Energy Savings Performance Contract
Encyclopedia
Energy Savings Performance Contracts (ESPC) are an alternative financing mechanism authorized by the United States Congress
designed to accelerate investment in cost effective energy conservation
measures in existing Federal buildings. ESPCs allow Federal agencies to accomplish energy savings projects without up-front capital costs and without special Congressional appropriations. The Energy Policy Act of 1992
(EPACT 1992) authorized Federal agencies to use private sector financing to implement energy conservation methods and energy efficiency technologies.
An ESPC is a partnership between a Federal agency and an energy service company (ESCO). The ESCO conducts a comprehensive energy audit for the Federal facility and identifies improvements to save energy. In consultation with the Federal agency, the ESCO designs and constructs a project that meets the agency's needs and arranges the necessary financing. The ESCO guarantees that the improvements will generate energy cost savings sufficient to pay for the project over the term of the contract. After the contract ends, all additional cost savings accrue to the agency. The savings must be guaranteed and the Federal agencies may enter into a multiyear contract for a period not to exceed 25 years.
(FEMP) of the United States Department of Energy
(DOE) as required by the Energy Policy Act of 1992. The final DOE ruling came into effect on May 10, 1995. The use of ESPCs by Federal agencies was reauthorized in the Energy Policy Act of 2005 (EPACT 2005) through the end of Fiscal Year (FY) 2016 and permanently reauthorized in The Energy Independence and Security Act of 2007
(EISA).
(DOE) energy savings performance contracts are indefinite delivery/indefinite quantity (IDIQ) contracts designed to make ESPCs as practical and cost-effective as possible for Federal agencies. The Department of Energy awarded these "umbrella" contracts to ESCOs based on their ability to meet terms and conditions established in IDIQ contracts. DOE ESPCs can be used for any Federally-owned facility worldwide.
(DOA) use of ESPCs is focused on the reduction of energy and water consumption, with ancillary benefits of achieving facility improvements, improving the quality of life in the Army, and ultimately reducing the overall energy costs of the Installations.
United States Congress
The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....
designed to accelerate investment in cost effective energy conservation
Energy conservation
Energy conservation refers to efforts made to reduce energy consumption. Energy conservation can be achieved through increased efficient energy use, in conjunction with decreased energy consumption and/or reduced consumption from conventional energy sources...
measures in existing Federal buildings. ESPCs allow Federal agencies to accomplish energy savings projects without up-front capital costs and without special Congressional appropriations. The Energy Policy Act of 1992
Energy Policy Act of 1992
The Energy Policy Act is a United States government act.It was passed by Congress and addressed energy efficiency, energy conservation and energy management , natural gas imports and exports , alternative fuels and requiring certain fleets to acquire alternative fuel vehicles, which are capable of...
(EPACT 1992) authorized Federal agencies to use private sector financing to implement energy conservation methods and energy efficiency technologies.
An ESPC is a partnership between a Federal agency and an energy service company (ESCO). The ESCO conducts a comprehensive energy audit for the Federal facility and identifies improvements to save energy. In consultation with the Federal agency, the ESCO designs and constructs a project that meets the agency's needs and arranges the necessary financing. The ESCO guarantees that the improvements will generate energy cost savings sufficient to pay for the project over the term of the contract. After the contract ends, all additional cost savings accrue to the agency. The savings must be guaranteed and the Federal agencies may enter into a multiyear contract for a period not to exceed 25 years.
Federal Policies
Energy Savings Performance Contracts are regulations created by the Federal Energy Management ProgramFederal Energy Management Program
The USA Federal Energy Management Program promotes energy efficiency and the use of renewable energy resources at federal sites, helping agencies save energy, save taxpayer dollars, and demonstrate leadership with responsible, cleaner energy choices, because as the largest energy consumer in the...
(FEMP) of the United States Department of Energy
United States Department of Energy
The United States Department of Energy is a Cabinet-level department of the United States government concerned with the United States' policies regarding energy and safety in handling nuclear material...
(DOE) as required by the Energy Policy Act of 1992. The final DOE ruling came into effect on May 10, 1995. The use of ESPCs by Federal agencies was reauthorized in the Energy Policy Act of 2005 (EPACT 2005) through the end of Fiscal Year (FY) 2016 and permanently reauthorized in The Energy Independence and Security Act of 2007
Energy Independence and Security Act of 2007
The Energy Independence and Security Act of 2007 is an Act of Congress concerning the energy policy of the United States...
(EISA).
Impacts of ESPCs
As of March 2010 more than 550 ESPC projects worth $3.6 billion were awarded to 25 Federal Agencies and organizations in 49 states and the District of Columbia (D.C.). These projects saved an estimated 30.2 trillion BTU annually, equivalent to the energy consumed by 318,300, and $11 billion in energy costs, $9.6 billion goes to fund energy efficiency projects and $1.4 billion is reduced Federal Government spending.U.S. Department of Energy ESPCs
United States Department of EnergyUnited States Department of Energy
The United States Department of Energy is a Cabinet-level department of the United States government concerned with the United States' policies regarding energy and safety in handling nuclear material...
(DOE) energy savings performance contracts are indefinite delivery/indefinite quantity (IDIQ) contracts designed to make ESPCs as practical and cost-effective as possible for Federal agencies. The Department of Energy awarded these "umbrella" contracts to ESCOs based on their ability to meet terms and conditions established in IDIQ contracts. DOE ESPCs can be used for any Federally-owned facility worldwide.
Benefits
DOE energy savings performance contracts help Federal agencies meet energy efficiency, renewable energy, water conservation, and emissions reduction goals by streamlining contract funding for energy management projects. The streamlined financing provides multiple benefits, including:- Increased quality and value through:
- Access to private-sector expertise in energy efficiency, renewable energy, water conservation, and reduced emissions
- Built-in incentives for ESCOs to provide high-quality equipment, timely services, and thorough project commissioning
- Infrastructure improvements to enhance mission support
- Healthier, safer working and living environments
- Flexible, practical contract and procurement processes to ensures your project, your way
- Expert, objective technical support through FEMP assistance, including:
- FEMP-provided legal and financing guidance, project facilitators, advanced technology experts, and training for Federal agencies
- Smart project management that:
- Ensures building efficiency improvements and new equipment without upfront capital costs
- Finances energy improvements without relying on special Congressional appropriations
- Guarantees energy and related operation and maintenance cost savings
- Enhances the ability to plan and budget energy, operation, and maintenance accounts
- Minimizes vulnerability to budget impacts due to volatile energy prices, weather, and equipment failure
U.S Department of the Army ESPCs
The United States Department of the ArmyUnited States Department of the Army
The Department of the Army is one of the three military departments within the Department of Defense of the United States of America. The Department of the Army is the Federal Government agency which the United States Army is organized within, and it is led by the Secretary of the Army who has...
(DOA) use of ESPCs is focused on the reduction of energy and water consumption, with ancillary benefits of achieving facility improvements, improving the quality of life in the Army, and ultimately reducing the overall energy costs of the Installations.