President Ronald Reagan was fond of saying, “The nine most terrifying words in the English language are: I’m from the government, and I’m here to help.” In an age of declining budget revenues and increasing public demands for government services, though, the shoe is now on the other foot. Government officials are opening their doors and welcoming representatives of private-sector firms that come with an offer of help.
That “help” can come in the form of industry experience, cutting-edge expertise not found in the government workforce and private-sector capital. The collaboration that results can expedite the launch of critical projects, greatly reduce or eliminate government risk and – most importantly – provide much-needed funding. One financing option – the public-private partnership (P3) – is becoming a popular choice of government entities and is being used to finance solar energy projects across the U.S.
At the moment, there is some federal energy policy uncertainty as the new Trump administration settles in; nonetheless, government entities on the federal, state and local level are continuing to move forward with solar projects nationwide. Whether it is cities creating solar farms on municipal properties or public schools installing photovoltaic panels on their buildings, government is increasingly engaging in projects to harness this readily available renewable energy source – making power from the sun.
Demand for solar energy from homeowners and businesses has skyrocketed over the years, and public officials are also now exploring solar installations in order to take advantage of the savings and contribute to the sustainability of the planet. Solar energy is the most abundant power resource on earth, and prices for installations have dropped significantly. That makes solar projects extremely attractive candidates for public-private partnerships. In addition, many cities, states and other public entities are increasingly mandated by lawmakers to seek out renewable energy to decrease their carbon footprint and to move toward sustainability.
P3s are also becoming more prevalent at military installations, and a number of bases not only generate their own power, but also sell power to the region. Interest in solar energy at military bases was spurred by the 2014 Capital Solar Challenge, a White House effort that encouraged military bases and other federal agencies in the national capital area to find ways to incorporate solar energy into their energy portfolios. In a public-private partnership engagement, the private partner normally bears the costs of installation of a solar energy system and then either operates the facility or buys the military base’s generated power through a power purchase agreement (PPA).
Last December, the U.S. Department of the Navy announced a $12 million PPA with SunPower Corp. for the solar built on parking lot rooftops on Joint Base Anacostia-Bolling (JBAB), a 905-acre military installation in southeast Washington, D.C. The production term is 25 years, and the agreement allows JBAB to purchase the electricity at a cost equal to or less than the current rate it pays for conventional power.
Some states are entering into P3s as a means of adding solar energy to their electric grids. For example, the Commonwealth of Virginia, technology company Microsoft and Dominion Virginia Power recently partnered on the Fauquier County solar facility, which will add 20 MW of solar energy to the grid in Virginia. The state government and Microsoft will both purchase energy from the new facility.
Other very frequent participants in solar P3s are institutions of higher education, where solar panel installations are increasing. These projects are almost always met with great enthusiasm.
Also in Virginia, the University of Virginia (UVA) partnered with Dominion Virginia Power for installation of solar panels at various locations on the university campus. The power company agreed to lease the roof space at the Ruffner Hall academic building and the University Bookstore and then installed more than 1,500 solar panels. Dominion signed a 20-year agreement, and the university was able to receive $1.6 million for the lease on the rooftop space. The power generated through the solar panels goes directly into the local power grid.
This type of engagement, or partnership, is not uncommon. Through Dominion Virginia Power’s Solar Partnership Program, a private-sector firm often leases space for solar installations from public entities. These, and similar engagements, are also common with commercial and industrial facilities. One of the perks for universities that participate in such partnerships is that students and faculty are often allowed to use the solar energy systems for research. The highly successful Solar Partnership Program has resulted in the installation of more than 5 MW of solar-generating capacity at universities and on industrial and commercial sites.
Later this year, UVA and Dominion will collaborate on the Hollyfield Solar Project. Under the agreement, UVA will purchase the entire output of electricity produced at a new, 160-acre solar facility in King William County over the next 25 years. Approximately 65,000 solar panels will be constructed and operated by Dominion.
Last summer, the Five Points Solar Park opened in Fresno County, Calif. – a partnership between the University of California (UC) system and private developer Centaurus Renewable Energy. Five Points is a 60 MW solar power facility that includes 271,200 panels and will supply energy to UC. It will be supplemented by a 20 MW installation slated to come online later this year. UC signed a 25-year PPA with Centaurus for the projects, totaling 80 MW, and they will help the university achieve its goal of becoming carbon neutral by 2025. Furthermore, the University of Massachusetts Amherst expects its electric bills to decline by $6.2 million over a 20-year period from a 5.5 MW solar energy initiative – a P3 involving the university, Brightergy, Sol Systems and ConEdison.
The cost savings alone make solar P3s attractive, but the additional incentives of cleaner air and sustainability make them even more enticing.
Seattle City Light, a large public power company in Washington, uses its Green Up program to allow its customers to participate in the renewable energy market. Simply put, it means that its customers benefit from reduced costs when green energy is generated. Seattle City Light recently partnered with the University of Washington for installation of solar panels on three of its residence halls. It invested $225,000 for the purchase of the solar panels for installation on those three campus facilities. That contribution allowed the university to compete for matching grant funds of $225,000 through the Washington State Department of Commerce. The project uses solar energy to augment other clean energy sources. Seattle City Light also works with other public and nonprofit organizations in the region.
Many state and local government entities are already saving money and reducing their carbon footprint by incorporating solar energy into their energy portfolios, and their reliance on solar energy will likely continue in spite of any changes that might be made to federal energy policy. As such, P3s will remain a major contributor to growth of the solar industry in the public sector.
Mary Scott Nabers is president and CEO of Strategic Partnerships Inc., a business development company specializing in government contracting and procurement consulting throughout the U.S.