A pivotal moment arises when strategic elements harmonize seamlessly in pursuit of a goal. After enduring years of unwavering commitment and overcoming obstacles with determination, efforts have converged into a synchronized alignment, creating a window of opportunity for federal agencies to modernize aging infrastructure in pursuit of achieving net-zero emissions goals set by Executive Orders 14057 and 14008. The time for federal agencies to act is now.
From my experience in various roles, working for energy service companies and in leadership positions at the DOE, I’ve seen federal agencies consistently adapt to meet numerous climate-related goals, steadily working towards building the framework for climate-resilient infrastructure and operations.
Despite challenges that shifted priorities momentarily, such as responding to COVID-19 and managing economic uncertainties, federal agencies have emerged stronger than ever. Over the past three years, agencies have rebuilt their departments and energy programs, leveraging years of data and experience to establish the necessary framework to deploy infrastructure investments. Now is the time to capitalize on this framework.
Agencies are well-positioned with access to DOE qualified private sector partners, funding opportunities, and internal support structures to achieve net-zero emissions.
We often hear from DOE leadership that the energy transition is government-enabled and private sector-led. Qualified private sector partners that can provide validated financing mechanisms to leverage federal agencies’ dollars are critical to deploying any infrastructure project. Energy service companies (ESCOs) have successfully partnered with federal agencies for the past 25 years. ESCOs provide Energy Savings Performance Contracting (ESPC) and Utility Energy Service Contracting (UESC) as procurement vehicles for financing capital intensive infrastructure projects. Two unique aspects of performance contracting that greatly benefit federal agencies are that funds are effectively multiplied through the implementation of energy efficiency measures and upgrades, and ESCOs financially guarantee the energy savings, shifting the risk from the federal agency to the ESCO.
ESCOs also serve as resources during the project development phase, providing preliminary assessments, investment-grade audits, recommendations and guidance on the best and most feasible energy conservation measures for the project. The relationship with an ESCO is extremely collaborative; the project is, in essence, built in partnership.
Federal agencies can access funding through the Federal Energy Management Program (FEMP) Assisting Federal Facilities with Conservation Technologies Program, which offers grants for the development of energy and water efficiency upgrades to new and existing federal buildings. In March 2023, the Biden-Harris Administration announced $250 million in funding from the Bipartisan Infrastructure Law for this purpose, to be distributed over three phases. The first phase awarded $104 million to 31 federal projects, with 80% of projects leveraging performance contracts.
Additionally, agencies received funding from the Inflation Reduction Act, allowing them to invest in staff and resources. The IRA also offers tax credits, like the clean energy investment tax credit, which can provide up to 30% for qualifying investments in renewable energy projects.
Energy Resilience & Conservation Investment Program funds are available for the Defense Department. The program is intended to fund projects that provide energy resilience to critical electrical loads at an installation or joint base, implement energy and water conservation measures and renewable energy technologies.
Leveraging Funding Contributions with a Performance Contract
Federal agencies have experienced significant advantages through leveraging funding contributions alongside performance contracting. The Oak Ridge National Laboratory completed a study in 2023 that concluded, “Funding contributions allow for expanded scope; the savings generated annually for the term of the contract by the new Energy Conservation Measures are capitalized to expand the scope even further and there is little or no need to finance the additional scope. For this reason, a funding contribution increases the size of the project more than the funding contribution itself.”
Resources
There is an abundance of resources available for agencies to learn how to develop a project, fund a project, and partner with ESCOs. Internally within agencies, leadership has been established to drive towards the goals set by the administration. In addition to the chief sustainability officer, many agencies have implemented sustainability taskforces or working groups to help facilitate projects. A few places to start for agencies to learn more about project development and implementation are:
The Oak Ridge National Laboratory supports FEMP and agencies, providing technical assistance, reviewing investment grade audits and preliminary assets, managing maintenance and verification reports, providing stakeholder engagement, and managing the indefinite-deliver, indefinite-quantity ESCO List. They also help develop tools in partnership with the FEMP, like:
ESCO Selector: A tool to help agencies create a notice of opportunity that complies with federal requirements and meets agency needs.
There are also supporting organizations representing energy service companies, advocating for performance contracting, offering resources and training to ESCOs, and aiding federal agencies in learning more about them.
If you feel that your agency is stuck and facing challenges getting a project off the ground, whether that be limited resources, limited access to funding, unfamiliarity with project development, or any other reason – raise your hand and ask for help. The DOE, FEMP, ORNL, supporting organizations and ESCOs are all here to help you get your project started. Gone should be the days when agencies said, “We don’t know where to start.”
Dr. Timothy Unruh, Executive Director of the National Association of Energy Service Companies (NAESCO).
Federal agencies are primed to address net zero infrastructure goals – Here’s why
Over the past three years, agencies have rebuilt their departments and energy programs, leveraging years of data and experience.
A pivotal moment arises when strategic elements harmonize seamlessly in pursuit of a goal. After enduring years of unwavering commitment and overcoming obstacles with determination, efforts have converged into a synchronized alignment, creating a window of opportunity for federal agencies to modernize aging infrastructure in pursuit of achieving net-zero emissions goals set by Executive Orders 14057 and 14008. The time for federal agencies to act is now.
From my experience in various roles, working for energy service companies and in leadership positions at the DOE, I’ve seen federal agencies consistently adapt to meet numerous climate-related goals, steadily working towards building the framework for climate-resilient infrastructure and operations.
Despite challenges that shifted priorities momentarily, such as responding to COVID-19 and managing economic uncertainties, federal agencies have emerged stronger than ever. Over the past three years, agencies have rebuilt their departments and energy programs, leveraging years of data and experience to establish the necessary framework to deploy infrastructure investments. Now is the time to capitalize on this framework.
Agencies are well-positioned with access to DOE qualified private sector partners, funding opportunities, and internal support structures to achieve net-zero emissions.
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Private sector partners
We often hear from DOE leadership that the energy transition is government-enabled and private sector-led. Qualified private sector partners that can provide validated financing mechanisms to leverage federal agencies’ dollars are critical to deploying any infrastructure project. Energy service companies (ESCOs) have successfully partnered with federal agencies for the past 25 years. ESCOs provide Energy Savings Performance Contracting (ESPC) and Utility Energy Service Contracting (UESC) as procurement vehicles for financing capital intensive infrastructure projects. Two unique aspects of performance contracting that greatly benefit federal agencies are that funds are effectively multiplied through the implementation of energy efficiency measures and upgrades, and ESCOs financially guarantee the energy savings, shifting the risk from the federal agency to the ESCO.
ESCOs also serve as resources during the project development phase, providing preliminary assessments, investment-grade audits, recommendations and guidance on the best and most feasible energy conservation measures for the project. The relationship with an ESCO is extremely collaborative; the project is, in essence, built in partnership.
The DOE qualifies ESCOs that have met the criteria set by the DOE to perform federal government ESPC projects. The DOE manages three approved ESCOs lists.
Funding
Federal agencies can access funding through the Federal Energy Management Program (FEMP) Assisting Federal Facilities with Conservation Technologies Program, which offers grants for the development of energy and water efficiency upgrades to new and existing federal buildings. In March 2023, the Biden-Harris Administration announced $250 million in funding from the Bipartisan Infrastructure Law for this purpose, to be distributed over three phases. The first phase awarded $104 million to 31 federal projects, with 80% of projects leveraging performance contracts.
These grants can support projects at any stage, including technical assistance funding up to $100,000. Phase application submission deadlines can be found FEMP’s website.
Additionally, agencies received funding from the Inflation Reduction Act, allowing them to invest in staff and resources. The IRA also offers tax credits, like the clean energy investment tax credit, which can provide up to 30% for qualifying investments in renewable energy projects.
Energy Resilience & Conservation Investment Program funds are available for the Defense Department. The program is intended to fund projects that provide energy resilience to critical electrical loads at an installation or joint base, implement energy and water conservation measures and renewable energy technologies.
Leveraging Funding Contributions with a Performance Contract
Read more: Commentary
Federal agencies have experienced significant advantages through leveraging funding contributions alongside performance contracting. The Oak Ridge National Laboratory completed a study in 2023 that concluded, “Funding contributions allow for expanded scope; the savings generated annually for the term of the contract by the new Energy Conservation Measures are capitalized to expand the scope even further and there is little or no need to finance the additional scope. For this reason, a funding contribution increases the size of the project more than the funding contribution itself.”
Resources
There is an abundance of resources available for agencies to learn how to develop a project, fund a project, and partner with ESCOs. Internally within agencies, leadership has been established to drive towards the goals set by the administration. In addition to the chief sustainability officer, many agencies have implemented sustainability taskforces or working groups to help facilitate projects. A few places to start for agencies to learn more about project development and implementation are:
The Oak Ridge National Laboratory supports FEMP and agencies, providing technical assistance, reviewing investment grade audits and preliminary assets, managing maintenance and verification reports, providing stakeholder engagement, and managing the indefinite-deliver, indefinite-quantity ESCO List. They also help develop tools in partnership with the FEMP, like:
There are also supporting organizations representing energy service companies, advocating for performance contracting, offering resources and training to ESCOs, and aiding federal agencies in learning more about them.
If you feel that your agency is stuck and facing challenges getting a project off the ground, whether that be limited resources, limited access to funding, unfamiliarity with project development, or any other reason – raise your hand and ask for help. The DOE, FEMP, ORNL, supporting organizations and ESCOs are all here to help you get your project started. Gone should be the days when agencies said, “We don’t know where to start.”
Dr. Timothy Unruh, Executive Director of the National Association of Energy Service Companies (NAESCO).
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