs and hands-on learning opportunities for students and families in the community, advancing environmental stewardship and empowering the next generation to embrace sustainability. VBS will develop programs centered around the installed solar panels to educate the community about renewable energy and the connection between sustainability and Jewish values.

The total cost for the solar array installation reached $1.2 million, including inverters. VBS received several grants, low-interest loans, and donations from the community to finance the solar panels. Through the Jewish Solar Challenge, VBS received a $150,000 grant in 2023. In that same year, VBS secured a $100,000 zero-percent interest loan from the Adamah Climate Action Fund, a loan program run by Adamah, a national Jewish climate organization that VBS is a member of. Additionally, as a nonprofit organization, VBS will apply for direct pay this year, once the panels are put into service, to recoup at least 30% of the project costs.

"Everything that we do at Valley Beth Shalom revolves around tikkun olam, or ‘repair the world’," said Matthew Weintraub, executive director at VBS. “We are good stewards of the environment, an integral part of our Jewish values. We focus on spending money and energy on things that make an impact on the community.”

 

Solar panels on another section of the Martha's Vineyard Hebrew Center building.
Courtesy: Martha's Vineyard Hebrew Center.

 

Martha’s Vineyard Hebrew Center

Looking to make a significant contribution to its community amid high electricity rates, the MVHC decided to install solar panels. The center completed a 76-panel 30 kW array in May 2023 and put it into service in July of that year. The total cost for the solar array installation was $76,000. The 30 kW solar array is already saving the MVHC hundreds of dollars annually, which they used to install a new heat pump in place of their old propane-fueled furnace.

“In 2022, we installed solar panels in our house, and we wanted to do the same for the Hebrew Center," said Ricky Diamond, the first vice president of the MVHC. “We are a small community with 324 members, with many concerned about climate change and how to get off fossil fuels. We saw solar panels as a way to do good for the environment, the community, and save money on our utility bills.”

As a nonprofit organization, the center filed for a 30% direct pay disbursement for its solar panels in June 2024 through IRS forms 990-T, 3800, and 3468. Due to the novelty of the direct pay process, Ricky and his wife Batya had difficulty finding an accountant who was familiar with the required paperwork for nonprofits seeking clean energy credits, so they filed themselves. After months of back-and-forth with the IRS, the MVHC received a check for $24,405.85 in March 2025, representing 30% of the solar project’s costs, plus interest from the IRS for issuing the direct pay payment late.

As a tax-exempt house of worship, Martha’s Vineyard Hebrew Center was never obliged to file tax returns with the IRS. But because direct pay credits are processed through an organization’s tax return, the center had to file a tax return in 2024, the year after its eligible clean energy project was put into service, to claim its credits. The Hebrew Center will not need to file tax returns in subsequent years, unless it claims credits for future projects.

Through its communications with the IRS, the MVHC discovered that, as a first-time tax filer, it could determine the starting month of its tax year without being tied to the calendar year. Given that the clean energy system was fully commissioned with its local utility in July 2023, Martha’s Vineyard Hebrew Center decided to start its tax year that month, and end it in June 2024.

“From a financial and an environmental point of view, it was worthwhile to install the solar panels,” said Diamond. “The solar panels are helping us get rid of fossil fuels as we used the savings from the solar panels and installed a heat pump to replace the propane-fueled furnace. We are slowly becoming energy independent.”

Author: Miguel Yañez-Barnuevo

 

¹ Source: conversation with Matt Weintraub, Valley Beth Shalom executive director

² Source: conversation with Ricky Diamond, first vice president of Martha’s Vineyard Hebrew Center and Batya Diamond