Project Purpose

To deploy multi-site solar, storage, and energy infrastructure upgrades across municipal facilities to reduce emissions and lower long-term energy costs.

Project Overview

For over a decade, the City of San Diego has embraced multiple approaches to increase the sustainability, efficiency, and resiliency of its municipal facilities. The City’s efforts have evolved from leveraging individual site installations to larger, multi-site procurements that achieve greater economies of scale by bundling solar, storage, and building upgrades.

Most recently in 2026, the City approved a $112 million contract with Willdan Energy Services to implement solar, battery storage, electrification, lighting, and infrastructure upgrades across 40 municipal facilities. This portfolio includes approximately 15 solar systems totaling approximately 1.6 MW, 15 battery storage systems totaling approximately 3.9 MWh, and upgrades to roughly 36,000 streetlights — all at no upfront cost to the city.

Why did you choose this procurement approach?

San Diego pursued a multi-site procurement strategy to efficiently scale deployment of solar and related on-site energy technologies across its large portfolio of municipal facilities while reducing costs and administrative burden. Prior to 2016, the City deployed solar across 16 municipal facilities through its Municipal Solar Installations program, totaling approximately 2.3 MW of installed capacity, equivalent to the annual electricity use of 600 homes and generating roughly $1 million annually in energy cost savings. These early projects demonstrated the feasibility of on-site solar across a range of municipal facilities, including libraries, recreation centers, police stations, and water treatment plants.

Building on those initial projects, the City pursued two approaches to implement multi-site strategies:

Phase 1: First Multi-Site Procurement (2016–2017)

San Diego completed its first multi-site solar procurement in 2017, deploying solar across 17 municipal sites through a power purchase agreement (PPA). The portfolio became fully operational by 2019 and ultimately totaled 3.515 MW of solar capacity, roughly equivalent to the annual electricity use of approximately 933 homes.

Bundling sites into a single procurement:

• Can reduce the cost per unit of installed capacity through economies of scale;
• Saves staff time by reducing the need for multiple procurement processes;
• Attracts stronger participation and competition from prospective contractors and developers; and,
• When paired with a long-term PPA, enables the City to lock in a fixed electricity price.

The PPA structure allowed the City to buy renewable electricity at a fixed price without upfront capital investment. The City locked in a fixed electricity rate of approximately $0.18/kWh. This is substantially lower than the City’s utility rates, which range from $0.30 to $0.50/kWh. This structure provided immediate cost advantages while also serving as a hedge against rising electricity prices.

California has higher electricity prices than most other states, making solar projects financially attractive because they can provide immediate savings. At the same time, locking in fixed electricity prices through long-term contracts provides additional protection against future utility price increases. As electricity prices continue to rise nationally, long-term solar procurement strategies may increasingly become attractive for cities in a wider range of markets. Even when a PPA price or equivalent project cost is higher than current utility rates, local governments should evaluate projects against longer term, 20–30-year electricity cost projections rather than short-term utility prices or upfront costs.

Phase 2: Portfolio-Based Multi-Site + Storage (2020s–Present)

San Diego’s multi-site strategy evolved after the first procurement. After the successful PPA effort, the City partnered with the Clean Coalition to conduct a separate Solar Siting Survey, which identified more than 120 viable sites with approximately 500 MW of technical solar potential. While the survey did not directly inform site selection for the Energy Savings Performance Contract (ESPC) portfolio, it highlights the broader scale of solar opportunities available across the city. This survey also identified the potential of siting on parking lots and garages, reinforcing the opportunity to deploy distributed, multi-site solar systems such as rooftop installations and parking canopies.

Building on its initial multi-site experience, San Diego transitioned to a broader portfolio-based approach using an ESPC model, a financing structure that allows public agencies to bundle energy upgrades and repay project costs over time through avoided operational energy costs. The City shifted from a traditional PPA structure to an ESPC model because it wanted to bundle solar, battery storage, energy efficiency upgrades, with building electrification measures that would not otherwise pay for themselves through energy savings alone. San Diego’s goal of electrifying every single city facility by 2035 and transitioning away from natural gas systems helped catalyze this integrated approach.

The City’s $112 million contract with Willdan Energy Services includes upgrades across 40 buildings, including 23 fully electrified facilities. The portfolio includes libraries, recreation centers, police facilities, administrative buildings, and other municipal assets, combining distributed solar, battery storage, streetlight retrofits, and broader building efficiency and electrification upgrades across municipal facilities. Solar installations total approximately 1.6 MW, roughly equivalent to the annual electricity use of 425 California homes. Battery storage systems totaled approximately 3.9 MWh.

By combining solar, battery storage, energy efficiency, and building electrification into a single portfolio, the City was able to bundle highly cost-effective measures with more expensive electrification projects that would not have achieved cost recovery on their own. This broader portfolio approach helped support larger-scale municipal decarbonization efforts. Measures included: HVAC electrification, water heater electrification, indoor and outdoor lighting retrofits, electric kitchen appliances, utility service upgrades, high-efficiency transformers, and water conservation upgrades. In particular, San Diego bundled highly cost-effective measures, specifically lighting upgrades and streetlight retrofits, with more expensive electrification projects that otherwise would not have achieved cost recovery on their own. Overall, San Diego approached this by keeping in mind direct energy savings and longer-term opportunities to reduce exposure to future utility cost increases.

What were San Diego’s biggest challenges in setting up this project?

San Diego faced several challenges in implementing its multi-site, multi-technology portfolio.

Procurement and Regulatory Complexity

One of the first major challenges was modifying the City’s procurement structure to support a portfolio-based ESPC model. San Diego needed to amend its municipal code in 2021 to incorporate California Government Code 4217. This amendment enables the City to avoid bidding contracts and conducting audits on a site-by-site basis.

Additionally, the City’s Zero Emissions Municipal Buildings & Operations Policy (ZEMBOP), adopted in 2022, requires full electrification of any facility receiving a retrofit that replaces two or more energy-using systems. City staff determined that ZEMBOP would be triggered at most facilities in the portfolio. This risked increasing project costs, expanded the project, and prompted staff to ultimately adjust and limit the included facilities.

Lastly, the contract development process also proved more complicated than anticipated. The City’s novel approach of pursuing a large infrastructure project without significant direct capital investment meant that the City needed to coordinate closely with Public Works staff to define roles, responsibilities, and resource needs. This included:

• Public Works supporting the effort but not managing the procurement process;
• Purchasing staff adapting contract provisions and performance terms into the agreement because this did not
  follow the City’s more traditional RFP process; and,
• The City developing and incorporating its own construction terms and conditions and preferred design-build
  contract language into Willdan’s ESPC contract structure.

Blending elements of performance-based contracting and the City’s Design-Build template into a single agreement required nearly 6 months of extensive coordination and negotiation between legal, procurement, and public works departments. However, this effort enabled the City to not only be more innovative in its contracting and its energy upgrades across multiple facilities.

Financing Constraints & Debt Capacity

The financing structure was another major challenge. The project relied on a 25-year financing term to preserve affordability and maintain the inclusion of electrification measures that otherwise would not have achieved cost recovery within shorter repayment windows. At the same time, the City was approaching its internal debt capacity limits. This then required extensive coordination with the finance department to demonstrate the long-term value of the investment.

Stakeholder Coordination Across Departments

Because the ESPC portfolio touched dozens of facilities and multiple technologies, the project required extensive coordination across procurement, finance, sustainability, engineering, operations, asset management, and facility management departments. The planning and procurement process took approximately 2.5 years, reflecting the complexity of aligning stakeholders across a large municipal organization. The City emphasized the importance of repeatedly engaging departments throughout the process to maintain alignment and ensure stakeholders understood how the audit process and the eventual project would affect their facilities and operations.

Near the end of this process, the timeline got further complicated because the City had to accelerate its solar procurement process to preserve eligibility for the federal Investment Tax Credit for solar projects as federal regulations evolved. For additional insight into federal incentives and ways to accelerate planning and procurement efforts, check out the City Story for Austin’s multi-site solar procurement.

Is there anything you wished you knew at the beginning or would do differently?

San Diego’s experience highlights the importance of early coordination and planning when pursuing large-scale, multi site projects. The City found that aligning procurement, engineering, legal, operations, and financial processes early on is critical, particularly when combining multiple technologies and contract structures within a single portfolio. The City also emphasized the importance of understanding financing limitations early in project development, particularly repayment timelines and debt capacity constraints.

San Diego’s experience suggests that cities pursuing similar multi-site projects should anticipate longer development timelines and more extensive stakeholder coordination than standalone energy projects. While these larger procurements require more time-upfront, they can ultimately be more time- and cost-efficient than delivering the same portfolio of projects through a piecemeal approach.

The City also emphasized the importance of framing projects around avoided future operational costs rather than direct budget savings. This distinction helped City staff communicate that the portfolio was not generating extra funding for unrelated budget priorities but rather helping stabilize long-term operational costs while financing electrification measures that delivered on Climate goals, coupled with major facility upgrades that addressed deferred maintenance and were otherwise unfunded.

Communicating the intended project scale (over 100 City-owned sites) was essential for priming the solar developers best suited to deliver on the City’s goals. Beyond the explicit announcement, the message implicitly demonstrated the City’s seriousness of interest and understanding of market timing. And because the City knew it was planning a two-month turnaround through the winter holiday season, this announcement offered an extra week for prospective respondents to prepare staff and materials to respond.

What advice would you give other local governments?

San Diego’s experience offers several lessons for other cities pursuing similar projects.

Build Internal Capacity Over Time

The City’s earlier municipal solar projects helped establish internal familiarity with solar procurement and project implementation before transitioning to more complex portfolio-based procurements involving storage, electrification, and performance contracting. San Diego’s experience suggests that lessons learned from earlier projects, as well as from peer cities and technical partners, can help local governments build internal expertise, reduce risk, and strengthen stakeholder buy-in over time. Allowing them to pursue larger and more ambitious multi-site portfolios more efficiently over time.

Build Internal Champions

The City emphasized the importance of securing buy-in from key departments and identifying strong internal champions. Even with shared goals, departments have different near-term and long-term priorities and evaluate projects and their operational impacts differently. As a result, it is useful to understand department concerns and questions early, invite them into the planning conversations, avoid surprises, and host separate meetings with each department throughout the planning process. Similarly, effective internal champions can be sounding boards for colleagues, elevate concerns early, help troubleshoot when challenges arise, sustain momentum over multi-year project timelines, and communicate project value in ways that resonate with different stakeholders across the organization. They serve as advocates and the first line of defense for the project’s success within their respective departments, especially when obstacles arise or priorities change.

Multi-Site Approaches Can Unlock Broader Benefits

Bundling solar, storage, lighting, electrification and efficiency measures into a single portfolio improved overall project economics, more efficiently used staff time, and enabled the City to make more progress on its goals sooner. Similar
reflections and insights are also discussed in City Stories about Austin and San Antonio.

Explore Opportunities to Piggyback on Other Processes

For the first PPA, San Diego signed a cooperative agreement leveraging SPURR (Schools Project for Utility Rate Reduction), a California joint powers authority that helps public agencies collaboratively procure energy and infrastructure services. In this case, the City was able to leverage an existing competitively awarded procurement rather than conducting a completely standalone solicitation process, saving staff time and resources. Ultimately, the City worked with SunEdison LLC and later Onyx as part of the project delivery team.

Many states allow local governments, school districts, and other public agencies to “piggyback” off of other agencies to procure similar products and services to reduce duplicative efforts and administrative effort. Similarly, the state of California allows for procurement without competition when project costs are outweighed by energy savings (CA GC4217). Where allowed and available, local governments should examine what types of opportunities exist for their energy and sustainability goals.

How does this project fit into San Diego’s broader climate and community goals?

This project plays a key role in advancing San Diego’s Climate Action Plan by reducing emissions from municipal buildings and accelerating the transition to all-electric systems. The portfolio also improves public health by reducing reliance on fossil fuel-based systems and upgrading facilities such as libraries and recreation centers that serve local communities.

Additionally, the multi-site projects support San Diego’s broader resilience goals. These include solar and storage to help critical facilities maintain operations during outages and emergencies and leveraging municipal facilities as long-term climate infrastructure assets for financial resilience by hedging against rising utility cost and future energy price volatility.

Additional Information and Resources

• San Diego Municipal Code Design Build Contracts
• San Diego Energy Savings Performance Contracts Municipal Code Amendment Staff Report
• San Diego Energy Service Companies Request for Information
• San Diego City Solar Installations
• San Diego Solar Siting Survey