Global Project, Energy and Infrastructure Finance Partner Allan Marks recently authored a Forbes article titled “‘As Ohio Goes, So Goes The Nation’ – From Ohio to Iowa to Idaho, New University Partnerships Bolster Finances and Sustainability”, which discusses how higher education institutions are utilizing public-private partnerships (“P3”) to increase financial resilience in the midst of pressures to stabilize their budgets and boost their endowments.
Noting that the COVID-19 pandemic has exacerbated challenges faced by public universities, such as lessened state financial support and projected declines in enrollment, Mr. Marks explores how the University of Idaho has embraced the P3 trend with a new energy public-private partnership. The partnership, similar to the P3 model pioneered by The Ohio State University and the University of Iowa, was created to boost the school's endowment, to make its long-term utility infrastructure more sustainable and resilient, and to secure long-term financing for future capital investments.
In the article, Mr. Marks observed, “Through these P3 concessions, the universities have been able to monetize existing non-core assets, creating new funds for endowments and special programs, while shifting operating risks to private partners who bring expertise and access to long-term capital to fund needed improvements.” He added, “The future creates opportunities for innovation in contracting models, technology and energy management systems as schools adapt to changing circumstances…. In the short term, restrictions limiting classes and other on-campus activities during the 2020 pandemic have enabled schools to reduce operating costs and cut energy usage.… Over time, it is possible that schools will reconfigure space on campus to accommodate different activity patterns…. Increased physical distance in classrooms and improved HVAC and air filtration systems may require greater capital expenditures, further stressing school budgets. Demands for power, cooling and connectivity may increase with the additional digital infrastructure needed for online education, cloud computing, wireless networks and advanced telecommunications. Shifting climate patterns may increase demands for heating and cooling or tools to deal with extreme weather. Technological improvements (including adaptive building systems, thermal design, energy storage, microgrids, and smart energy management systems and software) may facilitate operational efficiencies and cost reductions and may make intermittent renewable energy sources like wind and solar power more available at times of peak demand and more affordable…. There are ample opportunities to reimagine how P3 collaboration between universities and private partners can make schools more robust and stimulate research and development, with schools serving as both research centers and test beds for innovation by engineers, designers, financial investors and commercial parties alike. The key is to align interests around shared goals with a clear and fair allocation of risks and rewards.”
Mr. Marks recently spoke about higher education institutions using public-private partnerships to meet sustainability and reliability goals on the “Powering a Greener Future: University Energy Management Projects” panel at the virtual P3 Higher Education Summit. The full panel discussion can be viewed here.