‘Less savings’ without federal tax credits

The 2022 Inflation Reduction Act allowed tax-exempt entities, like local governments and schools, to utilize clean energy tax credits for the first time. These credits offer reimbursement payments to schools that cover 30% or more of the costs of a solar project.

The Upper Darby School District expected these federal tax credits to cover over $2 million of the total $9 million cost of its six solar projects.

But the timelines set out in the House bill would likely be difficult, if not impossible for the district to meet, because the district needs to vet and choose contractors, get approval from the school board, acquire supplies through the contractors and wait until schools are closed during the summer to begin construction, officials said. Districts also need approval from utilities to connect the projects to the local grid.

The soonest the Upper Darby School District could start to build its solar projects would be next summer, officials said.

Without the federal tax credits, the solar projects would eat up most of the district’s yearly capital budget at a time when federal funding for operational costs is uncertain, McGarry said. This could mean sacrificing crucial facilities projects, such as replacing windows, renovating old bathrooms and upgrading security systems, he said.

“We can’t afford to do that,” McGarry said.

The Upper Darby School District is not alone. The William Penn School District would not be able to complete a Solar for Schools project planned for Park Lane Elementary School without the federal tax credit, said district Chief of Operations Darnell Deans.

“As our district is under-resourced and we are still advocating for our appropriate level of funding, our district will not be able to proceed with this project without the tax credit,” Deans wrote in an email.

Pennsylvania state Rep. Elizabeth Fiedler, who sponsored the Solar for Schools legislation, said she’s confident the projects will still save schools money, even if the schools are not able to use the federal tax credits.

“Obviously, if the federal IRA incentives for renewable energy are cut, that would mean less savings for schools,” she wrote in a statement.

When awarding the state grants, the Pennsylvania Department of Community and Economic Development believed the schools could complete the projects without the federal tax credits, said spokesperson Justin Backover.

Still, Shannon Crooker, Pennsylvania director at the nonprofit renewable energy advocacy organization Generation180, worries these slimmer savings would force many districts to abandon the projects.

“We’re at risk of losing a lot of great investment,” she said.