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An energy savings performance contract energy sales agreement - referred to as an ESPC ESA or ESPC with an ESA - is a project structure that uses the multiyear ESPC authority to implement distributed energy projects on federal buildings or land. The distributed energy project implemented under an ESPC ESA is referred to as an ESA energy conservation measure, or ESA ECM.
This Commissioning Guidance for Energy Savings Performance Contracts (ESPCs) is DOE’s official guidance for ordering agencies under the current DOE ESPC IDIQ contract. This guidance document explains how commissioning of energy conservation measures (ECMs) and water conservation measures (WCMs) is incorporated into the ESPC process, roles and responsibilities in project commissioning, and key elements of commissioning. This document updates the previous version, released in 2015. This guidance can also be used as applicable in the development of ESPC ENABLE and UESC performance assurance plans.
Operations and maintenance (O&M) savings frequently occur in energy savings performance contracts (ESPCs). During FY 2022, 37% of reported annual cost savings for projects awarded under the U.S. Department of Energy (DOE) ESPC indefinite delivery indefinite quantity (IDIQ) contracts and in the performance period were due to O&M or other energy- and/or water-related cost savings, with the balance (63%) from utility cost savings (i.e., energy or water cost savings). Sometimes the energy- and water-related cost savings are acknowledged and included in payments within ESPCs; other times, for various reasons, they are not. As presented in this guide, FEMP recommends including energy- and water-related cost savings that are O&M (including related repair and replacement) savings in the financial aspects of an ESPC, to the extent such savings can be documented. Inclusion of these savings will help augment project scopes and/or lower interest costs (by shortening financing terms). However, there is a burden of proof as to what constitutes acceptability in O&M savings that needs to be carefully considered and documented in individual projects. Beyond promoting a key tenet used in U.S. federal performance contracting—that savings must be from actual budgets and therefore based on the level of O&M that is actually occurring, not what should have been performed—FEMP also recommends good practice in establishing and documenting O&M baselines, formulating the rationale for baseline adjustments during the performance period, and conducting ongoing verification activities. This document concludes with five examples of how O&M savings may be handled, in situations ranging from the partial displacement of O&M contracts to consolidation and “virtualization” of servers in data centers. A key theme that permeates this guide is the importance of thoroughly documenting all conditions and assumptions used in the development of and accounting for O&M costs and savings throughout the ESPC life cycle, from baseline-setting to measurement and verification (M&V) of the savings during each year of the performance period. Doing so not only prevents internal claims of non-performance (especially in the case of staff turnover during the contract term), but also simplifies ordering agency and energy service company (ESCO) response in the event of scrutiny from oversight organizations, such as government audits. While this guide focuses on federal ESPCs, it may also be applicable when O&M savings are included in utility energy service contracts (UESCs) and non-federal ESPCs.
The U.S. Department of Energy's Federal Energy Management Program (FEMP) is issuing this document to provide clarifications and guidance on issues commonly raised regarding the scope of 42 U.S.C. § 8287 et seq. This document is intended to supplement FEMP's extensive collection of materials that are available to assist federal agencies execute successful energy savings performance contracting (ESPC) projects.
The resilience of federal facilities has become increasingly important among lawmakers, agency leadership, and the American public as high impact natural hazards occur more frequently over time. Resilience is broadly defined as the ability of a federal facility to withstand, respond to, and recover rapidly from disruptions to maintain critical functions. The Department of Energy (DOE) Federal Energy Management Program (FEMP) was codified to facilitate the strengthening of federal energy and water efficiency and resilience. Performance contracting is one of the mechanisms through which federal agencies can finance projects at their facilities, but resilience improvement measures do not always result in utility cost savings, which are the primary driver behind performance contracts. This report provides example cases where performance contracts, specifically energy savings performance contracts (ESPC) or utility energy service contracts (UESCs), were used to implement a resilience measure at a federal facility.
This presentation provides an overview of on-site carbon pollution-free electricity (CFE) purchase contracts and energy savings performance contract (ESPC) energy sales agreements.
This training covers technical, economic and other photovoltaic (PV) project considerations. Technical topics include cost-effectiveness, resilience, cybersecurity, and electrical considerations. In addition, other topics, such as compatibility with agency mission, site plans, coordination with the serving utility, the National Environmental Policy Act, and agency approval requirements. Considerations specific to third-party owned/third-party financed PV projects are also covered, as well as available resources and templates for project development. The training also includes a recap of the first session in the Energy Savings Performance Contracts Energy Sales Agreements (ESPC ESA) Webinar Series.
This webinar provides instructions and resources for financing distributed energy projects (e.g. on-site renewable energy, storage, and combined heat and power) using an energy savings performance contract (ESPC) energy sales agreement (ESA) through the U.S. Department of Energy (DOE) indefinite-delivery, indefinite-quantity (IDIQ) energy savings performance contract (ESPC) vehicle. The DOE IDIQ ESPC contract vehicle uses a streamlined master contract that allows federal agencies to work with 21 energy service companies holding the current DOE IDIQ ESPC. Topics covered in the webinar include: An overview of the DOE IDIQ contract vehicle; ESA-specific considerations for IDIQ contracts; and Specific use cases. The webinar also provides an overview of the resources available on the Federal Energy Management Program website, such as IDIQ tools and templates. This webinar is the fifth in a series that provides information, best practices, and resources for implementing an ESPC ESA project. ESPC ESAs are a great option for federal sites that are motivated to reduce site costs, have no capital investment funding, and cannot use the U.S. Department of Defense 10 USC 2922a authority for long-term contracting.
Report provides recommendations and best practices concerning fair and reasonable price determination in federal energy performance contracts (EPCs), which include energy savings performance contracts (ESPCs) and utility energy service contracts (UESCs). It reflects the experiences, lessons learned, and best practices of agencies implementing EPCs, and is consistent with FEMP’s training on this subject. This is an update to the 2015 revision.
Energy Savings Performance Contracts (ESPCs)are a contractual mechanism that allow a federal agency to procure energy savings and facility improvements without upfront capital costs to reduce costs and resiliency. ESPCs are covered under FAR Part 23.2, and 42 USC § 8287. Section 8287(a)(2)(A) of Title 42 of the U.S. Code requires that each energy savings performance contract (ESPC) undergo an annual energy audit, resulting in a separate audit report for every project. The objective of the present report is to compile and analyze all annual ESPC audit reports issued between October 1, 2023, and September 30, 2024, for projects awarded under Generations 1, 2, and 3 of DOE’s ESPC IDIQ contracts. During this period, 205 measurement and verification (M&V) reports were produced for 200 projects; the total number of reports exceeds the number of projects because some projects generated more than one report(for example, a few projects measure savings twice per year and produce two audit reports annually, each covering a different six-month period). By aggregating the results from these individual audits, the report determines the portfolio-wide realization rate of energy and cost savings for all active ESPC projects awarded under DOE’s IDIQ program. For all 205audit reports, sufficient information was available to compare project-level estimated, reported, and guaranteed cost savings. Reported cost savings accounted for ESCO verified savings per each project’s M&V plan. The total reported cost savings for the period addressed were $\$$647.8million,compared with the total guaranteed cost savings of $\$$601.6million. On average across the reported projects: •ESPC contractors guaranteed 92.8% of the estimated cost savings• projects reported achieving 100.0% of the estimated cost savings• projects reported achieving 107.7% of the guaranteed cost savings. The M&V performed for the period indicated adjustments for government operations and maintenance impacts to savings amount to$\$$43.9millionandcould be restored with the original operational parameters for impacted projects. Accounting for this potential cost savings impact, these projects still realized 100.4% of the guaranteed cost savings. The information on estimated and reported energy savings was collected and compared for all 205of the reports examined. Based on site energy, estimated savings totaled 14.88million MMBtu, and reported savings were 15.33million MMBtu; 3.1% greater than the estimated energy savings. All of the reports examined contained sufficient information to calculate source energy savings. Based on site-adjusted source energy, total estimated energy savings were 20.90 million MMBtu, and reported savings were 21.22million MMBtu, 101.5% of the estimated energy savings. For water savings, the estimated savings were 11,539,055 kGal and the reported savings were 13,315,930 kGal. This means 1,776,875 kGal more water was saved than estimated, which is about 15% higher than the estimate. These results indicate that, overall, the reported energy savings slightly exceeded the estimated values, while estimated water savings significantly exceeded estimated values, suggesting that the projects achieved greater cost savings than originally projected. The total annual expense for the ESCOs to perform annual M&V audits and reporting was $\$$10.02million. Through this effort, $\$$647.8 million in annual cost savings was verified. The M&V results indicated that $\$$43.9 million of these verified savings reflected adjustments due to government operations A-6and maintenance impacts, which could be restored under the original operational parameters for the affected projects. These findings show the value of M&V that only costs 1.7%of the guaranteed cost savings to ensure guarantees are met.
This webinar provides instructions and resources for financing distributed energy projects (e.g., on–site renewable energy, storage, and combined heat and power) using an energy savings performance contract (ESPC) energy sales agreement (ESA) through the site–specific/stand–alone contract vehicle. The site–specific/stand–alone contract vehicle is a procurement process using a request for proposal (RFP). Topics covered during the webinar include forming a strong project team, validating the feasibility of the distributed energy project at a site, acquisition planning, RFP development, procurement, proposal evaluation and contract award, and the construction and performance period. This webinar also provides an overview of the resources available in the ESPC ESA Toolkit, such as checklists and templates.
This webinar provides instructions and resources for financing distributed energy projects (e.g. on-site renewable energy, storage, and combined heat and power) using an energy savings performance contract (ESPC) energy sales agreement (ESA) through the U.S. Department of Energy's (DOE) ESPC ENABLE contract vehicle. The ESPC ENABLE contract vehicle is a streamlined procurement process that uses a standard investment grade audit tool and standard contract templates. Topics covered in the webinar include: An overview of the ESPC ENABLE contract vehicle; ESA-specific considerations for ENABLE contracts; and Case studies. This webinar also provides an overview of the resources available on the Federal Energy Management Program website, such as ESPC ENABLE templates. This webinar is the fourth of a series that provides information, best practices, and resources for implementing an ESPC ESA project. ESPC ESAs are a great option for federal sites that are motivated to reduce site costs, have no capital investment funding, and cannot use the U.S. Department of Defense 10 USC 2922a authority for long-term contracting.
Measurement and verification (M&V) are key to determining and confirming the continued operation of, and savings associated with, performance-based contracts. The Federal Energy Management Program (FEMP) updates these guidelines to reflect the evolution of M&V to incorporate industry best practices and ensure that savings from these performance-based projects are properly planned, communicated, and realized. FEMP released M&V Guidelines: Measurement and Verification for Federal Energy Projects Version 3.0 in 2008. This document was developed with input from industry-government working groups, previous M&V guideline authors, and national laboratory subject matter experts. The document provided the methods and guidelines, with a focus on federal energy savings performance contracts (ESPCs). When FEMP released M&V Guidelines: Measurement and Verification for Performance-Based Contracts Version 4.0 in 2015, FEMP expanded the intended audience to include anyone (energy managers, procurement officers, and contractors) involved in implementing performance-based contracts. The streamlined M&V Guidelines Version 4.0 provided the procedures and guidelines needed to quantify savings resulting from installing energy-efficient equipment, water conservation, improved operation and maintenance (O&M), renewable energy, and cogeneration projects with a performance-based contract; however, it removed some of the associated details on topics such as developing regression models and sampling plans. The details and information provided in M&V Guidelines v. 3.0 are still pertinent to M&V for performance-based contracts. The objective is to keep FEMP M&V version 4.0 condensed, providing the reference document for specifying M&V methods and procedures and a resource for developing project-specific M&V plans; this supplement provides additional details. The content of this supplement has been updated to include pertinent revisions between M&V version 3.0 and M&V version 4.0 by providing details and updating the content to ensure relevancy.
Utilizing policies and programs which incentivize energy efficiency or on-site renewables is difficult. The challenges and costs associated with researching these policies, interacting with their providers, and ensuring regulatory compliance can be collectively referred to as administrative burden. To better understand the impact of administrative burden on energy efficiency policies, we investigated the administrative burden associated with energy sales arrangements (ESA). ESAs are a contracting vehicle related to energy savings performance contracts where an energy services company designs and constructs a renewable energy system at a federal site, transferring ownership of those generating assets to the site after a 20-year term. We conducted a series of in-depth interviews with a variety of relevant ESA stakeholders, including federal project managers, subject matter experts, and energy service companies. We then augmented these interviews with a review of the relevant literature. This research indicated that the current level of administrative burden decreases the adoption of renewable energy through ESAs by the federal government by raising upfront costs, depressing project attempts due to complexity, and introducing delays and challenges in successfully implemented projects. This chilling effect is especially pronounced in new policy vehicles and with inexperienced implementers. Findings from the specific case of ESAs can be generalized to other types of energy policy including efficiency programs. Policy makers decrease the efficacy of initiatives through increased administrative burden, and these effects will be most pronounced in programs with novel design or targeted at unfamiliar audiences.
This webinar is the first of a series that provides information, best practices, and resources for implementing energy savings performance contract (ESPC) energy sales agreement (ESA) projects.
Energy Savings Performance Contracts (ESPCs) are a contractual mechanism that allow a federal agency to procure energy savings and facility improvements without upfront capital costs to reduce costs and enhance mission resiliency. ESPCs are covered under FAR Part 23.2, and 42 USC § 8287. Section 8287(a)(2)(A) of Title 42 of the U.S. Code requires that each energy savings performance contract (ESPC) undergo an annual energy audit, resulting in a separate audit report for every project. The objective of the present report is to compile and analyze all annual ESPC audit reports issued between October 1, 2023, and September 30, 2024, for projects awarded under Generations 1, 2, and 3 of DOE’s ESPC IDIQ contracts. During this period, 205 measurement and verification (M&V) reports were produced for 200 projects; the total number of reports exceeds the number of projects because some projects generated more than one report (for example, a few projects measure savings twice per year and produce two audit reports annually, each covering a different six-month period). By aggregating the results from these individual audits, the report determines the portfolio-wide realization rate of energy and cost savings for all active ESPC projects awarded under DOE’s IDIQ program.
The objective of this work was to determine the realization rate of energy and cost savings from the U.S. Department of Energy’s (DOE’s) Energy Savings Performance Contract (ESPC) program based on information reported by the energy services companies (ESCOs) that are carrying out ESPC projects at federal sites. Information was extracted from 201 measurement and verification (M&V) reports covering 193 projects to determine reported, estimated, and guaranteed cost savings and the associated reported and estimated energy savings for the previous contract performance year. This report covers projects that had a performance year ending in fiscal year 2021, between October 1, 2020 and September 30, 2021, and had an M&V report issued. Additionally, the annual cost to perform M&V was extracted from the individual project Task Order (TO) Schedules.
The objective of this work was to determine the realization rate of energy and cost savings from the U.S. Department of Energy’s (DOE’s) Energy Savings Performance Contract (ESPC) program based on information reported by the energy services companies (ESCOs) that are carrying out ESPC projects at federal sites. Information was extracted from 190 measurement and verification (M&V) reports covering 182 projects to determine reported, estimated, and guaranteed cost savings and the associated reported and estimated energy savings for the previous contract performance year. This report covers projects that had a performance year ending in fiscal year 2021, between October 1, 2021 and September 30, 2022, and had an M&V report issued. Additionally, the annual cost to perform M&V was extracted from the individual project Task Order (TO) Schedules.