ESPCs are a hot topic this week! The White House Council on Environmental Quality (CEQ) convened a summit Wednesday to discuss progress on President Obama’s energy savings performance contracting (ESPC) goal of entering into $2 billion worth of ESPC projects by the end of 2013. Senator Ron Wyden (D-Oregon), and Congressmen Cory Gardner (R-Colorado) and Peter Welch (D-Vermont) joined CEQ Chairwoman Nancy Sutley and other White House officials for a dialogue on ESPC best practices and a discussion of the future of ESPCs in federal and state facilities.
In these times of tight budgets and sequestration, commercial building owners and federal agencies are looking for ways to reduce operating costs and stretch every dollar further. In a recent survey conducted by the Institute for Building Efficiency, 51% of building owners cited either availability of capital or other financial criteria as their top barrier to investing in energy efficiency projects. ESPCs allow cash-strapped building owners and federal agencies to improve the energy performance of their buildings with no up-front capital expenditure.
The contract structure allows a building owner or federal agency to pay a slightly lower rate per month than their historic energy bill to an energy services company (ESCO) for a set period of time (typically 15-25 years), and in exchange the ESCO will install upgraded energy technologies (such as lighting systems, heating, air conditioning, and ventilation controls, energy-efficient motors, variable frequency drives, and more) and guarantee a specific amount of energy savings. After the contract period ends, the energy savings accrue to the building owner or federal agency. For a visual explanation, see the diagram above from the Lawrence Berkeley National Laboratory.
ESPCs have saved $7.2 billion dollars in energy costs in federal buildings alone since 1998 and have the potential to save billions more. NEMA agrees with Senator Ron Wyden’s assertion that, “You can't have an all-of-the-above energy strategy unless energy efficiency is part of the equation.” In order to ensure that efficiency remains part of our domestic energy strategy, NEMA encourages President Obama to extend his Administration’s ESPC goal beyond the end of 2013.