Amy Vaughn is a fellow in the 2019 Leaders in Environment and Finance (LEAF) program. As part of the LEAF Fellowship, Amy worked with NC GreenPower over the summer of 2019. Amy is a senior at UNC majoring in Environmental Science and Economics with a minor in Information Science. She currently works at the EFC as a Research Assistant.
As the renewable energy sector continues to grow rapidly in North Carolina, it is important that the next generation understands how to use these resources and the data that energy creates. This is achieved most effectively with hands on learning experience at a young age. Unfortunately, it can be difficult for K-12 schools to adapt their curriculum and train teachers, let alone invest in educational materials like solar panels.
Recognizing this barrier, NC GreenPower introduced their Solar Schools program in an effort to support community solar photovoltaic (PV) projects and expand renewable energy education in North Carolina. This program is open to every K-12 school in North Carolina and provides matching grants from NC GreenPower and the potential for an additional grant from the State Employees Credit Union (SECU) Foundation for public schools. The remaining balance of the system, typically 30-40% of the total cost, is fundraised by the school and its broader community. Grant recipients receive up to a 5 kilowatt (kW) solar installation along with a weather station, real-time monitoring equipment, STEM curriculum and teacher training needed to implement renewable energy education into existing class curricula.
The NC GreenPower Solar Schools pilot program was launched in 2015. The organization’s goal for the program is to install a solar array for at least one school in all 100 of North Carolina’s counties to broaden their impact across the state. As of August 2019, NC GreenPower has supported educational solar arrays in 26 counties, with five more receiving installations in 2020.
NC GreenPower and the SECU Foundation prioritize funds for schools in Tier 1 counties, determined by the NC Department of Commerce to be the most economically distressed counties based on four socioeconomic factors. Those factors are average unemployment rate, median household income, percentage growth in population, and adjusted property tax base per capita. However, the distribution of schools awarded over the lifetime of the program has not fully reflected that prioritization. A major barrier for many “high-distressed” schools is their expected contribution. The schools agree to raise 50% of the cost of the system, though system costs are not determined until after schools have signed program contracts. Because the installation is highly specific to the site conditions and the installer, the total system cost is highly variable. Schools are given an extremely wide range for their possible fundraising goal, to which many high-distressed schools cannot commit.
In many cases, financial modeling is helpful to perform scenario analysis, assess the current status of an organization, and allocate resources effectively. Financial models can be tailored to individual cases in order to balance an organization’s priorities.
NC GreenPower decided to reevaluate the program model in order to reduce the burden on schools and encourage wider participation. This reevaluation required extensive financial modelling to consider the impacts of various factors on expected contributions from all participants; the portion of the construction cost balance paid by the school, fee percentages, and application of the grants were among the considerations.
In addition to the matching grant, NC GreenPower provides administrative and engineering support, teacher training, and curriculum for the program. These costs are not incorporated into the grant, so NC GreenPower charges a small fee to the schools to recoup some of that cost. The fee income from the schools must be balanced with their expected fundraiser goal to lessen strain on the schools without depleting NC GreenPower donations. Multiple scenarios were modelled to determine how grants can be applied to the cost of the system to diminish the impact on schools and their community while retaining enough fee income for NC GreenPower to sustain the program.
In this process, it became apparent that many schools are under significant financial strain regardless of their tier status. These high-distressed schools are less likely to commit to the program if their total contribution is unknown and highly variable. A scenario was modeled to evaluate the impact of a tiered model for school fundraising goals. This scenario explores three different tier levels for the school’s fundraising goal, SECU grant, and expected NC GreenPower contribution. Schools are given an additional ranking based on their overall economic need to determine their maximum fundraising goal, which is capped to incentivize participation in the program. In most cost scenarios analyzed, this goal covers the remaining balance the school is expected to pay. The results show this scenario would greatly reduce the range of expected school contribution to encourage target schools to apply and accept the award. The model also determined that this scenario would still generate enough fee income to sustain the program and potentially expand in the future if desired.
While NC GreenPower is effectively expanding energy education in the state of North Carolina, the Solar Schools program needed to adjust to ensure it would be sustainable in the long run. The application of a financial model pinpointed where those changes could be made while balancing the needs of all the stakeholders.