Energy Savings Performance Contracts (ESPCs), Utility Energy Savings Contracts (UESCs) and GSA ENABLE ESPCs are proven programs that allow Federal agencies to upgrade facilities infrastructure using budget neutral programs. Siemens has successfully implemented over 30 ESPCs and generated >$1B in guaranteed energy savings through these contract vehicles.
An Energy Service Company (ESCO) and/or utility company in consultation with the government agency develops, designs, and implements improvements at the project site and provides the money to pay for it. The agency pays the ESCO over the term of the contract, up to 25 years out of the energy and energy-related cost savings resulting from the project. The ESCO guarantees the performance of the project that is estimated to generate enough cost savings to pay for the project over the term of the contract. After the contract ends, all additional cost savings accrue to the agency.
Every successful ESPC needs a champion – someone who will maintain momentum and enthusiasm for the project within your organization. Ideally, this person has considerable influence within the organization and is an assertive advocate for the ESPC process. The strongest setback of an ESPC project is doing nothing – this can be overturned with the right people.
What exactly are you trying to achieve? What are the technical, legal, and financial requirements? Document these requirements and re-emphasize to all stakeholders:
For an ESPC to be efficiently executed, all stakeholders must understand and support the objectives and requirements of this financing mechanism. Maintaining communication and full transparency through the entire ESPC acquisition planning, assessment, development, implementation, and audit phases is critical to the success of the program. Relevant stakeholders from your organization’s finance, capital planning, and facilities departments should be consulted at each phase of the project. In addition, having weekly calls and meetings with the ESCO is highly recommended to ensure the project stays on schedule.
IGA reports serve as the technical basis for the ESPC project development and justify the economic feasibility of the project to secure financing. Therefore, IGA reports can be complicated, brimming with technical details, financing strategies, and explanations of maintenance roles. Take the time to fully understand the contents of the report, asking questions and getting clarification on anything that isn’t clear. Make sure you understand exactly what is being requested from your organization in the way of assistance during construction, system maintenance, and other phases before the project begins. Establish an efficient process to respond to questions within the IGA document.
While installing clean energy solutions will help improve the resilience and efficiency of your facilities, you may need to source additional funding to meet your goals. Consider applying supplementary funds that are authorized and appropriated by Congress or available through other approved parties, such as MILCON, ERCIP, and O&M, to close the gap.
Establish a process to phase the infrastructure improvements so that your organization can see results earlier. For example, implement quick payback improvements first and then issue modifications to the agreement after the more complex solutions are designed and fully vetted to maintain momentum with the team.
ESPC Case Study: 
ESPC Case Study: 