Funding Solar PV in Schools

With energy spend one of the highest budget lines, increasing sustainability expectations and the Department for Education's focus on decarbonisation, more schools and Multi Academy Trusts are exploring the installation of solar PV.

However, one of the most common questions we hear is:

"How do we pay for it?"

The good news is that there are several funding routes available, each with its own advantages and considerations. Understanding these options can help schools and trusts identify the most suitable approach for their circumstances.

Grant Funding

Grant funding remains the most attractive option where available.

Under this model, a third party provides funding towards the installation, reducing or eliminating the capital contribution required from the school or trust.

Advantages

• Minimal or no capital investment required
• Immediate reduction in energy use / costs
• Strong return on investment
• Supports sustainability and net zero objectives

Considerations

• Funding opportunities can be limited
• Application processes can be competitive
• Timescales may be outside of the organisation's control

Where grants are available, they often represent the quickest route to achieving energy savings with minimal financial risk.

Self-Funding

Many trusts choose to fund solar projects directly using reserves or capital budgets.

While this requires an upfront investment, it typically delivers the highest long-term financial return.

For example, a £100,000 solar installation generating annual savings of £15,000 could achieve a simple payback of around 6-7 years, while continuing to generate savings for many years beyond that.

Advantages

• Maximum financial benefit retained by the school or trust
• No borrowing costs
• Immediate ownership of the asset
• Long-term protection against energy price volatility

Considerations

• Requires capital investment
• Funding may need to compete with other estate priorities

For organisations with available reserves, self-funding often provides the strongest long-term return on investment.

Loan Funding (Where DfE rules allow)

Loan funding allows schools and trusts to spread the cost of installation over a number of years.

The energy savings generated by the solar panels can often offset a significant proportion of the loan repayments.

Advantages

• No large upfront capital requirement
• Immediate access to solar benefits
• Asset ownership remains with the school or trust

Considerations

• Interest costs increase the overall project cost
• Loan approval processes may apply
• Savings are partially offset by repayments during the loan term

For organisations looking to preserve cash while still benefiting from solar generation, loans can provide a balanced solution.

Power Purchase Agreements (PPAs)

Under a Power Purchase Agreement, a third-party investor funds, owns and maintains the solar installation.

The school or trust then purchases the electricity generated at an agreed rate, typically lower than standard grid electricity prices.

Advantages

• No upfront capital investment
• Reduced electricity costs from day one
• Maintenance and performance risks remain with the provider

Considerations

• The third party retains ownership of the asset
• Long-term contractual commitments may apply
• Overall financial benefits are typically lower than self-funding

PPAs can be particularly attractive where capital funding is unavailable but there is still a desire to reduce energy costs and carbon emissions.

Which Option Is Right for Your Organisation?

There is no single solution that suits every school or trust.

The most appropriate funding model will depend on a number of factors, including:

• Available capital budgets
• Access to grants
• Appetite and ability to borrow
• Estate strategy
• Sustainability objectives
• Planned occupancy of buildings

The important thing is not to view solar PV as an all-or-nothing investment. With multiple funding routes available, many organisations can find a solution that delivers both financial and environmental benefits.

How WME Can Help

Through our DfE-approved "Education Decarbonisation Framework" and brand new "Solar PV Framework", WME supports schools and Multi Academy Trusts in exploring renewable energy opportunities and identifying the most suitable route to delivery.

Whether you're looking to understand potential savings, evaluate funding options or develop a wider decarbonisation strategy, our team can help you make informed decisions that support both your budget and your journey to net zero.