Energy Savings Performance Contracts

Memorandum for the Heads of Executive Departments and Agencies
On December 2, 2011, the White House issued a memorandum to the heads of executive departments and agencies committing the Federal Government to enter into a combined $2 billion in energy savings performance contracts (ESPCs) and utility energy savings contracts (UESCs) by the end of 2013. This commitment will help agencies meet the goals set by Executive Order 13514 on Leadership in Environmental, Energy, and Economic Performance in 2009. Read the full memorandum.

Energy savings performance contracts (ESPCs) allow Federal agencies to accomplish energy savings projects without up-front capital costs and without special Congressional appropriations.

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 funding. 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. Contract terms up to 25 years are allowed.

Department of Energy ESPCs

Department of Energy (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. DOE 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 process 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 funding 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
- Funds 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

Getting Started

Federal agencies new to the energy savings performance contract process are encouraged to review FEMP's ESPC information packet, which includes the following resources: Program Overview, FEMP Assistance Guide, FAQs, and multiple case studies. To get started, call a FEMP financing specialist for assistance.

Additional resources are outlined in this section to help Federal agencies of all familiarity levels evaluate and implement ESPC projects:

DOE directed enhancements to the Department's use of ESPCs to accelerate energy savings and carbon reduction at DOE facilities. These enhancements are outlined in a recent memo.