Finding the Funding: Considering ESPC
Energy service performance contracting (ESPC) is a key financing mechanism for organizations to realize the benefits of energy conservation measures while minimizing the cost burden. ESPCs are a great model for state and local governments because they:
- Provide upfront financing for energy efficiency projects that is repaid by the guaranteed savings on utility bills resulting from the upgrades;
- Work for comprehensive projects in multiple facilities ($1M+, preferably $5M+); and
- Are suited to long-term contracts (typically 10-20 years).
The ESPC model can enable energy efficiency projects in the state and local market to move forward that might not otherwise. DOE has developed a series of tools for organizations implementing ESPC based on lessons learned from successful leaders in the public sector as part of DOE’s ESPC Accelerator. The Accelerator was a 3-year partnership of states, local governments, and K-12 schools to expand access to energy performance contracting. DOE has compiled the resources created during the Accelerator into the ESPC Toolkit, which can guide project owners through every step of the ESPC process.
This blog is the first in a 5-part series highlighting the resources from the ESPC Accelerator. To start, we will examine the Considering ESPC section, and how to determine if ESPC is a good vehicle for your projects. To help you start your journey, the following tools are available:
- ESPC or Design-Bid-Build for Your Retrofit? – This handy illustrated fact sheet enables users to decide whether ESPC or design-bid-build is a better fit for their planned retrofit project by comparing the development, management, and outcomes of each approach.
- Preliminary Diagnosis Tool – This fast mini-audit might help you determine whether ESPC is the right solution for your energy efficiency goals. Answer these questions and find out!
- ESCO Market Study – A comprehensive overview of the market size, growth projections, industry trends, and market potential in the U.S. ESCO industry. The study was conducted by experts at the Lawrence Berkley National Laboratory and funded by DOE.
- Legislative Library – An inventory of ESPC legislation that provides sample legislative language that has been successful in enacting ESPC legislation, for users interested in drafting or revamping their own state laws.