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ESPCs help agencies fund energy projects

Aug. 17, 2012 - 12:56PM   |  
By ANDY MEDICI   |   Comments

In March, the Energy Department’s Savannah River Site in Aiken, S.C., completed construction of a new 20-megawatt biomass power plant — at no cost to the department.

Instead, the $795 million project will be paid for entirely out of energy savings — estimated at about $47.2 million a year — making it the largest energy savings performance contract yet awarded by the federal government.

In an ESPC, the vendor pays the upfront costs of facility renovations and retrofits in exchange for payments from energy cost savings over time. The contractor guarantees the energy savings for the life of the contract or has to pay the balance.

At the Savannah River Site, which conducts research into nuclear power and weapons, the new biomass power plant will replace an aging 1950s-era coal-fired power plant and oil-fired boilers, reducing costs and greatly decreasing greenhouse gas emissions, Thomas D’Agostino, undersecretary for nuclear security and administrator of the DOE’s National Nuclear Security Administration, said in a statement.

Energy contractor Ameresco Inc. will be responsible for maintaining and fueling the biomass power plant for the next 20 years.

Agencies struggling under tight budgets are increasingly using ESPCs to fund renewable energy projects, according to energy contractors.

By 2013, agencies must get 7.5 percent of their facilities’ energy needs from renewable sources.

President Obama in December called on agencies to award at least $2 billion worth of ESPCs over the next two years.

Ameresco CEO George Sakellaris said in a statement that the Savannah River Site’s biomass plant “is a shining example of how public-private partnerships can create transformative energy infrastructure.”

Jeff Sherman, director of federal energy solutions at energy contractor Schneider Electric, said he is seeing a spike in the number of agencies seeking ESPCs for renewable energy projects.

He said that requests for ESPCs with solar power components might have been more difficult to fulfill a few years ago because solar projects were more expensive and more difficult to fund out of energy savings. He said costs have come down, and companies are more able to incorporate those into ESPCs.

Renewable energy fits in well with energy-conservation measures and gives agencies the ability to meet mandates and generate more power on site, Sherman said.

The Army is installing a 4-megawatt solar field on a 42-acre tract at its White Sands Missile Range in central New Mexico as part of its efforts to generate more renewable energy.

The $16.8 million project, to be completed in December, will generate about 10 percent of the installation’s power and is funded entirely through an ESPC.

“This project implements a solar photovoltaic array system that will partially offset White Sands Missile Range’s energy requirements, improve facilities and operations, demonstrate Army engineering and technology capabilities, and align with the Army’s Energy Security and NetZero objectives,” said Judy Marks, president of Siemens Government Technologies Inc., in a statement.

The Army’s Fort Bliss in Texas also will be getting 5,500 solar panels and $16 million in electricity upgrades over the next three years. That project will be paid for by the estimated $39 million in savings generated over the next 24 years, according to Johnson Controls, which is overseeing the project.

Fort Bliss also will receive various energy-efficiency upgrades and the ability to monitor energy use in real time across the installation.

Dave Myers, president of building efficiency at Johnson Controls, said in a statement that the Army is embracing calls for more renewable energy and greater use of alternative financing.

“Fort Bliss is a great example for other U.S. military installations by taking advantage of available financing methods to fund projects that more than pay for themselves through energy cost savings,” Myers said.

Other agencies using ESPCs to generate renewable energy include:

• The Transportation Department’s Volpe Center in Cambridge, Mass., which is looking to incorporate solar, wind or geothermal energy into a retrofit of its lighting and heating and cooling systems.

• The Environmental Protection Agency’s Environmental Science and Assessment Laboratory in Edison, N.J., is looking to build a 2-megawatt solar field using an ESPC.

• The Veterans Affairs Department is exploring the use of solar power to help provide electricity for its hospital in Dayton, Ohio.

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