Solar for Schools

According to the U.S. Department of Energy, K-12 school districts spend nearly $8 billion annually on energy costs – the second largest expense after teacher salaries. Aging facilities combined with limited school budgets can result in deferred maintenance of facilities, with current estimates of around $270 billion needed for infrastructure repairs.

Solar energy can deliver significant energy savings, while helping to meet sustainability goals – and provide opportunities for education around renewable energy.

As a leader in developing energy solutions for Pennsylvania’s school districts and as an approved ESCO (Energy Services Company) under COSTARS, TIPS, and Omnia, CM3 is uniquely positioned to help Pennsylvania’s schools understand the economics around solar implementation.

We have extensive experience in adhering to both grant and GESA (Guaranteed Energy Savings Act) requirements, as well as providing appropriate documentation for all grant and regulatory submissions, including federal and state grants, utility rebates, and performance contracting/ pay-from-savings opportunities.

Solar and the Inflation Reduction Act

The Inflation Reduction Act (IRA) brings new life into schools’ decisions around solar. Signed into law in 2022, the IRA aims to boost investments in domestic energy production and manufacturing, and to reduce carbon emissions by roughly 40% by 2030. It also creates a unique opportunity for K-12 school districts to leverage federal tax credits to help fund investments in clean energy infrastructure.

Through elective pay, also known as “direct pay,” school districts can claim certain clean energy tax credits and receive funds directly from the IRS for their qualifying projects or investments. Under proposed Treasury regulations, public school districts that are agencies or instrumentalities of state, local, tribal, or territorial governments can benefit from several tax credits. After a school district places eligible property in service, the school district can register its intent to claim a tax credit with the IRS and file a tax return. The IRS would then make a payment in the amount of the credit.

Prior to the IRA, school districts had limited options for taking advantage of solar tax credits. In general, a district would need to enter a third-party agreement for solar financing, a solar lease or power purchase agreement (PPA), or other financing options where the third-party could use the projects’ solar tax credits on behalf of the school district.

With the IRA, the IRS will now directly pay the school district the amount of tax credit earned by solar electricity projects. This is known as an “Investment Tax Credit” or ITC, the base amount of which will be 30% of the project’s cost to install solar. This is increased to 40% if located in a designated area near a recently closed coal-fired power plant.

Pennsylvania’s Solar for Schools

In July 2024, Pennsylvania’s Solar for Schools grant program was signed into law. Through the program, the State will award funds to eligible public-school districts, intermediate units, career and technical schools, and community colleges to purchase and install a solar energy project. Under the program, schools must implement solar through either the Separations Act or the Guaranteed Energy Savings Act.

Unlike the Separations Act which requires owners to use a multi-prime project delivery system and competitively bid plumbing, heating, ventilating, and electrical work, the Guaranteed Energy Savings Act (GESA) provides a limited exception to the separation requirements: public entities may award guaranteed energy savings contracts for the evaluation and recommendation of energy conservation and for implementation of one or more such measures through a simple request for proposal process.

How to Get Started

Since the guidelines for the application process are under development now, your first task is to reach out to your CM3 rep (or info@cm3inc.com) to let us know you would like to be included in our Solar Grant updates. Our solar team is your ears on the ground for what’s happening with PA Solar for Schools program.

Second, you can start compiling your utility bills since they will be needed once the energy savings calculation process starts. Three years of utility data is especially helpful.