Public-Private Partnerships (P3s) offer a powerful financial solution for today’s energy needs. They provide the framework to build energy infrastructure that is more cost-efficient, scalable, and resilient enough to withstand outages and disruptions. However, before a public agency commits to a partnership, a critical question remains: Which model is the right fit for our specific project?
Energy infrastructure needs are rarely one-size-fits-all. A building retrofit requires a different approach than a multi-megawatt microgrid or a fleet-wide EV charging rollout.
To help navigate P3 options, Schneider Electric developed a P3 Playbook centered on three models: energy savings performance contracts (ESPC), power purchase agreements (PPAs), and energy as a service (EaaS). This is the third in a series of blog posts to help public leaders learn about the benefits of P3s. Other blog posts in the series are:
- Strategic Financing is Accelerating Critical Energy Infrastructure Projects
- Why P3s Are the Financial Answer to Limited Public Capital
- Bridging the Expertise Gap to Successfully Deploy P3 Models
- Streamlining Procurement to Ensure Smarter Infrastructure Delivery
ESPC: The gateway to energy efficiency
The Energy Savings Performance Contracting (ESPC) model has long been the standard-bearer for public sector energy projects. It is often described as the gateway to more integrated partnerships, because it allows agencies to address a backlog of deferred maintenance and efficiency upgrades with zero upfront capital.
In an ESPC model, the public entity partners with an Energy Service Company (ESCO). The ESCO identifies and installs energy-saving measures, such as high-efficiency HVAC systems, LED lighting, or advanced building controls. The defining characteristic of this model is that the project is paid for over time using the guaranteed energy savings generated by the new equipment.
Key advantage: The public entity retains ownership of the assets. This is ideal for agencies that want to modernize existing building stock while maintaining long-term control over their physical assets.
PPA: Fixed-rate for power provides long-term certainty
For agencies focused specifically on renewable energy generation, the Power Purchase Agreement (PPA) is a familiar and effective tool. This model is most commonly used for on-site solar arrays or wind installations.
In a PPA, a private developer finances, builds, owns, and operates the energy system. The public entity does not pay for the equipment; instead, they sign a long-term contract, typically 15 to 25 years, to purchase the electricity generated by that system at a fixed rate.
Key advantage: The PPA serves as a powerful hedge against market volatility. By locking in a predictable energy rate, agencies gain budget certainty and protection from the rising utility costs currently straining public budgets. A February 2026 industry survey found that 76% of organizations expect their utility budgets to increase in 2026, and the teams managing facilities and finance day-to-day reported a significant confidence gap in their ability to set and meet those budgets as complexity and costs grow. Utilities are often the second-largest line item after payroll, so volatility makes budgets based on past spending difficult to maintain.
EaaS: Integrated solution provides maximum flexibility
While PPAs are excellent for energy supply, Energy-as-a-Service (EaaS) represents the newest and most comprehensive evolution of a service model. EaaS is fundamentally more flexible because it moves beyond the simple sale of electricity to provide a full suite of integrated energy outcomes.
An EaaS agreement can bundle multiple disparate services into a single, guaranteed contract, including:
- Capacity and storage: Integrating battery systems to manage peak loads.
- Resilience: Deploying microgrids to ensure 100% uptime during utility outages.
- Decarbonization: Managing EV charging infrastructure and carbon reduction goals.
- Operations and maintenance: Transferring full responsibility for the lifecycle of the technology to a private partner.
Key advantage: EaaS is the Evolved P3. It allows an agency to fold complex, project-enabling work—like a roof replacement required for a new solar array—into one fixed price, something most PPAs do not do.
The selection comparison
Choosing among these models requires an assessment of your agency’s goals, risk tolerance, and technical capacity. The following criteria from our P3 Playbook can guide your decision:
The selection rule of thumb:
- If you want to own the assets and pay via energy efficiency savings: Choose ESPC.
- If you only need a steady supply of renewable power: Choose PPA.
- If you need the resilience of a microgrid or a comprehensive energy infrastructure solution with no lifecycle risk: Choose EaaS.
Download our P3 Playbook to learn more about P3s
Selecting the right P3 model is the difference between a project that simply saves money and one that transforms operations. Whether you are looking for the proven stability of an ESPC or the comprehensive innovation of EaaS, the goal is to leverage private expertise to fulfill a public purpose. By matching your project to the right model, you can secure the resilience and efficient energy infrastructure your community needs for tomorrow. Download our P3 Playbook to learn more about P3s.
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