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Saving Energy and Money with Energy Savings Performance Contracts

Posted Jul 25 2012 11:38am

On the Energy Savers Blog, we talk a lot about what you, our readers, can do to make your homes, workplaces, and vehicles more energy efficient. We love to hear from you about what you think about some of the energy-saving tips we pass along and the stories we tell about our own projects and experiences. But I thought our readers might also like to have a peek at one of the ways that federal agencies are leading by example and saving money by saving energy.

Federal agencies are creating jobs and reducing energy costs at federal facilities through energy savings performance contracts (ESPCs). ESPCs are designed to help the federal government save energy and water and increase the use of clean, renewable energy—all at no cost to the taxpayer. An ESPC is a partnership between a federal agency and an energy service company (ESCO). The ESCO conducts a comprehensive energy assessment for the federal facility and identifies improvements to save energy. In consultation with the federal agency, the ESCO designs a project that meets the agency's needs and arranges the necessary financing from the private sector. The savings on utility bills created through the facility upgrades pay for the project over the term of the contract. After the contract ends, all additional cost savings accrue to the agency. For more information on energy savings performance contracts, visit the ESPC home page .

For example, on Monday, the Energy Department announced a new ESPC awarded by the Department of Veterans Affairs (VA) Greater Los Angeles Healthcare System to NORESCO, LLC. The project will leverage more than $15 million in private sector investments for energy savings and infrastructure improvements at the West Los Angeles VA Medical Center, the Sepulveda VA Ambulatory Care Center, and the Los Angeles VA Ambulatory Care Center. The contract includes retrofitting lighting, installing direct digital HVAC controls, switching to more efficient ventilation systems, and installing timers on individual window air conditioning units.

The combination of retrofits and upgrades will save the facilities nearly 65 billion Btu per year. In dollar terms, the projects are expected to save at least $24 million in energy costs over the life of the 19-year contract. The savings on utility bills created through the facility upgrades will be used to pay for the project over the term of the contract, and the VA will continue to save energy and money after the contract term has ended.

This project supports the Presidential Memorandum—Implementation of Energy Savings Projects and Performance-Based Contracting for energy savings , which commits the federal government to enter into a minimum of $2 billion in performance-based contracts to improve federal building energy efficiency over the next two years, at no cost to the taxpayer. The White House press release on the memo announced that the investments will save billions in energy costs, promote energy independence, and create tens of thousands of jobs in the hard-hit construction sector, according to independent estimates.

More today than ever before, federal agencies are using ESPCs to help America secure its energy future.

Eric Barendsen is a communications specialist and former Presidential Management Fellow with EERE's Communications and Outreach office in Washington, D.C.

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