In times of fiscal uncertainty and budget shortfalls, energy managers, public works directors and military installations struggle to fund necessary infrastructure upgrades and energy-savings projects that impact their energy-reduction goals.
Energy Savings Performance Contracting offers a tool that allows for those critical upgrades to take place with zero up-front capital cost. Upgrades are installed, and then the capital investment is paid back over a period of up to 25 years. But there is more to the story …
While the installation enjoys new equipment upgrades that save energy, there are many benefits to an ESPC that are not captured in the project financials — savings are often realized by the installation in ways that do not impact the cash flow of the ESPC project. The additional savings are above and beyond what goes to pay back the initial investment and are seldom considered when contemplating using an ESPC.
A few examples of these types of intangible savings are major reductions in trouble calls, reduced preventive-maintenance costs, expanded technical skill sets of government employees, a quicker path to achieve success versus traditional funding and contracting processes, and end-use customers having more comfortable and productive work environments.
As an example, Space and Naval Warfare Systems Command System Center, Pacific has enjoyed many intangible benefits with its ESPC projects.
“We used to shut down the lab's programs when equipment went down, but with the new equipment installed by the ESPC projects, we have significantly reduced lost lab work hours,” said Randy Peacock, SPAWAR Pacific head of facilities operations and energy manager.
Peacock also said he has been able to reduce the number of trouble calls after normal work hours, which in turn reduces SPAWAR’s Operations and Maintenance costs. With more efficient equipment, they are able to reduce their charges to the labs on site, which in turn reduces the lab’s costs. They are also able to control space temperature, which in turn makes their lab work more efficient and cost effective.
At Fort Bliss, Texas, Gene Curtiss, the Building Operation Control Center Manager for the U.S. Army Garrison, said he believes that ESPC projects have allowed his staff to gain extensive knowledge about complex systems that they may not have been able to gain if not for the ESPC effort. Curtiss said ESPC contracts “often improve the efficiency of identified needs based upon economics.” This allows for smarter use of limited government funding and allows the government to leverage scarce dollars to the greatest extent possible. “When you create a pleasant working atmosphere, that is priceless.”
Garrison Department of Public Works customers are the end-users of the systems often touched by an ESPC project. More often than not, DPW resources are consumed with handling trouble calls to support the mission’s facilities. At Aberdeen Proving Ground, Maryland, Devon Rust and Jeff Presgraves have said since ESPC was implemented, trouble calls have been reduced, thus lowering service technician hours. These types of maintenance savings are not typically captured in ESPC cash flow models — these are savings that stay with the customer, from day one. These benefits are in addition to the fact that a more reliable HVAC system and better-lit working areas are providing their customers a more comfortable and productive working environment.
Rust and Presgraves also pointed out that the ESPC warranty handled by the energy service company takes added workload/stress off of their DPW staff, and their work reception/service order desk has a new routing system directly to the ESCO for ESPC service, resulting in quicker response times. These benefits are key to DPWs and help improve overall efficiencies and generate actual savings to the government.
In the environment of limited resources facing DPWs, using new and different ways to tackle problems are a must. With an ESPC project, many benefits are never captured in the proposal or financial schedules of the project, but they are indeed enjoyed by many DPWs across the world. Fewer maintenance hours, better working environments, opportunities to train and learn on new technology, and reduced funding requirements are a few of the many benefits not commonly touted by the program.
Since installations don’t often claim credit in the project financials for many of these “ancillary” savings, decision makers often don’t realize they exist until after the fact. Once customers realize how much more they can get from an ESPC than just what’s on paper, opportunities abound.