Maybe like me, you’ve seen some eye-popping news reports recently about how much money solar energy can save schools. I’m the father of two elementary-school-aged girls, and in the last couple of months alone, I’ve read with great envy and delight about solar saving $3.5 million over the next 25 years for Dublin High School in Dublin, Georgia; $5.3 million over the next 20 years for Barstow school district in Barstow, California; and, $1.4 million over that same time period for Parkway School District in St. Louis County, Missouri. And that’s just the tip of the iceberg.
Add to those savings the tremendous financial, energy and pollution benefits that can come from energy efficiency upgrades—we’re talking 30 percent here or more—and it looks like energy efficiency and solar energy are important answers to the devastating budget cuts that so many of our kids’ schools face. Energy, after all, is their second highest cost, after personnel, totaling $6 billion nationwide; the country’ K-12 schools spend more money on energy than they do on textbooks and computers combined.
In this context, the U.S. Department of Energy’s new guide, “Financing Energy Upgrades for K-12 School Districts,” couldn’t be more timely. It teaches school administrators the ABCs of financing energy efficiency and solar upgrades so that instead of wasting money on polluting power, they can realign their schools’ financial resources with their core mission: educating today’s kids for the many challenges of tomorrow.
Part of the guide’s power is the way it walks non-experts through the complex and sometimes counterintuitive field of energy upgrades. A case in point: In the first chapter, which explores principles of energy efficiency finance, we learn that comprehensive, deep upgrades often result in significantly larger savings long-term than do “cream-skimming” projects that focus on quicker payback periods and lower upfront costs.
The guide also explains that when it comes to paying those upfront costs, free money is the best money. (Isn’t it always?) Grants—from utilities, local, state and federal governments, from philanthropies—are obviously great. They’re free and don’t need to be paid back. Internal cash—money already in a school or district’s operating or capital budget—is also top-tier. Internal cash allows schools to retain “all energy cost savings and often speeds project implementation time by avoiding complex contract negotiations or transaction delays that may accompany third party-financed projects.”
The truth is, though, that few schools have the kind of cash they need on hand to invest in what can be significant long-term savings. So bonds are important options, as the guide spells out. However, purchasing outright isn’t always the best route savings-wise. So the next chapter delves into lease-purchase agreements and other forms of leasing. Similarly, the last chapter explains the pros and cons of solar power-purchase agreements—contracts that allow renewable energy developers to install solar arrays that they own on school grounds and then sell the power to schools at discounted rates. Also explored are on-bill financing and revolving loan funds.
The guide also has great case studies. In fiscally conservative Douglas County, Nevada, for instance, the school district knew it wouldn’t be able to pass a bond issue up front. So, first, to save money on energy, it used an energy savings performance contract, in which an energy services company identifies, designs and installs energy improvements and then guarantees their results. Once those results were in—the district started saving $450,000 a year—it publicized them widely and were then able to pass a bond issue to finance further upgrades. Washington’s Centralia School District financed many of their upgrades through the state’s Local Option Capital Asset Lending program, which has provided capital at rates of 3.24 percent or lower for terms as long as 15 years. Colorado’s Boulder Valley School District used a solar PPA that’s allowed them to save 10 percent on their electric costs and prevent 1,711 tonnes of carbon pollution from entering the atmosphere each year, the equivalent of taking 356 cars off the road. (Calulations thanks to SEIA and EPA.)
Think about that. What could your kids’ school do with an extra cash infusion each year from money it wasn’t wasting on polluting power? Could it re-fund the music program it lost in the last round of budget cuts? Could it drop class sizes down from 30 to 25? Energy savings—both solar and efficiency—can perform these kinds of miracles. Luckily, with its new guide, “Financing Energy Upgrades for K-12 School Districts,” the U.S. Department of Energy has had the foresight to show school administrators how.