How Energy Savings Performance Contracts Help Save Energy

June 29th, 2012 by Scott Raybin

We hear it all the time: if businesses and government would use less energy, they would save money. That’s just common sense, but energy efficiency improvements cost money. In the case of government, that money comes from you, the taxpayer.

There is a way to do it, though, without reaching into the taxpayer’s pocket. With Energy Savings Performance Contracts (ESPCs), government can:

• Finance improvements upfront and pay off the debt with money saved on energy bills.

• Get a guarantee from companies contracted to do the work that energy savings will result from it — making the projects attractive to lenders.

• Support jobs

There is a smart piece of bipartisan legislation in the pipeline that takes the concept to the next level. The Smart Energy Act requires the federal government to make its buildings more energy efficient, using ESPCs. Again, energy bills will come down, and the taxpayer won’t be footing the bill. Plus, skilled workers are needed.

The Smart Energy Act is also a good kick-starter for businesses, making it easier for them to finance energy upgrades. The bill specifically mentions an innovative technique where factories can capture the considerable heat given off by the manufacturing process and reuse it for electricity and heating.

By making business and government facilities significantly more energy efficient, we can create 600,000 to 1 million skilled jobs, according to a joint study by the Department of Defense and the Oak Ridge National Laboratory. Another key benefit: our industries will be more competitive in the global economy, Phyllis Cuttino, director of the Pew Clean Energy Program, says.

The federal government is on the bandwagon but could do more to accelerate the use of ESPCs across the federal building portfolio. U.S. Rep. Marsha Blackburn recently joined other House members in urging President Obama to demand increased energy efficiency in federal facilities. In particular, she pointed to the potential for ESPCs to save taxpayer money and put Americans to work in good-paying jobs. According to the Energy Department, for every $1 million spent on energy efficiency retrofits, nine jobs are created.

Rep. Blackburn has been a champion for private-sector job growth. With the respect she commands in Washington, she would be an effective co-sponsor of the Smart Energy Act. It is the kind of common-sense solution that has been her signature.

We don’t need simply to cut back on energy use because it makes us feel good. We should do it because it delivers real results, real dollars, and real jobs.

Scott Raybin @greensavingsco