#144 Why Energy Projects Stall — and How to Fix It.
Why energy projects
stall.
Five years after his first appearance, Charlie Zitnik — public-finance veteran at D.A. Davidson — returns to the round table to explain why the finance conversation has to start on day one of an ESPC, not at the goal line.
#144Why Energy Projects Stall — and How to Fix It
Charlie has been in the field since 1980 — through every interest-rate cycle since Volcker.
Part of a 1,600-person broker-dealer with 31 offices nationwide — a focused team inside a national platform.
Charlie's team joined via the Kirkpatrick Pettis acquisition ~20 years ago and has stayed together since.
That's all the AGLF members reported across the year — up from zero the prior year. Tax-exempt still wins.
From 1980 to a 1,600-person broker-dealer — without changing teams.
Charlie's career reads less like a job-hopping résumé and more like one long apprenticeship. Click any stop on the timeline to hear what changed underneath the ESCO and public-finance business along the way.
1980 Out of school and straight into securities +
~1995 Joins Kirkpatrick Pettis — a regional broker-dealer +
~2005 Kirkpatrick Pettis is acquired by D.A. Davidson +
Post-2010 Dodd-Frank rewrites the ESCO finance playbook +
2020 Part One on the Building Efficiency Podcast — peak COVID +
2026 Today: energy & renewables at D.A. Davidson, with partner Steve Goehl +
Where all projects go to die is finance.Charlie Zitnik · on the call ESCOs avoid making early enough
If you've done your diligence on the front end, you have a response to that.
"We don't phone it in. We don't video it in. We go out."
Asked what separates D.A. Davidson from the competition, Charlie's answer sounds like a cliché — until you hear what he means operationally. Every issuer they've ever placed bonds for or underwritten a deal with, they've met on-site. It's the round-table mindset before the round table even forms.
Four legs every MUSH-market deal needs.
Charlie describes the financing of a public-sector energy project as a round table with four legs. Pull one out and the table falls. Tap each role to see what they bring — and where deals tend to wobble.
The issuer is the borrower — the one who owes the money for the next 15 years.
A school district, county, municipality, public university, or hospital authority. They're the ones whose budget the debt service hits every year. They're also the party with the least structural finance experience in the room — they may issue once a decade.
That asymmetry is why Charlie's team treats the issuer as the client even when the ESCO is the one who calls them in. The issuer's interests need a dedicated voice at the table — someone whose job is the credit, not the project economics.
What strong issuers do
- Engage a municipal advisor before talking to a bank
- Frame financing as a multi-year capital plan, not one deal
- Ask the hard questions about debt covenants and coverage
- Treat the savings guarantee as a contract, not a slogan
Where issuers get hurt
- Accepting "what one bank offered" as the market
- Taking financial guidance from the ESCO directly
- Discovering the credit gap at the last possible moment
- Treating finance as a paperwork step at the end
The ESCO builds it, guarantees it — but doesn't pay for it.
The energy-services company designs the retrofit, builds it, and stands behind a measurable savings guarantee. They are the delivery engine. They are not the financier — and since Dodd-Frank, they have to be careful even talking like one.
Charlie's view: ESCOs who learn the new sequence — bring in a municipal advisor and a placement agent first, structure the deal together, then go close the project — close more deals than the ones still trying to keep the finance conversation inside their own four walls.
Modern ESCO motion
- Pull in a placement agent at the IGA stage, not after
- Let an MA carry the credit-analysis conversation
- Stay focused on engineering, measurement, & guarantee
- Build trust as a deal partner, not a quasi-bank
Where ESCOs go sideways
- Trying to give financial advice — a Dodd-Frank no-go
- Calling the lender at the 11th hour, after the IGA
- Sizing projects without testing the issuer's capacity
- Letting "we'll figure financing out later" derail a year of work
The lender shows up when they're asked to compete — not before.
Banks and institutional investors are the capital source. They underwrite the issuer's credit, hold the paper, and enforce the covenants. They have a product to sell. When an issuer calls a single bank, that bank's offer is the market.
The point of bringing in a brokerage like D.A. Davidson is to force a competition — multiple banks, real bids, negotiable terms. Not just interest rate: debt covenants, redemption terms, coverage ratios.
What competition unlocks
- Negotiable interest rate, not "take it or leave it"
- Softer covenants when multiple lenders are bidding
- Better redemption flexibility for the issuer
- Coverage ratios that don't strangle future capacity
What single-source costs
- The bank's standard product, on the bank's standard terms
- No visibility into where the spread actually came from
- No leverage to walk if covenants are too restrictive
- A 15-year obligation written on someone else's template
The financier sits with the issuer — even when the ESCO made the call.
This is the seat D.A. Davidson occupies. As placement agent, underwriter, or municipal advisor, Charlie's team runs the credit analysis, designs the deal structure, and runs the competition among lenders. The role pays for itself in the terms it negotiates — and in the deals that don't die at the goal line.
Critically: the financier is invited by the ESCO most of the time, but their fiduciary loyalty is to the issuer. The round table only works if at least one party at it is unambiguously on the borrower's side.
What the financier owns
- Front-end credit analysis on the issuer's capacity
- Deal structuring across budget years if needed
- Running the lender competition end-to-end
- Negotiating non-rate terms: covenants, coverage, calls
Why early matters
- The "we don't have the money" objection isn't the answer — it's a clue
- You can size a multi-year program if you know it on day one
- You can match scope to capacity instead of cutting at close
- You get to "yes" with answers instead of an awkward 11th-hour pivot
We're not adversaries.On how MUSH-market financings actually get done
You need four legs to hold up the round table.
Six questions worth expanding.
The threads Jim and Charlie went deepest on — pulled from across the conversation. Click any question to expand.
01Why can't ESCOs give financial advice anymore? +
Dodd-Frank, mostly. Once the law established a formal municipal advisor category, anyone providing financial guidance to a local government became a regulated party — with fiduciary duty, disclosure obligations, and conflict-of-interest rules. ESCOs sit on the wrong side of most of those tests.
ESCOs are incentivized to grow projects and guarantee the savings. A municipal advisor is supposed to be agnostic on project size and aligned only with the issuer. You can't credibly do both. So the regulation, in effect, requires the ESCO to step back and bring in someone whose only job is the borrower's interest.
Before Dodd-Frank, ESCOs would call us late in the game. Under Dodd-Frank, they call us very early.
02Why is geothermal having a moment while solar cools off? +
Two reasons. First, the tax-credit tail: ITC for solar is burning off fast — many programs have a hard start date of July 3 with in-service deadlines after. Geothermal's credit tail is meaningfully longer. So the time-value of "do it now" looks very different across the two.
Second, the project shape. Geothermal is a deep, capital- intensive replacement of central-plant infrastructure that tends to land well at county courthouses (often sitting on enough land for a well field) and at private colleges with end-of-life central plants. Both segments are showing real activity.
03Why hasn't energy-as-a-service taken off — five years on? +
Math. Charlie was at the AGLF — the Association of Government Leasing and Finance — the day of the recording, looking at the annual industry survey. The members' total volume of as-a-service financing in the past year? One deal. One more than the year before.
Tax-exempt public-sector financing is just too efficient. Once an issuer has access to it, the math for owning the asset and financing it with tax-exempt debt almost always beats the math for paying a private operator to deliver energy as a service. Until that calculus changes, EaaS will stay an interesting concept and a rare deal.
Five years ago we were talking about EaaS. We haven't overcome the hurdle of what's more efficient — and tax-exempt is still winning.
04What does "all projects go to die at finance" actually mean? +
It's the moment an account executive has run the technical audit, walked the buildings, priced the scope, made it past the investment-grade audit — and only now discovers that the issuer can't carry the resulting debt service. That conversation, surfaced late, kills more projects than any engineering problem.
Charlie's point is that the answer "we don't have the money" is almost never the end of the conversation — but it sounds like one. With early credit analysis, the team can structure across budget years, right-size the scope, or pull capacity forward. Without it, the response is just an awkward shrug.
05Why bring a brokerage like D.A. Davidson instead of just calling a bank? +
If you call a bank, you get the bank's product. They quote their offer — interest rate, covenants, redemption terms, coverage ratios — and the issuer takes it or leaves it. That's not negotiation; that's shopping.
A placement agent runs a competition. Multiple lenders that already know D.A. Davidson, that already trust the underwriting work, that bid on the same package. The issuer then negotiates on every dimension that matters, not just the headline rate.
When you call one bank you get a product. When we run it, you get a deal.
06What's coming for the MUSH market in the next five-to-ten years? +
Healthcare is Charlie's headline. He sees a confluence of biology, healthcare, and AI accelerating faster than any of the other MUSH sectors — and an enormous need for efficiency inside hospitals to free up capital to invest in that shift. Not lower healthcare cost — but a real industrial revolution underneath it.
Beyond healthcare: private universities will bifurcate, survivors will thrive. Traditional municipal and K-12 infrastructure is, in his words, "collapsing" and must be replaced — energy efficiency will pay for a chunk of it, but not all of it. He's exceedingly optimistic on the industry overall.
Jim reframes Charlie's "first six months" rule from the recruiting side
Earlier in the conversation Charlie said the first six months for a new ESCO account executive are everything — razor-sharp focus or nothing else works. Here Jim echoes it from the executive-search side: ten searches each getting 10% of your time will close far fewer than one search getting 100%.
The four questions every BEP guest gets.
Charlie answered them the first time around, five years ago. Tap any card to see how he answered them again this time.
Concepts worth knowing before you listen.
The episode moves fast through some specialized vocabulary. If any of these terms are new, tap for a 90-second primer — no prior industry knowledge assumed.
Charlie Zitnik
Charlie is a senior member of D.A. Davidson & Co.'s Public Finance group, where he leads energy and renewables work with prime contractors and ESCOs serving the MUSH market — municipalities, universities, schools, and hospitals.
He's been in the securities business since 1980. About thirty years ago he joined Kirkpatrick Pettis, a regional broker-dealer and the predecessor firm to today's practice; about twenty years ago Kirkpatrick Pettis was acquired by D.A. Davidson, and his team has stayed together unchanged ever since.
With his partner Steve Goehl, Charlie covers the country in person — three nights a week on the road, in front of clients four days a week. The practice runs placements and underwritings for tax-exempt public-sector borrowers in the energy-efficiency space, and is best known for showing up and not phoning it in.
Public Finance · Energy & Renewables · D.A. Davidson & Co. — a 1,600-person broker-dealer with 31 offices nationwide.
What is the MUSH market?
MUSH stands for Municipalities, Universities, Schools, and Hospitals. It's a working shorthand in public finance for the segment of tax-exempt issuers whose buildings and central plants are the bread-and-butter of the ESCO industry: cities and counties, public & private universities, K-12 districts, and hospital systems (public, non-profit, and increasingly health authorities).
These issuers share three things: they own a lot of aging physical infrastructure, they have access to tax-exempt financing, and they typically issue debt rarely enough that each deal needs custom attention. That's why a specialist desk like Charlie's exists.
D.A. Davidson works only in the MUSH market — no federal, no foreign, and no energy-as-a-service. Charlie is explicit that focus is the source of being "best in class."
Dodd-Frank & the ESCO finance rewrite.
Dodd-Frank was the post-2008 financial-reform law that, among many other things, created a formal regulatory category called Municipal Advisor. If you provide financial advice to a state or local government entity in connection with the issuance of municipal securities, you're now in that category — with fiduciary duty, registration, and conflict-of-interest rules.
That swept up ESCOs by accident. Before Dodd-Frank, an ESCO could comfortably tell a school district how to finance the project the ESCO was selling them. After, doing so would make the ESCO a de-facto municipal advisor — a role they're structurally conflicted to play.
ESCOs now bring in a registered placement agent or municipal advisor early — at the IGA stage, not at close. Charlie's team is one of the desks that occupies that seat.
Energy-as-a-service, explained.
Instead of an issuer borrowing money to own and operate an energy asset, in an as-a-service structure a third party owns and operates the asset and the issuer simply pays for the energy (or the performance, or the BTUs delivered) month by month. The asset and the debt sit on the provider's balance sheet — not the public entity's.
On paper this is elegant: no debt issuance, no covenants, no long capital-planning slog. In practice, when the issuer has access to tax-exempt financing — and most MUSH-market issuers do — the math for owning-and-financing usually beats the math for paying-as-a-service. Which is why the model, five years in, is still rare.
Charlie's AGLF (Association of Government Leasing and Finance) industry survey, the week of the recording: one EaaS deal across all members in the past year. The year before: zero.
The ITC — what's burning off, what isn't.
The Investment Tax Credit and its renewable-energy variants were a major reason solar deal volume grew the way it did over the last decade. Tax-exempt issuers can't directly use credits themselves, but the credits flowed through developer/owner structures and reshaped what a project's "all-in" cost looked like.
Many of those programs now have hard start dates — Charlie cites July 3 — with in-service deadlines after. Projects that don't kick off in time miss the credit window. Solar economics revert to fundamentals: utility rates, redundancy, peak demand, battery storage. Geothermal's credit tail is longer, which is part of why it's having a moment.
The shift away from credit-driven economics means deals get sized on actual savings and capital cost, not on policy tailwinds. That's harder — and a financier's seat at the table becomes more valuable, not less.
