Authored by Christine Weydig, Industry Principal and George Karayannis, Public Sector Segment Leader, Schneider Electric
Energy is no longer just an operating expense to be tolerated. For public agencies, it has become a material and increasing budget risk that can quietly and quickly erode service levels, impact capital plans and widen affordability gaps for communities.
Geopolitical disruption and supply chain uncertainty can change energy markets quickly, and public budgets can be severely impacted. The question is no longer whether volatility will show up — it is whether your budget is protected when it does.
Across the public sector, from state and local government to education and transportation, leaders face a convergence of pressures. Heating and cooling costs are rising sharply, electricity demand continues to grow and the infrastructure required to deliver reliable power is becoming heavily strained and expensive to upgrade. In fact, rising electricity rates have emerged as a centerpiece of the 2026 “affordability” crisis, with some regions seeing annual increases exceeding 20 percent. That kind of sustained increase is difficult for any organization to absorb, but especially for public institutions with fixed or voter-approved budgets. When prices rise rapidly, waiting only increases your risk.
At the same time, utilities are entering what many analysts describe as an investment “super cycle.” An estimated $1.4 trillion is expected to be invested in grid and energy infrastructure between 2025 and 2030, more than double the investment of the prior decade. While this investment is necessary to modernize aging systems and support electrification, it also puts continued upward pressure on energy costs over time. City governments that move now can convert an uncertain line item into a predictable and manageable cost.
This dynamic helps explain a counterintuitive reality: electricity is becoming cheaper to generate, but more expensive to transmit and distribute. Since 2005, generation costs have steadily declined, while transmission and distribution costs have increased significantly — and this gap is likely to continue widening. What does this mean for city governments? Even as generation costs fall, total utility bills continue to rise because the cost of delivering electricity is increasing. For local governments, that creates budget uncertainty and long-term affordability risk. Without a strategy to create cost certainty, they remain exposed to future rate increases.
That is why a growing number of public sector leaders are taking a strategic step that may have felt unnecessary just a few years ago: locking in energy costs now to protect affordability in the years ahead. While some organizations may have deployed solar PV in the past to support their sustainability goals, now they are doing it to secure their economic future.
Cost Certainty
Locking in energy costs is not about predicting markets or timing prices perfectly. It is about creating energy cost certainty. By establishing long-term agreements that pair infrastructure upgrades with performance expectations, to reduce exposure to rate volatility, local governments can shift energy from an unpredictable liability into a managed, strategic asset. Cost certainty is a form of fiscal resilience that helps leaders plan, protect services, and avoid reactive and painful budget tradeoffs.
Public‑private partnership (P3) delivery models are increasingly enabling this shift. These collaborative models allow agencies to move faster while addressing challenges of limited capital, staffing shortages, procurement complexity and risk management. Through partnership‑based approaches, energy upgrades can be implemented with predictable costs, defined outcomes and shared accountability, typically without the need for upfront capital investment. Speed matters here, because timing can determine whether you lock in predictable costs or remain exposed to volatility.
Examples
Real-world examples demonstrate what this can look like. In San Diego, public EV infrastructure and municipal microgrids have been delivered through P3 models that required no upfront capital, included revenue-sharing mechanisms and prioritized deployment in communities of concern. In Fresno, a citywide program spanning 76 facilities combined energy efficiency upgrades, LED streetlight conversions and clean energy infrastructure. Deploying 34 MW of solar and battery storage and delivering more than $150 million in utility savings, the city projects savings to exceed $325 million over 25 years.
What makes these programs successful is not just financing; it is alignment. Effective partnerships bring public agencies and private‑sector partners not just to the table, but to the same side of the table, aligning strategic priorities and balance sheets. When policies, funding, technology and operational responsibilities are coordinated, energy infrastructure can be deployed more expediently while maintaining affordability and public trust. In an era of higher uncertainty, alignment is how agencies replace exposure with control.
For state and local governments, energy cost certainty helps protect essential services and prevents rising utility expenses from crowding out investing in community services. For education systems, predictable energy costs support reduced bus fuel costs, healthier learning environments and long‑term facility planning. For transportation agencies, cost stability underpins fleet electrification, depot and terminal operations and reliable service delivery.
Energy affordability is quickly becoming a defining leadership issue for the public sector. Local governments that act early by locking in cost certainty and leveraging partnership delivery models that reduce risk will be better positioned to protect budgets, strengthen resilience and serve their communities well into the future. If you are evaluating options this year, start now. Acting early helps preserve flexibility.
Learn More
To learn more about how public agencies are accelerating resilient, affordable energy infrastructure through partnership‑based delivery models, visit Schneider Electric’s Accelerating Resilient Infrastructure (ARI) initiative site. ARI brings together public leaders, developers and capital partners to help public entities, transportation authorities and educational institutions move faster, reduce risk and protect energy affordability at scale.
Visit the NLC Strategic Partnerships page to learn more about organizations like Schneider Electric dedicated to making NLC the premier resource for local governments.
Take the Next Step
If your organization is exploring ways to stabilize energy costs, modernize infrastructure, and improve long‑term affordability, Schneider Electric can help. Connect with our public sector experts to discuss partnership‑based approaches and how the ARI ecosystem is helping agencies move from strategy to execution. Take the first step toward reducing exposure with a scoping conversation and path to a price and performance structure.
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