Innovative Solar PV Financing Methods: Invest In Solar PV through Energy Services Performance Contracting

By Jim Kennerly and Autumn Proudlove, North Carolina Solar Center

PV RAY

Knoxville Convention Center Solar PV Array (Photo Credit: International Brotherhood of Electrical Workers Local 790)

Local governments across the country are often both some of the largest employers and largest users of electricity in their areas. When utility costs go up, as they have in recent years, local governments are forced to spend more on energy and less on providing essential services, like police, fire, and water and wastewater treatment. According to the Bureau of Labor Statistics, as of late 2013, local governments have shed over 500,000 jobs since 2009.[1] A major contributor to this is rising energy costs, coupled with the economic downturn. As a result, many local governments are turning to investments in solar PV and energy efficiency to cut their energy costs, retain jobs, and more cost-effectively maintain critical infrastructure.

An excellent way for local governments to invest in solar and save money on their often large utility bills is to purchase solar through an energy services performance contract. Performance contracts are a common type of public-private partnership between here an energy services company and a local government that result in significant guaranteed energy and cost savings. This week, the North Carolina Solar Center at NC State University and the SunShot Solar Outreach Partnership released Integrating Solar PV into Energy Services Performance Contracts: Options for Local Governments Nationwide (HERE), a resource for local governments interested in both reducing their energy costs and providing a boost to local economic development.  The guide contains several helpful resources, including:

  • A comprehensive list of the economic, operational, resilience, and sustainability-related benefits of entering into a performance contract and using that contract to invest in solar PV;
  • Ways that local governments can use performance contracts to finance the purchase of a commercial-scale rooftop PV system with limited to no upfront cost;
  • Information about the experience of the cities of Cincinnati, OH and Knoxville, TN, two large energy users that used performance contracts as a way to invest in solar and reduce their utility bills; and
  • A series of suggested best practices for local governments to follow in using a performance contract to invest in solar and save on their utility bills.

While performance contracting has long been a common tool for helping large energy users cut their costs, recent declines in the cost of solar PV have allowed it to become a cost-effective and potentially significant energy conservation measure that “pays back” more quickly than ever before. Therefore, this fact sheet is an important piece of the puzzle for local governments looking to save energy, retain jobs and save taxpayer money for mission-critical projects and services.


[1] Seasonally-Adjusted Employment, Hours and Earnings data for Local Government, Table B-1 of the Current Employment Survey, Bureau of Labor Statistics (BLS), U.S. Department of Labor. Accessible at: http://www.bls.gov/webapps/legacy/cesbtab1.htm