Public leaders are navigating energy infrastructure pressures as never before. They face reduced federal funding, rising utility rates that impact operating budgets, and the need to invest to ensure uninterrupted service. These pressures are compounded by the clear evidence of an aging power grid that is reflected in the data and the increasingly frequent disruptions to our communities. In their 2025 Infrastructure Report Card, the ASCE downgraded the U.S. Energy category to a D+, citing a combination of surging demand, capacity constraints, and a massive backlog of deferred maintenance.
Driven by the electrification of everything from transit fleets to AI-driven data centers, energy demand is outstripping supply. To help meet this rising demand, U.S. utilities are entering a “super cycle” of investment, planning to spend $1.4 trillion between 2025 and 2030, according to Industry Dive. Additionally, Duke Energy alone plans to invest $130 billion over the next five years.
Traditional project delivery methods, typified by long public capital planning and allocation cycles and multi-step design and construction phases, exacerbate the risk that projects end up over-schedule and over-budget. These protracted timelines can also mean missed funding opportunities and not having critical energy infrastructure in place when it is needed. The legacy approach to procurement and project delivery has become a liability.
To meet this urgency, public entities need a sprint strategy that bypasses bureaucratic friction without cutting corners. Public leaders can leverage strategic financing and operational models such as Public-Private Partnerships (P3s) to accelerate the deployment of energy infrastructure projects without the traditional barriers of scarce upfront capital and limited staff capacity and expertise. By transitioning from a focus on initial construction costs to a model that rewards long-term performance, leaders can improve resilience while shifting the technical risk of construction, operations, and maintenance to the private sector; reduce their long-term energy costs; and provide budget certainty.
Public leaders can leverage P3 models for complex energy projects to deliver the efficient, resilient energy systems their communities require, like district energy systems. They can also apply P3 models to agency-specific energy needs, like an airport microgrid or electrifying a sanitation fleet, as Jersey City, New Jersey, did.
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:
- Why P3s Are the Financial Answer to Limited Public Capital
- Bridging the Expertise Gap to Successfully Deploy P3 Models
- Selecting the Right Energy P3 Model
- Streamlining Procurement to Ensure Smarter Infrastructure Delivery
Why public leaders are trading traditional procurement for P3 performance
Energy infrastructure, like transmission and distribution assets are generally built with a 40-year expected lifespan, which would call for an average per year investment of 2.5% for continuing replacement of assets. But the U.S. has only been investing about 1% per year, which has led to an aging grid, posing a power reliability risk for all businesses.
But on-site energy infrastructure that can be delivered via a P3 model like EaaS is providing lower-cost, efficient solutions while shortening project deployment. The U.S. Army Corps of Engineers found that four energy-related and ecosystem-restoration P3 projects collectively saved 23 years in delivery time and achieved more than $500 million in cost savings compared to traditional procurement methods. According to Brailsford & Dunlavey’s “2024 State of the Industry Report,” 75% of surveyed universities engaged in energy infrastructure P3s reported they anticipate increased use of such models, underlining P3s’ role in accelerating modernization of central utility plants and campus microgrids.
Introducing energy P3s as a strategic financing tool
To move at the speed required by today’s energy environment, public leaders should expand how they think about funding projects. Traditional project delivery methods, such as the design-bid-build approach, which keeps assets on the public entity’s balance sheet, often leave agencies capital-strained, forced to choose between critical repairs and future-ready innovation. In addition, these traditional methods often focus on the lowest initial cost, which often fails to deliver the innovation and best value that organizations need.
When energy infrastructure is owned by a private partner that must deliver energy products or services to the public partner to be paid, the interests of the private partner are fully aligned with delivering high-quality, reliable infrastructure that is well operated and maintained. This shift in ownership can also create capital capacity for the public agency since the energy asset is not on its books.
This is where P3s serve as a strategic project delivery mechanism for energy infrastructure projects. A P3 is more than just a contract; it is a collaborative model designed to deploy resilient, cost-effective energy solutions without the need for upfront capital. In a P3 model, the private sector partner takes on the burden and risk of financing, delivery, operations, maintenance, and technology refresh, allowing public agencies to move faster, reduce risk, and preserve capital.
Energy Savings Performance Contracting (ESPC) is a performance-based model where an Energy Service Company (ESCO) funds facility upgrades through guaranteed energy savings. The public entity continues to own the assets, and project costs are paid to the ESCO via savings realized from the upgrades, typically over 10-20 years. The cost of ESPC projects shows up as debt on the customer’s balance sheet, so debt service coverage ratios are a consideration when evaluating this option.
A Power Purchase Agreement (PPA) is a long-term contract to buy renewable energy at a fixed rate. A private developer builds, owns, and maintains the system, such as solar, allowing the public entity to stabilize long-term energy costs with zero upfront capital. The assets in a PPA do not show up on the customer’s balance sheet.
Energy-as-a-Service (EaaS) is the most comprehensive and flexible business model, providing energy, resilience, and decarbonization in lieu of a utility payment while removing risk and stabilizing energy costs. This model aligns incentives to keep systems efficient, reliable, and up-to-date as the project development partner owns the entire lifecycle: design, financing, deployment, ongoing maintenance and operations, and technology refresh. This includes complex assets like microgrids and EV charging infrastructure. In this model, customers are paying for outcomes and not technology.
By positioning P3s as a financial and strategic tool rather than just a procurement method, agencies can unlock projects that were previously unfunded or deemed too complex.
Strategic financing: Shifting the mindset on risk and performance
One of the most significant advantages of modern strategic financing is the shift in the performance mindset. Traditional infrastructure projects often suffer from a disconnect: A contractor builds a system, gets paid, and leaves the long-term operational costs and responsibilities to the public agency.
Strategic financing restructures the risk profile through performance-based contracts. In these arrangements, incentives are aligned. The private partner’s compensation is directly tied to operational accountability and service quality. If the system doesn’t perform during outages or the energy savings don’t materialize, the provider is the one who bears the financial risk.
This represents a shift in active risk transfer. Instead of the public sector owning the risk of equipment failure or technological obsolescence, that risk is transferred to the private partner. This ensures that the infrastructure is not only built to last but is also maintained at peak performance throughout its entire lifecycle.
Why EaaS is the ideal vehicle for innovation
EaaS represents the most sophisticated and flexible evolution of business models associated with P3s. EaaS integrates every phase of the infrastructure lifecycle into a predictable fixed price. A 20-year agreement ensures assets are refreshed without the need for additional capital or the risk of obsolescence from rapidly evolving technologies.
For a public agency, EaaS transforms a complex energy infrastructure project into a simple, reliable service. This model is particularly effective for deploying cutting-edge technology that might otherwise be too risky or expensive to manage in-house, such as microgrids, battery energy storage systems, EV charging infrastructure, and advanced building automation.
With an EaaS model, the public entity pays for the outcome of efficient, reliable, clean energy rather than paying for the assets. The business model provides the ultimate flexibility to scale and adapt as technology evolves, ensuring that public infrastructure remains operationally sound, technologically current, and resilient for decades to come.
Download our P3 Playbook to learn more about P3s
The evolving landscape of energy infrastructure demands that public entities approach procurement and financing with the same innovation they apply to engineering. Embracing models like P3s allows leaders to act with urgency, securing infrastructure that is efficient, affordable, and built to last. Download our P3 Playbook to learn more about P3s.
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