The Energy Policy Act of 2005 requires all federal facilities, including all military bases in Europe, to cut 2003’s energy consumption per gross square foot by 20 percent in FYs 06-15. Here’s the problem: energy prices are increasing. In addition, so are the energy consumption levels of federal facilities, making energy one of the largest (and growing) operational expenses, especially considering that budgets at most facilities haven’t kept pace with rising costs. To make matters worse, these increasing financial constraints often cause facilities to cut back on new infrastructure, such as heating and ventilation systems, which usually means decreased efficiency and increased energy expenses.

However, through a tool called the Energy Savings Performance Contracts (ESPCs) offered through the U.S. Army Corps of Engineers (USACE), federal facilities can save energy and money at the same time. ESPCs allow for risk-free cost and energy savings, low upfront costs, and easy implementation at any military installation in Europe.

“It’s called a performance contract,” said James ‘Dusty’ Stehr, USACE ESPC Manager for Europe District. “It’s much different than the other contracts we do, but it’s a really great tool.” Federal facilities in Europe can sign an agreement with one of three chosen Energy Services Companies (ESCOs) that will swap energy-efficient infrastructure for an agreed-upon monthly amount of guaranteed cost savings. Any additional cost savings resulting from the new infrastructure can be added to the installation’s bankroll free of charge. “It’s a really smart way to do business,” said Hunter Dandridge, the District’s previous contract manager. “It’s like a mortgage, but you pay it off with your savings.”

Other than a small supervision and administrative cost, all initial costs for the new infrastructure are funded by the ESCO. This could include upgrading the existing heating, ventilation, electricity, or water systems; using renewable energy technology; installing better insulated windows and doors; or a combination. “Sometimes an automatic thermostat could mean big savings,” said Stehr. “Or sometimes you have to gut the whole thing. It just depends on the age of the building, what’s currently there, and how efficient it is.”

The ESPC program, managed in Europe by Installation Management Command-Europe (IMCOM-E), has been helping federal facilities finance prohibitively expensive large-scale energy savings projects for more than 10 years. According to David Yacoub, IMCOM-E’s ESPC Manager, the program’s strength lies in its ability to use private investment for public gain.

“The president has encouraged federal agencies to use the program extensively to achieve mandated energy and water reduction goals,” said Yacoub. “Garrisons decide what they want to implement, provided that the measure generates savings. The only criteria to qualify for an ESPC project is that the project generate savings to amortize within the life expectancy of the system.”

Most contracts last 5 years with optional 3-year and then 2-year extensions. “We’re actually developing a new contract now that will allow for more competitive bidding. So it’ll be a little different in the future,” said Stehr.

Expectations for the program, implemented through the U.S. Environmental Protection Agency, are that each facility undergoing a comprehensive upgrade financed through an ESPC achieves a greater than 50-percent reduction from current energy consumption levels. Maintenance on the new infrastructure is normally conducted by the ESCO, but could instead be done by each facility’s Directorate of Public Works to cut costs even further.

Currently, the largest executed contract is at the U.S. Army Garrison-Vicenza, Italy, where ESCO Siemens AG is installing a new boiler plant, which includes a cogeneration unit that will simultaneously produce heat and power by using the escaping “waste heat” from electricity production to produce steam that could help heat the installation.

“The ESPC is absolutely a win-win,” said Stehr. “In fact, every organization involved wins.” Yacoub agreed, adding that Europe District’s project managers, contracting officers, and legal team have been a “tremendous help in making the program run easily and smoothly.”