More Jobs, Lower Costs - Solar for Schools Grants Opening Soon

With only a few days remaining in the 2023-24 legislative session in Harrisburg and all eyes focused on the upcoming elections, we have an important update to share on the most significant climate and jobs bill signed into law by Governor Shapiro this year: the Solar for Schools Act. This legislation, which became Act 68 of 2024 in July, brought together a remarkable group of stakeholders in support. It received the endorsement not just of NRDC, key environmental partners, and the solar industry, but also organized labor; it was a centerpiece of the Blue-Green legislative agenda announced in the spring.

The law and the grant program that it establishes will save schools money, create family-sustaining jobs, drive additional federal investments into Pennsylvania, and help facilitate the Commonwealth's transition to clean energy. Those are wins across the board. It is a testament to the efforts of the bill's prime sponsor, Representative Elizabeth Fiedler (Philadelphia), who barnstormed the state for over a year meeting with fellow lawmakers, their school district officials, and diverse stakeholders to strengthen this bill as it worked its way through Pennsylvania's divided legislature.

How Does It Work?

The law creates the "Solar for Schools Grant Program" within the Department of Community and Economic Development ("DCED") to award targeted grants on a competitive basis to eligible applicants, which are defined as including:

• School districts;
• Intermediate units;
• Charter schools;
• Career and technical schools; and
• Community colleges

Private schools are not eligible for grant awards. Grants can cover up to 50% of the costs related to the purchase/installation of solar PV panels or solar thermal devices to power a school facility. Grant awardees must pay the prevailing wage to any contractors or subcontractors hired to install the project. And because every solar project might look different - school buildings have roofs of different sizes, some have available land to install a ground-mount system, etc. - applicants will first need to conduct a facility site assessment by a qualified, third-party provider.

The law requires DCED to consider different factors in reviewing forthcoming applications, including:

• Geographic diversity of awardees across Pennsylvania (DCED has divided the state into three regions of equal population and will allocate an equal % of funds to each region);

• Whether the solar equipment is manufactured in the United States;

• Whether the applicant is located within 50 miles of a coal-fired power plant retired on or before July 17, 2025; and

• Whether the applicant is also seeking funding under the federal Inflation Reduction Act ("IRA").

Solar for Schools uses state funds to capitalize on federal funds available to school districts through the IRA. The General Assembly set aside $25 million in FY 24-25 specifically for Solar for Schools from the total $100 million allocated to the Commonwealth Financing Authority (CFA) for the existing Public School Facility Improvement Grant Program (the CFA is an independent agency of DCED).

Meanwhile, the IRA, which created the largest investment in clean energy in U.S. history, also creates a unique opportunity for school districts to leverage federal tax credits to fund investments in clean energy infrastructure. Using "direct pay," school districts with no federal tax liability can claim clean energy tax credits and receive funds directly from the IRS to, for example, install solar arrays. The federal credit's value will depend on project details and qualifications for relevant IRA bonuses, but they can cover 30% to 50% of eligible project costs.

As you can see, Solar for Schools was designed to make it easier for school districts that may not have the tax base to fund 50% or more of a solar installation themselves to make up the difference using state dollars. Combining IRA tax credits with a Solar for Schools grant, school districts in Pennsylvania might not be responsible for any installation costs (just limited operation and maintenance) while benefiting from reduced energy costs. That is especially critical given the rising electricity prices projected to hit the region starting next year.

So What's New?

The law took effect immediately when Governor Shapiro signed it on July 17, and it directed DCED to establish guidelines for implementation and publish them within 90 days. That deadline arrived this week, and the agency's materials were just posted online. These guidelines lay out the nuts and bolts of the program: outlining the application process, establishing standards for conducting a facility site assessment, etc. There will also be a financial report that grant awardees will need to update monthly that will track solar project costs and provide an analysis of energy and cost savings. The guidelines make clear that DCED will cap individual grants at $500,000, which should allow for at least 50-60 awards.

It is widely expected that grant applications will open within two weeks with the guidelines now available, and DCED anticipates there will be an approximately two-month application window. Essentially, this period will run through the end of the calendar year. DCED is expected to use the winter to review applications and make recommendations to the CFA, which will likely issue awards sometime in Q1 or Q2 2025 at a CFA board meeting. The time to spread the word about Pennsylvania's Solar for Schools Grant Program, its availability and deadlines, and its widespread benefits is now!

Big Picture

There are 500 public school districts in Pennsylvania. The Commonwealth's ongoing efforts to "provide for the maintenance and support of a thorough and efficient system of public education" has been one of the most politically controversial issues in Harrisburg in recent years. Adequately and equitably funding Pennsylvania's schools is a constitutional obligation.

With Solar for Schools, more school districts can take advantage of the economic, energy, and educational benefits provided by clean, affordable on-site power. Several forward-thinking districts across Pennsylvania have already taken action to install solar arrays and, as a result, expect to save millions of dollars in the coming decades. For the first time, in FY 24-25, state government will be making investments to help more schools reap those clean energy rewards.

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