Private Partners to Fund Overdue Energy Upgrades at Government Facilities?

Lawmakers warm to prospect of private investment in long neglected projects, including in renewable energy

Microgrids are being considered; the microgrid at Princeton University kept the lights on during superstorm Sandy.
With an aging, and often obsolete energy infrastructure in government-owned facilities in New Jersey, lawmakers are pushing a bill that would allow the private sector to invest in energy-related projects at those facilities.

The bill (S-2958)/(A-4535) won approval from committees in both houses last week, a sign that legislators are warming to the idea of private investments funding long neglected projects because of increasing constraints on local and other government entities.

To advocates, the concept represents a cost-effective way to fund projects that could help governments reduce energy costs, improve resiliency and develop cleaner ways of meeting government facilities’ energy needs.

“There is a large amount of aging and obsolete energy infrastructure,’’ Steven Goldenberg, a lawyer representing the New Jersey Distributed Energy Coalition, told the Senate Environment and Energy Committee, noting that government entities have consistently put off upgrades because of budgetary constraints. “Projects are not happening in the current environment.’’

Tax abatements

If the bill is enacted into law, Goldenberg argued it could lead to governments developing a wide range of projects, including renewable energy, energy efficiency and storage, and even microgrids. The latter could help critical facilities, like hospitals, keep their lights on even during failures of the conventional power grid.

Those problems were magnified during superstorm Sandy when widespread outages left government facilities dark for days. More than 90 wastewater treatment plants, left without electricity, ended up spewing raw sewage into state waterways. A few hospitals without power had to evacuate patients.

The legislation would allow private entities to be responsible for designing, building, financing, operating, and maintaining the energy projects. The bill provides a lot of flexibility on financing, letting private entities take advantage of tax abatements, long-term bonding, and other funding mechanisms.

Many of the projects envisioned under the legislation may wind up being self-funded by the energy savings once the upgrades are completed, according to Goldenberg.

Assemblyman Andrew Zwicker (D-Mercer), who is sponsoring the bill in the lower house, said the legislation would allow government entities to leverage the expertise and financial resources of the private sector to develop a number of energy-related projects.

“With collaborations being a key component of sound energy infrastructures, this legislation will help government entities partner with the private sector to develop crucial state-of-the-art, energy-related projects that can help improve the reliability, efficiency and lower the cost of energy services to government facilities,’’ Zwicker said.

The bill’s implementation would be overseen by a new unit within the state Economic Development Authority. The legislation also would allow government entities to partner with others in the community, such as hospitals, colleges, and large energy users to make the projects more economically feasible.