Energy contracts help agencies reach green goals

DoE set up Energy Savings Performance Contracts with several different companies to work under a share-in-savings approach to reduce agency utility bills. Agenc...

Agencies have until Sept. 1 to tell the White House what they think of the strategy to reduce federal greenhouse emissions.

The administration extended the comment deadline from Aug. 16 to give agencies more time to understand the governmentwide requirements for calculating and reporting greenhouse gas emissions associated agency operations.

The draft calls for agencies to report their baseline 2010 greenhouse gas emission inventory by January 2011.

“The data required to develop an agencywide inventory will likely be drawn from multiple levels throughout an agency’s organizational structure,” the draft strategy states. “This guidance has been developed to provide federal agency users, whether representing facility-level activities or headquarters-level functions, with the necessary information to fulfill reporting requirements.”

One way several agencies are not only reducing their carbon footprint, but saving money as well is through the Energy Department’s Energy Service Companies (ESCOs) contracts. And soon, DoE will provide agencies with a dashboard to better understand and track energy efficiencies through the program.

“These contracts are used by federal agencies basically to tap into the technological and financial resources of the private sector to implement energy savings from renewable energy projects and related activities that generate savings to the agency’s utility bill,” said Skye Schell, a supervisor in the Federal Energy Management Program, which is part of DoE’s Energy Efficiency and Renewable Energy department.

Schell said agencies can benefit from upgraded infrastructure and modernized plants.

“They cover a wide range of technologies,” he said. “Really any efficiency technology implementation you can think of probably has been included in Energy Savings Performance Contracts (ESPCs) over the year. Different renewables, wind projects, solar thermal, photovoltaics, geothermal, all have been aspects of ESPCs. It’s quite a breadth of technology.”

He added that the investments are in the tens of millions of dollars as agencies may replace a central heating plants or converting a fossil fuel infrastructure to a biomass plant.

The cost of a typical project can run between $8 million and $10 million. The company bids on the work using a type of share-in-savings approach.

Schell said the one big difference is the energy companies’ estimate and the agency agrees to the projected savings on the front end of the deal.

“We do ongoing measurement and verification to determine if the savings were in fact achieved, and if so, then the energy savings companies gets their share of savings,” Schell said.

Usually on share-in-savings contracts, vendors make the upfront investments and receive money as the savings come in. Agencies have used this type of contract in the past for recovery audit initiatives.

Agencies also receive savings from paying less for electricity or water or other types of energy.

More and more agencies are starting to use the program. Schell said in 2008, the vehicle saw about $300 million in terms of investment value in projects. A year later, the investment increased to $450 million, and Schell expects the value to increase by another $100 million to $550 million in 2010.

He said about 19 agencies have active projects with DoE, the Justice Department and the Navy among the biggest agency users of the contract.

Schell said these contracts usually are long-term deals where companies invest more than $10 million and are paid back with interest on average over 18 years.

Over the next six months, Energy will give agencies more data to better understand how to reduce their greenhouse gas emissions and carbon footprints.

Schell said Energy will make its ESPC dashboard available for government officials and contractors.

“We are tracking key indicators of program performance,” he said. “The dashboard answers questions such as trends in agency uses of the program, which Energy Service Companies are participating, what is the pipeline of projects and awards, the time it takes from inception to award, the cost of borrowing associated with the program, and the cost of BTU saved associated with the program. It really gives us a decent snapshot of the program efficiency and effectiveness.”

Energy has used the dashboard since 2008, mostly for internal tracking. But Schell said by the end of the calendar year, Energy will have removed any sensitive data and ensured the information in the dashboard is accurate and open it up to agency users.

“Agencies using our program may be interested in information and trends to compare their experiences with others, and also this might be a tool we use to put out report cards for ESCOs for agencies to review against different parameters,” he said.

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