Four Farmington schools should have solar panels on their roofs by the end of September.

The school board on Monday approved a contract with Edina-based Sundial Solar Energy to put solar panels on Boeckman and Dodge middle schools and Riverview and Farmington elementary schools.

The district currently pays a $976,000 annual electricity bill. Once the arrays are up and running, Sundial Solar estimates the the district could save about $74,250 in energy costs after expenses in the first year. They could save up to $2.7 million over the length of the 25-year contract. They could save a lot more if, by year seven, they choose to buy out their investor.

Jon Kramer, CEO of Sundial Solar, explains it this way: “The school district doesn’t pay a dime to have the solar systems installed, but in order to do that, we have to have an investor to pony up the money.”

Florida-based Kenyon Energy is the district’s investor.

The investor makes money in two ways. First, by cashing in on state tax credits. As part of a state omnibus energy bill passed in 2013, Minneapolis-based Xcel Energy, the state’s largest utility, is required to administer a community solar garden program, which it started in 2014.

Through 2019, investors get a 30 percent tax credit, a savings that developers can pass on to their subscribers.

Investors also make money by charging the district for electricity, but at a reduced price compared to Xcel Energy.

Sundial Solar estimates the district will be saving about 21.2 percent on its energy bill.

The district had originally planned to put solar panels on all of its buildings. However, some buildings, like the high school, are serviced by Dakota Electric, which does not support solar like Xcel does.

“It’s too bad,” Kramer said. “We are working politically to try to change that. It’s frustrating.”

Kramer said Sundial Solar should begin installation in a month or two. It is waiting for other roofing projects to be completed on those buildings before the panels can go on.

“We’re trying to get as much of this done before school starts,” he said.

Finance director Jane Houska recommended the board put aside the savings and plan to buy out its investor as soon as the contract allows.

She said the solar contract allows the district “different ways to save money that doesn’t impact the classroom.”