Schools can overcome the initial cost barrier for solar energy installations primarily through financial models and funding strategies that minimize or eliminate upfront capital expenses. Key approaches include:
- Power Purchase Agreements (PPAs):
Schools often enter into PPAs with third-party solar developers who finance, build, own, and maintain the solar systems. The school agrees to purchase the electricity generated at a discounted rate for a set period (usually 10-20 years), resulting in immediate energy cost savings without paying the initial installation costs. Around 79% of school solar installations use third-party financing like PPAs. This model is available in approximately 28 states and the District of Columbia, making it widely accessible. - Loans, Bonds, and Ownership:
About 12% of schools opt to own their solar systems by taking loans or issuing bonds. This option requires upfront capital or borrowing but can maximize long-term financial returns from energy savings. - Grants, Private Donations, and Government Funding:
Roughly 8% of schools use grants, donations, or government funds to cover installation costs. Federal and state incentives have supported decreasing solar costs dramatically over the past decade, making solar more affordable than ever. For example, a typical 202 kW solar project that might have cost over $1 million ten years ago now costs just under $300,000. - Decreasing Installation Costs:
The cost per watt of solar for schools has dropped by over 70% in the last decade, falling below $1.50 per watt in 2023. This price drop, combined with federal funding support, enables schools to undertake larger, more cost-effective projects.
These financial mechanisms allow schools to adopt solar power with little to no upfront expenditure while benefiting from substantial reductions in energy costs. The savings can then be redirected to other school needs, such as teacher support or facility upgrades. Beyond cost savings, solar installations also create educational opportunities in STEM fields related to renewable energy.
In summary, schools overcome the initial cost barrier mainly by leveraging third-party financing models like PPAs, tapping into various funding sources, and benefiting from the steep decline in solar installation costs over recent years.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/how-can-schools-overcome-the-initial-cost-barrier-for-solar-energy-installations/
