Briefing on Historic Performance, Mandates, and Outlook

by the Federal Performance Contracting Coalition

Energy Savings Performance Contracting

What is an ESPC? Under ESPCs, the private sector competes to develop

projects at facilities ESCo’s install new energy efficient equipment, arrange the

financing for the upgrades, and provide a measurable performance guarantee

The maximum contract term allowed is 25 years Financing is paid back from the guaranteed energy savings

(to be no more than energy costs would have been without the project)

1. Before ESPC: Funds are wasted on energy and O&M costs2. During ESPC:

Private Sector finances, installs and maintains new energy efficient equipment, at no upfront cost to government

Energy $avings are guaranteed by contractor Government pays off investment with $avings on utility bill

3. After ESPC: Government keeps the savings after investment is paid off

Energy BillO&M Costs

Energy BillO&M Costs

EnergyCost

Savings

Energy BillO&M Costs

1. Before ESPC

2. During ESPC

3. AfterESPC

Contractor Payment

Govt Savings

GovernmentSavings

Federal Energy Mandates and Goals

30% energy intensity reduction of 30% by 2015 (note that this is far less ambitious than the President desire to green of 75% of Federal Buildings)

Increased on-site renewable energy generation –ACES sets a goal of 20% by 2020

Emissions reductions presumably as ambitious as the mandate being discussed in congress of at least 17% by 2020

What will it take to meet the Executive Order and EISA Energy Goals?

Based on 2008 DOE Federal Energy Management report, federal government will have to invest $9 billion between 2009-2015

This is approximately $1.4 Billion per year!

What has been the Historic Funding?

FY 2003 through FY 2008, the Federal government invested $3.74 billion in energy efficiency improvement projects ($622 M per year) Direct Appropriations totaled $1.73 Billion (46%) Privately financed energy efficiency investments totaled $2.01 Billion.

$1.426 Billion (38%) through ESPCs $588 Million (16%) through Utility Energy Service Contracts (UESCs).

2009 Data

Over 46 projects in over 20 states Total investment value of over $690,000,000* Over 10,000 jobs created

*Not all projects have been included. Number may increase significantly.

Reasons for Good 2009 ESPC Results

Last year to use the “old” SuperESPC contract so agencies wanted to award projects that were started under the “old” process

$623 M includes FY09 and Calendar year 09 One extremely large contract accounted for $183 M

of this amount

2010 Expectations

Note: “Old” DOE contract was extended an additional 2 months to bring projects to award

Under the new DOE contract: Projects awarded: 1 (follow on from Task Order) Projects announced: 7 Projects under development or consideration: 6

ESPCs under consideration since the New contract went into effect Jan 08

Bureau of Land Management NASA-JPL Bureau of Prisons Coast Guard Veterans Administration VSN22 Department of Health and Human Service Fort Lee –Army GSA Regions 7 (used sole source exception) Forest Service (since pulled)

2010 Will Be a Tough Year for ESPCs

Impact of Stimulus Impact of New Contract Perceived lack of Administration Interest/advocacy Even contracts under consideration will not likely be

negotiated until 2011

What Can the Administration do to Reverse the Trend?

Use the bully pulpit to inform energy managers across the government that this Administration supports ESPC use

Embolden FEMP and ensure adequate resources and ADVOCATES

Change the way the Project Facilitators are used/funded (make them advocates)

Support legislative change to enhanced competition