Teaching students how to care for the environment starts with the practices and initiatives of the schools they attend. We look to schools to lead the way to a better future and inspire the next generation of innovators and entrepreneurs. An on-site solar project is an ideal way to demonstrate a school’s commitment to the environment and apply the sustainability curricula that students learn in the classroom to the real world around them.
Moreover, solar energy can help reduce the high energy and maintenance costs that schools face every year. There are many ways for schools to go solar, and it is not a one-size-fits-all solution. Let's explore the different financial pathways for schools to go solar.
Power Purchase Agreement
In this context, a power purchase agreement (PPA) is defined as a financial contract where a third party owns, manages and operates a solar system installed on a school’s property. The school can buy the clean energy generated on-site at a discount to the standard utility rate, enjoying reduced operational costs on campus. A PPA can provide key benefits to schools: eliminating initial costs and operational responsibilities and costs of the system.
Important factors to consider when looking into a PPA is the assumed escalator on the price of energy currently being procured and the proposed price escalator of the price of the PPA. The energy cost escalator is a forward-looking cost projection created to estimate future energy costs without solar. The PPA cost escalator is a contractual increase in the per kilowatt hour costs to the school. Before an administration decides to convert their school or university to solar, they should look at the historic trends of energy costs for their area so that they can make an accurate decision regarding their purchase.
Through a PPA, the private entities that are the third-party owners can take advantage of solar tax incentives, such as the ITC, to make the solar project even more economically compelling for all stakeholders. Some educational institutions include a market-value purchase clause in their PPA agreement as a method of eventually buying the system from the third party provider.
Site Hosting Fee
Combining the idea of a PPA and a direct purchase, a Community Solar system allows universities, colleges or schools to sell power to the community power utility or to specific businesses, residences and governmental buildings. These solar systems can help make the grid more sustainable and involve their local community in a unique way.
Fordham University recently decided to deploy community solar at a new system on their Rose Hill campus. Through this program, they can share the benefits of solar directly with their local community. Fordham faculty, staff and alumni can subscribe to be a part of the project and receive credit to their electricity bills each month for a portion of the clean energy that the system generates. Through the program, subscribers can receive up to a 10% discount on their monthly electricity bills.
Outright Purchase with Financing
Schools, colleges and universities have some unique financing arrangements if the administration, board of trustees and public are all in support of the solar project. For public institutions, including school districts, colleges and junior colleges, and universities, bonds or loan financing can help schools purchase a solar system outright.
There are some advantages to purchasing and managing a solar energy system internally. First, the long-term energy savings are greater in comparison to a PPA. Second, managing the solar system internally can give the faculty and students hands-on training in managing renewable energy systems. Third, if the school installs a system that generates more clean energy than they can use, they can be a net energy producer instead of a consumer and be eligible to receive revenue for sending the excess energy to the grid. Schools and universities can also plan in advance for the system to handle a growing load should they decide to extend their campuses.
If you are interested in learning more about how your school can go solar, contact EnterSolarEDU. We have operated nationally for more than 12 years, handling everything from system design, financing, construction and ongoing support of all solar projects. EnterSolarEDU’s clients include several top universities, such as Cornell Tech and Fordham University, as well as leading k-12 schools, such as The Kent School and Cardinal Spellman High School.