ESPCs Gaining Popularity in Financing Clean Energy Projects

Energy savings contracts gaining ground in government

Federal Times, January 7, 2015

Paying for electricity in Puerto Rico can be expensive — very expensive.

That’s why the Army is overhauling Fort Buchanan, Puerto Rico, with a series of wind turbines, thousands of solar panels and a new irrigation system, saving the installation millions of dollars a year in energy costs.

But the new energy systems — from the 21,824 solar panels down to the new air conditioning and LED lighting — were all installed at no cost to the Army through an energy savings performance contract (ESPC).

Under an ESPC, a vendor pays the upfront costs of energy-saving or water-saving retrofits in exchange for payments from energy cost savings over time. If the building doesn’t save energy, the contractor doesn’t get paid, which gives all parties the motivation to make sure the technologies pay off.

ESPCs are an increasingly popular option for building upgrades and renewable energy, according to agency officials and energy contractors, who plan on investing hundreds of millions of dollars over the next few years.

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