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 costs 2. 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

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  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