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ESPC AFCEC is aggressively applying Energy Savings Performance Contracts to large energy-saving projects such as heat plant decentralizations, which can decrease an installation's energy intensity by as much as 20 percent. But, these projects can cost between $20M and $60M, typically too much for Air Force energy focus funds, driving the use of third-party financing through ESPCs.

Background

The Air Force uses Energy Savings Performance Contracts and Utility Energy Service Contracts to fund energy conservation projects with no upfront cost to taxpayers. They are executed through an Energy Service Company that acquires financing for the infrastructure or equipment system and recovers costs, plus overhead and profit, from the funds made available via lower utility and operation and maintenance costs. ESPCs typically have performance periods of 10 to 20 years (max of 25), and come with complex financial terms.

The Air Force anticipates entering into contracts valued around $180 million during FY 13/14. An additional $400 million worth of potential ESPC and Utility Energy Service Contract projects have been identified for evaluation.

In the absence of appropriate funding, or if a project crosses lines of funding (medical, IT, working capital, etc.) ESPCs might be the right choice. In these cases, the Air Force prefers the Department of Energy's "multiple award" contract. It is an indefinite delivery/indefinite quantity contract with 16 preapproved ESCOs.

Policy

The Air Force Civil Engineer Center began centrally managing ESPCs for the Air Force in October 2010 when the Air Force Civil Engineer at the time, Brig. Gen. Timothy Byers, issued a policy requiring installations to submit ESPCs with a focus on energy and water conservation initiatives to AFCEC for initial vetting prior to formal engagement with an ESCO. The policy also establishes AFCEC as the approval authority at key points in the project development and evaluation process. ESCOs are encouraged to introduce and market their firm's capabilities to Air Force installations, major commands and AFCEC.
Engineer Technical Letter 11-24, ESPCs, provides guidance for initiating ESPCs, preferred contracting vehicles, important elements to include, and measurement and verification strategies. An installation that complies with the ETL can accomplish an ESPC with assurance that the energy savings will be realistically measured and validated.

The ESPC Process

  Process
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