Federal agencies can use the following on-site distributed energy project financing options to help meet federal distributed energy goals and requirements.

Project Financing Option Description
Appropriated Funds

Financing distributed energy projects through appropriations allows federal agencies to own their projects and immediately benefit from the cost savings. This type of financing should be an agency's first consideration in pursuit of its renewable energy goals. An operations and maintenance (O&M) contract should be considered to ensure that the system continues to operate, and funding should be set aside for emergency repairs and/or equipment replacement that may not be covered by an O&M contract.

Use the FEMP Technical Assistance Request Portal to apply for assistance with a distributed energy project financed through appropriated funds.

Federal On-Site Renewable Power Purchase Agreements

Federal on-site renewable power purchase agreements (PPAs) allow federal agencies to implement distributed energy projects on their property with minimal up-front capital costs incurred and no responsibility for operations and maintenance of the project.

Energy Savings Performance Contracts

Energy savings performance contracts (ESPCs) allow federal agencies to implement energy conservation measures, which include distributed energy, with no up-front capital costs. ESPC energy sales agreements are another option.

Utility Energy Service Contracts

Utility energy service contracts (UESCs) offer federal agencies an effective means to implement distributed energy projects by participating in programs offered by their gas, water, or electric utilities.

Other Utility Options

Federal agencies can contract with their serving utility to implement on-site distributed energy projects that are privately owned. There are two primary options:

  • Contract for the purchase of energy (including or excluding the RECs) from an on-site distributed energy project. The prime contract is with the utility, but the utility or the project developer may own the project and take advantage of available tax incentives. 
  • Contract for the use of federal land so that the utility can develop a renewable energy project for utility use. The project can be rate-based to serve all of the utility's customers, or can be used to meet the utility's renewable portfolio standard requirement. The prime contract is some type of real property instrument such as an easement, lease, or license. 

If more than one utility serves your site, fair consideration must be given to each serving utility before moving forward with a contract.

Enhanced Use Leases

If an agency is authorized to enter into an enhanced use lease (EUL) and owns under-utilized land or buildings with the potential for renewable energy development, it may allow a utility or third-party developer to use the property for the development of energy projects. 

Under an EUL, the utility or third-party developer pays a "rental" fee to the agency in the form of cash or an in-kind consideration—most likely a renewable energy project, renewable energy, or RECs produced from the renewable energy project.

Enhanced use lease lengths can range from short-term to decade-long and are typically a practical option for a federal agency site if it can accommodate a large renewable energy project but does not have a need for some or all of the energy.