Alternative Energy | Feature

How To Take Your School Solar

The summer of 2011 proved to be the busiest of times for school construction of solar energy projects, a growing trend among the nation's school districts to reduce their electricity costs by switching to renewable energy. Thanks to a variety of creative financing options, school districts are discovering that they can install photovoltaic (PV) solar panels that turn sunlight directly into electricity and hedge against rising utility rates without spending any scarce capital.

On July 5, 2011, the Boulder Valley School District in Colorado signed a 20-year contract with SolarCity, a solar power provider, to install solar panels on 16 of the districts 55 schools by next spring to offset 15 percent of the energy used at those schools. The district will buy the power from SolarCity for the next 20 years at a fixed rate equal to what they pay the local utility today.

"It gives us price stability," said Ghita Carroll, sustainability coordinator for the Boulder Valley School District.

This same story has been repeating over and over.

In fact, the summer of 2011 has proved to be the busiest of times for school construction of solar energy projects, a growing trend among the nation's school districts to reduce their electricity costs by switching to renewable energy. Thanks to a variety of creative financing options, school districts are discovering that they can install photovoltaic (PV) solar panels that turn sunlight directly into electricity and hedge against rising utility rates without spending any scarce capital.

These solar school projects have been all over the map, including South San Francisco Unified School District, San Diego Unified School District, Greenfield Union School District, San Ramon Valley Unified School District, San Dieguito Union High School District, East Side Union High School District, Lodi Unified School District, and Mountain View Los Altos High School District in California; Mercy High School in Farmington Hills, MI; George Washington Carver Elementary School in Lexington Park, MD; Berkshire School in Sheffield, MA; Paradise Valley Unified School District, Copper Ridge School, and Cholla Elementary in Arizona; Irving Independent School District and Pasadena Independent School District in Texas; and Bnos Bais Yaakov High School in New Jersey.

School districts hesitant about exploring their solar power options should consider this: Utility bills are often the second-largest expense for most school districts, and is growing. According to Touchstone Energy Cooperative, K-12 schools spend more on energy than on textbooks and computers combined--more than $6 billion a year on energy, yet 25 percent of that energy is wasted. The California Department of Education has estimated that California schools alone spend $132 per student each year on energy costs. With the California Solar Initiative (CSI), the State of California's solar rebate program, California's public sector, including schools, is forecast to save $2.5 billion from solar installations over the 30-year life a system. Of the total savings for the public sector, K-12 schools and higher education institutions are expected to save approximately $1.5 billion, according to the California School Boards Association.

Bringing solar power to public schools is not only creating much needed energy savings, there has been some very recent movement in developing creative ways for school districts to finance these projects, while at the same time using the projects to teach students about energy use.

School Solar Financing
Financial incentives for solar energy exist in the 30 states having "renewable portfolio standards" that require electric utilities to develop a specific percentage of renewable power by a certain date. These incentives typically come from the state utility, as well as from state and federal tax rebates and even Clean Renewable Energy Bonds.  The trick is to tap into these incentives to cut down on the initial expensive of installing solar power.

The favored financing trend for school solar projects is the use of "power purchase agreements (PPA)." Through these arrangements, a third party finances, builds, and owns the solar panels, while the school avoids all upfront costs and in turn buys the solar electricity through a long-term contract giving the school electric rate stability.

St. Gregory College Preparatory School in Tucson, AZ, an independent school (with no religious affiliation) for students in grades six through 12, is installing one of the largest solar energy systems of any Tucson school, producing 140 kilowatts of electricity. The project involves a PPA with Tucson-based Solar H2O, and crews have worked throughout the summer to install 600 solar panels on six buildings that will provide the school with more than 26 percent of power usage at the school over the course of a year, with an expected savings of at least $220,000 over the 20-year contract.

"For us--and each school deal is going to be different--we've got nothing in the game so far in terms of money," said Rich Belding, business manager at St. Gregory School.

New York-based REgeneration Finance is one of the largest firms that have initiated a number of PPAs with school districts around the country.

In July 2011, REgeneration began construction of a solar installation at six schools and one district office for Buckeye Elementary School District in Buckeye, AZ to provide 70 percent of the district's annual electricity use. REgeneration takes full financial responsibility for the construction and operation of the project and serves as the long-term owner of the equipment. Buckeye School District will purchase the electricity generated by the installation at a predetermined rate from REgeneration but assumes no risk for the development or ongoing maintenance of the project.

Another REgeneration-financed solar project that is well under way is a 31-school project for the Douglas County School District in Colorado. More than 17,000 solar panels are in the process of being fitted to 30 elementary, middle and high schools, as well as a sports stadium. Initial cost for the solar panel system is approximately $18 million, but the project is costing the school district nothing. Under their PPA, REgeneration pays for the complete cost to develop, build, operate, and maintain the project, while DCSD purchases the emissions-free power at a rate estimated to save the district $5.5 million over the next 25 years.

Creative Solar Deals
Besides using the standard power purchase agreement to stabilize their electric bills, some school districts have found ways to actually make money from their solar projects.

DTE Energy and Mercy High School, a Catholic college preparatory school for young women near Detroit, signed of a 20-year PPA in July 2011. But what makes this project different is that Mercy High School also gets a one-time, upfront payment to cover any inconvenience during construction. The $2.5 million solar system will use 125,000 square feet of roof on the high school and will be owned, operated, and maintained by DTE. In return, Mercy High School and other customers that participate will get an annual credit on their energy bills, as well the one-time, upfront payment.

Another unique cash example is in Gainesville, FL, where private investors also cut a deal in July 2011 to own the roof-mounted solar systems they will install at eight county schools at no cost to the school district. The school district will receive an annual lease payment of $72,500 for 20 years for providing the roof space and investors get to sell the power to other customers. The money will be used to implement a K-12 renewable energy curriculum and fund further energy improvement at the schools.

Meanwhile, two Arizona elementary schools are getting solar power installed free not by investors or solar energy companies, but by the Salt River Project--the local utility. SRP will fund the purchase and installation of the project through federal stimulus money and provide maintenance for the first 10 years of the 20-year agreement. In return, the two schools agree to assume responsibility for the maintenance of the systems for the remaining 10 years. The schools expect to save $1,765 annually, or more than $70,600, over 20 years.

California's 'Solar Schools' Program
On July 27, 2011, the California School Boards Association partnered with San Jose, CA-based SunPower Corp. to launch their "Solar Schools," a program CSBA has said will help California schools save billions of dollars on energy use.

"At a time when our school board members need to make every dollar count, we are pleased to partner with SunPower in offering school districts throughout the state solar power solutions that yield immediate and ongoing savings," said Martin Gonzalez, deputy executive director of CSBA.

Within the next year, SunPower will install solar panels at more than 90 K-12 schools and higher education facilities across California. In fact, during this last summer SunPower began construction of the largest K-12 school solar energy project in the country. The company will install and maintain $60 million of solar power systems at 51 schools for the Mount Diablo Unified School District, located in the Bay Area of California. The school district is expected to save $192 million over the 30 years of its contract after construction of the 35,166 solar panels is completed in early 2012.

A Teaching Experience
Virtually all the solar deals between school districts and solar developers involves providing a monitoring system that allows students to track how much power their solar panels are producing and how much energy they're using at their school. This includes a solar curriculum as part of the overall commitment to give students a hands-on teaching experience about renewable energy. There are even plans underway in California to launch curricula for school districts to prepare students for career opportunities in the green energy sector.

Said St. Gregory's Belding: "Solar is an awfully nice thing to put on a school and help kids understand the economics of renewable energy."

How They Did It

Installing solar equipment at a school takes research and planning. The process usually begins with a school committee researching solar power and the appropriate financing options. But with more and more schools going solar, administrators at your school can learn from the experiences at schools that have already slogged through the process.

At the Boulder Valley School District in Colorado, administrators knew they wanted solar, but they wanted to make sure it was a model that made sense in Colorado. So, in June 2008, the school district created a position to coordinate sustainability efforts across its campuses.

"We really have been working for the past three years to see what the possibilities were with large-scale solar," says Ghita Carroll, sustainability coordinator for the BVSD. "The approach was we wanted to begin with these smaller projects and get comfortable with the technology and see how they worked with the schools before doing something large-scale like we're pursuing with Solar City."

Those smaller projects involved 14 schools with a modest number of solar panels that were acquired using different funding mechanisms through small grants, donations, and local partnerships all happening individually.

"We knew solar was something the district would not be able to invest money in, so this power purchasing agreement has been something that our local government entities have tried and the University of Colorado Boulder," said Carroll. "So we followed other people's experience and how it's been working, and we decided to put out a request for proposal for our own solar last spring. We selected SolarCity based on their experience and price and their education package."

BVSD sent out the RFP to see what the numbers would be. Then they moved fast before the local utility rebates expired, signing the contract with SolarCity in July.

At St. Gregory College Preparatory School in Tucson, AZ, they did not have the luxury of experimenting on a small scale among different schools within a district. But Rich Belding, business manager at St. Gregory, sits on board of the National Business Officers Association, which includes about 1,000 independent schools around the country. He said he had received a lot of interesting feedback on school solar projects.

"There's a lot of interesting things going on, such as donors buying the solar equipment and taking the tax credits," says Belding.

St. Gregory's experience with joining the solar school club took a bit more personal route when the school chose to work with Tucson-based solar energy provider, Solar H2O. As it happened, Solar H2O's government and business sales representative, Joe Herrick, is a parent at the school who happened to be chatting with the school director and asked if they would be interested in a solar deal. Herrick was directed to Belding, who had never met him.

"Usually, I just say no to that kind of stuff, but because he was a parent I said, 'Sure, I'll talk to him,'" said Belding. "Going in, I didn't have any reason to work with them other than this connection."

The idea sounded appealing to Belding, except for one thing: the 20-year contract.

"I was very concerned about the nature of a 20-year agreement, and Solar H2O mentioned to me that there was a solar installation at the water treatment plant," said Belding. "It turns out that contract was available online, and I studied it for days to see who was responsible for what, what the outputs are, what guarantees there are and things like that."

Belding said he did his homework and worked hard to put all of those responsibilities on Solar H2O, including language in the contract concerning successors in case the company is ever bought out by another firm.

"The thing that I would advise people is that you have to look out for the interests of the school when you're partnering with, in our case, the state, the local utility, and the installer-operator," says Belding. "The terms and conditions of the offer are the most important thing, such as who's responsible for insurance and who's responsible for maintenance."