Funding Solar Projects at Federal Agencies: Mechanisms and Selection Criteria (Brochure)

Implementing solar energy projects at federal facilities is a process. The project planning phase of the process includes determining goals, building a team, determining site feasibility and selecting the appropriate project funding tool. This fact sheet gives practical guidance to assist decision-makers with understanding and selecting the funding tool that would best address their site goals. Because project funding tools are complex, federal agencies should seek project assistance before making final decisions. High capital requirements combined with limits on federal agency energy contracts create challenges for funding solar projects. Solar developers typically require long-term contracts (15-20) years to spread out the initial investment and to enable payments similar to conventional utility bill payments. In the private sector, 20-year contracts have been developed, vetted, and accepted, but the General Services Administration (GSA) contract authority (federal acquisition regulation [FAR] part 41) typically limits contract terms to 10 years. Payments on shorter-term contracts make solar economically unattractive compared with conventional generation. However, in several instances, the federal sector has utilized innovative funding tools that allow long-term contracts or has created a project package that is economically attractive within a shorter contract term