Deploying Solar Through Municipal Franchise Agreements: Data and Lessons Learned From Pioneering Cities and Utilities
Cities have a wide variety of renewable energy procurement options to help them achieve their goals. One emerging trend is for cities to leverage an electric franchise agreement to partner with their local utility on new renewable energy projects or programs. Franchise agreements are contracts between municipalities and electric service providers that grant the utility authority to serve customers in the municipality. The agreement also typically structures the utility’s activity in the public right of way and includes a fee remitted back to the municipality.
Some cities have successfully negotiated solar and other clean energy objectives into their franchise agreements. When these agreements are implemented, a city and utility then work together to deliver on a variety of outcomes, including new energy-related projects. New National Renewable Energy Laboratory (NREL) research provides the first available analysis of franchise agreements nationwide. The analysis evaluates the extent to which municipalities have the authority to enter franchise agreements, how many have pursued additional energy objectives in or alongside their agreements, and to what effect.
NREL collected franchise-related information from over 3,500 municipalities across the 30 states where municipalities were identified to have this authority. Of these municipalities, 467 referenced at least one energy-related objective. NREL completed five case studies of cities that pursued renewable energy objectives including: Chicago, Illinois; Denver, Colorado; Sarasota, Florida; Minneapolis, Minnesota; and Salt Lake City, Utah. From these cases, NREL further modeled the potential impact of widespread adoption of similar franchise agreements nationwide. The results demonstrate significant potential for deployment exceeding 273,000 gigawatt hours (GWh) by 2030.
1,300 cities within NREL’s dataset alone will have expiring franchise agreements between 2020 and 2030. NREL’s data along with the lessons learned from these cities will provide a critical foundation for other cities, solar project developers, and utilities to maximize the opportunity provide by expiring franchise agreements to support significant solar deployment nationwide.