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Industry ReportsMay 2005New Report Documents Importance of ESCO Investments at Federal Facilities and Refutes GAO Report ConclusionsA recently released report from Lawrence Berkeley National Laboratory (LBNL) entitled "Public and Institutional Markets for ESCO Services: Comparing Programs, Practices and Performance" documents that ESCO investment in energy efficiency retrofits at public and institutional facilities has totaled between $15-19 billion since the early 1990s. Of that amount, at least $3 billion was invested at federal facilities during the 1990-2003 timeframe. The authors conclude that the combined net benefits to the federal government of the 109 Super Energy Savings Performance Contracts (ESPC) projects as they were actually financed range between $138 and $286 million in 2003 dollars depending on which of the three discount rates were used for analysis. The authors call ESPC projects "solidly cost effective" and state that because the benefits outweigh the costs they represent no cost to the government. The investment costs of Super ESPCs are paid for out of annual utility and operations and maintenance bill savings. NAESCO, in its press release on the publication of the report, said, "This report should be required reading for members of Congress and their staff, the Congressional Budget Office, and the Office of Management and Budget." The report directly challenges the conclusions of the GAO report on federal use of alternative financing for energy efficiency retrofits at government facilities issued late in 2004. The GAO report recommends that agencies use "timely full and upfront appropriations" to fund energy efficiency projects rather than third party financing through Energy Savings Performance Contracts. The LBNL report states that appropriations are not available for most energy efficiency projects but even at a five percent discount rate, delays of more than one year in obtaining congressional appropriations on result in reduced net benefits to the government relative to an ESPC financed project. NAESCO, in its press release heralding the release of the report, noted that since studies show that the average delay for appropriations for energy efficiency retrofits is four to six years, the data overwhelmingly supports the use of ESPCs at federal facilities to maximize dollar and energy savings. The authors note that these retrofit projects provide benefits beyond the directly quantifiable energy and operational cost savings used in the calculation of net benefits. These include equipment modernization, improved quality of lighting and space conditioning, enhanced worker productivity, asbestos abatement and environmental improvements. Other benefits not reflected in the report’s calculations are the benefits of reduced emissions and avoided environmental compliance costs, avoided generation or transmission infrastructure costs, and economic development benefits. Lawrence Berkeley National Laboratory scientists Nicole Hopper, Chuck Goldman and Jennifer McWilliams, Kate McMurdie Stoughton of Pacific Northwest National Laboratory (PNNL), and Dave Birr of Synchronous Energy Solutions authored the report. Based on a 1,634 project database housed at LBNL, the project data includes 129 federal ESPCs provided by DOE’s Federal Energy Management Program and over 1,300 projects whose project information was collected by LBNL through the NAESCO accreditation program. The authors also looked at the Utility Energy Service Contract project information housed at PNNL. A full copy of the report can be downloaded at: http://eetd.lbl.gov/EA/EMP/ee-pubs.html. |
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