School Solar Ownership Models

Public schools anchor entire communities. Schools are where students spend the majority of their childhoods outside of the home, workplaces for more than 6 million people, and neighborhood anchors for voting, sports, community health programs, and more. They are also, often, characterized by outmoded, energy-inefficient infrastructure that both contributes to emissions – at the estimated rate of 78 million metric tons of CO2 per year – and is impacted by the climate crisis. The price of those emissions stacks up on school budgets, too. After salaries, energy is the second biggest expense for public K-12 schools – totaling nearly $8 billion per year in expenses. Transitioning to renewable energy sources like solar can mean cost savings down the road for schools while also ensuring school buildings demonstrate the possibility of a decarbonized, healthy future. Savings from reduced utility bills can be funneled into educational programs, infrastructure and facility upgrades, teachers salaries, and more. 

School solar as well as building decarbonization technologies more broadly also bring a myriad of health and learning benefits to students. By removing oil and gas from on-site infrastructure, schools take an immediate step towards removing dangerous indoor air pollution that harms student health, especially students with asthma. By bringing innovative technologies onto campus, schools can incorporate clean energy technologies into their curriculum, preparing students for careers in the growing field of clean energy. Finally, when paired with battery storage, school solar sets schools up to be local resilience hubs, guaranteeing locally-generated power even in times of crises.

School administrators, organizers, and workers have a range of options for transitioning to solar energy. Undertaking large-scale capital projects can be challenging for most districts and the complexity of these projects can slow down uptake at the district level. 

The passage of the Inflation Reduction Act (IRA) means that there are far more options for funding and financing solar projects and new opportunities for strengthening public sector capacity to maximize long-term economic and social benefits of the transition off of fossil fuels. As relatively new legislation, it also presents school districts with new expectations and nuances. This new terrain, and the nuanced opportunities that come with it are the focus of this memo.

This memo reviews three ownership models available to school districts across the country: private ownership managed through power purchase agreements with third-party developers, direct school ownership, and green bank or state finance authority ownership. Every district has different conditions to consider, and this memo provides a preliminary guide and recommendations on the three most-used options for financing solar on schools. This memo recommends that, thanks to new investments and funding mechanisms from the Inflation Reduction Act, school districts should look beyond the status quo of power purchase agreements in which they continue to pay a third party private energy provider for their electricity, and instead embrace the benefits and incentives of the Inflation Reduction Act to either directly own their school solar system or collaborate with state finance institutions to scale public financing and public ownership of school solar systems across the district.