Solar electricity can be a huge benefit to educational institutions, from elementary schools to college campuses. Schools that adopt solar energy make a positive statement to their community; they ease our dependence on fossil fuels and foreign markets, improve the environment, and provide an active way to combat global warming while providing hands-on curricula for subjects like science, math, and politics. In fact, many schools pair their solar energy systems with solar learning kiosks in the schools that present live data on solar production and energy usage. Solar systems also can provide sufficient power to run essential operations and services should grid power fail.

Perhaps most importantly, solar energy systems are a great choice for schools that are minding their budgets. In a market flooded with rebates and tax incentives, the economics—and predictability—of alternative energy are incredibly enticing...with one important catch.

Going solar is financially smart in the long-term, but for many schools, the allure dwindles when writing that first check. Financing a clean power plant often means making a substantial financial outlay at the outset, which is difficult for many schools—especially public schools, which may need to rally behind a bond measure for the needed funding.

A Different Angle

Traditionally, schools have opted to finance their systems through loans and leases. Yet there are still costs to manage and hassles to grapple with, like screening installers, arranging for construction and power integration, and managing and maintaining a system over its lifetime.

What’s wrong with this scenario? The upfront payments in a loan or purchase situation put customers in a position of financing decades of power use all at once, and that’s not how energy sales—clean or otherwise—need to be managed, especially when financial resources are difficult to secure.

Traditional energy sales are based on consumption. You don’t have to build a power plant to turn on a light bulb! Why should it be any different for renewable energy?

These costs and complications of setting up systems have brought those in the solar industry to develop new strategies for purchasing renewable energy. These power purchase agreements (PPAs) allow customers like educational institutions to take advantage of renewable energy as quickly, reliably, and easily as they get power from the local utility.

In a power purchase agreement, a PPA provider agrees to construct and care for a customer’s energy-producing devices, like solar photovoltaic systems, on their rooftop or outside property. The power produced by the system is then sold back to the customer per kilowatt-hour, at a set rate for a set time, much as with a traditional energy utility.

PPAs address some of the biggest concerns of school managers. They:

• eliminate initial capital outlay,
• remove the risk for owning and operating a system,
• allow for schools to scale their systems as needed to offset some or all of their power needs, and
• allow predictable energy pricing over the long-term—something even their existing power providers can’t offer.

Schools make excellent PPA customers. Their credit ratings are high, they provide highly visible community leadership, they provide a tangible educational opportunity for students, and they sell back more energy during the summertime, when schools are closed and energy rates are the highest.

Power purchase agreements provide a renewable energy sales model for schools that mimics the way traditional energy is purchased. Like a lease, PPA providers relieve businesses of the responsibility of covering upfront costs. They structure contracts of various lengths and terms. They also provide tax benefits to purchasers, including those normally exempt institutions like government and nonprofit customers because the purchase is channeled through a separate entity.

Relationships Equal Savings

But there are additional benefits with PPAs that surpass others, like lower pricing and higher installation satisfaction. That’s because unlike any single provider, PPA companies build industry relationships with top-tier banks, system architects, and installation partners who provide real benefits to their customers, like volume discounts on equipment, lower cost of materials, and increased ability to pass along savings.

As a PPA customer, a school assumes no installation risk or extra management of vendors; the provider is charged with designing and installing systems together with their installation partners. And when it comes time for payment, schools pay only for the electricity provided to them, while excess power generation is sold back to their utility and results in lower long-term costs from their energy provider.

PPAs can be a positive way for schools to go solar, when other measures prove too expensive or laborious. And helping schools go solar can help teach others about saving money, saving energy, and saving the planet—which might be the most important lessons of all.

Learn about Tioga Energy's approach to Solar Energy Plans: Power Purchase Agreements

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