4 solar financing options for schools

An array of energy credits, performance contracts and regional programs help districts pay for solar technology
By: | July 16, 2019
SUNNY DAYS AHEAD—The rural Sheridan School District in Indiana is the first in the state to be completely powered by solar, thanks to a 1.8-megawatt system. Installed in 2016, the panels above should generate up to 2.2 million kilowatt-hours of power annually.

Involving very few moving parts and requiring little maintenance, solar power serves as a sustainable and clean power source for schools and districts. The technology also can create learning opportunities for students. But solar power can be expensive to install. While tax credit programs have lowered installation and system costs for businesses and consumers, education institutions are tax-exempt and cannot take advantage of such breaks. Consequently, solar financing for schools usually involves bond measures and capital budget expenditures combined with grants, loans and rebates. Here are four other solar power financing options for schools.

1. Solar renewable energy certificates (SREC)

SRECs are tradable energy credits based on the electricity generated by an installed solar power system. An SREC is earned for every 1,000 kilowatt hours of energy produced by solar. However, the value varies by local utility, and not every state offers this opportunity.

2. Energy services performance contracts (ESPC)

Districts and energy companies can sign ESPCs, which focus on energy upgrades and efficiencies, including the use of solar. In some states, an energy services company will install an array on behalf of the district and receive tax credits, and then will trade the value back to the district.

3. Net metering programs

More than 40 states offer these programs, in which a district connects to a regional energy grid and then receives credits for days its solar arrays generate more energy than the district uses. However, some power providers and utility companies believe net metering reduces revenue opportunities and are pressuring states to change regulations. Many are calling for a reduction in kilowatt-hour credit rates, which could make solar power cost prohibitive for districts since lower rates means systems would not earn as much credit for generating power.


Read: What to consider for a solar power RFP


4. Regional electric provider contracts

To fund multimillion-dollar solar projects, some districts sign multiyear contracts with regional electric providers that cover the school systems’ daily energy use and solar panel costs, installation and maintenance. These districts typically pay a couple hundred thousand dollars per year with hopes of saving millions of dollars over decades.


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