Innovative Financing of Solar Panels for Schools

Posted: September 1, 2010

by Margaret Pennock and David Wood, Sidwell Friends School

For further information, contact Mike Saxenian, CFO and Assistant Head of School at Sidwell or Common Cents Solar

Installing solar panels can be too costly for many schools. Sidwell Friends School developed an innovative funding mechanism for purchasing 120 solar panels for the roof of its Lower School gymnasium. The $200,000 price tag is being funded entirely by $5,000 “solar bonds” bought by shareholders, mostly parents and other members of the school community. This takes the burden of the up-front costs away from the school. The solar panels will provide about half of the gym’s electricity needs, saving the school money on its electric bill. Shareholders will make their money back over a 10-year period using funds that Sidwell would normally pay to Pepco in their electric bill. In addition, shareholders are expected to make a three percent return on their investment during this 10-year period—a rate that is better than bank interest rates and much less volatile than stock market returns.

Private ownership of the solar system provides access to tax incentives unavailable to a non-profit school. All available financial incentives will be combined with solar power output payments to pay back investors as quickly as possible. Once the investors are re-paid, the solar system will be conveyed to the School, which will then enjoy free, clean solar energy for the balance of its 30-year life. Thus, by buying solar bonds, investors will realize a double bottom line—“doing good while doing well.”

Sidwell teamed up with Common Cents Solar of Chevy Chase, Maryland in this endeavor. Common Cents Solar (CCS) is a community-based organization developing innovative ways to encourage solar energy installations for homes, schools, and other non-profits in the Washington, DC area and has assisted with over 75 installations so far. The collaboration with Sidwell is the first CCS project to be financed by community bonds. Due to the success of this project, CCS is planning to use this funding model with other institutions.