Energy Division - Energy Savings Performance Contracting (ESPC) Program

The U.S. Army Engineering and Support Center, Huntsville, is considered the Army’s expert in Energy Savings Performance Contracts (ESPC). In consultation with the garrison, the Energy Service Company (ESCO) provides capital and expertise to make comprehensive energy and water reduction, energy resilience and security efficiency improvements on facilities, and maintains them in exchange for a portion of the generated savings. ESPC is a tool used to support the Army’s Installation Energy and Water Resilience Policy as reflected in Army Directive 2020-03. ESPCs can be implemented and paid for from energy savings within the maximum 25-year contact length. The partnership between the garrison, ESCO, CEHNC and Army stakeholders requires a high degree of commitment and work in good faith from the partners to enable successful outcomes as an ESPC is a long-term relationship.
 

Benefits of ESPCs

ESPCs assist installations in providing energy resilience and energy cybersecurity; reducing energy and water use, as well as carbon and greenhouse gas emissions; and improving readiness and quality of life. Actual energy cost savings pay for the ESPC efforts on a yearly basis. An ESPC project provides many key benefits to the installation including the following:

• Mandatory savings guarantee that ensures savings must exceed payments each year
• Mandatory Measurement and Verification (M&V) of savings, and of equipment performance
• Infrastructure system upgrades (more efficient systems)
• Infrastructure improvements that pay for themselves over time (no up-front funding is required for capital improvements)
• Ability to purchase long-payback equipment by bundling with short-payback Energy Conservation Measures (ECMs)
• ESCO-guaranteed equipment performance, maintenance, repair, and replacement 

Advantages of implementing ESPC projects through Huntsville Center include the following: 

• Greater breadth and depth of experience with ESPC project execution than any other acquisition organization
• Centralized project management, which enables a standardized and streamlined process. We are a “one-stop shop.”
• Dedicated and experienced project development team to provide comprehensive program support including engineering technical expertise, project management expertise, cost analysis, legal review, and M&V services through a third-party for CONUS projects and through PMs for OCONUS projects.
• Easier to monitor a portfolio of projects vs a single project at garrison level
• Third-party M&V contract support
• Ensures DoD compliance with all policies and regulations of third-party financing 

The ESPC is a relatively large program within Huntsville Center with 113 active projects and $2.5 billion in capital investments. The FY20 ESPC verified savings was $116.7M, which is $16.8M above the ESCO guaranteed amount of $99.9M. The average ESPC project capital investment amount — approximately $22M in FY20 — has been increasing over the years.

The ESCO performs operations and maintenance on major systems, allowing limited Department of Public Works maintenance resources to be spent on other activities. These third-party financed agreements allow the garrison to focus appropriated funds on mission critical requirements.

ESPC project savings are cumulative, creating savings for the installation year after year throughout the project contract period and often replacing equipment near the end of its service life with higher efficiency energy solutions.

Huntsville Center has a worldwide ESPC Multiple Award Task Order Contract (MATOC) with 17 ESCOs including small businesses. Task orders are competed among the MATOC vendors using the center’s streamlined procurement process. HNC can also use the MATOC contract to award ENABLE projects to its pool of contractors. ENABLE can further reduce project development time by removing the preliminary analysis step and using standardized DOE templates. HNC ESPC prgrogram has a proven streamlined business model, which solidifies its place as a subject matter expert in third party financing in the Department of Defense. Successes associated with this program include task orders awarded to Kwajalein Atoll, Marshall Islands, and Fort Huachuca, Arizona. Huntsville Center is also working overseas with efforts in Korea and Germany.

ESPC Services
ESPC provides several types of Energy Conservation Measures (ECMs) for government facilities.

ESPC’s documented performance, validated through our robust annual M&V process, continues to provide verified annual savings that are 10 percent or greater over the contract guaranteed savings. These energy projects will continue to produce cost savings far into the future.

ESPC Hotline — For more information about ESPC services, call (256) 895-1349.

Download the ESPC Fact Sheet (PDF) HERE.

(updated August 2021)