The view from the ivory tower isn’t great these days. Headlines are dominated by a select few clashes between some ivy league schools and the Trump administration. Other policy changes, such as reductions to indirect cost rates on federal research grants, could have much broader, and deeper, economic impacts on higher education.
These are acute political problems, but for years higher-ed has been facing longer-term headwinds. Student enrollment has been declining for years and was especially sharp during the pandemic. More students today are either online or dual enrollment. And more young people are choosing trade schools instead of traditional four-year degree programs.
Some of these trends may be passing, but it is safe to conclude that, going forward, universities will very likely face greater resource constraints and more difficult tradeoffs than they have in the recent past. One of those tradeoffs is going to be how, or even whether, to meet their ambitious decarbonization or net zero emissions goals.
One promising solution to that challenge is the rise of campus energy public-private partnerships (P3s). It isn’t hard to see why. Universities have aging energy systems that are in need of rehabilitation and are becoming more and more expensive to operate. They also want to green their grid and reduce their campus carbon footprint. With a P3 procurement, universities can bring on a private partner to make that capital investment, replace or renovate key generating, distribution, or even building system infrastructure, and operate that system over a long-term concession. The university also gets to transfer both construction and some performance risk to their private partner.
And most importantly, the retrofits help pay for themselves: the energy savings from the rehabilitation can offset the long-term availability payments to the private partners, so the partnership shares in both the value created by the rehabilitation and the risk of implementing it.
For investors with the technical capability and development expertise to implement these complex rehabilitations, university energy P3s create a unique benefit as well. University campuses are essentially cities, but their governance and ability to make decisions is much more streamlined relative to a city council or state agency. That can make for faster decisions and more direct lines of communication for what will certainly be a complex project.
The Ohio State University started the trend, signing a 50-year energy concession with a team led by ENGIE and Axium Infrastructure in 2017. The universities that have awarded campus energy P3s since include the University of Iowa (2019, with a team led by ENGIE and Meridiam), the University of Idaho (2020, with a team led by Sacyr and Plenary), Syracuse University (2020, with a team led by CenTrio (formerly Enwave), Fresno State University (2021, with a team led by Meridiam and NORESCO), Louisiana State University (2022, with a team led by CenTrio and a JV between Bernhard and Johnson Controls), and the University of Maryland (2024, with a team led by Plenary and Kiewit).
That Fresno State University project is the latest campus energy retrofit P3 to reach operations. The central utility plant replacement reached substantial completion late last year and the project held a ribbon cutting in January. The project scope included not only the central plant replacement, but upgrades to the campus’s steam distribution system and the installation of new electric chillers for the chilled water system as well.
This month, Public Works Financing caught up with Meridiam’s Omri Gainsburg to discuss the project, the partnership, and the future of higher education energy P3s.
