The University of Maryland (UMD) is proposing a public private partnership (P3) to implement the NextGen Energy Program (NextGen) in order to renew and modernize the University of Maryland, College Park’s aging energy system. Under the proposed P3, UMD will contract with a private sector entity to design, engineer, finance and install energy system improvements. After improvements are completed, the entity will also manage, operate and maintain UMD’s energy systems moving forward.
The University of Maryland has more than 41,000 students, 14,000 faculty and staff, and 377,000 alumni. The main campus is located in College Park, MD.
On April 27, 2020, UMD issued a Request for Qualifications (RFQ) seeking qualifications for entities to improve, manage, operate and maintain the UMD’s central heating, cooling and electrical generation and distribution systems to ensure the UMD receives long-term reliable, efficient, sustainable and affordable energy services.
According to a Pre-Solicitation Report (PSR) dated January 31, 2020, UMD recommended two primary commercial structures for implementing the NextGen Program, either (i) a 501(c)(3) type Structure, or (ii) a Concession (Availability Payment) Structure. Under the 501(c)(3) type Structure, UMD would finance energy system capital improvements through a tax exempt entity and contract with a private sector entity to design, engineer and install those improvements and manage, operate and maintain the energy systems.
In the past, the Maryland Economic Development Corporation (MEDCO) has been involved in such projects. Under the Concession Structure, a private sector concessionaire would finance capital improvements using a mixture of equity and taxable debt, design and build those improvements and manage, operate and maintain the energy systems.
In the PSR, UMD indicated that it would consider other commercial structures and that it would consider a variety of payment models such as an availability payment for the central energy generation facility and a “base rate” model for the distribution system.
Further, UMD indicated it would also consider an incentive-based compensation model for a continuing program of energy reviews reductions in campus buildings and facilities.
The statement of qualifications are due on July 29, 2020. The PSR identifies the following additional milestone dates – deadline for receipt of proposals in March, 2021, selection of the preferred proposal in June, 2021, the approval by the Maryland Board of Public works in April – May, 2022 and a financial closing in June, 2022.
The NextGen Energy Program would commence in July, 2022, with UMD preliminarily assuming a construction period of 3 years and an operational period of 30 years, although such time frames are subject to the receipt of final proposals.
Duane Morris has a dedicated P-3 Team to help organizations plan, respond to and address RFQs/RFPs and to structure and execute your P-3 transactions. If you have any questions about this post or have interest in responding to the RFQ and would like some assistance, please contact Tom Totten, Brad A. Molotsky, Joel Ephross or the attorney in the firm with whom you are regularly in contact.
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